Summarizing the Latest Data on Unbanked and Underbanked Households

If you are a retailer that offers walk-in cash financial services, such as money orders, check cashing, or bill payment, one trove of information is the U.S. government’s own FDIC Survey of Unbanked and Underbanked Households. This month, we will explore this document for trends and identify one interesting bit of analysis implied in the data.

Some background: the FDIC conducts a survey every two years of a large sample of American households to determine banking habits and any extra-banking financial activity. This is called the “FDIC Survey of Unbanked and Underbanked Households,” and was last conducted in 2021. While it focuses on unbanked and underbanked households, it also surveys banking customers to determine how people conduct their financial lives through banking or other financial transactions.

A few definitions, and then we promise to get to the article. Unbanked households are those households where no member of the household has a bank account. Underbanked households are those where someone in the household has a bank account, but they still have at least one non-bank transaction in the last 12 months.


Unbanked households as a percentage of the total households in the U.S. have been in decline. Unbanked households dropped from 5.4% of the total households to just 4.5% in the last two years (about a 17% drop). While this is good news for banks, it also means that more people are finding it easier and more convenient to open a checking account, use a debit card, and handle their finances through banks rather than private, non-banking services.

It is not great news for those non-banking financial services. However, so long as people are using cash, there will be a need for transactions that don’t necessarily involve a bank, like check cashing, payday loans and walk-in bill payment. What do the trends look like for each of these products?

Check Cashing

Check cashing services exist outside of banks, which are often restrictive about the checks they will cash, and often only cash checks issued on the same bank. Check cashers are a lifeline for the unbanked and often offer other traditionally unbanked services such as money orders, bill payments, and even payday loans. Nonbank check cashing has experienced the largest drop in households using their service in the last two years, with 42% fewer households using these services from 2019 to 2021.

Payday Loans

Loans are another example of an extra-bank transaction. While banks are the first thought when applying for a loan, traditional banks can take time to approve and process a loan, and often require some existing good credit. Payday loans are a great way for the unbanked to get money fast and without much more than proof of employment. Payday loan usage has dropped over the last six years, from just over 7% in 2017 to 4.4% in 2021.

Prepaid Debit Cards

Prepaid debit cards additionally give someone without a regular bank account the ability to use a debit card in all the ways that we use cards today. Prepaid card usage has also declined over the last several years, seeing use by 10.2% of households in the prior twelve months in 2015 but only being used by 6.9% of households in 2021.

Bill Payment

Bill payments with cash is another type of transaction used by those who prefer to operate with cash. If you cannot pay through a banking website or directly online with a debit or credit card, a walk-in bill payment is the next best thing. It is one visit to a local retailer, no envelopes, no stamps, and nothing lost in the mail. These transactions are considered a “nonbank money transfer service” in the survey, and account for about 25% of the total nonbank money transfer services surveyed. The rest are used to send money either within the U.S. (36.9%) or internationally (39.6%). An electronic bill payment is often recognized by the biller within days or even hours, so it has stark convenience compared to stamping and mailing a money order or a check.

Money Orders

Which brings us back to money orders. Money orders are frequently used by young people renting their first apartment, either once for a security deposit or each month for the rent itself. Money orders are mostly (85%+) used to pay bills. Over the last several years, money order usage has declined, culminating in 2021 at a rate of 9.7%. This is a drop of 18% since 2019.

Some Final Thoughts

Even with cash being used less and cash financial services thereby dwindling, cash financial services are especially strong in areas with lower income, rental properties, diasporas, or urban areas. If your retail location is in an area where people use cash, you are going to want to make it known that your store provides your community with their unique financial services. You want a partner like Fidelity Express to ensure your customers are taken care of and their payments are safe.

If you are interested in learning more about the FDIC’s survey for 2021, you can find it here. If you are interested in more news and trends in the cash services area, give us a bookmark here. We will keep you informed. Of course, if you would like to ensure your cash-paying customers keep visiting, send us some information here and we will be in touch.