Ranks of the ‘unbanked’ drop, FDIC survey finds

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Americans have access to a checking or savings account, according to a survey released on 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 US. Without one, households must rely on cheque-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% in 2015 from 7.7% in 2013, according to the survey from the Federal Deposit Insurance Corp (FDIC).

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.

The Census Department reported last month that median household income rose 5.2% 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% to 13.5%, 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 say they believe banks are not at all interested in serving households like theirs, according to the report.

But the No. 1 reason why Americans say they do not have a chequing or savings account is that they believe they do not have enough money to get an account.

The FDIC said roughly 57% of all unbanked households cited lack of money as a reason not to have an account, and roughly 38% 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 on 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% of American households in 2015, up from 7.9% 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% 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% of unbanked households used a prepaid card in 2015, the FDIC said, up from 22.3% 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.’’