Access to basic banking services like checking accounts is something many of us take for granted. Having this access can help boost a person’s financial well-being. However, more than 7 million US households did not have a bank account in 2019.
To kick off Financial Literacy Month, today’s WatchBlog post looks at who is least likely to have a bank account, why that may be, and what is being done to help these households open a bank account.
Who is least likely to have a bank account?
Historically, who has a bank account has varied based on income, education, and race. These differences continue today, although households without a bank account are at their lowest level in 30 years. In our March report, we found that lower-income, less educated, and minority households are less likely to have a bank account. For example, black and Hispanic households are about 60% less likely than white households to have a bank account.
Households without a bank account are also more likely to use more expensive alternative financial services, such as check cashing and payday loans.
Why might someone not have a countdown?
Consumers cited various reasons why they did not have a bank account. Among the top 3 reasons, consumers said not having enough money, high or unpredictable fees, and mistrust of banks were reasons they didn’t have accounts. Other reasons cited by consumers included privacy concerns, not qualifying for an account, banks not offering necessary services, and inconvenient bank hours and locations.
How is the federal government helping more consumers open bank accounts?
Federal financial regulators have taken a wide range of steps to help unbanked households gain this access to basic banking services. These have included initiatives to provide:
However, in our review of these efforts, we found that several federal financial regulators did not have performance measures evaluating the results of their efforts to ensure that people can access basic banking services. As a result, we recommend that you develop performance measures that can help determine the effectiveness of these efforts.