Credit: Shutterstock
Opening a first savings or checking account—whether with birthday money or a first paycheck—is a milestone many of us remember. Yet, for millions of Americans, that milestone is still ahead. Others are just learning how to use their accounts to take control of their finances. Banking experts say this step can be life-changing.
In 2024, nearly 4.8 million new Bank On accounts were opened, marking a 27% increase from the previous year, according to the St. Louis Federal Reserve. Bank On, led by the nonprofit Cities for Financial Empowerment Fund (CFE), connects people to affordable, safe, and Bank On certified accounts through banks and credit unions nationwide. By the end of last year, more than 14 million active accounts were helping people save, manage money, and build financial stability.
Why does banking matter? Without an account, households struggle to save, pay bills efficiently, and build credit. Having a bank account also protects you from fraud and theft—benefits that cash alone cannot offer.
“Cash flow is king,” says Seth Schaefer, Chief Impact Officer at Rivermark Community Credit Union. Banking can make everyday life easier by offering flexible loans, grants, and real-time payroll access without the burden of high fees and interest rates.
Understanding Unbanked and Underbanked Communities
The term unbanked refers to people who don’t have a checking or savings account. In 2023, a record-low 4.2% of U.S. households—around 5.6 million—were unbanked. Many rely entirely on cash, leaving them vulnerable to theft and loss. Others use prepaid cards or apps like Venmo and PayPal to handle financial tasks.
Underbanked households, on the other hand, do have bank accounts but still rely on alternative financial services for most transactions. In 2023, 19 million households fell into this category.
High fees, minimum balance requirements, and mistrust of banks often prevent people from opening accounts. Recognizing this, initiatives like Bank On and the credit-union-led Backbone campaign have worked to make banking more accessible, offering low- to no-fee accounts to bring more people into the financial mainstream.
“There’s a perception that banking is a club you have to qualify for,” says Schaefer. “But that’s not the case.”
Community banks and credit unions are particularly welcoming. Ziquora Banks, Chief Impact Strategy Officer at Verity Credit Union, explains that smaller, community-focused institutions can often work with individuals who may have bounced checks or faced past banking challenges. “We let you in,” she says.
Banking as a Tool to Build Wealth
Many Americans fall into the ALICE category—asset-limited, income-constrained, and employed. These households, which include people in poverty as well as those just above the federal poverty line, often rely on costly alternatives like payday loans or money orders. Banking can help break this cycle.
For instance, real-time payment services can help gig workers avoid overdrafts, while international transfer services provide a safer, cheaper way to send money home. Banks also make it easier to receive government benefits, a need highlighted during the COVID-19 pandemic when direct deposit became essential.
Building Stronger Communities
Banks do more than manage individual finances—they support local communities and small businesses. Credit unions, in particular, are deeply rooted in their neighborhoods. For example, when a government shutdown left many people struggling, one credit union delivered $53,000 in financial aid to over 200 individuals while offering financial coaching onsite.
Unlike large banks focused on shareholders, community banks and credit unions prioritize the people and neighborhoods they serve. They understand local gaps, respond quickly, and create programs that help families and businesses thrive.
Opening a bank account may feel like a small step, but it can have a lasting impact. Whether it’s building savings, protecting your money, or accessing affordable financial services, local banks and credit unions can be powerful allies on the path to financial stability.
