By Blake Ellis
NEW YORK (CNNMoney) — Nearly 10 million households across the country are living without a bank account. And in some states, these residents make up a big slice of the population.
Among all of the regions in the country, the South has the largest percentage of residents who are “unbanked,” meaning they don’t have a checking or a savings account. According to an FDIC report released this week, 10% of the region’s population doesn’t have a bank account, compared to the national average of 8.2%.
While 37% of U.S. households live in the South, nearly half — or 46% — of all unbanked households in the country reside in this region. And so do nearly 40% of the nation’s poor, according to the U.S. Census Bureau.
And that’s no coincidence, said Odysseas Papadimitriou, CEO of CardHub.com and former head of a team at Capital One tasked with identifying products for unbanked customers. “Wherever you see high poverty and low-income populations, you will see higher populations of unbanked,” he said.
Mississippi, which has suffered the highest poverty rate in the country for years, also has the biggest population of unbanked households — with 15% of its residents lacking a bank account. Texas and Arkansas follow, with bankless rates of 12.8% and 12.3%, respectively.
Compare that with New Hampshire, which has the lowest rate of unbanked, at 1.9%, as well as the lowest poverty rate in the nation.
“If you’re poor and don’t have a steady income and aren’t able to keep a high balance in a bank account, you might feel you’re saving money by not paying a monthly fee, since it might be just one fee at the check-cashing store,” said Papadimitriou.
But often, fees for alternative financial services like check-cashers, payday loans, tax refund anticipation loans or money orders can be much higher than monthly bank account fees. And even what may start out as small fees can add up significantly depending on how carefully — and how often — you use these products.
Some prepaid cards, which are attracting a growing number of unbanked households, can be low-cost alternatives to traditional bank-issued debit cards. But others come loaded with fees.
Among the main reasons people cited for not having a bank account in the FDIC’s report were a lack of money or that they didn’t need or want an account, didn’t trust banks, thought the fees and minimum balance requirements were too high or were denied accounts because of identification issues or bad banking track records.
About 28% of households earning less than $15,000 don’t have bank accounts, according to the study. While that’s a much larger percentage than the 8.2% national unbanked rate, it still means that a large portion of the lowest-income earners are using bank accounts, so income isn’t the only factor at play when it comes to being unbanked.
The study also found that 22% of foreign-born non-citizens, 21% of black households and 20% of Hispanic households are unbanked. Nearly 23% of households with unemployed members and 19% of families headed by a single mother are also unbanked.
Overall, the national unbanked rate has risen from 7.7% in 2009 to 8.2% in 2011, meaning one in 12 households are now without bank accounts.