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States and Metro Areas With the Most Unbanked Households

 

 

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States in the United States and Metro Areas With the Most Unbanked Households

 

The author is Laura McMullen Assistant Assigning Editor Personal finance, financial news Laura McMullen assigns and edits financial news articles and content. She was previously a senior journalist at NerdWallet and wrote about the process of saving, budgeting and making money. She also contributed to the "Millennial money" column in The Associated Press. Prior to becoming a part of NerdWallet as of the year 2015 Laura had worked at U.S. News & World Report, where she edited and wrote articles on careers, wellness and education as well as contributed to the rankings of the company. Before joining U.S. News & World Report, Laura interned at Vice Media and studied journalism, history and Arabic at Ohio University. Laura is a resident of Washington, D.C.

 

 

 

 

 

 

Updated September 28 in 2016

 

 

 

 

 

 

 

 

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The benefits of your bank aren't limited to the free coffee and sweets -they offer services you may take for granted for example, free check cashing and loans that offer reasonable rates of interest. However, for more than 9.5 million households that are not banked in the U.S., these services come with a hefty price which NerdWallet found adds many hundreds of dollars each year.

 

The U.S., 7.7% of households had no members who had a bank account, according to the 2013 FDIC National Survey of Unbanked and Underbanked Households, the most current collection of data available. It was a decrease from the 2011 edition of the Federal Deposit Insurance Corp.'s biannual survey, and the number dropped to 7% in 2015, as per a preview of the latest version, due to be available in October.

 

Missed benefits, added fees

 

While fewer families are avoiding financial institutions, those who are miss out on , in which they can save up for emergencies, and secured credit cards that can assist in building credit. They're not able to take advantage of the full array of fraud protections that federally insured banks as well as credit unions offer, and they can't access online or mobile banking tools which can save both time and cash. (Read NerdWallet's comprehensive coverage of national banks on the to learn more about options for unbanked consumers, like .)

 

households that do not have an bank account also pay loads of costs to high-cost alternative financial service providers. NerdWallet calculated the cost of money orders, check cashing and debit cards that are prepaid. The households with no bank accounts that have a prepaid debit card that allows direct deposit pay an average for $196.50 in fees, while households who do not have a bank account and use a prepaid debit card with no direct deposit have an average annual amount of $488.89 in charges. (See our full methodology for more details.)

 

Unbanked households are reported by metro and state

 

We examined the $196.50 and $488.89 figures as percentages of each state's average income for households who don't have an bank account, based on FDIC data. Check out this map to see the states in which households without a bank account are the most affected by fees using both the more expensive ($488.89) as well as the less ($196.50) figures. It is also possible to see which states have the highest percentage of households without a bank account.

 

The tables below illustrate the percentage of unbanked households in 22 metropolitan areas , and across all states, plus Washington, D.C. We calculated the cost of not having a bank account as a percentage of the household's average non-banked income for that metropolitan area, as provided from the FDIC. We excluded three major metro areas for which some data were unavailable: San Diego-Carlsbad-San Marcos, California; Sacramento-Arden-Arcade-Roseville, California; and San Antonio, Texas.

 

Unbanked households by metro area

 

UNBANKED HOMEHOLDS BY STATE

 

Rank (most to least)

 

 

 

 

State

 

 

 

 

The percentage of households that aren't banked

 

 

 

 

Average unbanked household income

 

 

 

 

Total unbanked expenses for all households (lower estimate)

 

 

 

 

Total unbanked cost of all household households (higher estimate)

 

 

 

 

Costs unbanked average as a percentage of income (using higher estimate)

 

 

 

 

1

 

 

 

Mississippi

 

 

 

14.5%

 

 

 

$15,394.41

 

 

 

$31.08 million

 

 

 

$79.82 million

 

 

 

3.18%

 

 

 

2

 

 

 

Louisiana

 

 

 

13.9%

 

 

 

$20,104.15

 

 

 

$47.26 million

 

 

 

$121.37 million

 

 

 

2.43%

 

 

 

3

 

 

 

Arizona

 

 

 

12.8%

 

 

 

$20,300.92

 

 

 

$61.95 million

 

 

 

$159.07 million

 

 

 

2.41%

 

 

 

4

 

 

 

Arkansas

 

 

 

12.3%

 

 

 

$15,653.75

 

 

 

$29.08 million

 

 

 

$74.68 million

 

 

 

3.12%

 

 

 

5

 

 

 

District of Columbia

 

 

 

11.8%

 

 

 

$14,588.29

 

 

 

$7.46 million

 

 

 

$19.15 million

 

 

 

3.35%

 

 

 

6

 

 

 

West Virginia

 

 

 

11.0%

 

 

 

$18,592.82

 

 

 

$16.56 million

 

 

 

$42.54 million

 

 

 

2.63%

 

 

 

7

 

 

 

New Mexico

 

 

 

10.9%

 

 

 

$18,934.67

 

 

 

$17.78 million

 

 

 

$45.67 million

 

 

 

2.58%

 

 

 

7

 

 

 

Georgia

 

 

 

10.9%

 

 

 

$18,957.70

 

 

 

$81.64 million

 

 

 

$209.64 million

 

 

 

2.58%

 

 

 

7

 

 

 

Oklahoma

 

 

 

10.9%

 

 

 

$19,373.49

 

 

 

$32.56 million

 

 

 

$83.61 million

 

 

 

2.52%

 

 

 

10

 

 

 

South Carolina

 

 

 

10.5%

 

 

 

$19,724.50

 

 

 

$38.88 million

 

 

 

$99.84 million

 

 

 

2.48%

 

 

 

11

 

 

 

Texas

 

 

 

10.4%

 

 

 

$20,621.80

 

 

 

$191.63 million

 

 

 

$492.07 million

 

 

 

2.37%

 

 

 

12

 

 

 

Kentucky

 

 

 

9.7%

 

 

 

$15,417.32

 

 

 

$34.05 million

 

 

 

$87.45 million

 

 

 

3.17%

 

 

 

12

 

 

 

Tennessee

 

 

 

9.7%

 

 

 

$17,204.81

 

 

 

$48.51 million

 

 

 

$124.58 million

 

 

 

2.84%

 

 

 

14

 

 

 

Alabama

 

 

 

9.2%

 

 

 

$18,787.70

 

 

 

$36.03 million

 

 

 

$92.52 million

 

 

 

2.60%

 

 

 

15

 

 

 

Missouri

 

 

 

8.9%

 

 

 

$20,058.95

 

 

 

$42.11 million

 

 

 

$108.12 million

 

 

 

2.44%

 

 

 

16

 

 

 

New York

 

 

 

8.5%

 

 

 

$16,833.40

 

 

 

$125.19 million

 

 

 

$321.47 million

 

 

 

2.90%

 

 

 

17

 

 

 

North Carolina

 

 

 

8.4%

 

 

 

$17,177.65

 

 

 

$61.46 million

 

 

 

$157.82 million

 

 

 

2.85%

 

 

 

18

 

 

 

New Jersey

 

 

 

8.2%

 

 

 

$21,298.78

 

 

 

$51.25 million

 

 

 

$131.61 million

 

 

 

2.30%

 

 

 

19

 

 

 

California

 

 

 

8.0%

 

 

 

$22,211.31

 

 

 

$206.18 million

 

 

 

$529.45 million

 

 

 

2.20%

 

 

 

20

 

 

 

Nevada

 

 

 

7.9%

 

 

 

$19,047.68

 

 

 

$17.06 million

 

 

 

$43.80 million

 

 

 

2.57%

 

 

 

21

 

 

 

Illinois

 

 

 

7.4%

 

 

 

$21,036.78

 

 

 

$71.47 million

 

 

 

$183.53 million

 

 

 

2.32%

 

 

 

22

 

 

 

Ohio

 

 

 

7.2%

 

 

 

$18,777.16

 

 

 

$65.61 million

 

 

 

$168.47 million

 

 

 

2.60%

 

 

 

22

 

 

 

Indiana

 

 

 

7.2%

 

 

 

$22,675.18

 

 

 

$36.28 million

 

 

 

$93.17 million

 

 

 

2.16%

 

 

 

24

 

 

 

Montana

 

 

 

6.6%

 

 

 

$11,963.24

 

 

 

$5.35 million

 

 

 

$13.74 million

 

 

 

4.09%

 

 

 

25

 

 

 

Virginia

 

 

 

6.5%

 

 

 

$19,340.75

 

 

 

$39.67 million

 

 

 

$101.88 million

 

 

 

2.53%

 

 

 

26

 

 

 

Colorado

 

 

 

6.4%

 

 

 

$22,159.12

 

 

 

$25.84 million

 

 

 

$66.36 million

 

 

 

2.21%

 

 

 

27

 

 

 

Rhode Island

 

 

 

6.2%

 

 

 

$18,543.22

 

 

 

$5.12 million

 

 

 

$13.15 million

 

 

 

2.64%

 

 

 

27

 

 

 

Florida

 

 

 

6.2%

 

 

 

$19,376.05

 

 

 

$95.70 million

 

 

 

$245.73 million

 

 

 

2.52%

 

 

 

29

 

 

 

Delaware

 

 

 

6.1%

 

 

 

$22,921.16

 

 

 

$4.33 million

 

 

 

$11.12 million

 

 

 

2.13%

 

 

 

30

 

 

 

Kansas

 

 

 

6.0%

 

 

 

$21,820.97

 

 

 

$13.49 million

 

 

 

$34.64 million

 

 

 

2.24%

 

 

 

31

 

 

 

Massachusetts

 

 

 

5.8%

 

 

 

$22,086.69

 

 

 

$29.38 million

 

 

 

$75.45 million

 

 

 

2.21%

 

 

 

32

 

 

 

Nebraska

 

 

 

5.7%

 

 

 

$15,622.98

 

 

 

$8.47 million

 

 

 

$21.76 million

 

 

 

3.13%

 

 

 

32

 

 

 

Michigan

 

 

 

5.7%

 

 

 

$19,127.41

 

 

 

$42.44 million

 

 

 

$108.99 million

 

 

 

2.56%

 

 

 

34

 

 

 

Connecticut

 

 

 

5.6%

 

 

 

$21,036.57

 

 

 

$15.37 million

 

 

 

$39.48 million

 

 

 

2.32%

 

 

 

34

 

 

 

Wyoming

 

 

 

5.6%

 

 

 

$24,067.11

 

 

 

$2.65 million

 

 

 

$6.82 million

 

 

 

2.03%

 

 

 

36

 

 

 

Idaho

 

 

 

5.4%

 

 

 

$17,444.44

 

 

 

$6.39 million

 

 

 

$16.42 million

 

 

 

2.80%

 

 

 

37

 

 

 

Pennsylvania

 

 

 

5.2%

 

 

 

$17,820.47

 

 

 

$52.14 million

 

 

 

$133.90 million

 

 

 

2.74%

 

 

 

38

 

 

 

Wisconsin

 

 

 

4.8%

 

 

 

$16,495.70

 

 

 

$21.75 million

 

 

 

$55.85 million

 

 

 

2.96%

 

 

 

38

 

 

 

Maryland

 

 

 

4.8%

 

 

 

$24,470.06

 

 

 

$20.81 million

 

 

 

$53.43 million

 

 

 

2.00%

 

 

 

40

 

 

 

Oregon

 

 

 

4.5%

 

 

 

$16,345.12

 

 

 

$13.62 million

 

 

 

$34.98 million

 

 

 

2.99%

 

 

 

40

 

 

 

Iowa

 

 

 

4.5%

 

 

 

$18,571.62

 

 

 

$10.83 million

 

 

 

$27.81 million

 

 

 

2.63%

 

 

 

42

 

 

 

South Dakota

 

 

 

4.2%

 

 

 

$16,040.68

 

 

 

$2.67 million

 

 

 

$6.86 million

 

 

 

3.05%

 

 

 

43

 

 

 

Washington

 

 

 

4.1%

 

 

 

$17,048.35

 

 

 

$21.07 million

 

 

 

$54.10 million

 

 

 

2.87%

 

 

 

44

 

 

 

Hawaii

 

 

 

3.8%

 

 

 

$21,096.90

 

 

 

$3.41 million

 

 

 

$8.77 million

 

 

 

2.32%

 

 

 

45

 

 

 

Minnesota

 

 

 

3.6%

 

 

 

$16,228.27

 

 

 

$14.92 million

 

 

 

$38.31 million

 

 

 

3.01%

 

 

 

46

 

 

 

Utah

 

 

 

3.3%

 

 

 

$21,617.24

 

 

 

$6.11 million

 

 

 

$15.68 million

 

 

 

2.26%

 

 

 

47

 

 

 

Vermont

 

 

 

3.1%

 

 

 

$22,553.77

 

 

 

$1.59 million

 

 

 

$4.08 million

 

 

 

2.17%

 

 

 

48

 

 

 

New Hampshire

 

 

 

2.9%

 

 

 

$26,653.71

 

 

 

$3.00 million

 

 

 

$7.71 million

 

 

 

1.83%

 

 

 

49

 

 

 

North Dakota

 

 

 

2.8%

 

 

 

$22,645.30

 

 

 

$1.58 million

 

 

 

$4.06 million

 

 

 

2.16%

 

 

 

50

 

 

 

Maine

 

 

 

2.4%

 

 

 

$14,906.68

 

 

 

$2.57 million

 

 

 

$6.59 million

 

 

 

3.28%

 

 

 

51

 

 

 

Alaska

 

 

 

1.9%

 

 

 

$21,299.66

 

 

 

$1,002,022.57

 

 

 

$2,573,028.07

 

 

 

2.30%

 

 

 

 

 

 

 

 

 

Important takeaways

 

1. The proportion of households that are not banked is significantly higher for low-income households. Nationally, 7.7% of households did not have an bank account in 2013, however that number was much higher for households with low incomes. Around 20percent of families that had incomes less than $30,000 had no bank accounts, and 24% were underbanked which means they had at least one savings or but used at least one alternative financial service in the past year. These types of services include check cashing, money orders and payday loans. More than three-quarters (35.6%) of households that were not banked for the FDIC report stated that the primary reason for them not to have an account was because they didn't have enough funds to maintain an account, or to maintain a minimum balance. (Note that many do not require the minimum amount of balance.) Other reasons that are common include the distrust or dislike of banks and the high or unpredictable charges for account accounts.

 

The national correlation between unbanked and low-income households is reflected at the state-level. Seven of the states with the highest proportions of unbanked residents are among the 10 states that have low median incomes for households, in the latest U.S. Census American Community Survey. Except for Washington, D.C., the nine states with the highest proportion of households without bank accounts were home to households with incomes that were lower than the 2013 U.S. median of $52,250.

 

2. The costs of being unbanked are particularly affecting households with low incomes: Income among households who don't have the benefit of a bank account is particularly low. The average income after tax of unbanked households within the U.S. was $17,359, and was the lowest in Montana at $11,963.

 

Remember that unbanked households that make use of a prepaid debit cards without direct deposit have to pay on average $488.89 in fees annually. In Montana the amount would be upward of 4% of the average unbanked household's income. To give you a sense of scale, the average U.S. household spent about 3.5 percent of their post-tax earnings on gasoline or motor oil during 2015, as per the U.S. Bureau of Labor Statistics.

 

The situation in Washington, D.C., the gap in income between banked and unbanked households is huge. The median 2013 income for households that had a bank account D.C. was $55,032, however it was just $14,588 for households without an account with a bank account. The latter figure doesn't get much further in a country where low-income housing opportunities are diminishing. According to the D.C. Fiscal Policy report 2013 there were about half as many Washington apartments renting for less than $800 a month than they did in 2002. The report suggests "subsidized housing is now virtually the only source of inexpensive apartment units."

 

3. Local unbanked demographics reflect national trends: According the FDIC, one-fifth of black households (20.5 percent) across the U.S. in 2013 were unbanked, followed closely by Hispanic (17.9%) along with American Indian/Alaskan household (16.9%). Just 2.2% of Asian households had no bank accounts, which was a lower concentration than for white (3.6 percent) and Pacific Islander/Hawaiian (6.1 percent) households.

 

The areas that have the highest percentage of unbanked households reflect the national demographics. In No. 12 Tennessee in addition to No. 2 Louisiana, each state's biggest city is home to a large percentage of black residents and the largest cities are Memphis at 63% as well as New Orleans at 59.8%. Phoenix, which tops our list of metros that are not banked is home to a substantial Hispanic population as does Albuquerque which is the biggest city located in New Mexico, which tied for seventh among the states. Two states that have the highest proportions of unbanked populations, New Mexico and Oklahoma are home to American Indian populations nearly 10 times higher than those in the U.S. as a whole.

 

4. Access to only in-person and online banking is a problem it to get a bank account when there are no branches where you live. More than half of ZIP areas in mid-South region are "bank deserts" that is, they're home to only one or no bank branches, according to the Mississippi-based Hope Policy Institute, which examines the financial inclusion. The analysis of the Hope Policy Institute shows that the mid-South is comprised of Mississippi, Louisiana and Arkansas and has one of the highest percentages of unbanked households. This region includes the western region of Tennessee which is home to Memphis which is where more than one-fifth (19.5 percent) of households don't have an account with a bank account.

 

Brick-and-mortar branches are even more important for consumers who can't connect to financial institutions online. Certain Memphis residents have difficulties with both of these methods. According to the U.S. Census Bureau's 2013 American Community Survey, 27.7 percent of Memphis households didn't have access to the internet, as compared with 21.4% nationwide. Lack of internet access is very high across New Orleans, too, at 27.4%.

 

Sreekar Jasthi is a data analyst at NerdWallet which is a personal finance website. Email: . Laura McMullen is a staff writer at NerdWallet. Email: . Twitter: .

 

Methodology

 

Concentrations of income and unbanked households

 

To calculate the average earnings for unbanked households nationwide and across all states, we used information from the . To identify which metropolitan areas to analyze, we first chose the 25 in the FDIC report that had the most households. We omitted San Diego-Carlsbad-San Marcos, California; Sacramento-Arden-Arcade-Roseville, California; and San Antonio, Texas, because of insufficient income data.

 

Figures for the percentage of unbanked households within each state as well as metro area are also derived from FDIC's report. FDIC report.

 

Charges associated with not having a bank account

 

We found a price range from $196.50 between $196.50 and $488.89 in fees for the average household without a bank account by adding in the costs associated with cash checking, money orders and prepaid debit cards. The price of these charges is contingent on whether the debit cards are prepaid and allow direct deposit.

 

To determine the check-cashing costs for non-banked households with debit cards that do not require direct deposit and unbanked households using only cash, we assumed two paychecks that were cashed each month, and a charge of 1% of a check's total value. For households using prepaid debit cards with direct deposit we factored in $0 for check cashing. For both types of households we took that there would be one money order per month and an average fee of $1.40.

 

To calculate the average cashing or fee for money order transactions We analyzed the FDIC's data on what frequency alternative financing services used by each households of different types (banked or unbanked) and then applied the lower frequency of usage among households with bank accounts to the average costs.

 

To calculate the average annual cost of debit cards that are prepaid, we examined the 69 cards we examined, based on the major issuers, the highest search volumes, Pew Charitable Trust's and the offerings of the cards on 's and 's websites. For cards that offer several plans we considered each plan as a separate card.

 

The report includes the annual costs of an prepaid debit card and without direct deposit to pay payroll. The median monthly cost used was $4.98, and the median out-of-network ATM fee used was $2.50. We employed the maximum fee for loading cash of $4.95.

 

Without direct deposit We assumed 12 monthly fees as well as four ATM fees per month and 2 cash load fees per month. Signature- and PIN-based purchase transaction fees aren't usually applicable to cards that have monthly fees, which is why we excluded them.

 

Upcoming FDIC survey

 

A recent preview of 2015. FDIC National Survey of the Unbanked and Underbanked Households, scheduled to be released in its entirety on Oct. 20, 2016 The survey showed that the rate of unbanked households dropped to 7.7%, or around 8.6 millions of households. The NerdWallet analysis is based upon the most current set of data available.

 

 

 

 

Author bios: Laura McMullen writes about managing money for NerdWallet. Her work has appeared in The Associated Press, The New York Times, The Washington Post, and other publications.

 

 

 

 

 

 

 

 

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