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Analysis

2017 FDIC National Survey of Unbanked and Underbanked Households

Last Updated: December 17, 2021

The 2017 household survey results show that one in four households (25.2 percent) are either unbanked or underbanked, conducting some or all of their financial transactions outside of the mainstream banking system. Many of these households rely on alternative financial services (AFS) providers, while others use cash or other financial arrangements.

2017 Survey Results

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Key Findings and Implications from the 2017 Survey

Key Findings

Key findings from the 2017 FDIC Survey of Unbanked and Underbanked Households. Use the navigation on the left to explore these findings in more detail.

  • In 2017, 6.5 percent of U.S. households were unbanked. Approximately 8.4 million U.S. households, made up of 14.1 million adults and 6.4 million children, were unbanked in 2017.
  • 18.7 percent of U.S. households were underbanked in 2017, meaning that the household had an account at an insured institution but also obtained financial products or services outside of the banking system. Approximately 24.2 million U.S. households, composed of 48.9 million adults and 15.4 million children, were underbanked in 2017.
  • The unbanked rate in 2017 declined to the lowest level since the survey began in 2009. Since the survey was last administered in 2015, the unbanked rate has fallen by 0.5 percentage points.
    • The decline from 2015 to 2017 can be explained almost entirely by changes in household characteristics across survey years, particularly improvements in the socioeconomic circumstances of U.S. households.
  • Use of mobile banking to access a bank account continued to increase sharply, while use of bank tellers declined somewhat.
    • The proportion of banked households that used mobile banking to access their accounts increased from 23.2 percent in 2013 to 31.9 percent in 2015 and 40.4 percent in 2017.
    • Use of bank tellers remained quite prevalent: 73.6 percent of banked households used bank tellers to access their accounts in 2017.
    • Use of bank tellers as the primary means of account access also remained prevalent among certain segments of the population, including lower-income households, less-educated households, older households, and households in rural areas.
  • In 2017, 86.0 percent of banked households visited a bank branch in the past 12 months. 30.8 percent of banked households visited a branch one to four times, 18.2 percent visited five to nine times, and 35.4 percent visited ten or more times.
    • Branch visits were prevalent even among banked households that used online or mobile banking as their primary method of account access. For example, 81.0 percent of banked households that used mobile banking as their primary method visited a branch in the past 12 months, and 23.0 percent visited ten or more times.
  • The proportion of households that used prepaid cards decreased from 9.8 percent in 2015 to 9.2 percent in 2017, but it remained higher than in 2013 (7.9 percent). Consistent with previous survey results, use of prepaid cards was most prevalent among unbanked households.
  • AFS use continued to be much higher among unbanked households than banked households.
    • The proportion of unbanked households that used AFS decreased substantially in recent years and is attributable to declines in the use of both transaction and credit AFS over this period.
    • Use of AFS among banked households also decreased in recent years and is attributable almost entirely to the decline in the use of transaction AFS over this period.
  • In 2017, 57.8 percent of households saved for unexpected expenses or emergencies in the past 12 months, which increased from 56.3 percent in 2015. Consistent with previous survey results, unbanked households saved at a much lower rate than underbanked and fully banked households.
  • Credit cards were the most common type of mainstream credit in 2017 (68.7 percent of households had a credit card from Visa, MasterCard, American Express, or Discover, and 41.6 percent had a store credit card), followed by mortgages, home equity loans, or home equity lines of credit (HELOCs); and auto loans.
    • In 2017, 19.7 percent of households had no mainstream credit in the past 12 months and likely did not have a credit score.
    • Lower-income households, less-educated households, black and Hispanic households, working-age disabled households, and foreign-born, noncitizen households were more likely to have had no mainstream credit. These differences persist even after accounting for other socioeconomic and demographic characteristics (such as income, education, and age) and bank account ownership.
  • As in 2015, unbanked households in 2017 primarily went outside of the banking system to pay bills and receive income in a typical month. Underbanked households, on the other hand, used banks extensively to handle their financial transactions, but they also widely used other methods to pay bills.
    • Approximately two-thirds of unbanked households paid bills using cash in 2017, the most prevalent method. The most prevalent way unbanked households received income was paper check or money order, followed by cash and direct deposit onto a prepaid card.
    • About two-thirds of underbanked households paid bills using an electronic payment from a bank account. Approximately one in four underbanked households used cash to pay bills in a typical month, and a similar share used nonbank money orders. Direct deposit into a bank account was by far the most prevalent method of receiving income for underbanked households.

Implications

The survey results show that the unbanked rate declined 0.5 percentage points between June 2015 and June 2017. This decline can be attributed almost entirely to improvements in the economic circumstances of U.S. households. The unbanked rate fell for many groups that had high unbanked rates in 2015. However, unbanked rates for these groups remain substantially higher than the overall unbanked rate in 2017. Below, we discuss a number of opportunities to increase the use of mainstream banking services by unbanked and underbanked households that may help to further reduce unbanked and underbanked rates going forward.

Expand implication-1 Expand New underwriting technologies could help expand access to small-dollar credit for banked consumers, including consumers with little or no credit history. The vast majority of the 13 percent of households with unmet demand for mainstream small-dollar credit are banked, and almost all receive income and pay bills using their bank accounts. But few of these households applied for a credit card or bank personal loan. Account balances and transactions may provide information for banks to underwrite small-dollar credit to some of these households.

Access to small-dollar credit is important for weathering financial setbacks, particularly for households with fluctuating income or lack of savings. Almost 13 percent of households have unmet demand for mainstream small-dollar credit, meaning that, in the past 12 months, they applied for and were denied a credit card or bank personal loan, felt discouraged about applying for a credit card or bank personal loan, or used credit AFS.

Nine in ten of these households are banked, and more than eight in ten have been banked for 12 months or longer. Most direct deposit their income into their bank accounts (87.1 percent) and pay bills using methods directly linked to their accounts, including electronic payment from a bank account, bank debit card, or personal check (95.0 percent). Despite an active banking relationship, only one-third of banked households with unmet demand for mainstream small-dollar credit applied for a credit card or bank personal loan in the past 12 months.

Among households with unmet demand for mainstream small-dollar credit, almost six in ten indicate that they were current on their bills over the past 12 months. While this is an incomplete measure of creditworthiness, it nevertheless provides some insight into the financial situation of these households. For some of the remaining households, it is possible that obtaining mainstream small-dollar credit could have prevented the household from falling behind on its bills.

For households with a banking relationship, account balances and transactions may provide information for underwriting loans to these consumers. In particular, such information may enable banks to underwrite small-dollar loans to consumers with little or no credit history. Almost a quarter of banked households with unmet demand for mainstream small-dollar credit likely have insufficient credit history to have a credit score.1 Providing small-dollar bank loans to these households may help strengthen their relationships with banks and allow them to begin building credit.2

Footnotes

1 In the past 12 months, these households did not have any of the credit products that are likely reported to credit bureaus. These include credit cards; store credit cards; mortgages, home equity loans, and home equity lines of credit (HELOCs); auto loans; student loans; bank personal loans; and other mainstream nonbank credit.

2 In qualitative research, several banks described small-dollar loan products that they offered, some of which included financial education. See “Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research,” May 25, 2016 (available at http://www.fdic.gov/consumers/community/research/qualitativeresearch_may2016.pdf).

Expand implication-2 Expand About one in five households likely have little or no credit history. The vast majority of these households are banked and may not seek credit until a need arises. Helping these households establish and build a credit history may particularly benefit black households, Hispanic households, and households headed by a working-age individual with a disability. All of these households are disproportionately less likely to have mainstream credit.

Approximately one in five households did not, in the past 12 months, have any mainstream credit products that are reported to credit bureaus and therefore likely have little or no credit history. Although three-quarters of these households are banked, they might not be aware of the importance of credit and might not seek credit until a need arises.

Some segments of the population are less likely to have had mainstream credit in the past 12 months. More than one-third (36.0 percent) of black households and 31.5 percent of Hispanic households had no mainstream credit, compared with 14.4 percent of white households. Four in ten working-age disabled households (40.4 percent) had no mainstream credit, compared with 15.3 percent of working-age nondisabled households.

These disparities persist even after accounting for socioeconomic and demographic characteristics (such as income, education, and age) and bank account ownership. For example, among households with income between $30,000 and $50,000, 27.9 percent of black households and 28.5 percent of Hispanic households had no mainstream credit, compared with 16.2 percent of white households. Helping households with no mainstream credit establish and build a credit history may therefore particularly benefit black, Hispanic, and working-age disabled households that are disproportionately less likely to have mainstream credit.

Expand implication-3 Expand Mobile banking holds real promise for deepening the connection between underbanked households and their banks while increasing the safety and convenience of bill payments. A large share of underbanked households pays bills in a typical month with cash or nonbank money orders. More than two in five of these households already use mobile banking to access their bank accounts. Increased use of mobile banking activities by these households may enable them to conduct a greater share of their basic financial transactions within the banking system.

About two in five underbanked households pay some bills in a typical month with cash or nonbank money orders. These underbanked households demonstrate a high level of engagement with the banking system: more than four in five also pay bills in a typical month using a bank method, such as electronic payment from a bank account. A similar proportion typically receives income through direct deposit into their bank accounts.

These underbanked households’ high level of engagement with the banking system suggests that they may be receptive to conducting a greater share of their basic financial transactions within the banking system. Banks and other stakeholders could encourage and facilitate the use of mobile bill pay or mobile person-to-person payments by these households because more than four in five of them had access to a smartphone.

Also, more than two in five of these underbanked households already use mobile banking to access their accounts. But only a quarter use a bank’s mobile website or mobile app to pay bills, and only about one in eight use a bank’s mobile website or mobile app to send money to other people. Using mobile bill pay or mobile person-to-person payments instead of cash or nonbank money orders increases safety and convenience, deepens the connection between households and their banks, and increases the opportunity for households to derive value from the banking relationship.

To the extent that the use of cash or money orders is partially the result of payee requirements, efforts to encourage and make it easier for a range of payees (e.g., landlords) to accept electronic payments may help these households reduce their use of cash and nonbank money orders. For example, opportunities may exist for banks to increase customer awareness about innovations that have made mobile payments between individuals and payments to businesses faster and safer.

Expand implication-4 Expand Physical access to bank branches remains important even as use of mobile banking and online banking has increased. In 2017, the great majority of banked households visited a bank branch in the past 12 months, and more than one-third visited ten or more times. In addition, almost one in six unbanked households visited a bank branch in the past 12 months. These findings suggest that branches continue to play an important role for banked households and that opportunities may exist for branch staff to inform unbanked households about products and services that can help meet their financial needs.

Household use of mobile banking as the primary method of bank account access more than doubled between 2013 and 2017. Use of online banking as the primary method also increased during that period. Commensurately, the proportion of households that primarily use bank tellers to access their accounts declined from 32.2 percent in 2013 to 24.3 percent in 2017. Despite this decline, physical access to branches remains important.

In 2017, almost three in four banked households used bank tellers to access their accounts at least once in the past 12 months, a higher proportion than any other method asked about in the survey. Moreover, some households may rely on bank branches for activities other than accessing an account, such as resolving a problem or asking about products or services. Almost five in six banked households visited a bank branch at least once in the past 12 months, and more than one in three visited ten or more times.

Branch visits were prevalent even among banked households that did not use bank tellers as their primary method of account access. For example, about eight in ten banked households that primarily used mobile banking visited a branch in the past 12 months, and nearly one-quarter visited ten or more times. These findings suggest that branches and the range of services they provide continue to play an important role for many banked households.

In addition, some groups with higher unbanked and underbanked rates, including lower-income households, less-educated households, older households, and households in rural areas, continue to disproportionately use bank tellers as their primary—and often only—method for accessing their accounts. For example, in 2017, more than one-third of banked households in rural areas primarily used bank tellers to access their accounts, and one in five only used bank tellers. Almost half of banked households in rural areas visited a branch ten or more times in the past 12 months.

While bank branch visits were less common among unbanked households, relative to banked households, almost one in six unbanked households visited a bank branch at least once in the past 12 months, and one in twenty visited ten or more times. Approximately seven in ten unbanked households that visited a branch had previously been banked, and about two in five were “very likely” or “somewhat likely” to open a bank account in the next 12 months.

These findings suggest that unbanked households that visit banks find value in the banking system and can benefit from the development of products and services that could meet their financial needs. 3 For example, if unbanked households are visiting a bank branch to cash a payroll check, banks that offer accounts with low or no minimum balance requirements and low fees could promote these accounts and advertise the convenience and security of using direct deposit and bill pay compared with cashing a payroll check. 4

Footnotes

3 See “Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research,” May 25, 2016, for examples of a range of products and services that the 11 interviewed banks offered to sustainably meet the needs of unbanked and underbanked consumers. This report also describes a variety of additional strategies used by these banks to reach and serve unbanked and underbanked consumers.

4 See http://www.fdic.gov/consumers/template/template.pdf for the FDIC Model Safe Accounts Template.

Expand implication-5 Expand Unbanked rates for some segments of the population have declined as economic conditions improved between 2011 and 2017. Still, unbanked rates for these groups, including black and Hispanic households, remain substantially above the national average. At the same time, unbanked rates for other population segments, such as working-age disabled households, have remained high and stayed fairly constant between 2011 and 2017. Understanding the evolution of unbanked rates for different population segments and adopting targeted strategies may help sustain increases in bank account ownership in future economic downturns and increase access for different population segments with high unbanked rates.

Almost 17 percent (16.9 percent) of black households and 14.0 percent of Hispanic households were unbanked in 2017. Unbanked rates for these two groups have declined steadily in recent years, consistent with the overall decline in the national unbanked rate. For black households, the unbanked rate has fallen from 21.4 percent in 2011. Similarly, the unbanked rate for Hispanic households has decreased from 20.1 percent in 2011.

Improved economic conditions of black households in 2017 relative to 2011, particularly increases in household income, educational attainment, and employment, explain almost all of the 4.5 percentage point decline in the unbanked rate for black households over this period.5 Improved economic conditions of Hispanic households in 2017 relative to 2011 also played a role in the declining unbanked rate for those households.6

These findings are consistent with findings from the 2013 survey, where job losses or gains and significant income changes seemed to be common triggers for bank account openings and closings among households that had recently become banked or had recently become unbanked.7 To reduce the likelihood that future economic downturns reverse some or all of the decline in the unbanked rate for population segments whose unbanked rates have declined, policymakers and industry participants may consider ways to cushion the impact of adverse financial shocks on a household’s ability or desire to maintain a bank account, such as forbearance of fees or the use of flexible product design.

While unbanked rates have declined for black and Hispanic households during this period of economic expansion, unbanked rates for other populations with a large percentage of unbanked households have not declined at a similar pace. For example, the unbanked rate for working-age disabled households has been fairly constant between 2011 and 2017: 18.9 percent in 2011, 18.4 percent in 2013, 17.6 percent in 2015, and 18.1 percent in 2017.

Moreover, even with the declines in unbanked rates, bank account ownership among black and Hispanic households continues to be significantly below the national average. Further, an overwhelming majority of unbanked black, Hispanic, and working-age disabled households are “not very likely” or “not at all likely” to open an account in the next 12 months.

These findings suggest the continued need for targeted strategies that address barriers to bank account ownership for each of the different population segments with high unbanked rates.8 A substantial portion of the 6.2 percentage point decline in the unbanked rate for Hispanic households between 2011 and 2017 cannot be explained by changes in economic conditions. Research to identify the factors that have contributed to this decline, beyond those related to the business cycle, can inform actions that may further reduce the unbanked rate for Hispanic households, and these efforts may be adaptable to other groups with high unbanked rates.

Footnotes

5 A linear probability model was estimated to account for changes from 2011 to 2017 in the distribution of households across the household characteristics listed in Appendix Table A.2 (except for monthly income volatility, which is not available for 2011). Changes in these household characteristics between 2011 and 2017 accounted for about 85 percent of the decrease in the unbanked rate for black households over this period.

6 A linear probability model was estimated to account for changes from 2011 to 2017 in the distribution of households across the household characteristics listed in Appendix Table A.2 (except for monthly income volatility, which is not available for 2011). Changes in these household characteristics between 2011 and 2017 accounted for approximately 40 percent of the decrease in the unbanked rate for Hispanic households over this period.

7 See 2013 FDIC National Survey of Unbanked and Underbanked Households, October 2014 (available at https://www.fdic.gov/analysis/household-survey/2013/2013report.pdf).

8 See “Bank Efforts to Serve Unbanked and Underbanked Consumers Qualitative Research,” May 25, 2016, for examples of different efforts and targeted strategies undertaken by 11 interviewed banks to reach and serve unbanked and underbanked consumers.