2.09BM Being Unbanked

QUESTION OF THE DAY: What percent of teens have opened a bank account? 📷5 min
Answer the question on the first slide in the space below. Then, compare your answer to the answer on the second slide. Finally, follow your teacher’s directions on how to answer the follow-up questions on the last slide.

2

What percent of teens have opened a bank account?
Your Guess:_______ 
Actually: _______ 

ARTICLE: The Costs Of Being Unbanked Or Underbanked
Being unbanked or underbanked means that you either don’t have access to or choose not to use a traditional bank which leads you to use services like payday loans and check cashers.  Read the article about being unbanked.  Then, answer the questions.

3

According to the survey mentioned in the article, what are some of the reasons that people are unbanked? (name 3)_______ _______ _______ 

3

What are some of the major downsides of being unbanked? (name 3)_______ _______ _______ 

1

Many people choose to be unbanked due to a lack of trust in traditional banking services. Why do you think some individuals place more trust in alternative banking services?

ARTICLE: What Is A Prepaid Card And How Does It Work?
Due to the cashless nature of today’s world, many who are unbanked rely on prepaid cards to complete transactions.  Read the article on prepaid cards.  Then, answer the questions.

1

What’s the difference between a prepaid card and a debit or credit card?

1

What are the downsides of using a prepaid card?

ARTICLE: Payroll Card
Instead of issuing paper paychecks that you would have to go to a bank to deposit, employers are mostly using direct payment to a bank account.  But what if you don’t have an account to deposit your pay into? Read the article about payroll cards.  Then, answer the questions.

1

Why might an unbanked employee choose to use a payroll card over receiving a paper check?

1

One of the main disadvantages of payroll cards is fees. What types of things might you be charged for when using one of these cards?

INTERACTIVE: What’s the Banking Status in Your Area?
Interactive: FDIC's Household Use of Banking Services
While the majority of people in the U.S. have some kind of account with a bank, there are many that don’t use banks at all! Use this interactive to find out how many households are unbanked in the country and your area.

Part I: Unbanked vs. Underbanked
BEFORE accessing the interactive, do a little research and answer the questions below.

1

What does it mean to be unbanked?

1

What does it mean to be underbanked?

1

Part II: Regions in the Country
Open the interactive. Click on REGION underneath the map and hover over the different regions of the U.S. Use the 2021 data to answer the questions below.

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What percentage of households are unbanked in your region?_______  Does this surprise you?_______  Why or why not?_______ 

1

How does your region compare to the other regions in the country?

1

What do you think explains the trend you observed?

1

Part IV: Consequences of Banking Status
Let’s now take a look at the consequences of being unbanked by using data from the 2021 FDIC survey How America Banks: Household Use of Banking and Financial Services. The images below show the percentage of households that use money order and check cashing services split by unbanked and banked households.

1

What trend exists in both money orders and check cashing from 2017 to 2021?

1

Money orders and check cashing both involve fees. How might this affect unbanked and banked households differently?

The map above shows the different percentage of non bank credit services for households in different states.

1

Describe the overall trends you notice in the map above regarding non bank credit services among households in the country.

1

Look back at the trend you noticed in question 14. What do you notice between the use of non bank credit services and the percentage of households that are unbanked?

1

What are some examples of non bank credit options?

1

1

What is the main reason unbanked households do not have a bank account?

1

27.3% of households claim one reason for being unbanked is that account fees are unpredictable, while 29.5% say that account fees are too high. What types of fees do you think they are referring to and why can avoiding these types of fees be difficult?

1

The chart shows the results of the question asked to households: “How interested are you in having a bank account?” Why do you think more never banked households are “not at all interested” in having an account over previously banked households?

1

Across all households, about 73% are “not very” or “not at all” interested in a bank account. Imagine you've been hired by a bank to help them 'capture' more customers on the local and state level where you live. How could the bank be more accommodating to these customers?

1

Which of the following is a disadvantage of using a payroll card?
1 You cannot withdraw your money for cash
2 Many payroll cards charge fees
3 You cannot use your payroll card as a debit card
4 It is challenging to use a payroll card for purchases

1

All of the following are reasons that a person might be unbanked EXCEPT…
1 Not trusting the banking system
2 Not having enough available money to maintain an account
3 Not having a bank within close distance to your residence
4 Not having a credit card account from a traditional bank

1

Danielle is unbanked and is considering using a prepaid card. Which of the following would be BAD information to give her about prepaid cards?
Prepaid cards are a good way to build credit because they work like credit cards
Prepaid cards can have a lot of fees associated with them including transaction and loading fees
Prepaid cards are generally accepted anywhere that debit and credit cards are accepted
Prepaid cards are a viable way for the unbanked to complete online transactions

2.09BM Being Unbanked

QUESTION OF THE DAY: What percent of teens have opened a bank account? 📷5 min

ARTICLE: The Costs Of Being Unbanked Or Underbanked

Many people choose to be unbanked due to a lack of trust in traditional banking services. Why do you think some individuals place more trust in alternative banking services?

What’s the difference between a prepaid card and a debit or credit card?

What are the downsides of using a prepaid card?

ARTICLE: Payroll Card

Why might an unbanked employee choose to use a payroll card over receiving a paper check?

One of the main disadvantages of payroll cards is fees. What types of things might you be charged for when using one of these cards?

What does it mean to be unbanked?

What does it mean to be underbanked?

How does your region compare to the other regions in the country?

What do you think explains the trend you observed?

What trend exists in both money orders and check cashing from 2017 to 2021?

Money orders and check cashing both involve fees. How might this affect unbanked and banked households differently?

Describe the overall trends you notice in the map above regarding non bank credit services among households in the country.

Look back at the trend you noticed in question 14. What do you notice between the use of non bank credit services and the percentage of households that are unbanked?

What are some examples of non bank credit options?

What is the main reason unbanked households do not have a bank account?

27.3% of households claim one reason for being unbanked is that account fees are unpredictable, while 29.5% say that account fees are too high. What types of fees do you think they are referring to and why can avoiding these types of fees be difficult?

The chart shows the results of the question asked to households: “How interested are you in having a bank account?” Why do you think more never banked households are “not at all interested” in having an account over previously banked households?

Across all households, about 73% are “not very” or “not at all” interested in a bank account. Imagine you've been hired by a bank to help them 'capture' more customers on the local and state level where you live. How could the bank be more accommodating to these customers?

Which of the following is a disadvantage of using a payroll card?1 You cannot withdraw your money for cash2 Many payroll cards charge fees3 You cannot use your payroll card as a debit card4 It is challenging to use a payroll card for purchases

All of the following are reasons that a person might be unbanked EXCEPT…1 Not trusting the banking system2 Not having enough available money to maintain an account3 Not having a bank within close distance to your residence4 Not having a credit card account from a traditional bank

QUESTION OF THE DAY: What percent of teens have opened a bank account? 📷5 min

ARTICLE: The Costs Of Being Unbanked Or Underbanked

Many people choose to be unbanked due to a lack of trust in traditional banking services. Why do you think some individuals place more trust in alternative banking services?

What’s the difference between a prepaid card and a debit or credit card?

What are the downsides of using a prepaid card?

ARTICLE: Payroll Card

Why might an unbanked employee choose to use a payroll card over receiving a paper check?

One of the main disadvantages of payroll cards is fees. What types of things might you be charged for when using one of these cards?

What does it mean to be unbanked?

What does it mean to be underbanked?

BEFORE accessing the interactive, make a hypothesis: What percent of households do you think are unbanked in your state?

How does your region compare to the other regions in the country?

What do you think explains the trend you observed?

Are there any states that are major exceptions to the overall trends you observed above?

What trend exists in both money orders and check cashing from 2017 to 2021?

Money orders and check cashing both involve fees. How might this affect unbanked and banked households differently?

Describe the overall trends you notice in the map above regarding non bank credit services among households in the country.

Look back at the trend you noticed in question 14. What do you notice between the use of non bank credit services and the percentage of households that are unbanked?

What are some examples of non bank credit options?

What is often true about the interest rates of these non bank credit alternatives, and how might that affect the banked and unbanked differently?

What is the main reason unbanked households do not have a bank account?

27.3% of households claim one reason for being unbanked is that account fees are unpredictable, while 29.5% say that account fees are too high. What types of fees do you think they are referring to and why can avoiding these types of fees be difficult?

The chart shows the results of the question asked to households: “How interested are you in having a bank account?” Why do you think more never banked households are “not at all interested” in having an account over previously banked households?

Across all households, about 73% are “not very” or “not at all” interested in a bank account. Imagine you've been hired by a bank to help them 'capture' more customers on the local and state level where you live. How could the bank be more accommodating to these customers?

Which of the following is a disadvantage of using a payroll card?1 You cannot withdraw your money for cash2 Many payroll cards charge fees3 You cannot use your payroll card as a debit card4 It is challenging to use a payroll card for purchases

All of the following are reasons that a person might be unbanked EXCEPT…1 Not trusting the banking system2 Not having enough available money to maintain an account3 Not having a bank within close distance to your residence4 Not having a credit card account from a traditional bank

BEFORE accessing the interactive, make a hypothesis: What percent of households do you think are unbanked in your state?

Are there any states that are major exceptions to the overall trends you observed above?

What is often true about the interest rates of these non bank credit alternatives, and how might that affect the banked and unbanked differently?

Which of the following is a disadvantage of using a payroll card?
1 You cannot withdraw your money for cash
2 Many payroll cards charge fees
3 You cannot use your payroll card as a debit card
4 It is challenging to use a payroll card for purchases

All of the following are reasons that a person might be unbanked EXCEPT…
1 Not trusting the banking system
2 Not having enough available money to maintain an account
3 Not having a bank within close distance to your residence
4 Not having a credit card account from a traditional bank

Which of the following is a disadvantage of using a payroll card?
1 You cannot withdraw your money for cash
2 Many payroll cards charge fees
3 You cannot use your payroll card as a debit card
4 It is challenging to use a payroll card for purchases

All of the following are reasons that a person might be unbanked EXCEPT…
1 Not trusting the banking system
2 Not having enough available money to maintain an account
3 Not having a bank within close distance to your residence
4 Not having a credit card account from a traditional bank