A record 96% of US households were banked in 2021.
So says the latest national survey just released by the Federal Deposit Insurance Corporation (FDIC).
Why it matters? The percentage of those unbanked in a country reflects on that nation’s willingness to provide its peoples with levels of financial inclusivity that is key to increased prosperity and security.
The FDIC’s 2021 National Survey of Unbanked and Underbanked Households found an estimated 4.5% of US households (5.9 million households), lacked a bank or credit union account, the lowest national unbanked rate since the FDIC survey began in 2009.
Ticket tape parade? The marching bands should be rehearsing, as these figures show that around 1.2 million more households were banked since 2019. But, the fight is far from over, as six million people remain unbanked and 14.1% of households (18.7 million households), were underbanked in 2021. This means they had a bank, or credit union account, and used non-bank financial products and services. So, progress, but not job done.
The record was achieved despite the economic challenges posed by the COVID-19 pandemic. Although, nearly half of newly banked households that received government payments said these payments contributed to their decision to open an insured bank or credit union account.
“During the pandemic, consumers opened bank accounts to access relief funds and other benefits quickly and securely,” said FDIC Acting Chairman Martin J Gruenberg. “Safe and affordable bank accounts provide a way to bring more Americans into the banking system and will continue to play an important role in advancing economic inclusion for all Americans. Today’s results highlight the importance of ensuring consumers who are receiving benefits or starting a new job, two key bankable moments, can easily find and open a bank account that meets their needs.”
Since 2009, the FDIC has asked households about their use of banking and financial products and services through the most comprehensive survey of its kind. In 2011, 8.2% of households were unbanked, the improvement from that point represents 5 million additional households with banking relationships over the most recent decade.
Key findings in the 2021 survey include:
- National Unbanked Rate Drops to Record Low. An estimated 4.5% of U.S. households were “unbanked” in 2021, meaning that no one in the household had a checking or savings account at a bank or credit union. This represents approximately 5.9 million U.S. households, compared to 7.1 million in 2019.
- National Underbanked Rate and Use of Non-bank Financial Products and Services Declines. An additional 14.1% of households, or 18.7 million, were underbanked in 2021, meaning they had a bank account but used non-bank financial products and services during the year. Banked households’ use of key non-bank financial products and services that classify a household as underbanked declined by about one third between 2017 and 2021.
- Unbanked and Underbanked Rates Remain Higher Among Minorities. In 2021, 2.1 percent of White households were unbanked, compared with 11.3% of Black households and 9.3 percent of Hispanic households. While this gap is sizable, it is notably smaller than just two years prior when the unbanked rate in 2019 among White households was 2.5% compared to 13.8% and 12.2% among Black and Hispanic households, respectively. In 2021, 9.3% of White households were underbanked, compared with 24.7% of Black households and 24.1% of Hispanic households.
- Importance of Bankable Moments. Among recently banked households that received a government benefit during the pandemic, almost half (45%) or 1.9 million households said that the payment contributed to their opening a bank account. For recently banked households that started a new job, about a third (33.1%) said it contributed to their decision to open a bank account.
- Mobile Banking use Continues to Increase: The use of mobile banking increased sharply among banked households between 2017 (15.1%) and 2021 (43.5%), and was the most prevalent primary method of account access. Use of a bank teller declined but remained prevalent for certain segments of the population.
- Reasons for Not Having a Bank Account. About 21.7% of unbanked households cite “Don’t have enough money to meet minimum balance” as the main reason for not having an account. “Don’t trust banks” was the second-most cited main reason for not having an account. The proportion of unbanked households citing fees or minimum balance-related reasons for not having a bank account fell from 38% in 2019 to 29.2% in 2021.
- Use of Check Cashing and Non-bank Loans (e.g. Payday or Pawn Shop Loans) Decreases. Use of some non-bank financial transaction services, such as check cashing, and non-bank credit products, including payday or pawn shop loans, continued to decline. Unbanked households’ use of non-bank check cashing fell from 30.2% in 2017 to 21.8% in 2021. Similarly, use of non-bank credit also declined. In 2017, 7.4% of households had used at least one non-bank credit product tracked by the survey. In 2021, that share fell by 40% to 4.4% of households using those same products.
- Use of Non-bank Online Payment Services Increases Overall. Non-bank online payment services such as PayPal, Venmo, and CashApp have quickly become a common tool for many households—banked and unbanked—to conduct financial transactions. Nearly half of all households (46.4%) used a non-bank online payment service in 2021, including two-thirds of households younger than 35.
“Banked households appear to be using non-bank online payment services in conjunction with banking products by linking them to credit cards or bank accounts, while unbanked households are frequently using these services in place of a bank account,” added Gruenberg. “The FDIC will continue its educational and outreach efforts to help consumers understand the benefits of a bank account, the consumer protections they afford, and the applicability of deposit insurance.”
The FDIC launched the #GetBanked initiative at the onset of the pandemic as a way to inform consumers about how to open a bank account online and to facilitate the safe and timely distribution of Economic Impact Payments through direct deposit. As part of ongoing efforts to expand financial inclusion, the FDIC began a public awareness campaign in April 2021 with targeted advertising in select cities to promote the benefits of opening a bank account, including access to safer, lower-cost financial products.
In turn, the FDIC is calling on community groups and government agencies to join the movement and help bring more people into the banking system. Go to www.FDIC.gov/GetBanked and follow the campaign at #GetBanked.
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system. The FDIC insures deposits; examines and supervises financial institutions for safety, soundness, and consumer protection; makes large and complex financial institutions resolvable; and manages receiverships.