A recent Federal Deposit Insurance Corporation (FDIC) report reveals that U.S. households with limited banking access are more likely to own cryptocurrencies than fully banked households. These underbanked households often depend on alternative financial services like payday loans and check cashing. This reliance increases their exposure to risks linked to both cryptocurrency investments and nontraditional financial products.
The FDIC’s findings stem from a June 2023 survey of 30,000 households. This survey is part of an ongoing study series that has tracked banking access trends since the 2007 financial crisis. The report examines the financial behaviors of “underbanked” and “unbanked” households—groups with limited or no access to traditional banking services.
Decline in Unbanked Households but Persistent Disparities
The number of unbanked households—those without checking or savings accounts—has dropped significantly in recent years. In 2023, only 4.2% of U.S. households (about 5.6 million) were unbanked, down from much higher levels in 2011. Despite this progress, disparities remain. Black, Hispanic, Native American, single-parent, and disabled households are more likely to be unbanked or underbanked.
Underbanked households typically have bank accounts but still rely on alternative financial services, such as pawnshops or payday lenders. These households face barriers to credit access and often turn to riskier financial tools like digital currencies. About 14.2% of U.S. households (around 19 million) are classified as underbanked. Over 6% of these households reported owning cryptocurrencies, compared to 4.8% among fully banked households. This trend indicates that limited banking options may push households toward digital currencies as an investment or savings strategy.
Risks of Alternative Financial Products
The survey also found that nearly 10% of underbanked households used Buy Now, Pay Later (BNPL) services, compared to only 3% of fully banked households. However, 13% of BNPL users reported late or missed payments. Among the underbanked population, the rate of missed payments exceeded 20%, highlighting greater financial instability in this group.
The findings illustrate that underbanked households navigate a more precarious financial landscape. They often rely on riskier products like cryptocurrencies and BNPL services, which involve higher fees, less regulation, and increased financial vulnerability compared to traditional banking.
