How credit unions can help underbanked members overcome barriers to financial inclusion

For most of us in America who count on financial institutions to manage our primary financial requirements may find it difficult to believe that, according to the Federal Deposit Insurance Corporation (FDIC), 14.1 million adults, or 6 percent, are unbanked. Unbanked means the consumer has no connection to the national banking system.

Many of us may also be surprised that a full 16 percent are underbanked, meaning they may have a bank account but they utilize alternative financial services to meet their individual or family requirements. Unfortunately, a full 89 percent of those underbanked consumers depend on such alternative financial services like money orders or predatory checking cashing services for their banking activities, per the Federal Reserve Board. The research also found that underbanked and unbanked individuals are characteristically minority, low-income individuals featuring lower levels of education.

The most common reason those surveyed for the FDIC’s 2019 report How America Banks: Household Use of Banking and Financial Services claimed they were unbanked was because they did not have enough money to meet minimum balance requirements for a bank account since so many financial institutions require the consumer to to maintain a monthly balance in order to avoid paying a fee. The FDIC research found that 23 percent of households earning less than $15,000 per year are unbanked. Most likely, they have simply been shut out of the opportunity to begin their journey towards financial inclusion.


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