Menus Subscribe Search
broken-bank

Why Don’t More Americans Have Bank Accounts? And Should They?

• August 07, 2013 • 11:03 AM

(PHOTO: WAVEBREAKMEDIA/SHUTTERSTOCK)

If you’ve ever bounced a check, you could be blacklisted.

The nation’s major banks are shutting out a million Americans from having a checking account, reported the New York Times on its front page recently. Banks like Wells Fargo and Citibank are paying consumer credit reporting firms for customer data, and effectively blacklisting customers that have bounced checks and other mistakes in their banking history. But all told, around 10 million U.S. households have no checking or savings account. The Times piece is only addressing why a tenth of those people live off the financial grid. So why don’t more Americans—up and down the income ladder—have bank accounts?

According to the Federal Deposit Insurance Corporation’s National Survey of Unbanked and Underbanked Households, the main reason people reported not having a bank account was that they thought they didn’t have enough money (roughly a third of respondents). Nearly as large percentages think they don’t need or want a bank account.

One in 10 households earning between $50,000 and $75,000 only have a checking account.

Further down the list of reasons for no accounts: lack of identification, or a history of credit and banking problems. The FDIC estimates that nearly eight percent of the 5.3 million households that have never had a bank account reported some combination of these issues. “Banking history” issues like those described in the Times piece were identified by just over a quarter of that eight percent—a relatively small sliver of the problem (though the survey only asked for the primary reasons households didn’t have bank accounts; it’s possible many more households have been turned away for other reasons as well).

What’s so great about having a bank account anyway? They do appear to make a difference in encouraging people to save money. For example, according to a recent Federal Reserve Bank of Cleveland report, over the last two decades, the phasing-in of electronic transfer of funds from government assistance programs like food stamps may have encouraged the poverty-stricken recipients of those funds to open checking accounts, which in turn increased the value of their financial assets—an indicator that the recipients were saving some of what they received more than before they had a bank account to hold those funds. The fraction of low-income households with checking accounts has jumped from 50 percent to 75 percent since 1989; over the same period, the median value of financial assets among the poor (the bottom 20 percent of earners) increased by almost 50 percent. And it’s not just because the country is getting wiser as it’s population gets older: The share of low-income households headed by people under 29 that have financial assets like checking accounts jumped from less than 75 percent in 1989 to almost 90 percent in 2009.

That said, the poor aren’t the only ones not banking: 17.1 percent of households without a bank account earn between $15,000 and $50,000 a year (most, though, less than $30,000). And one in 10 households earning between $50,000 and $75,000 only have a checking account. That could be part of the reason it’s not just the poor that find themselves living in a financially fragile position—49 percent of households in the United States would have trouble coming up with $2,000 in 30 days to cover even a moderate financial mishap. As for getting those more than 55 million households into the banking system: Citibank and Wells will probably not be opening their doors for a big chunk of them, according to the Times, very soon.

Michael Fitzgerald
Michael Fitzgerald is an associate editor at Pacific Standard. He has previously worked at The New Republic and Oxford American Magazine.

More From Michael Fitzgerald

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts


July 21 • 4:00 PM

Do You Have to Learn How to Get High?

All drugs are socially constructed.


July 21 • 2:14 PM

The New Weapon Against Disease-Spreading Insects Is Big Data

Computer models that pinpoint the likely locations of mosquitoes and tsetse flies are helping officials target vector control efforts.


July 21 • 2:00 PM

Why Are Obstetricians Among the Top Billers for Group Psychotherapy in Illinois?

Illinois leads the country in group psychotherapy sessions in Medicare, and some top billers aren’t mental health specialists. The state’s Medicaid program has cracked down, but federal officials have not.



July 21 • 12:00 PM

What Makes You So Smart, MacArthur Genius?

Noah Davis talks to Yoky Matsuoka about youth tennis, wanting to be an airhead, and what it’s like to win a Genius Grant.


July 21 • 11:23 AM

People Are Clueless About Placebos

Doctors know that sometimes the best medicine is no medicine at all. But how do patients feel about getting duped into recovery?


July 21 • 10:00 AM

How Small-D Democratic Should Our Political Parties Be?

We need to decide how primaries should work in this country before they get completely out of hand and the voters are left out entirely.


July 21 • 8:00 AM

No, Walking on All 4 Limbs Is Not a Sign of Human ‘Devolution’

New quantitative analysis reveals that people with Uner Tan Syndrome don’t actually walk like primates at all.


July 21 • 6:00 AM

Sequenced in the U.S.A.: A Desperate Town Hands Over Its DNA

The new American economy in three tablespoons of blood, a Walmart gift card, and a former mill town’s DNA.


July 21 • 5:00 AM

Celebrating Independence: Scenes From 59 Days Around the World

While national identities are often used to separate people, a husband-and-wife Facebook photography project aims to build connections.


July 21 • 4:00 AM

Be a Better Person: Take a Walk in the Park

New research from France finds strangers are more helpful if they’ve just strolled through a natural environment.



July 18 • 4:00 PM

The Litany of Problems With the Pentagon’s Effort to Recover MIAs

A draft inspector general report found that the mission lacks basic metrics for how to do the job—and when to end it.


July 18 • 2:00 PM

Sure, the Jobs Are Back, but We Need a Lot More

We’re back to where we were before the 2008 recession, but there are now 12 million more people in the United States.


July 18 • 12:00 PM

What Are the Benefits of Government-Funded Research?

Congress wants to know.


July 18 • 10:31 AM

Why Didn’t California’s Handheld Phone Ban Reduce Motor Accidents?

Are handheld cell phones as dangerous as they have been made out to be?


July 18 • 10:00 AM

The Upside of Economic Downturns: Better Childhood Health

For children, the benefits of being born in tough times can outweigh the costs.


July 18 • 9:48 AM

What Tech Talent Shortage? Microsoft Trims 18,000 Employees From Payroll

Like manufacturing before it, the Innovation Economy has reached a turning point, with jobs moving to places where labor is cheaper.


July 18 • 8:00 AM

The Academic of Comic Books

Kim O’Connor talks to Hillary Chute about comics as objects of criticism, the role of female cartoonists, and the art world’s evolving relationship with the form.


July 18 • 6:00 AM

The Supreme Court’s ‘Hobby Lobby’ Ruling Isn’t a Women’s Health Issue

It’s a private health issue. And it affects us all.


July 18 • 4:00 AM

‘Don’t Worry, Be Happy’ Comes Easier to the Danes

New research finds the closer a nation is to the genetic make-up of Denmark, the happier its citizens are.


July 17 • 4:00 PM

A Way for Feminism to Overcome Its ‘Class Problem’

A growing body of research indicates that there are few other interventions that improve the economic prospects and work-life balance of women workers as much as unions do.


July 17 • 2:00 PM

How a Fanny Pack Mix-Up Unraveled a Massive Medicare Fraud Scheme

Two secretaries in a doctor’s office have pleaded guilty and a pharmacy owner faces charges in a scam that Medicare allowed to thrive for more than two years.


July 17 • 12:00 PM

‘Dawn of the Planet of the Apes’ Makes a Great Argument for Sex

We could all learn a thing or two from our close cousin, the bonobo.


Follow us


Subscribe Now

The New Weapon Against Disease-Spreading Insects Is Big Data

Computer models that pinpoint the likely locations of mosquitoes and tsetse flies are helping officials target vector control efforts.

People Are Clueless About Placebos

Doctors know that sometimes the best medicine is no medicine at all. But how do patients feel about getting duped into recovery?

No, Walking on All 4 Limbs Is Not a Sign of Human ‘Devolution’

New quantitative analysis reveals that people with Uner Tan Syndrome don't actually walk like primates at all.

Why Didn’t California’s Handheld Phone Ban Reduce Motor Accidents?

Are handheld cell phones as dangerous as they have been made out to be?

The Upside of Economic Downturns: Better Childhood Health

For children, the benefits of being born in tough times can outweigh the costs.

The Big One

Today, the United States produces less than two percent of the clothing purchased by Americans. In 1990, it produced nearly 50 percent. July/August 2014

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.