The FDIC defines a household as “unbanked” if no one in the family has a checking or savings account and “underbanked” if the household members have checking or savings accounts but rely on alternative financial services, Atlanta Black Star reports.
The FDIC also found that the use of prepaid debit cards is on the rise, particularly among consumers who have never banked or previously banked consumers. Between 2009 and 2011, the use of prepaid cards by consumers who have never had a bank account almost doubled from six to 11 percent. The use of prepaid by previously banked consumers increased from 19 to 27 percent.
Unbanked Latinos use AFS more frequently than any other racial or ethnic group. AFS are considered by underbanked and unbanked consumers to be more accessible and easier to use than traditional banking services, according to Atlanta Black Star.
Additionally, the FDIC found the highest incidence of unbanked consumers in Southern states, including Alabama, Arkansas, Louisiana, Mississippi, Oklahoma and Texas. More than 15 percent of Mississippi consumers are considered underbanked or unbanked.
Data from the FDIC revealed that 28 percent of Houston consumers were underbanked, the highest percentage of any metro area. Austin, Baltimore, Kansas City, Little Rock, New Orleans and Rochester were also areas in which the percentage of underbanked consumers reached 20 percent or higher, Atlanta Black Star reports.