FDIC Reports 25% Of Households Do Not Have Bank Accounts

In a report by the FDIC, 25% of households do not have a bank account and seem to prefer payday loans, check-cashing services or pawn shops. Those who fall into this category, according to the FDIC, are mostly minorities or those who are considered poor in relation to their income.

Many ideas surround these findings but there is nothing certain as to why these households have no banking accounts whatsoever. The FDIC feels that having a bank account, be it checking, savings, or both is a step in the direction of financial security, but still the question remains, why would someone prefer payday loans and pawn shops over a bank account.

There are those who feel banks are unstable, could fold at any time and their account be cleaned out leaving them with nothing, but this old notion from the depression era is antiquated at best as the FDIC insures bank accounts against loss.

Also, a bank account usually shows responsibility with money, or at least the understanding of how to manage money. Mind you, not all who have a bank account are responsible with money, but when people save their income and budget through their checking account this shows someone who is seeking some type of financial security.

There are also ideas that people who are without bank accounts have little regard for their income and when they get a check they take it to a check-cashing service and promptly spend the money. Also, payday loans take advantage of those in need and are less affordable than loans from a bank.

These findings are interesting in that having a bank account seems unimportant for some and one wonders what these individuals do in case of an emergency or unexpected expense. Do they just have a lot of cash on hand?

Some losses of bank accounts obviously have resulted from the financial strains put on many during the recession, but overall a bank account is probably the best way to safely save and plan for the future.  It will be interesting to see how many without bank accounts look for a 30 year fixed mortgage rate.  It is important to note that it is very difficult to lock in to a low rate if you do not have a bank or checking account.