Unbanked and Underbanked Communities This paper will focus on unbanked and underbanked individuals and communities, the challenges they face, and what are some potential solutions that can be provided to mitigate the trials and tribulations of these communities. Before we delve into the world of the unbanked and underbanked, I think it's necessary to define what we mean when we refer to someone as unbanked or underbanked. Additionally, I will explain the significance of the Community Reinvestment ACT and its central role in trying to improve relationships between banks and the unbanked and underbanked. An individual or groups of individuals may be considered unbanked when they do not use banking or credit. syndicates to conduct their financial transactions. These people do not have a checking or savings account. According to an FDIC survey of households with no and insufficient access to banking services, 8.2% of U.S. households have no bank banking services; in other words, 1 in 12 households or 17 million adults live in unbanked households. On the other hand, individuals with insufficient access to banking services typically have checking or savings accounts, but in addition to traditional banking services, they also use alternative financial services, such as non-bank money orders, payday loans, rent-to-own agreements and pawn shops. According to the FDIC survey mentioned above, 20.1% of U.S. households are underbanked, or 24 million households or 51 million adults. Unbanked and underbanked individuals generally share some common characteristics such as: individuals and families with low income, no formal education (or with a lower level of education than other groups), young adults and families headed by women. The unbanked are... middle of paper... to the same extent as the unbanked. Those who do not have access to banking services or are under-banked are those who cannot afford alternative financial services, yet are virtually forced to use them due to their inability/unwillingness to deal with banks. As mentioned above, a lack of understanding of the US banking system often leads people to distrust banks, thus having to rely on alternative financial services. A prime example would be Sarah Yeats (real name withheld), a fully employed professional barmaid since high school. Sarah opened a bank account while in college and, inexperienced in managing the check register, bounced a couple of checks in quick succession. (Rotter, Kimberly). John Griego of Albuquerque, New Mexico, shares a similar story. John says he has trouble making ends meet, so he tends to bounce checks. (Rotter, Kimberly).