Sur­vey: More Amer­i­cans now have ac­cess to bank ac­counts

Malta Independent - - BUSINESS - ■ Ken Sweet AP Busi­ness Writer

More Amer­i­cans have ac­cess to a check­ing or sav­ings ac­count, ac­cord­ing to a sur­vey re­leased Thurs­day by fed­eral reg­u­la­tors, a sign that the im­prov­ing econ­omy is help­ing lift the na­tion’s poor­est house­holds.

Hav­ing a check­ing or sav­ings ac­count is con­sid­ered a cor­ner­stone of fi­nan­cial sta­bil­ity in the U.S. With­out one, house­holds must rely on check-cash­ing ser­vices, pre­paid debit cards and other costly ways to pay bills and make rou­tine trans­ac­tions.

The por­tion of Amer­i­cans who do not have a bank ac­count, known in in­dus­try jar­gon as the “un­banked,” de­clined to 7 per­cent in 2015 from 7.7 per­cent in 2013, ac­cord­ing to the sur­vey from the Fed­eral De­posit In­sur­ance Corp. The im­prove­ments came mostly from house­holds mak­ing less than $15,000 a year and among mi­nor­ity pop­u­la­tions, par­tic­u­larly black and His­panic house­holds.

Another way of look­ing at it: For ev­ery 10 house­holds that were un­banked in 2013, one of those house­holds is now banked.

“The im­prov­ing econ­omy no doubt im­pacted these num­bers in a pos­i­tive way,” FDIC Chair­man Martin Gru­en­berg said in an in­ter­view.

The Cen­sus Depart­ment re­ported last month that me­dian house­hold in­come rose 5.2 per­cent from 2014 to 2015 , the first an­nual in­crease in that met­ric since be­fore the Great Re­ces­sion. That same re­port showed the pro­por­tion of Amer­i­cans in poverty also fell last year, from 14.8 per­cent to 13.5 per­cent, the big­gest an­nual de­cline in nearly 50 years. Not only did more Amer­i­cans mak­ing less than $15,000 open bank ac­counts be­tween 2013 and 2015, but the num­ber of Amer­i­cans mak­ing less than $15,000 also de­clined.

“The poor have more money in their pock­ets, and more are able to af­ford bank ac­counts,” said Aaron Klein, a fel­low in eco­nomic stud­ies at the Brook­ings In­sti­tu­tion.

There are sev­eral rea­sons why peo­ple choose not to have a tra­di­tional bank ac­count. Some do not trust banks or want to avoid their fees, or they have pri­vacy con­cerns, ac­cord­ing to the FDIC re­port. There is also a per­cep­tion among the un­banked that bank ac­counts are not for the poor. More than half of un­banked house­holds said they be­lieve banks are “not at all in­ter­ested” in serv­ing house­holds like theirs, the re­port said.

But the No. 1 rea­son why Amer­i­cans say they do not have a check­ing or sav­ings ac­count is that they be­lieve they do not have enough money to get an ac­count. The FDIC said roughly 57 per­cent of all un­banked house­holds cited lack of money as a rea­son not to have an ac­count, and roughly 38 per­cent of those same peo­ple said that was the main rea­son.

The FDIC con­ducts a sur­vey of the un­banked and un­der­banked ev­ery two years, gath­er­ing the data on odd years and re­leas­ing the re­sults roughly a year later. The fig­ures re­leased Thurs­day were gath­ered in June 2015, so the re­sults do not re­flect im­prove­ments in the econ­omy since then.

The FDIC re­port also showed the grow­ing pro­lif­er­a­tion of pre­paid debit cards as an al­ter­na­tive to bank ac­counts, par­tic­u­larly among the poor, young and mi­nori­ties. Pre­paid debit card us­age grew to 9.8 per­cent of Amer­i­can house­holds in 2015, up from 7.9 per­cent in the FDIC’s sur­vey in 2013.

Pre­paid cards, which can be picked up at most drug­stores or gro­cery stores, have be­come in­creas­ingly so­phis­ti­cated in re­cent years and in many ways can be thought of as a bank ac­count re­place­ment. The growth of pre­paid cards has be­come so no­tice­able that fed­eral reg­u­la­tors, no­tably the Con­sumer Fi­nan­cial Pro­tec­tion Bureau, moved to in­tro­duce reg­u­la­tions for the in­dus­try last month . But since only 17 per­cent of all pre­paid debit cards were is­sued by a bank or through a bank web­site, the FDIC con­sid­ers pre­paid debit card users as un­banked.

Roughly 27 per­cent of un­banked house­holds used a pre­paid card in 2015, the FDIC said, up from 22.3 per­cent in 2013.

The num­ber of un­banked Amer­i­can may con­tinue to de­cline as the econ­omy keeps im­prov­ing, Gru­en­berg said. If more banks start of­fer­ing low-fee tran­sactional ac­counts with low bar­ri­ers for ac­cess, that may also bring some of the un­banked back into the main­stream.

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