States Where Financial Inclusion Has Improved the Most Since 2013

The Unbanked and Underbanked: Who They Are, and How Many Households Are Affected

Unbanked consumers and households have no access to traditional banking products, such as personal checking accounts and savings accounts. As a consequence, many of the unbanked must use more expensive, inconvenient or otherwise less-beneficial alternatives—including prepaid debit cards, money orders and payday loans.

According to the most recent data from the Federal Deposit Insurance Corporation (FDIC), 4.5%, or about 6 million households, were unbanked as of 2021. It’s a vast improvement from 2013, when 7.7% of households were unbanked.

The Percentage of Unbanked Americans Continues to Decline

There are also some consumers and households who have partial access to banking services. These consumers are referred to as “underbanked” by the FDIC. Unlike the unbanked, however, the underbanked may have one or more of these traditional banking products but also regularly use alternative financial services, such as money orders and check cashing services, to make transactions. In 2021, some 14.1% of U.S. households were underbanked, down from 20% in 2013.

Often, both the unbanked and underbanked use alternative services to make transactions that banks offer either for free or at a substantially lower financial cost.

Most States Have Seen Financial Inclusiveness Improve Since 2013, Some Dramatically

In 2013, the rate of unbanked and underbanked households reached nearly 50% in some states. And some states had more catching up to do than others. To that end, we show the states where the percentage of unbanked has decreased the most.

The good news: All but three states have fewer unbanked households than they did in 2013. And there’s been significant improvement in some states where the proportion of unbanked households was much higher in 2013. Seven states, most of which are in the South, saw the percentage of unbanked households fall by 5 percentage points or more from their post-2013 peaks.

Source: FDIC; Experian calculations

The states at the bottom of the above table aren’t necessarily laggards, as many of them already had fuller banking participation than other states that saw significant improvements over the decade. Overall, there’s now less of a difference among the unbanked in the individual states now than in 2013.

States Where Personal Incomes Are Rising the Most

Personal income growth is one of the primary ways to measure a region’s or area’s overall economic health: Income on the rise usually translates into more economic consumption, which is the lifeblood of the U.S. economy. More economic activity, and more jobs, enable unbanked households to better participate in the financial system.

And more good news: All 50 states grew their incomes in the years leading up to the pandemic. Here, we see a significant Western tilt.

Source: Bureau of Economic Analysis

At the other end of the spectrum, many of the Great Plains states, crushed by floods and a boom and bust cycle that hit energy producers in the region earlier in the decade, have seen lower income growth.

Credit Scores Have Improved Across All States Since 2013

All 50 states saw average FICO Score improvement from 2013 to 2021. Again, as with personal incomes, the bigger gains were in Western states. But the nation’s capital and Michigan also observed significant improvement versus FICO Scores earlier in the decade.

Source: Experian

Bringing It All Together

Based on the observations above, the following six states (and Washington, D.C.) saw greater-than-average improvement in all three categories:

Source: Experian; based on FDIC, BEA and Experian data

Will Financial Inclusion Continue to Improve?

Cutting in half the number of households without a bank account over a decade is an achievement, but there’s still some way to go. While the percentage of Americans with adequate access to banks and credit unions have improved markedly over the past decade, there are still about 5 million households that transact largely outside of the banking system, relying on more expensive means for virtually any type of financial transaction.

Percentage of Unbanked Persons or Households, Selected Nations

For their part, more than 200 banks are offering accounts designed to assist potential new customers gain access to low-cost, low initial deposit savings and checking accounts through Bank-On, a program by the nonprofit Cities for Financial Empowerment. Bank-On accounts were designed to assist the unbanked access to low-cost savings and checking accounts.

To find a bank with an account that best suits your needs, visit the FDIC’s GetBanked program.