Financial Empowerment Program

Cost of Being Unbanked

by Jenny Sanford, AFC®, Financial Empowerment Program Manager

The Financial Empowerment Program equips participants with knowledge, skill and access to reach their financial goals. Checking and savings accounts are a financial product that most people access for free or with very low maintenance fees. People without access to these free services are called “unbanked.” People with a checking account who also access non-banking services such as payday loans, rent to own, pawn shops or refund anticipation loans are called “underbanked.” 

If you have ever seen people waiting in the service center line at a big box store on a Friday night, you are seeing the hidden world of the unbanked. People are waiting to cash paychecks, purchase money orders for utilities and buy secure prepaid cards. These free services offered by traditional banking institutions cost both time and money for the unbanked.  

According to a study by NerdWallet, the annual cost of being unbanked is $198.83, or 1% of the average annual income of a person who is unbanked. This can add up to over $70,000 during a lifetime.  

As more customers turn to digital banking, 2021 saw a record number of branches close across the U.S. Payday lenders, title loan companies and other predatory lenders target communities where traditional branches are not in service. When you drive through a neighborhood and see these businesses operating on each block, consider how you would bank if you lived in that community.  

Neighbors provides access to FAIR banking products. The video below describes the partnership between Prepare and Prosper’s FAIR program and distributing partners like Neighbors. Participants improve their financial well-being by combining the banking product along with financial counseling. 

If you or someone you know is un-or-underbanked, there is help available. Call 651-455-5000 Monday through Friday between 9:00 – 4:00 or email us to learn more.