Average Americans Embace Life as Un- and Underbanked


Updated on Wed Sep 12, 2012

Being unbanked is no longer just for the poor … or the young … or folks engaged in shady business practices.

According to a study in the Wall Street Journal, even middle-class, middle-aged, run-of-the-mill Americans are shunning banks. Some 12 million U.S. households — roughly 8.2 percent — have abandoned traditional banks and moved their funds to prepaid debit cards and similar services,  according to Census-based data the Federal Deposit Insurance Corp. plans to release later today. Nearly twice that number have moved some of their financial activity out of banks and into alternative systems.

 Some are prompted by irritation over banking charges, including overdraft fees that cost Americans $31.6 billion in 2011, according to research firm Moebs Services Inc. Others are spurred by tight credit conditions spawned by the financial crisis and a loss of confidence in traditional institutions. Those drawn to newer nonbank options, such as NetSpend and Green Dot Corp., tout the benefits of new technology and services, such as real-time text alerts.

The phenomenon shows how consumer behavior has changed in the five years since the onset of the global financial crisis. Previously, the federal government tried to lure millions of “unbanked” citizens—typically low-wage earners—into the financial main. Not having or using a bank account was an indicator of economic distress.



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