According to recent data from the Federal Reserve, approximately 6% of Americans are considered unbanked, meaning they lack access to traditional financial services such as savings accounts, credit cards, or personal checks. This percentage rises to 23% when focusing on individuals earning less than $25,000 annually. The unbanked population is more susceptible to predatory lending practices and financial risks, especially within Black and Hispanic communities.

Black and Hispanic adults are significantly more likely to be unbanked compared to white and Asian adults, according to Fed data. This disparity is attributed to a lack of financial institutions in marginalized neighborhoods, leading to a lack of trust and access to essential banking services. Additionally, many rural areas in the US are considered banking deserts, further limiting access to traditional financial services.

Young adults, particularly those in the 18-29 age group, are also more likely to be unbanked. This could be due to Generation Z’s perception of banking as outdated and not aligned with their values. However, financial experts emphasize the importance of having a bank account to protect one’s money and build credit.

Individuals without bank accounts often resort to check cashing services or payday loans, which come with their own set of risks, including high-interest rates and lack of federal insurance. Building trust between financial institutions and marginalized communities is crucial in addressing the issue of unbanked individuals. Local leaders and banks are urged to engage with communities, provide educational resources, and create programs tailored to their needs.

Source: https://www.pressrundown.com/business/23percent-of-low-income-americans-do-not-have-a-bank-account