If you can't imagine paying the bills without a bank, you may be surprised to learn 10 million households representing 17 million adults make do without savings accounts or checking accounts, according to a new government report.

The 2011 FDIC National Survey of Unbanked and Underbanked Households, released last month, finds a slight increase in the number of those going without a traditional bank account. According to the survey findings, 8.2% of households are unbanked while another 20% are underbanked.

Tracking banking habits

The 2011 survey is the second one conducted by the Federal Deposit Insurance Corporation, the first being conducted in 2009. Since that time, the number of unbanked households has increased 0.6% while the number of those who are underbanked rose nearly 2%.

For purposes of the survey, the FDIC defines unbanked and underbanked households using the following criteria:

  • Unbanked: Households which do not have any type of deposit account at an insured financial institution.
  • Underbanked: Households which have a deposit account but also rely on alternative financial service providers such as a non-bank check-cashing or payday loans.

Of all households, 29.3% do not have savings accounts and 10% do not have checking accounts. Meanwhile, one in four households have used an alternative financial service in the past year, with 40% of unbanked and underbanked households using these services in the past 30 days at the time of the survey.

Groups most likely to skip bank accounts

In addition to looking at the overall rate of unbanked and underbanked households, the FDIC identified several demographic groups that were more likely to skip the use of savings accounts and checking accounts.

Less than 50% of these groups report being fully banked:

  • African-Americans: 21.4% unbanked and 33.9% underbanked
  • Households experiencing unemployment: 22.5% unbanked and 28% underbanked
  • Households with incomes less than $15,000: 28.2% unbanked and 21.6% underbanked
  • Unmarried female family households: 19.1% unbanked and 29.5% underbanked
  • Hispanics: 20.1% unbanked and 28.6% underbanked

Instead of traditional bank accounts, these household tend to view alternative financial services including non-bank check-cashing and money orders as more convenient. In addition, credit products such as payday loans, refund anticipation loans and rent-to-own services are considered easier to obtain than financial products offered by banks, credit unions and other insured institutions.

Finally, the FDIC discovered the use of prepaid cards had increased 5.6% among unbanked households from 2009 to 2011. Last year, 17.8% of the unbanked used these cards, compared to 10% of the overall population.

In concluding its report, the FDIC suggests its findings could be valuable for policyholders and financial institutions as they work to improve access to banking services for currently underserved populations.

The original article can be found at Money-Rates.com:
Bank accounts feel out of reach to more Americans