COVID-19 leaves unbanked minority communities behind on savings, credit: FDIC
The disparate impact of the COVID-19 crisis on low-income, minority communities will likely exacerbate their ability to build savings and get access to credit, according to a new survey from the FDIC. Yahoo Finance's Brian Cheung joins Akiko Fujita to break down the findings.
Video Transcript
AKIKO FUJITA: The number of Americans with no checking or savings account hit a new low last year, but a new study from the FDIC points to a troubling reversal during this pandemic. Brian Cheung is following that story for us. And Brian, we saw this kind of play out during the Great Recession. Is this a repeat of that?
BRIAN CHEUNG: Well, absolutely during the Great Recession, we did see that unbanked rates did go up. This is the percentage of households that do not have an account with either a bank or a credit union. Now we have to keep in mind that the FDIC did a survey of household use of banking and financial services. This covered data as of 2019, so it doesn't necessarily cover the COVID period.
But before the pandemic, about 95% of US households did indeed have some sort of bank account. But when you look at that number based off of different minority groups-- you look at Black, Hispanic, American Indian, or Alaska Native communities-- the unbanked rates are significantly higher of 13.8% for Black households, 12.2% for Hispanic households, and 16.3% for American Indian households, which shows that those people were likely more impacted by the lack of ability to get those stimulus payments, as you'll recall, from the CARES Act back in March.
AKIKO FUJITA: And Brian, another study you're looking at, an interesting one here about how many people actually trust the Fed. You're obviously familiar with it. It feels like Americans have become more familiar with the central bank throughout this crisis. But that hasn't necessarily led to high marks.
BRIAN CHEUNG: Absolutely. Well, I'm aware of the Fed because I cover it. But it seems like if you pull any American on the street, probably not very well versed in how the central bank works or if they even have trust in that institution. So an interesting Axios poll saying that only 34% of Americans say they have a fair amount or a great deal of trust in the central bank.
Apparently, the numbers were even lower for those that are in the 18 to 29-year-old bracket or the 30 to 49-year-old bracket, in addition to people making under $50,000 or people who are defining themselves as politically independent. Some very interesting data as the Federal Reserve tries to build credibility with its efforts to try to moderately overshoot its 2% target.
AKIKO FUJITA: OK, an interesting study there. Thanks so much for that, Brian.
