2023 FDIC National Survey of Unbanked and Underbanked Households

• The unbanked rate changed little from 2021 (4.5 percent)
• Between 2011—when the unbanked rate was at its highest level since the survey began in 2009—and 2023, the unbanked rate fell by almost half. Similarly, unbanked rates among Black, Hispanic, and American Indian or Alaska Native households fell by about half. However, unbanked rates among these households remained several times higher than the unbanked rate among White households
• As in previous years, among all unbanked households, “Don’t have enough money to meet minimum balance requirements” was the most cited main reason and “Don’t trust banks” was the second-most cited main reason for not having a bank account

• Over the past decade, use of mobile banking as the primary method of account access increased almost ninefold. Increase in use of mobile banking as the primary method of account access was widespread across household characteristics, including across all age groups
• In contrast, use of bank tellers fell by more than half (and use of online banking declined by more than one-third). Decline in use of bank tellers as the primary method of account access was widespread across household characteristics 
• However, use of bank tellers continues to be more prevalent among certain groups, including lower-income households, less-educated households, older households, and households that did not live in a metropolitan area. Further, almost all banked households used an in-person channel—ATMs or bank tellers—at least once in 2023 to access their accounts

• The use of nonbank online payment services increased from 46.4 percent in 2021 and continues to be more common among banked households than among unbanked households
• In 2023, 5.9 percent of all households were using prepaid cards at the time of the survey, down from 6.9 percent in 2021. Unbanked households’ use of prepaid cards continued to be disproportionate when compared with banked households’ use of prepaid cards. However, between 2021 and 2023, the use of prepaid cards fell by about one-third among unbanked households but only one-tenth among banked households
• Compared with banked households, substantially higher shares of unbanked households used online payment services and prepaid cards in ways that substitute for some of the core financial transactions that can be conducted using a bank account, including paying bills, receiving income, and saving or keeping money safe

• Over the past decade, the use of money orders and check cashing among all households fell by more than half. While the use of these services continued to be much more common among unbanked households than among banked households, both unbanked and banked households experienced substantial declines in their use of these services 
• The use of nonbank money transfer services was similar to the percentage in 2021 (7.0 percent). Use of these services was more than twice as prevalent among unbanked households as among banked households
• Compared with banked households, higher shares of unbanked households used money orders, check cashing, and money transfer services for the core transactions of paying bills and receiving income. More than nine in ten unbanked households that used money orders did so to pay bills; three in four unbanked households that used check cashing cashed a check from work, retirement, or a government agency; and half of unbanked households that used money transfer services did so to pay bills 

• Households with no mainstream credit did not have a credit card, auto loan, or other credit product that is likely reflected on credit records with the nationwide credit reporting agencies (NCRAs). Such households therefore likely did not have a credit score, which could make it more difficult to obtain mainstream credit should a credit need arise. Almost eight in ten unbanked households in 2023 (78.4 percent) had no mainstream credit, compared with 13.0 percent of banked households
• Among all households, 5.8 percent used at least one of the following nonbank alternatives to mainstream credit: a rent-to-own service or a payday, pawn shop, auto title, or tax refund anticipation loan
• Among all households, 3.9 percent used Buy Now, Pay Later (BNPL), a short-term loan that allows consumers to split their payments on purchases over time, often without interest, with four equal payments over six weeks. One in eight households that used BNPL missed or made a late payment on at least one of their BNPL purchases

• Use of crypto was higher among banked households (5.0 percent) than among unbanked households (1.2 percent)
• Use of crypto also varied by household characteristics and was higher among higher-income households, more-educated households, younger households, Asian and White households, working-age households without a disability, and households with higher monthly income volatility. Differences by income level were especially pronounced: 7.3 percent of households with income of $75,000 or more used crypto, compared with 1.1 percent of households with less than $15,000 in income
• Among all households that used crypto, the vast majority held crypto as an investment (92.6 percent). Far fewer households used crypto in another way; for example, only 4.4 percent of households that used crypto did so to make purchases online

• Underbanked households are banked households that use nonbank products to meet their core financial needs. A household is considered underbanked in 2023 if it had a checking or savings account at a bank or credit union but in the past 12 months had used at least one of eight nonbank financial services (NBFSs). These NBFSs include three transaction services (nonbank money orders, check cashing, and international remittances) and five alternatives to mainstream credit (rent-to-own services and payday, pawn shop, auto title, and tax refund anticipation loans). Such NBFSs historically have been used disproportionately by unbanked households to meet their transaction or credit needs. Households that had a checking or savings account at a bank or credit union but in the past 12 months had not used any of the above NBFSs are considered fully banked.  In contrast, 81.6 percent of U.S. households—representing about 109.1 million households—were considered fully banked
• Nearly one in four households without a high school diploma (23.1 percent) were underbanked, compared with 10.4 percent of households with a college degree. More than one in five Black, Hispanic, American Indian or Alaska Native, and Native Hawaiian or Other Pacific Islander households were underbanked, compared with one in ten White households
• Use of mobile banking more common among underbanked households compared to fully banked households, while use of online banking less common among underbanked households
• Compared with fully banked households, higher shares of underbanked households used online payment services and prepaid cards in ways that substitute for some of the core financial transactions that can be conducted using a bank account, including paying bills, receiving income, and saving or keeping money safe

The composition of unbanked households has changed significantly over the years. The age distribution of unbanked households is now less disproportionately young. And while some unbanked households may be more tech savvy, still others rely primarily on cash. As a result, economic inclusion strategies that may have worked in the past may not be as compelling today. Gaining a more nuanced understanding of the current composition of unbanked households can help economic inclusion efforts evolve and better meet the needs of today’s unbanked households.

Technology is changing how consumers interact with banks and reshaping the financial services industry by increasing options for using technology to conduct financial transactions and develop business relationships. Smartphones are ubiquitous among banked consumers, but many are not using them to improve their banking experience. Significant untapped potential exists for banks to engage these consumers and help them use technology to sustain and grow banking relationships. Late adopters might be ready to use more technology for banking, but they are at risk of being left behind if they are not considered part of banks’ technology strategies.

Gaining access to credit and establishing a credit history allow households to smooth consumption, build wealth, and weather financial shocks. In recent years, the share of households using mainstream credit has increased and the share using nonbank alternatives to mainstream credit has decreased, indicating that more consumers are able to access mainstream credit. However, large numbers of households do not use mainstream credit, and efforts to increase access to safe and affordable credit remain important. And as more consumers gain access to mainstream credit, targeted outreach and education about managing and building credit may be valuable to support successful use of credit. In addition, lenders and consumers alike would benefit from more detailed and transparent information about the impact of timing and types of credit use on credit history and scores.