A recent Federal Deposit Insurance Corporation (FDIC) report highlights an emerging financial trend. U.S. households with limited access to traditional banking services are more likely to own cryptocurrencies than fully banked households. These “underbanked” and “unbanked” groups often rely on alternative financial tools like payday loans and check-cashing services. As a result, they face elevated financial risks, including exposure to the volatility of digital currencies.
The report’s findings stem from a June 2023 survey of 30,000 U.S. households. This survey is part of the FDIC’s ongoing efforts to track banking access trends. Since the 2007 financial crisis, the FDIC has consistently monitored the financial behaviors of households with limited access to traditional banking.
Decline in Unbanked Households
One key insight from the report is the declining number of unbanked households. “Unbanked” households are those without a checking or savings account. As of 2023, only 4.2% of U.S. households, or about 5.6 million, are unbanked. This marks a significant drop from 2011 figures. However, financial access disparities remain. Black, Hispanic, Native American, single-parent, and disabled households are still more likely to be unbanked or underbanked.
“Underbanked” households have a bank account but still rely on non-bank financial services like pawn shops, payday lenders, or check cashing. These households are more likely to invest in digital currencies. For many, cryptocurrency represents an alternative financial tool, offering potential growth and perceived independence from traditional banks.
The Link Between Banking Status and Financial Risk
The FDIC survey identifies 14.2% of U.S. households—around 19 million—as underbanked. Among these households, over 6% reported owning cryptocurrency. This rate is higher than the 4.8% ownership observed in fully banked households. These figures indicate that households with limited access to traditional banking services may view digital currencies as a viable financial alternative.
The report also sheds light on the use of Buy Now, Pay Later (BNPL) services. Nearly 10% of underbanked households use BNPL services, compared to just 3% of fully banked households. These services allow consumers to make installment payments for purchases. However, BNPL usage carries financial risks. About 13% of all BNPL users reported missing or making late payments. Among underbanked users, this rate exceeds 20%, highlighting an increased risk of debt accumulation.
The findings reveal a shift in financial behavior among underbanked households. They increasingly turn to higher-risk products like cryptocurrencies and BNPL services to manage their finances. While these tools may offer convenience and flexibility, they also pose significant risks. Compared to traditional banking, these alternatives often lack strong consumer protections and carry greater financial volatility.