FDIC’s Unbanked and Underbanked Households

Earlier this week, the Federal Deposit Insurance Corporation (FDIC) released the findings of its latest National Survey of Unbanked and Underbanked Households, which it has conducted biennially for the past 15 years. This year, the survey found that nearly one in five American households is either unbanked (4.2 percent) or underbanked (14.2 percent).

As part of the Southwest Public Policy Institute’s work, we put ourselves directly in these consumers’ shoes, first with our No Loan For You! report in which we attempted to obtain a small-dollar loan from a bank. Through that experiment, we exposed the challenges that unbanked and underbanked consumers face daily when trying to get credit from their local bank—even when that bank offers a small-dollar loan product to its customers.

Then, our No Loan For You, Too! report built upon the work started with No Loan For You! by expanding our focus to include New Mexico credit unions and the challenges Minnesota’s unbanked and underbanked consumers experience.

The FDIC’s latest survey identifies some 5.6 million unbanked and 19 million underbanked households. In addition, roughly one in six households lacked mainstream credit (for unbanked households, this number rose to nearly eight in ten households).

Online Lenders Alliance CEO Andrew Duke included the following in his statement:

“[A] recent Online Lenders Alliance study found that a significant number of consumers with active accounts at a bank or credit union offering small dollar loans still choose fintech lenders as the best product to meet their needs.”

SPPI’s work will continue to explore the challenges faced by the unbanked and underbanked and the various ways that price controls on consumer access to credit create unintended consequences that further harm these consumers. As we have learned through our emulation experiences, we must protect their ability to access credit when financial needs arise.