FDIC helps ‘unbanked’ Americans get stimulus payments

One thing is clear after multiple rounds of pandemic-related stimulus payments: having a bank account helps deliver the money faster.

People who provided current bank account information to the IRS were among the first to receive direct deposit payments, which began arriving a year ago this month. Although glitches prevented some people with directdeposit information on file with the IRS from getting their payments right away, electronic delivery decreased wait times exponentially. Direct deposit easily beat receiving a mailed check or prepaid debit card, which, with the slowdowns in the U.S. Postal Service, further increased the possibility of a delay.

Millions of Americans conduct their day-to-day financial business outside the banking system, leaving many to be preyed upon by payday-loan companies or rent-to-own establishments. Or they end up paying unnecessary fees to cash checks.

For decades, various government agencies have struggled to persuade the most economically vulnerable households to open bank accounts. Nearly 95% of U.S. households — about 124 million — have either a bank or credit union account, according to the latest “How America Banks” report by the Federal Deposit Insurance Corporation (FDIC).

But the other 7.1 million households don’t have bank accounts. Lower-income and minority populations are disproportionately represented among these unbanked households. Nearly 14% of Black and 12% of Hispanic households are unbanked, compared with 2.5% of White households, according to the report.

Given the economic and social disruptions caused by the pandemic, being able to conduct your financial business electronically is paramount.

“The pandemic is also presenting particular challenges to households that rely on paper instruments to conduct financial transactions; that need or want to visit bank branches; that do not have an adequate savings cushion; or that do not have access to responsible, affordable credit,” the FDIC report said.

Then there is the stimulus money. There is a population of people the government is trying to reach. They don’t receive federal benefits and typically don’t file a tax return. And many are unbanked, which means if and when the IRS finally gets a tax return for them to send a payment, the agency will have to mail them a check or prepaid debit card.

To make it easier for these households to get their stimulus funds, the FDIC has launched a public awareness campaign — #GetBanked — to persuade unbanked individuals of the benefits of having a bank account.

The campaign will run in Atlanta and Houston, where the FDIC says its research finds a disproportionately higher percentage of unbanked Black and Hispanic households.

This summer, more stimulus money is slated to be distributed by the IRS in the form of advance child tax credit payments. Having a bank account will speed up the payments.