FDIC Survey on Unbanked and Underbanked Households Once Again Highlights Millions of Americans’ Need for Financial Options

ARLINGTON, Va. (November 15, 2024)—After the Federal Deposit Insurance Corporation (FDIC) released the findings of its latest National Survey of Unbanked and Underbanked Households, Online Lenders Alliance Chief Executive Officer Andrew Duke Issued the following statement:

“While the FDIC survey shows that the number of unbanked households declined, the use of credit products from alternative financial services (AFS) providers continues to grow. AFS providers not only support the nearly one out of every six households that lacks access to mainstream credit, but they are also meeting the needs of those who have access to banks and banks’ credit offerings.

“Many consumers have accounts at banks and credit unions that do not offer small dollar credit. However, a recent Online Lenders Alliance study found that a significant number of consumers with active accounts at a bank or credit union offering small dollar loans still choose fintech lenders as the best product to meet their needs.

“Both of these studies make it abundantly clear that consumers benefit from more credit options in their financial decision-making.”

Among the report’s key findings:

• The unbanked rate decreased slightly from 4.5 percent in 2021 to 4.2 percent in 2023. The FDIC noted that between 2011 and 2023, the unbanked rate fell by almost half.
• The underbanked rate increased slightly from 14.1 percent in 2021 to 14.2 percent in 2023. The FDIC noted that “The age distribution of unbanked households is now less disproportionately young. […] As a result, economic inclusion strategies that may have worked in the past may not be as compelling today. Gaining a more nuanced understanding of the current composition of unbanked households can help economic inclusion efforts evolve and better meet the needs of today’s unbanked households.”
• In the state of Illinois, both the unbanked and underbanked rates saw major increases; the unbanked rate increased from 4.4 percent in 2021 to 6.6 percent in 2023 and the underbanked rate increased from 10.1 percent in 2021 to 13.2 percent in 2023. This represents one of the more dramatic shifts in the FDIC’s data, as the increase in unbanked and underbanked populations statewide came following the implementation of a dramatic rate cap which restricted the availability of alternative financial services products. A key study showed that credit access declined dramatically for residents of Illinois with below prime credit scores, and the FDIC data raises new questions about the effects of the rate cap.

The FDIC acknowledges that technology is challenging traditional thinking around the use of financial institutions and financial inclusion. When looking at all the data, one thing is clear: consumers are better off ?with more financial options.??

The complete FDIC report is available here.

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