People who are unbanked are most likely to rely on alternative financial services and methods for managing their money. This can include the use of:
- Cash Transactions: They may primarily use cash for everyday purchases and transactions since they do not have a bank account.
- Check-Cashing Services: Some may use check-cashing establishments to access funds from paychecks or government benefits.
- Money Orders: Unbanked individuals often use money orders for transactions that require payment without a bank account.
- Prepaid Debit Cards: They might opt for prepaid cards that can be loaded with cash, allowing for electronic transactions without the need for a bank account.
- Community Banks or Credit Unions: Some may seek out community banks or local credit unions that offer services with fewer barriers to entry.
- Gift Cards: For online purchases, unbanked individuals may turn to gift cards that can be used like cash.
- Peer-to-Peer Payment Apps: Limited use of financial technology (fintech) apps that don’t require a bank account, though this can vary widely by individual circumstance.
Unbanked individuals may also face challenges such as higher costs for financial services, limited access to credit, and increased vulnerability to financial exploitation. They are often associated with lower income levels and may have difficulty accessing traditional banking services due to various barriers, including lack of identification, credit history, or simply a distrust of financial institutions.