According to the latest survey data from the FDIC, 5.9 million American households are “unbanked” — meaning they do not have a checking account or savings account at a bank or credit union. Unbanked Americans make up about 4.5% of all U.S. households.
In some ways, it’s understandable that not everyone has (or might want) a bank account. If you’ve had a bad experience with banking or live in a community that is underserved by banks, being unbanked might feel like the best choice.
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But if you don’t have a bank account, you are vulnerable to a lot of extra risks and hidden costs of everyday life. Being unbanked can cause people to get charged higher fees for financial services, risk losing money to theft, and miss out on chances to improve their personal finances.
Let’s look at a few reasons why everyone could benefit from a bank account.
1. Bank accounts are FDIC insured
When you keep money in the bank, your money is protected by FDIC insurance (up to $250,000 per qualifying account). Even if the bank fails and goes out of business — which sometimes happens; there were a few big bank failures in 2023 — your money will be protected. You won’t lose money by putting it in the bank.
But if you don’t have a bank account and you keep cash in your house, what happens if you suffer a theft or a house fire? What if you lose your cash? Some people have also started to use mobile payment apps to keep their extra cash in a digital wallet, kind of like an online bank account — but these payment apps don’t always offer the same level of FDIC insurance as an actual bank.
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Banks are a safe, stable place to keep your money. Ever since the Great Depression, the has protected the cash of everyday bank customers. FDIC insurance is one of the most underrated, successful public policies ever created, and it’s worth getting that protection for your personal finances.
2. Bank accounts pay interest
Even if you don’t have a lot of savings, you deserve to have that money work harder for you. Banks will pay you interest for the money you “lend” to them as savings account deposits, and the best high-yield savings accounts are paying interest of over 5.00% APY today. Keeping cash under your mattress, in a safe in your home, or in a payment app digital wallet does not earn interest to help your money grow.
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3. Bank accounts help you save money
Bank accounts don’t just give you a place to keep savings; they help you save money in other ways by giving you free services like check cashing and bill pay. People who are unbanked often end up paying high fees for check-cashing services, money orders, and payday loans.
Instead of paying extra fees every time you get a paycheck, banks offer free, convenient, built-in services like ACH transfers to pay bills, and direct deposit for your paycheck. Some banks even offer “get paid early” features so you can get your paycheck up to two days early.
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4. Bank accounts can help you get other financial services
People who are unbanked are existing in a vulnerable situation, like they’re “out in the cold” beyond the financial system. When you have a bank account, you can come in from the cold and have an easier time getting connected to other services that you might need.
As a bank customer, your bank will look for opportunities to recommend other products and services that might help you. You might qualify for a secured credit card to help build credit, or a savings account to hold your extra cash. Banks want to deepen their relationships with customers and help you get more financial services that are a fit for your needs.
Some banks even offer in-person financial coaching. At Capital One Cafés, you can get one-on-one mentoring sessions from the Capital One Money & Life program. As part of its Banking Inclusion Initiative, Wells Fargo offers free one-on-one sessions with financial coaches from Operation Hope, available at over 150 Wells Fargo bank branch locations in 20 markets.
If you have questions about your personal finances, need guidance on the right moves to make with your money, or just need help to better balance your monthly budget, start at the bank. Banks and credit unions don’t just take deposits and make loans; they are staffed by financial professionals who are happy to offer ideas, suggestions, and advice for how you can improve your financial wellness.
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5. Bank accounts give you convenience
Having a bank account is useful for everyday life, because it gives you a convenient “home base” for your money. Every payday, you have a place for your paycheck to go. You can get a debit card to easily buy groceries or make purchases online or via mobile apps. You can get access to cash at ATMs or point-of-sale cash back at stores.
And many of these convenient banking services are available for free, or for low fees. Some bank accounts charge monthly fees, but these fees can often be waived if you keep a minimum balance in the account, sign up for direct deposit with your paycheck, or make other money moves.
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Bottom line
Being unbanked puts people at risk of higher fees, hidden costs, and big losses. There are many good reasons to get a bank account, beyond just having FDIC insurance. Having a bank account can help you improve your personal finances and get helpful advice and banking products for every stage of your financial journey.
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