Access to basic banking services, such as checking accounts, is something that many of us may take for granted. Having this access can help improve an individual’s financial well-being. However, more than 7 million American households did not have a bank account in 2019.
To kick off Financial Literacy Month, today’s WatchBlog article examines who is least likely to have a bank account, why this may be the case and what is being done to help these households open an account. banking.
Who is least likely to have a bank account?
Historically, who has a bank account has varied by income, education, and race. These gaps persist today, even if households without bank accounts are at their lowest level for 30 years. In our March report, we found that low-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 bank accounts are also more likely to use more expensive alternative financial services, such as check cashing and payday loans.
Why might someone not have a back account?
Consumers cited several reasons why they did not have a bank account. Among the top 3 reasons, consumers said lack of money, high or unpredictable fees, and distrust of banks were the reasons they didn’t have an account. Other reasons cited by consumers include privacy concerns, not being eligible for an account, banks not offering the necessary services, and inconvenient bank opening hours and locations.
How is the federal government helping more consumers open bank accounts?
Federal financial regulators have taken a wide range of measures to help households without bank accounts get this access to basic banking services. These include initiatives to provide:
However, in our review of these efforts, we found that several federal financial regulators lacked performance measures assessing the results of their efforts to ensure people can access basic banking services. Therefore, we recommended that they develop performance measures that can help determine the effectiveness of these efforts.