Bank ac­count? Slightly more check that box.

FDIC re­port on dip in ‘un­banked’ good sign for econ­omy

Baltimore Sun - - NATION & WORLD - By Ken Sweet

NEW YORK — Slightly more Amer­i­cans have 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 whodo 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 A check­ing or sav­ings ac­count in the U. S. is con­sid­ered a cor­ner­stone of fi­nan­cial sta­bil­ity. 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.

While the gains were mod­est, the re­sults of the sur­vey from the Fed­eral De­posit In­sur­ance Cor­po­ra­tion of­fered an en­cour­ag­ing sign. The FDIC re­port was the most re­cent piece of data show­ing that the eco­nomic re­cov­ery is be­gin­ning to pos­i­tively af­fect those at the bot­tom.

The Cen­sus Depart­ment in Septem­ber said 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.

The im­prov­ing econ­omy likely had some ef­fect on why more Amer­i­cans opened bank ac­counts. Not only did more Amer­i­cans mak­ing less than $15,000 open bank ac­counts be­tween 2013 and 2015, 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’s 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 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 fig­ures re­leased Thurs­day were gath­ered in June 2015, so the re­sults do not re­flect im­prove­ments in the econ­omy since then.


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