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A recent report from the Board of Governors of the Federal Reserve System sheds light on the banking status of adults in the United States.

According to the report, 81% of adult Americans are fully banked, 13% are underbanked, and 6% are unbanked. The share of Americans with each banking status in 2021 remained almost constant from 2020.

However, the share of Americans that are fully banked has risen by 10 percentage points since 2015, the first year that the Federal Reserve published comparable banking status data. This increased share of people who are fully banked corresponds to an 8 percentage point decline in the underbanked share and a 2 percentage point decline in the unbanked share over the same period.

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What does it mean to be unbanked or underbanked?

The Federal Reserve defines people’s banking status based on the types of financial services they use. Someone who is fully banked has a bank account and does not use alternative financial services, while someone with a bank account who uses alternative financial services is underbanked.

The Federal Reserve defines alternative financial services as money orders, check cashing services, payday loans or advances, pawn shop loans, auto title loans, or tax refund advances. People who have bank accounts but still use these services are underbanked because the services offered by their banking institutions appear to not fully meet their financial service needs.

Those who don’t have a bank account are unbanked.

The Federal Reserve uses an annual survey to measure the number of people with each banking status in the US. In 2021, the survey was given online to a sample of about 12,000 people designed to be representative of adults in the US.

Why is having a bank account important?

According to the Federal Deposit Insurance Corporation (FDIC), having a bank account can provide several advantages to consumers.

Bank accounts covered by federal deposit insurance provide a safe place to keep money, make transactions, and build savings. They can also help people access responsible and affordable credit that allows them to establish credit history, which can make it easier to get a job, apartment, or more credit in the future.

Which groups have the highest shares of unbanked or underbanked people?

Black and Hispanic adults have lower rates of bank account ownership than white and Asian adults. Black adults also have the highest underbanked rate of any demographic group included in the Federal Reserve report, at 27%.

Black adults have the highest unbanked and underbanked rates of any race or ethnicity.

Black adults have the highest unbanked and underbanked rates of any race or ethnicity.

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The share of people that are fully banked increases among those with more education. Adults with less than a high school degree have the highest unbanked rate of any demographic group at 24%, according to the report. This is also the only demographic group that is more likely to be unbanked than underbanked.

Adults with less than a high school degree have higher unbanked and underbanked rates.

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Banking status also varies by family income. Adults with higher family income are less likely to be underbanked or unbanked.

Adults with higher family income are less likely to be unbanked or underbanked.

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Which states have the most unbanked people?

Unbanked rates in 2019 varied from 0.5% in New Hampshire to 12.8% in Mississippi. Mississippi and Louisiana were the only two states in 2019 where more than 10% of the population did not have a bank account.

Southern states had some of the largest drops between 2015 and 2019 in the share of their populations that were unbanked. The unbanked rate in Alabama fell by 4.9 percentage points, and it fell by 4.5 percentage points in Georgia. These were the two largest declines over this period.

Despite this, states in the South had generally higher shares of their population that were unbanked in 2019. In Southern states[1], 6.3% of households did not have a bank account, compared with 4.8% for the rest of the country.

According to the FDIC, higher unbanked rates in the South are mostly associated with differences in income and other household characteristics, such as urban or rural status. Rural areas are less likely to have bank locations than urban areas, according to a report from the Consumer Financial Protection Bureau.

Vermont had a consistently low unbanked rate. In 2019, 0.7% of adults in Vermont were unbanked, and it was in the bottom three states in each survey year since 2015.

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These insights about geographic trends in banking status are available in data from the FDIC, which conducts a survey of how households use banks and other financial services. Because this survey is only conducted every two years, the data is slightly older than data from the Federal Reserve.

The FDIC data is also not strictly comparable to data from the Federal Reserve. The FDIC collects data at the household level, while the Federal Reserve collects data about all US adults. The two agencies also have slightly different ways of measuring underbanked status. However, the national unbanked rates reported by the two sources are similar; the FDIC reported that 5.4% of US households were unbanked in 2019, while the Federal Reserve reported that 6% of adults were unbanked.

To read more about the standard of living in the US, explore the data in our State of the Union report and get the data directly in your inbox by signing up for our newsletter.

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As defined by the Census Bureau