We take certain parts of life for granted. We can find a grocery store when we need one. We can get cash from an ATM. But some of the American population isn’t living in the same way.
These are the unbanked. The unbanked are individuals and families who don’t or won’t use a bank for their financial resources. They can’t swing by the ATM when cash is running low. This segment of society is operating without a checking or savings account. In our modern world of digital finance, being part of the unbanked can be a challenge.
There Are 80 million unbanked households
In the United States, there are 80 million households that are currently unbanked or underbanked. These households make up a full twenty-five percent of the United States population. That means one in every four households in the United States does not have adequate access to a bank resources. One in four.
While forty percent of these households may use a prepaid card for some expenses over the month, the majority are operating only with cash. Two-thirds of these unbanked households pay their monthly bills in cash.
45 million Americans don’t have a credit score
Having a credit score means that you have credit with a bank and that you can continue to use your existing credit in the future. Even a bad credit score means you have access to banking resources. After all, everyone starts out with a decent credit score and that score is always in flux based on borrowing and banking habits.
Not everyone borrows or banks, however. If having a credit score means you are actually using the credit that is available to you, not having a score means that you have never opened a credit card to use. You’ve never taken out a car loan or applied for a mortgage. You have never used credit or loans at all.
In the United States, 45 million people have never touched their credit. At all. That is 14 percent of all Americans.
Furthermore, about 27% of Americans do not have an emergency fund to cover an unexpected expense of $400.
There is a $1.4 trillion cash economy in the United States
There are many reports about the size and health of the United States economy. But what is harder to find are reports and statistics about the shadow economy. That would be the cash-only economy that exists in the shadow of the reported economy in the United States.
Where transactions that move through banks are reported, transactions that are paid in cash may not be. It’s based on how a company or individual chooses to report the transaction. So if a business only accepts cash and fails to report that cash income, all of its financial transactions are part of the shadow economy.
It is estimated that $1.4 trillion is moving outside of the reported economy in the United States every year. This figure includes only the legal cash transactions that aren’t reported. The babysitters, handymen and auto detailers, for example. This is the economy where cash is truly king. In fact, it’s the only means of payment.