Personal Finance
23% of low-income Americans are living without a bank account
Sean Gladwell | Moment | Getty Images
Even as many Americans go cashless, some don’t have the option to choose that lifestyle.
About 6% of Americans were unbanked in 2023, meaning they’re living without access to any traditional financial services such as savings accounts, credit cards or personal checks, according to data from the Federal Reserve.
This share of the population grows to 23% when only considering people making less than $25,000.
The unbanked are more vulnerable to predatory lending practices and their cash is more at risk, financial experts say. This issue disproportionately affects Black and Hispanic adults, Fed data shows, putting financial institutions and local organizations in a position to build trust within marginalized communities.
“Oftentimes the most vulnerable among us, who need the resources most efficiently, aren’t able to get access,” said Wole Coaxum, CEO of MoCaFi, a fintech company serving the unbanked and underbanked.
Young adults, people of color are more often unbanked
Black and Hispanic adults are 14% and 11%, respectively, more likely to be unbanked than white (4%) and Asian (4%) adults, according to the Fed.
This doesn’t come as a surprise to Joe Lugo, founder and CEO of J^3 Creations, a Clearwater, Florida-based consulting business that helps organizations become more culturally sensitive.
Much of the disconnect between financial institutions and communities of color, he said, can be attributed to a lack of banks in their neighborhoods.
“There is a subliminal message being sent to the community from generation to generation,” Lugo said. “When they don’t see a financial institution or a bank, [they] tend to say, ‘There’s no avenue for me this way. If I had a dream to start a business or buy a home, that’s not for me because they don’t exist here.'”
Many rural areas of the U.S. also tend to be banking deserts, largely because of a lack of population density, according to Darrin Williams, CEO of Southern Bancorp, Inc., a community development financial institution that serves rural and minority communities in the mid-South.
“In many of the markets we serve, we’re the only bank in town,” Williams said. “Often competition of the bank is a payday lender or some predatory provider of capital.”
Younger adults are also more likely to be unbanked.
Of 18- to 29-year-olds, 11% are living without a bank account, compared to 9% of 30- to 44-year-olds, 5% of 45- to 59-year-olds and 2% of people 60 and older, according to the Federal Reserve.
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Part of this can be explained by Generation Z’s mindset toward banking, said Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners. She is also a member of the CNBC Advisor Council.
“They feel like banking is something that is old school and traditional and there’s not a fit for them,” said Sun, who is the mother of a Gen Zer. “It’s an opportunity for us to talk to them about why they need to bank and how to open an account that works for them.”
‘They’re getting preyed upon’
Your money is better protected in a Federal Deposit Insurance Corp.-insured bank account, experts say, rather than keeping cash at home or stored in a Venmo or Cash App account, which are not FDIC insured.
It’s not always easy to tell which fintech services offer FDIC deposit insurance coverage, and the Federal Deposit Insurance Corporation says “it depends.” The American Fintech Council did not respond to a request for comment.
It’s still a good idea to keep some cash on hand in case of emergencies, but putting money in an inexpensive or free checking account can help build credit and establish good habits, Sun said.
“It would help you, even if it’s just small amounts, to start to build that savings pattern so that you can save for the future and other financial goals, too,” she said.
People without bank accounts might also turn to check cashing services or consider payday loans, especially if they’re the only brick-and-mortar financial services in their neighborhood. These each come with risks, such as steep interest rates and a lack of federal insurance, said Preston Duppins, a senior partner and financial advisor at Florida-based Vilardi Wealth Management.
“They’re getting preyed upon,” Duppins said about people taking out payday borrowers.
“And they don’t have the pull to get Congress to change payday loan laws,” he added.
The Community Financial Services Association of America, which represents payday lenders, did not respond to a request for comment.
Building trust
To get the unbanked to trust financial institutions, Lugo, with J^3 Creations, said local leaders and banks must meet people where they are.
“Most of the time, marginalized folks are not willing to venture out of their areas. I think there are some financial institutions that are starting to get it” said Lugo, who also co-founded the Hispanic Chamber of Commerce of Pinellas County.
“They’re going out into the community, they’re promoting their services into the community, they’re creating programs specifically for the community,” he said.
It’s one thing that Coaxum says MoCaFi aims to do. The fintech company, he said, initially assumed people who were unbanked or underbanked would readily adopt their free bank account offering with accessible ATMs. However, it wasn’t so simple, and Coaxum said the company’s “sophistication bias” impeded its ability to recruit customers.
The company shifted over time to partner with governments to distribute benefits like universal basic income programs, which gave recipients a reason to use the platform.
“Giving them access to some benefit and then using that conversation as a way to be able to get them into our demand deposit account is how we shifted,” Coaxum said.
Other ways to build trust are through education and representation, experts say. As a Black financial advisor, Duppins says he doesn’t see a lot of people who look like him in his field.
“I spend a lot of time in my community. I don’t segment people by their access, because that means segmenting people who look like me,” Duppins said. “We need to continually focus on women, women of color, men of color in this space, in this banking industry.”
Home Alone (1990)
20th Century Fox
The classic Christmas movie “Home Alone” tells the improbable tale of a family who leaves their 8-year-old son home when they leave for vacation.
Yet in the years since the 1990 film was released, viewers have focused on another question — how wealthy was the fictitious McCallister family featured in the movie?
The family orders 10 pizzas on the eve of their trip, lives in a house that can sleep 15 people (including extended family) and all fly to Paris for the Christmas holiday.
“They’re well off and in a good place financially,” Cody Garrett, a certified financial planner, owner and financial planner at Measure Twice Financial in Houston, said of the first impression of the McCallisters’ circumstances.
But the family may not be quite as wealthy as they seem, Garrett said.
To better understand the details of the McCallister family’s financial circumstances, Garrett recently did a deep dive analysis of the family’s finances from “Home Alone” and “Home Alone 2: Lost in New York,” which debuted in late 1992, and hosted a webinar with around 25 financial planners to discuss financial planning opportunities that arise in the movies.
Both movies were shot long before social media made it popular to flaunt personal wealth online. Nevertheless, the lifestyle the McCallister family shows to the world may not necessarily be an indication of their wealth, Garrett said.
“There’s a lot of things that are showing that they spent a lot of money, or at least financed a lavish lifestyle to the public,” Garrett said. “But inside their own home, they’re actually maybe a little scared about money.”
What the McCallister lifestyle would be worth now
The Home Alone Experience created by Disney+, opens in London, offering an immersive experience inspired by the Christmas movie, with set recreations of the McCallister family’s home.
David Parry Media Assignments | PA Wire | AP
What looked lavish more than 30 years ago when the first two movies were shot is now even more luxurious today, thanks in large part to the effects of inflation.
The actual five-bedroom, six-bathroom Winnetka, Illinois, home where the movie was filmed was listed for $5.25 million in the spring. Today, it is still under contract, and a final sale price won’t be known until the deal is finalized, according to Zillow spokesperson Matt Kreamer.
To buy the house at $5.25 million today would cost approximately $34,000 per month, with principal, interest and property taxes, according to Kreamer. That’s with 20% down and a 7% mortgage rate.
To comfortably afford the home, you would need $100,000 per month in income, assuming you’re adhering to an affordability threshold of not spending more than one-third of your income on housing costs, Kreamer said.
“It’s a pretty spectacular house, and certainly one of the more famous movie homes that people can instantly recognize,” Kreamer said.
In 1990 when the first movie debuted, the home would have likely been worth a little less than $1 million, Kreamer estimates, which is still high for that time.
Yet the home may not necessarily point to a high net worth for the McCallister movie family.
“I would not be surprised if they don’t have much equity in their house,” Garrett said, given the couple’s stage of life and circumstances.
In the films, the McCallisters are also driving what at the time were relatively new cars — a 1986 Buick Electra Estate Wagon and a 1990 Buick LaSabre — each of which would be valued at $40,000 in today’s dollars, according to Garrett’s estimates.
While the family is eager to show their wealth — including mother Kate paying in cash for the $122.50 pizza bill while also offering a generous tip — they’re frugal when it comes to the things people don’t see, Garrett said.
How the family talks about money can sometimes point to a scarcity mindset, he said. For example, Kate mentions she doesn’t want to waste the family’s milk before they leave on vacation.
The family’s lifestyle isn’t paid for all on their own. Peter’s brother Rob actually foots the cost of the Paris trip for the family. That airfare would cost around $55,650 today, GoBankingRates recently estimated.
What financial planning lessons are hidden in the movie
Many major details about Kate and Peter McCallister’s finances are not disclosed, including what they do for a living.
Nevertheless, the financial planners who evaluated the family’s circumstances saw some holes that could be addressed with planning.
On the top of their wish list: proper insurance coverage.
Because Kate and Peter McCallister have five children, having enough life and disability insurance should they pass away or become unable to work should be a top priority to ensure their dependents are provided for, according to Garrett.
The movie — which includes many slips and falls at the family’s home as 8-year-old Kevin tries to ward off a pair of robbers — also signals a need for an umbrella insurance policy, in case the McCallisters are found liable for injuries or damages that occur.
Kate and Peter — who forget or lose their son Kevin in both of the first two “Home Alone” movies — would also be wise to make proper estate planning arrangements in the event they can no longer provide or care for their children. That includes having wills, powers of attorney, advance directives, beneficiary designations, trusts and proper account titling, all kept up to date.
The couple should name physical and financial guardians who can care for the children. They may also establish a pre-need guardian for the children who can step in if the parents are unable to care for them even for a short period of time, said Aubrey Williams, financial planner at Open Path Financial in Santa Barbara, California.
“If the parents are not there to take care of the kids, there’s the possibility that kids, even if briefly, will become a ward at the state because there’s no one to care for them,” Williams said.
After a strong start to the holiday season, consumer spending is on track to reach record levels this year. But many of those purchases will soon be returned.
December’s peak shopping days are closely followed by the busiest month for sending items back, which experts dub “Returnuary.”
This year, returns are expected to amount to 17% of all merchandise sales, totaling $890 billion in returned goods, according to a recent report by the National Retail Federation — up from a return rate of about 15% of total U.S. retail sales, or $743 billion in returned goods, in 2023.
Even though returns happen throughout the year, they are much more prevalent during the holiday season, the NRF also found. As shopping reaches a peak, retailers expect their return rate for the holidays to be 17% higher, on average, than usual.
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“Ideally, I hope there is a world in which you can reduce the percent of returns,” said Amena Ali, CEO of returns solution company Optoro, but “the problem is not going to abate any time soon.”
How returns became an $890 billion problem
With the explosion of online shopping during and since the pandemic, customers got increasingly comfortable with their buying and returning habits and more shoppers began ordering products they never intended to keep.
Nearly two-thirds of consumers now buy multiple sizes or colors, some of which they then send back, a practice known as “bracketing,” according to Happy Returns.
Even more — 69% — of shoppers admit to “wardrobing,” or buying an item for a specific event and returning it afterward, a separate report by Optoro found. That’s a 39% increase from 2023.
Largely because of these types of behaviors, 46% of consumers said they are returning goods multiple times a month — a 29% jump from last year, according to Optoro.
All of that back-and-forth comes at a hefty price.
“With behaviors like bracketing and rising return rates putting strain on traditional systems, retailers need to rethink reverse logistics,” David Sobie, Happy Returns’ co-founder and CEO, said in a statement.
What happens to returned goods
Processing a return costs retailers an average of 30% of an item’s original price, Optoro found. But returns aren’t just a problem for retailers’ bottom line.
Often returns do not end up back on the shelf, and that also causes issues for retailers struggling to enhance sustainability, according to Spencer Kieboom, founder and CEO of Pollen Returns, a return management company.
Sending products back to be repackaged, restocked and resold — sometimes overseas — generates even more carbon emissions, assuming they can be put back in circulation.
In some cases, returned goods are sent straight to landfills, and only 54% of all packaging was recycled in 2018, the most recent data available, according to the U.S. Environmental Protection Agency.
Returns in 2023 created 8.4 billion pounds of landfill waste, according to Optoro.
That presents a major challenge for retailers, not only in terms of the lost revenue, but also in terms of the environmental impact of managing those returns, said Rachel Delacour, co-founder and CEO of Sweep, a sustainability data management firm. “At the end of the day, being sustainable is a business strategy.”
To that end, companies are doing what they can to keep returns in check.
In 2023, 81% of U.S. retailers rolled out stricter return policies, including shortening the return window and charging a return or restocking fee, according to another report from Happy Returns.
While restocking fees and shipping charges may help curb the amount of inventory that is sent back, retailers also said that improving the returns experience was a key goal for 2025.
Now 33% of retailers, including Amazon and Target, are allowing their customers to simply “keep it,” offering a refund without taking the product back.
For shoppers, return policies are key
Increasingly, return policies and expectations are an important predictor of consumer behavior, according to Happy Returns’ Sobie, particularly for Generation Z and millennials.
“Return policies are no longer just a post-purchase consideration — they’re shaping how younger generations shop from the start,” Sobie said.
Three-quarters, or 76%, of shoppers consider free returns a key factor in deciding where to spend their money, and 67% say a negative return experience would discourage them from shopping with a retailer again, the NRF found.
A survey of 1,500 adults by GoDaddy found that 77% of shoppers check the return policy before making a purchase.
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