A new survey by the Federal Deposit Insurance Corporation titled How America Banks: Household Use of Banking and Financial Services found a record 124 million U.S. households, or 95% of Americans, had a bank or credit union account in 2019.
Meanwhile, about 7.1 million American households, or 5.4%, were unbanked last year, the lowest rate on record since the agency's biennial report began in 2009.
The survey, which collected responses from nearly 33,000 households in June 2019, found that between 2017 and 2019, more than 1.5 million new households opened bank accounts, and the use of mobile banking as the primary means of accessing accounts more than doubled since 2017, leading all other methods including tellers, ATMs, and online banking.
The FDIC noted that the decline by nearly half in unbanked households between 2017 and 2019 was associated with improvements in household's socioeconomic circumstances, including higher annual income, lower monthly income volatility, low unemployment and higher rates of homeownership status and educational attainment that came as a result of a strong economy.
According to the survey, 56.2% of unbanked households were not interested in obtaining a checking or savings account compared to 24.8% who were. Respondents cited the most common reason for being unbanked was due to not having enough money to meet a bank account's minimum balance requirements.
Approximately 14% of African-American households and 12% of Hispanic households did not have bank accounts in 2019, a record low since 2009. About 28% of unbanked households used prepaid cards in 2019, including one in three Black unbanked households (31.1%) and one in six Hispanic unbanked households (16.7%).
Roughly 73% of U.S. households used bank credit, such as a credit card, personal loan, or line of credit from a bank, while just five percent used nonbank credit, such as a payday loan or an auto title loan, declining from 8% in 2015.
Despite the improvements in American's finances, the FDIC warned that the coronavirus pandemic is "likely to contribute to a rise in the rate of unbanked households."
"The economic ramifications of the COVID-19 pandemic may particularly affect households without an adequate savings cushion or without access to responsible, affordable credit," the FDIC said. "As a result, many households may need credit to handle unexpected changes in income and expenses."
In 2019, 35.8% of households did not save for unexpected expenses or emergencies and 37% of adults could not cover an emergency expense of $400 using only cash, savings, or a credit card paid in full on their next statement.
The FDIC report comes as the economy added 661,000 jobs in September, bringing the unemployment rate to 7.9%. However, jobless claims hit 898,000 for the week ending Oct. 10, the highest level since Aug. 22, with more than 10 million Americans still out of work.