Wednesday, December 16, 2009

More than 10% of Houstonians are "Unbanked"

A closer look on Federal Deposit Insurance Corp. released on its national survey of "underbanked" and "unbanked" households. The number only broke out for the 20 largest metropolitan statistical areas.

About 7.7 million of the nation's households don't use a financial institution. They're the unbanked who exist on a cash economy. When they are paid with a check, they take it to a check-cashing service. When they need to send a check, they buy a money order, or maybe they wire money, or they put the money into a reloadable debit card. When they need a loan, they go to payday loan or auto title loan shops. The most frequent reason people gave for not having a bank was feeling they didn't have enough money to warrant opening an account

Another 17.9 percent are underbanked: They have a checking or a savings account, but they occasionally use alternative services - money orders, pawn shops, payday lenders, even refund-anticipation loans. And the underbanked said speed and cost were the reason they use check-cashing business and other non-bank operations.

Texas banking connections are quite a bit below the national averages. Only about 60 percent of the state's 8.89 million households are considered "fully banked." An estimated 11.7 percent are living on an all-cash basis and about 24.1 percent are considered underbanked. It's no surprise that Dallas and Houston household figures are better than the state numbers. The surprise is in how little they really differ.

An estimated 10.6 percent of Houston-area households are unbanked, while Dallas is at 10.9 percent. About 21 percent of Houston's households are considered underbanked, while in Dallas, the number is about 23.5 percent.

Who are the people who aren't using banks?
They're the low income. Nearly a third of Texas households with annual incomes below $15,000 and almost 21 percent of families with incomes between $15,000 and $30,000 are considered unbanked.
Surprisingly, nearly a third of households with incomes between $30,000 and $50,000 in Texas are considered underbanked.

About 46.1 percent of Hispanic households and 42.4 percent of black households are considered "not underbanked."

The FDIC report estimates nearly 30 percent of people without high school diplomas run on an all-cash basis, compared with 15.1 percent of people with a high school diploma, 7.2 percent with some college, and 1.5 percent who have at least a four-year degree.