Share of ‘unbanked’ households dropped in 2019, report states, as nearly 95% hold accounts

Most households in the U.S. held at least one credit union or bank account in 2019, as the number of “unbanked” households dropped from two years earlier, the federal insurer of bank deposits said Monday.

In its “How America Banks: Household Use of Banking and Financial Services” report for 2019, the Federal Deposit Insurance Corp. (FDIC) said nearly 95% (for 124 million) of all U.S. households held at least the one account at a bank or credit credit union, with 5.4% of households (7.1 million) reporting they did not hold an account.

The reasons for not holding an account? Not enough money to meet minimum balance requirements (reported by about half of the unbanked households), and/or no trust in banks (reported by about one-third of the total unbanked).

Also according to the report, two key groups showed their lowest “unbanked” rate since the agency began measuring a decade ago. The report stated that approximately 14% of African-American households and 12% of Hispanic households did not have bank accounts in 2019 – both lowest rates for both since the FDIC began the report in 2009.

Both of those groups still lag behind white households, the report stated, with only 3% called “unbanked.”

Nevertheless, the report stated that African-American and Hispanic households still have ties to the banking system, largely through pre-paid cards. About one in three (31.1%) African-American unbanked households used a prepaid card in 2019, as did one in six (16.7%) of Hispanic unbanked households. Overall, nearly 28% of unbanked households used prepaid cards in 2019, according to the report.

The report also points out that credit unions and banks remain, overwhelmingly, the source of credit for bank account holders. It states that 73% of U.S. households used bank or credit union credit, such as a credit card, personal loan, or line of credit. Payday or auto title lenders account for nearly 5% of credit extended – which is a drop from 2015, when the non-bank lenders accounted for 8% of credit extended.

The survey was conducted largely before the financial impact of the coronavirus was apparent, the FDIC noted. It includes a postscript that draws on findings from the 2019 and earlier surveys, FDIC said, to address possible consequences for the unbanked rate. The postscript also discusses potential pandemic-related challenges faced by households in conducting financial transactions, visiting bank branches, saving for unexpected expenses or emergencies, and obtaining credit, according to the agency.

FDIC Survey Shows 95 Percent of U.S. Households Were Banked in 2019