When Yanely Espinal was growing up, her family didn't use a bank.
Her parents had immigrated to the U.S. from the Dominican Republic and, like many new arrivals, only used cash.
"I never, ever saw a credit card, a debit card, anything like that in my house," said Espinal, director of educational outreach at Next Gen Personal Finance. "There was never any kind of financial account or institution that my parents had a relationship with."
As the country celebrates National Hispanic Heritage Month, the good news is that the number of unbanked Hispanic households is at its lowest point since the Federal Deposit Insurance Corp. started surveying the public.
Still, Hispanic households are less inclined than white, non-Hispanic ones to use the banking system. In 2019, 12.2% of Hispanic households were unbanked, compared to 2.5% of white ones, according to the FDIC's latest survey. Black households had a rate of 13.8%.
However, the coronavirus pandemic will likely push the number higher, the agency said in its report. Significant job or income loss, as seen during the crisis, is a primary reason that people go from banked to unbanked, earlier FDIC surveys have shown.
The reasons for staying away from bank accounts may vary. There may be language barriers or a distrust of banking institutions, especially for those who may have come from a country that had a weak or corrupt system, Espinal said.
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Then there is the lack of access, said Teresa Montoya, chief marketing officer at GECU, an El-Paso, Texas-based credit union. As a community development financial institution, GECU supports economically disadvantaged communities. It has more than 400,000 members and 31 branches in the area.
"Brick and mortar is still extremely important to build that relationship," Montoya said.
The number of bank branches in communities has been on the decline, with a record number of closings in 2020 alone, according to S&P Global Market Intelligence. U.S. banks and thrifts closed 3,324 branches nationwide in 2020 but opened only 1,040, the data showed. The figures do not include temporary closures due to the pandemic.
Yet, predatory lenders have locations all over, Montoya said.
The end result is that people without bank accounts may wind up digging deep into their wallets.
For those who cash a check at a check-cashing outlet, the cost can run anywhere from 1% to 12% of the face value of the check, according to Bankrate.
While banks typically offer free bill pay, people who don't have an account have to either wait in line to pay cash or buy a money order, which has minimal costs, or cashier's check, which typically run between $10 and $15, according to Bankrate.
Those who go to a payday lender instead of a bank for a loan can end up paying over 300% interest, or higher. Often, people end up in a cycle, taking out loan after loan. Nearly 1 in 4 payday loans are reborrowed nine times or more, according to the Consumer Financial Protection Bureau.
The main reason people are unbanked is the belief that minimum balances are too high for them to meet, said Karyen Chu, chief of banking research at the FDIC. Therefore, they will incur fees.
Yet that is not necessarily true, she said.
The Cities for Financial Empowerment Fund's Bank On platform has been working to bring safe, low-cost banking products to customers around the country. Currently, almost 150 banks and credit unions are certified as meeting the Bank On standards, with the accounts representing 52% of the national deposit market.
The issue is getting the information to the community. When the pandemic hit, the FDIC launched its #GetBanked pilot campaign to help bring people into the banking system in order to get stimulus payments directly deposited.
The agency is also looking into possible fintech opportunities to reach the last of the unbanked.
"The persistent gap in access to the banking system has shown that we must think outside the box to create a regulatory system that will help close this gap," FDIC Chairman Jelena McWilliams said in a June speech.
Part of the FDIC's new approach is collaborating with minority depository institutions and community development financial institutes to better allow them to compete in the modern era.
There are more than 1,000 community development financial institutions operating nationwide. In an effort to serve low-income communities often left out of the financial system, they offer low-cost checking and savings accounts, as well as financial products such as loans.
At GECU, a big part of the credit union's mission is community outreach. There is also personal finance education. To become a member for life, a share costs $20. Then, checking is free.
"Everything that we make goes back into the community," Montoya said. "We consider ourselves as a social organization."
Another financial hurdle for many unbanked households is the cost of not building wealth through investing. Opening a bank account is the first step toward financial security, but savings accounts don't earn much interest. For many, it can be difficult to then move into the stock market.
There is a lack of access, as well as a dearth of information and education surrounding it, Espinal said.
Getting that education is key to gaining the confidence to make these kinds of financial moves, she said.
"You're going to be savvier financially and more well off," Espinal said. "You'll start to see the results."
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.