When it comes to cashing checks and other financial transactions, Blacks are “unbanked” at much higher rates than Whites, according to a new report by the Federal Deposit Insurance Corporation (FDIC).
The FDIC, an independent government agency that guarantees deposits up to $250,000 at insured banks, conducted the study in June 2013 aided by the United States Census Bureau, and collected data from nearly 41,000 respondents.
For the survey, the FDIC defined households that didn’t have an account at an insured institution as “unbanked” and households that had a bank account at an insured institution but still used alternative financial services (AFS) to perform some banking transactions (i.e. check cashing and payday lending) as “underbanked.”
In 2013 the FDIC estimated that less than 10 percent of U.S. households were unbanked. However, the rate of Black households that go without federally-insured bank accounts dwarfs the national rate.
According to the FDIC report, 20.5 percent of Black households are unbanked, compared to less than 4 percent (3.6 percent) of White households that don’t have a bank account at an insured institution.
And while less than 1 percent of U.S. households were “recently unbanked,” when the FDIC conducted the survey, Blacks accounted for nearly 50 percent of the households in that group.
“Among households that recently became unbanked, 34.1 percent experienced either a significant income loss or a job loss that they said contributed to the household becoming unbanked,” stated the report.
In contrast, 19.4 percent of households that had recently opened a checking or savings account when the poll was taken said that a new job prompted the transition.
Limited job prospects may partly explain, why Blacks who often suffer unemployment rates that are double the national unemployment rate, often go without bank accounts.
The Southern region, where most Blacks live, reported the highest rates for the unbanked and underbanked.
Source: LA Sentinel | Freddie Allen, NNPA