FDIC sees rise in unbanked households in the Miami area

The percentage of households in South Florida without a bank account – the so-called without a bank account – rose in 2017, although the national percentage fell last year, a new government survey shows.

A full 8 percent of households in the Miami, Fort Lauderdale, and West Palm Beach metropolitan area had no bank accounts, borrowed money, or cashed checks outside the banking system survey every two years was released Tuesday by the Federal Deposit Insurance Corporation, a major banking regulator.

The survey is conducted every two years, and at the national level, the number of households without bank details fell to 6.5 percent, down from 7 percent in 2015 and 7.7 percent in 2013.

“The good news is that our country’s banking system serves more American households than ever before. The bad news is that despite the decline in the total number of unbanked people, 8.4 million households remain out of banking, ”FDIC Chair Jelena McWilliams said in a statement accompanying the report’s release.

The South Florida number moved in the opposite direction from the national average, with the 8 percent of unbanked households last year higher than the national 6 percent figure, even better than the national average.

As a sign that South Florida’s economy is improving, the percentage of households in the region classified as underserved was 17.6 percent, below the national average of 18.7 percent. An inadequate household household is one in which a family member has an account with an insured financial institution but has obtained financial services or loans outside of the banking system.

Households with poor banking connections are also marked as those who have left the banking system in the past 12 months to receive a money order, cash a check or send money abroad, take out a loan before a paycheck, against their car title, or from one Pawnshop, drawn or loaned for an expected tax refund.

Deep in Data tables, there was another positive sign. The use of these types of products in South Florida actually declined along with the underserved numbers. About 4.5 percent of South Florida borrowed alternative loan products from non-bank lenders in 2017, compared with 5.2 percent in 2015 but up from 3.5 percent in 2013.

That could change, say consumer advocates, due to a relatively new law in Florida that the types of high-interest loans expanded Payday lenders can especially do that Working poor and minorities.

“This legislative move increases the risk of Floridians being thrown out of the banking system because they are trapped in harmful payday loans,” said Diane Standaert, state policy director for the Center for Responsible Lending, a national advocacy group.

There were fewer households nationwide in 2017 compared to 2015, and the 17.6 percent rate in South Florida was a slight improvement from an 18 percent rate in 2015. Compared to the 13.9 percent rate in 2013 it still increased by a tick of 5.9 percent in 2015, but less than 6.2 percent in 2013.

The falling number of households with underserved households could explain why Non-bank lenders lobby Congress and the Trump administration to relax rules protecting members of the armed forces and the working poor from expensive loans. The Trump administration has announced it will ease enforcement of rules capping a 36 percent annual interest rate on non-bank loans to active duty members.

And a coalition of non-bank lenders led by payday groups has filed a federal lawsuit seeking Implementation thwart of rules that would require them to measure a borrower’s ability to repay an expensive loan.

Payday lenders have been pushing hard to relax rules that will make it easier to lure more people into debt,” Standaert said.

Kevin G. Hall: 202-383-6038, @KevinGHall

This story was originally published October 24, 2018 8:00 a.m.

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