States in the United States and Metro Areas With the Most Unbanked Households
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States and Metro Areas With the Most Unbanked Households
by Laura McMullen Assistant Assigning Editor information Laura McMullen assigns and edits financial news articles and content. Her previous position was as a top writer at NerdWallet and was responsible for the process of saving, budgeting and making money; she was also a contributor to “Millennial Money” column of The Associated Press. Prior to becoming a part of NerdWallet as of the year 2015 Laura had worked at U.S. News & World Report in which she created and edited articles on the health and wellness of students, careers and other topics and also worked on the company’s ranking projects. Before joining U.S. News & World Report, Laura interned at Vice Media and studied journalism as well as history and Arabic at Ohio University. Laura is a resident of Washington, D.C.
Sep 28 September 28, 2016
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The benefits of the local bank extend beyond complimentary coffee and chocolate- they include things you may take for granted for example, free check cashing and loans with reasonable interest rates. However, for over 9.5 million households that are not banked in the U.S., these services are expensive which NerdWallet found adds up to hundreds of dollars per year.
The U.S., 7.7% of households didn’t have any members with a bank account, as per the 2013 FDIC national survey of Unbanked and Underbanked Households, which is the most up-to-date set of information available. This was lower than the 2011 version of Federal Deposit Insurance Corp.’s biannual survey, and the figure fell to 7% in 2015, as per an early preview of the new version, due to be available in October.
Benefits not used, additional fees
Although fewer families are forgoing banks, the ones who do are missing out on opportunities to build emergency funds, and secured credit cards that assist in building credit. They aren’t able to benefit from the full array of security against fraud that federally insured banks and credit unions provide as well as access to the online and mobile banking options which can save both time and cash. (Read NerdWallet’s coverage of the nation on the to learn more about options for unbanked consumers, including .)
Families without an account with a bank also have to have to pay a lot of fees to costly alternative financial service providers. NerdWallet has compiled the cost of money checks, cashing orders and pre-paid debit cards. The households with no bank accounts that have the prepaid debit card which allows direct deposit pay an annual average of $196.50 in fees. In contrast, those who are not banked and use a prepaid debit card that does not allow direct deposit pay an annual average of $488.89 in charges. (See our full methodology for more details.)
Unbanked households in the metro and state
We examined both the $196.50 and $488.89 figures in percentages of the state’s 2013 average income for households that don’t have accounts with banks that are based on FDIC data. Look at this map to see the states where unbanked households are the most affected by fees, using both the higher ($488.89) and the lower ($196.50) estimations. You can also see which states have the highest proportion of households with no bank account.
The table below shows the percentage of households without a bank account in 22 large metro areas and in all states, plus Washington, D.C. We calculated costs of having a bank account as a percentage of the household income of households that are not banked in the area according to 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.
In metro areas, households are not banked.
UNBANKED HOUSEHOLDS BY state
Ranking (most to least unbanked)
State
A percentage of households are not banked
The average household income is unbanked and non-banked.
Total unbanked cost for all households (lower estimate)
Total unbanked costs for all homes (higher estimate)
Average unbanked costs as percent of income (using more precise estimates)
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%
Key lessons to take away
1. The rate of unbanked households is particularly high among low-income households: Nationally, 7.7% of households had no bank accounts in 2013, however that rate was noticeably higher for households with low incomes. Around 20% of households that had incomes of less than $30,000 were unbanked and 24% were underbanked that is, they have more than one saving account account or but had employed at least one alternative financial service in the past year. These kinds of services include check cashing or money orders, as well as payday loans. More than one third (35.6 percent) of unbanked households surveyed for the FDIC report stated that the primary reason they don’t have an account was because they didn’t have enough money to fund an account, or to maintain a minimum balance. (Note that many do not require minimum balances.) Some of the most common reasons are dislike or distrust of banks, as well as high or unpredictability of charges for account accounts.
The nationwide correlation between unbanked and low-income households is reflected at the state level. Seven of the 10 states with the highest percentages of unbanked individuals are among the 10 states that have the lowest median household incomes as per the data from 2013’s U.S. Census American Community Survey. Except for Washington, D.C., the nine states with the highest percentage of unbanked households had household incomes below the 2013 U.S. median of $52,250.
2. The costs of being unbanked hit low-income households the hardest households: The income of households that don’t have accounts with banks is especially small. The 2013 average post-tax income of unbanked households across the U.S. was $17,359, and the lowest was in Montana at $11,963.
Be aware that households without bank accounts that utilize a prepaid debit card without direct deposit are charged the equivalent of $488.89 in fees annually. In Montana this would be more than 4 percent of an typical household’s income that is unbanked. For context, the typical U.S. household spent about 3.5% of its income after tax on fuel and motor oil in 2015 as per the U.S. Bureau of Labor Statistics.
In Washington, D.C., the disparity in earnings between banked and unbanked households is vast. The median income of 2013 for fully banked households in D.C. was $55,032, but it was just $14,588 for households without having a bank account. This figure isn’t going to go far in a place where housing options for those with low incomes are diminishing. According to the D.C. Fiscal Policy report in 2013, there were roughly half the number of Washington apartment rentals under $800 a month than the 2002. The report suggests “subsidized housing is currently the sole source of affordable apartments.”
3. The local unbanked population reflects national trends: According to the FDIC, one-fifth of black households (20.5%) in the U.S. in 2013 were not banked, followed by Hispanic (17.9%) along with American Indian/Alaskan families (16.9%). Just 2.2 percent of Asian households were unbanked, which was a lower proportion than that of white (3.6%) and Hawaiian/Pacific Islander (6.1 percentage) households.
A lot of the areas with the highest proportion of households that are not banked are in line with these national demographics. In No. 12, Tennessee in addition to No. 2 Louisiana, each state’s biggest city, has a high percentage of black residents, with Memphis at 63 percent as well as New Orleans at 59.8%. Phoenix is at the top of our list of cities that aren’t banked, has a large Hispanic population and Albuquerque which is the largest metropolis located in New Mexico, which tied for seventh among the states. Two states with the highest proportions of populations that aren’t banked, New Mexico and Oklahoma are home to American Indian populations nearly 10 times higher than the U.S. as a whole.
4. Limited access to in-person and online banking is a problem: It’s hard to get a bank account opened if there aren’t branches in the area you live. Nearly half of the ZIP code in the middle of South are “bank deserts,” that is, they’ve only one or no banks, as per the MS-based Hope Policy Institute, which examines the financial inclusion. In the institute’s analysis, the mid-South includes Mississippi, Louisiana and Arkansas, which have one of the highest percentages of unbanked households. This region includes western Tennessee which is home to Memphis which is where more than one-fifth (19.5%) of households do not have accounts with banks.
Brick-and-mortar locations are more important for consumers who can’t connect to financial institutions online. A few Memphis residents are unable to use both of these methods. As per the U.S. Census Bureau’s 2013 American Community Survey, 27.7 percent of Memphis households were without an internet connection, compared with 21.4 percent nationwide. The number of people without internet access is a major issue in New Orleans, too, with 27.4%.
Sreekar Jasthi is a data analyst at NerdWallet the personal finance website. Email: . Laura McMullen is a staff writer at NerdWallet. Email: . Twitter: .
Methodology
Income and concentrations of unbanked households
To calculate the median income of households that are not banked nationwide and in each state We used information from the . To identify which metro areas to examine We first picked the 25 areas in the FDIC report that had the highest number of households. We omitted San Diego-Carlsbad-San Marcos, California; Sacramento-Arden-Arcade-Roseville, California; and San Antonio, Texas, because of insufficient income data.
The percentages of households with no bank accounts in each state and metropolitan area are also from FDIC’s report. FDIC report.
Fees associated with being unbanked
We came up with a price range of $196.50 up to $488.89 in fees for the average household without a bank account by adding in the fees that are associated with cash checks, money orders and pre-paid debit cards. The cost of these fees will depend on the extent to which these households’ debit cards are prepaid and allow direct deposit.
To figure out the costs of cashing checks for households that are not banked and use debit cards prepaid without direct deposit, and for households using only cash we assumed two pay checks cashed per month and a fee of 1% of a check’s total value. For households that use debit cards prepaid with direct deposit, we factored in the cashing of checks at a cost of zero. For both households, we assumed one money order sent per month with an average fee of $1.40.
To determine the average check cashing and money order fees, we used the FDIC’s statistics regarding how often alternative financial services use by kind of household (banked or not), then used 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 evaluated 69 cards that were based on major issuers, high-traffic search volume including Pew Charitable Trust’s as well as the cards listed on the websites of’s and. If cards have multiple plan options we considered every plan as a distinct card.
The study includes the annual costs of an prepaid debit card and without direct deposit for payroll. The median monthly fee used was $4.98 The median out-of-network ATM fee used was $2.50. We paid the maximum fee for cash loading of $4.95.
Without directly depositing, we assumed 12 monthly fees as well as four ATM charges per month and two cash loading fees per month. Signature- and PIN-based transaction fees usually don’t apply to cards with monthly fees, which is why we excluded them.
Upcoming FDIC survey
A recent preview of the survey for the year 2015 FDIC National Survey of Unbanked and Underbanked Households, scheduled to go public in all its entirety on Oct. 20, 2016 It revealed that the unbanked rate has fallen to 7percent, which is about 8.6 millions of households. NerdWallet’s analysis is based on the most recent full set of information available.
The author’s bio: Laura McMullen writes about managing the money of NerdWallet. Her writing has been featured in The Associated Press, The New York Times, The Washington Post as well as other outlets.
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