Nichole Francis Reynolds, director of government affairs for Mastercard.

More than one-tenth of Georgians don’t use banks, study says

When it comes to the share of people who are unbanked, Georgia is among the top ten states – and that is not a good thing, according to a recent study by the Federal Deposit Insurance Corp.

More than one in ten households – 10.9 percent of them – have no involvement with traditional banks, no accounts for checking or savings, according to the FDIC.

That is significantly higher than the national average of 7 percent.

An additional 26.9 percent are “underbanked,” that is, they might have checking accounts, but they also rely on other kinds of services — like pawn shops, check-cashing and payday loan companies or auto-title loans — to get cash and credit.

Those alternatives often charge much higher rates than banks.

Reprsentatives of those businesses have countered by arguing that they offer services that many low-income households cannot get otherwise.

But critics maintain that for people of limited means, that dependence is seen as a handicap in the struggle to find stability and to claw out of debt. And that concern about the issue links financial institutions like the FDIC, with community advocates, left of center organizations and national credit card companies.

“Unbanked and underbanked families spend far too much of their hard-earned money on costly alternative financial services like check cashing, money orders and payday loans,” said Nichole Francis Reynolds, director of government affairs for Mastercard. “While a lower percentage of households across Georgia are financially underserved today than two years ago, the problem is still very real.”

A piece in the Atlantic examines the subject in some depth here.

Joe Valenti, director of consumer finance at the Center for American Progress, said the are a number of obstacles to financial security, but one is obvious: a decent job, a steady paycheck.

“Part of the challenge is ensuring stable employment: the FDIC data tells us that having and keeping a job makes it much easier to keep bank accounts open,” he said.

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