Unbanked

Unbanked is a term for individuals who do not use or have access to traditional financial services such as bank accounts. This demographic is more prevalent in less developed countries or economically disadvantaged regions within developed nations. In the U.S., the primary reasons for being unbanked include insufficient funds to maintain a bank account, distrust of banking institutions, and concerns over privacy. Unbanked individuals typically manage their finances through cash transactions, money orders, or prepaid debit cards. They generally lack access to insurance, pensions, and professional financial services and may resort to alternative financial services like check, cashing and payday lending. According to a 2021 FDIC study, approximately 4.5% of American households were unbanked. Often, the unbanked reside in banking deserts.