Why financial inclusion matters.
Financial exclusion imposes significant costs on individuals and society. Today, 62 million Americans are unbanked or underbanked—equivalent to twice the population of Texas.
These households pay hundreds of dollars annually in fees just to access basic financial services. This money, which could go toward essentials like rent, food, or education, instead goes to banks, payday lenders, and check-cashing services.
The consequences fall hardest on low-income families, people of color, single mothers, people with disabilities, and rural residents, exacerbating income inequality and hindering economic mobility.
Addressing financial exclusion could return billions to households, reduce reliance on predatory services, and create a more equitable economy.
What does it mean to be unbanked or underbanked?
In unbanked households, no one has a checking or savings account at a bank or credit union.
In underbanked households, at least one member has a checking or savings account but used at least one non-bank transaction or credit product in the last year. These can include check cashing, payday loans, pawn loans, international remittances, and more.
Why financial inclusion matters.
Financial exclusion imposes significant costs on individuals and society. Today, 62 million Americans are unbanked or underbanked—equivalent to twice the population of Texas.
These households pay hundreds of dollars annually in fees just to access basic financial services. This money, which could go toward essentials like rent, food, or education, instead goes to banks, payday lenders, and check-cashing services. The consequences fall hardest on low-income families, people of color, single mothers, people with disabilities, and rural residents, exacerbating income inequality and hindering economic mobility. Addressing financial exclusion could return billions to households, reduce reliance on predatory services, and create a more equitable economy.
What does it mean to be unbanked or underbanked?
- In unbanked households, no one has a checking or savings account at a bank or credit union.
- In underbanked households, at least one member has a checking or savings account but used at least one non-bank transaction or credit product in the last year. These can include check cashing, payday loans, pawn loans, international remittances, and more.
More than 9% of Mississippi households are unbanked, compared to just over 1% of households in Utah, New Hampshire, or Colorado.
These disparities reflect broader systemic barriers to wealth building and economic opportunity for marginalized communities.
For 40% of unbanked households, the primary barrier is not meeting minimum balance requirements, alongside high or unpredictable fees and a lack of trust in banks.
People who have a bank account can also face high costs to access their money.
Account maintenance, overdraft, and ATM fees may appear small, but they weigh more heavily on those with the least resources.
Low-income households are more likely to incur punitive fees for overdrafts, less likely to have enough money in their bank account to avoid minimum balance charges, and more likely to have to use expensive services like payday loans.
These fees can also have severe cascading effects.
An accidental overdraft can mean a missed rent payment, resulting in evictions or other dire consequences.
For 40% of unbanked households, the primary barrier is not meeting minimum balance requirements, alongside high or unpredictable fees and a lack of trust in banks.
Even for those with accounts, fees for overdrafts, ATMs, and maintenance create financial strain.
Even people who have a bank account can face high costs to access their money.
Account maintenance, overdraft, and ATM fees may appear small, but they weigh more heavily on those with the least resources.
Low-income households are more likely to incur punitive fees for overdrafts, less likely to have enough money in their bank account to avoid minimum balance charges, and more likely to have to use expensive services like payday loans.
These fees can also have severe cascading effects.
An accidental overdraft can mean a missed rent payment, resulting in evictions or other dire consequences.
Who is most affected?
Nearly 1 in 5 people in the U.S. are unbanked or underbanked.
But the impact of financial exclusion is deeply unequal.
Financial exclusion affects low-income households most.
Nearly 4 in 10 households that earn less than $15,000 annually are under or unbanked, compared to just over 1 in 10 for those who earn $75,000 or more. 1 in 3 unbanked households make less than $30,000 annually.
Black households are 5 times more likely to be unbanked than white households.
Single mothers are disproportionately represented among the unbanked and underbanked.
Over 40% of immigrants who are not citizens lack access, often due to ID requirements.
What are the costs of financial exclusion?
Financial exclusion costs households hundreds to thousands of dollars annually. Nationally, these fees add up to billions. The effects ripple through communities, reducing savings and financial freedom.
Lower savings can make the difference between paying for rent or food, increasing the likelihood of becoming homeless or facing other hardships.
Fees cost under and unbanked households $32.7 billion yearly.
Estella Mora, a caregiver for the elderly and disabled in Oxnard, CA, had a bank account that required her to have a minimum balance or be charged $50.
“That makes it impossible for me to save money,” she told Capitol Weekly.
Mora estimated paying $400 in overdraft fees in 2023.
Deysi Gomez, a worker at a McDonald's in San Jose, CA, could not open a bank account for years because she only had a non-U.S. ID. Instead, she cashed checks at a store.
A check cashier closer to home would charge Gomez 6% for every $100.
Imagine this difference: A single parent with access to affordable banking avoids predatory payday loans, saves for emergencies, and pays rent on time—avoiding eviction and its cascading effects.
"I would walk up to four hours just to get to that location to change my check," she told LAist.
What would a better world look like?
Expanding financial inclusion has many benefits:
- Keeping more money in families’ pockets, benefiting their overall well-being and allowing them to spend it where they need it most.
- Increases spending at grocery stores, on education and health, on recreation, and other areas that generate broader economic activity.
- Reduces the use of payday loans and other risky alternatives.
- Brings more people into the formal banking system, including immigrants, further increasing economic activity and government revenues.
- Potentially reduces the need for some government services as families are better off.
Efforts across the U.S. are paving the way for solutions:
Campaign for Postal Banking
The Campaign for Postal Banking is pushing for affordable financial services offered through the U.S. Postal Service and its thousands of locations in every community.
CalAccount
In California, the State government and a coalition of advocates support CalAccount, a zero-fee, zero-penalty debit account and debit card program that creates an alternative for every Californian.
Financial inclusion isn’t a luxury—it’s a necessity. Addressing the barriers to banking access is urgent, achievable, and transformative. It’s time to act.
Find out what financial inclusion looks like in my state
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