Al Behrman, Associated Press
Many U.S. households rely on alternative financial sources, such as payday stores.

The Federal Deposit Insurance Corp. wants mainstream financial institutions to develop products that better serve the millions of Americans who don't use or seldom use basic banking services.

Minority, immigrant and low-income households are disproportionately "unbanked" or "underbanked" — categories that include 16.9 percent of Utah households. Nationally, more than one-fourth of households, or 30 million, fit those categories, according to an FDIC survey released Wednesday.

Nationally, blacks, Hispanics and Native Americans are more likely to be un- or underbanked than Asians or whites. The survey found that 71 percent of unbanked households earn less than $30,000 a year, while households with incomes of $30,000 to $50,000 are "almost as likely" to be underbanked.

The survey defined "unbanked" as no one in a household having either a checking or savings account — 7.7 percent of households nationally and 1.7 percent in Utah. "Underbanked" — totaling 17.9 percent of American and 15.2 percent of Utah households — have an account but rely on alternative sources for financial transactions, such as money orders, check cashing, payday loans, rent-to-own, pawn shops or tax-refund-anticipation loans.

FDIC chairman Sheila Bair said vulnerable households need access to bank accounts so they can save and borrow on affordable terms.

The most heavy utilization of the nonbank businesses were for basic banking services like check cashing, said Martin Gruenberg, FDIC vice chairman, during a conference call Wednesday with reporters.

The FDIC is asking banks to consider creating appropriate credit products, including short-term, small-amount loans to meet immediate financial needs, as well as low-cost transaction accounts and savings accounts.

"To the extent that the insured financial institutions can do that and can be encouraged to do that, there's a strong public interest," he said. "If for no other reason, they should have the opportunity to accumulate savings in a safe and secure place."

He also noted that banks and credit unions are more highly regulated and thus may offer more protections to consumers.

"By better understanding this group — who they are and their reasons for being unbanked or underbanked — we will be better positioned to help them take that first step," Bair said in a statement.

The survey was conducted by the Census Bureau for the FDIC in January. It found, among other things, that 31 percent of the 1.3 million households that stopped having bank accounts in 2008 closed them because of overdraft fees, service charges or high minimum-balance requirements. Just over one-third said they dropped their account because they didn't have enough money to need one.

Utah statistics

1.7 percent households are "unbanked"

15.2 percent are "underbanked"

Total: 16.9 percent of Utah households

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