Feds: 20 Percent of U.S. Households "Underbanked"

Feds worried those people use payday lenders and check cashing facilities instead.

In the aftermath of one of the worst recessions in history, more Americans have limited or no interaction with banks, instead relying on check cashers and payday lenders to manage their finances, according to a new federal report.

Not only are these Americans more vulnerable to high fees and interest rates, but they are also cut off from credit to buy a car or a home or pay for college, the report from the Federal Deposit Insurance Corp. said.

Comments

[Audrey]

Lots of Americans are disappointed in services provided by banks. Especially people do not want to deal with big banks like BofA and etc. One of the reasons is that lots of American consumers have damaged credit and can't say that their credit scores are really good. As we all know banks prefer dealing with consumers with good and perfect credit and do not want lend money to people with bad credit because of high risk. That's why consumers choose alternative financial products and payday loans because they are available for people with less than perfect credit and it's possible to borrow cash very quickly. But it's not worth to forget that the interest rates on these loans are higher than on lending products provided by banks.