Why People Are Unbanked or Underbanked — And What to Do About It 2026

Why People Are Unbanked or Underbanked in 2026

Despite widespread banking access, the FDIC’s 2023 survey (the most recent published) found approximately 5.6 million US households (4.2%) were unbanked — relying entirely on cash, money orders, and check-cashing services. An additional 14.2% (19.0 million households) were underbanked, holding accounts but still using expensive alternative financial services. A newer FDIC survey covering 2025 was not yet published as of this writing — check fdic.gov/household-survey for the current figures.

Unbanked vs Underbanked: Definitions

Unbanked: No checking, savings, or other account at a bank or credit union. All financial transactions conducted in cash or through alternative services.

Underbanked: Has a bank account but relies on at least one alternative financial service (payday loans, check cashing, money orders, prepaid cards) in the past 12 months.

Source: FDIC 2023 National Survey of Unbanked and Underbanked Households (most recent published survey).

Who Is Most Likely to Be Unbanked?

Unbanked rates vary considerably by demographic group — lower-income households, Black and Hispanic households, Native American households, and households where the head has less than a high school education have historically had meaningfully higher unbanked rates than the national average. For current group-level percentages, see the detailed tables in the FDIC’s published survey report, since these figures are revised with each survey cycle.

Source: FDIC 2023 survey.

Top Reasons People Are Unbanked

FDIC survey data has consistently found these among the most common reasons unbanked households give for not having an account (check the FDIC’s current survey report for exact percentages, which shift slightly between survey cycles):

1. Not enough money to meet minimums / avoid fees — Many accounts require minimum deposits and impose monthly fees if balances fall below thresholds.
2. Don’t trust banks — Historical reasons: bank failures, discriminatory practices, perceived exploitation.
3. Privacy concerns — Concerns about financial surveillance or government access to account data.
4. Previous banking problems — ChexSystems negative record from bounced checks or unpaid fees.
5. ID documentation barriers — Some people lack government-issued ID required to open accounts.
6. Inconvenient hours/locations

The Cost of Being Unbanked

Alternative financial services extract significant fees:

Annual cost estimate: Various federal and consumer-advocacy estimates suggest unbanked households spend several hundred dollars per year in fees for basic financial services that would cost little or nothing with a bank account — check the CFPB’s current published research for a specific figure.

Solutions for the Unbanked and Underbanked

Second-Chance Bank Accounts

For those rejected by banks due to ChexSystems records, look for:

• Major banks’ no-overdraft, low-fee checking products (offerings and fees change — compare current terms)
• Chime — no ChexSystems check, no monthly fees, no minimums
• Current — similar to Chime, designed for underserved customers
• Many credit unions offer second-chance or fresh-start accounts

FDIC BankOn Program

The FDIC’s “BankOn” initiative certifies accounts that meet minimum standards: no overdraft fees, low monthly fee, no minimum balance requirement to open, and acceptance of alternative IDs. Search for certified BankOn accounts at FDIC.gov.

Alternative IDs for Account Opening

Many banks now accept:

• ITIN (Individual Taxpayer Identification Number) — available regardless of immigration status
• Matrícula Consular (Mexican consular ID) — accepted at many major banks
• Passport (foreign or domestic)

Related Guides

• Is My Money Safe in a Bank? — FDIC protection basics
• 10 Essential Banking Terms — banking vocabulary
• Banking Basics Hub — complete banking guide

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.