Slice of South Florida population that lacks a bank account grows

The percentage of South Florida households without a bank account— the so-called unbanked — rose in 2017 even as the national percentage fell last year, a new government survey shows.

A full 8 percent of households in the Miami, Fort Lauderdale and West Palm Beach metropolitan area were unbanked, borrowing money or cashing checks outside the banking system, according to an every-other-year survey released Tuesday by the Federal Deposit Insurance Corporation, a major bank regulator.

The survey is done every two years, and on a national level the number of unbanked households fell to 6.5 percent, down from 7 percent in 2015 and 7.7 percent in 2013.

“The good news is that our nation’s banking system is serving more American households than ever before. The bad news is that even as the overall number of people who are unbanked has declined, 8.4 million households continue to lack a banking relationship,” FDIC Chairman Jelena McWilliams said in a statement marking the report’s release.

The South Florida number moved in the opposite direction of the national average, with last year’s 8 percent of households unbanked coming in higher than the Florida statewide number of 6 percent, itself better than the national average.

In a sign that the South Florida economy is improving, however, the percentage of area households classified as underbanked was 17.6 percent, below the national average of 18.7 percent. An underbanked household is one where a member of the family has an account at an insured financial institution but has obtained financial services or credit outside of the banking system.

Underbanked households are also characterized as ones that over the past 12 months went outside the banking system for a money order, to cash a check or send money abroad, taken out a loan in advance of a paycheck, borrowed against their car title or from a pawn shop, used a rent-to-own service or borrowed against an expected tax refund.

Deep in the data tables, there was another positive sign. Use of these kinds of products in South Florida actually fell along with the underbanked number. About 4.5 percent of South Florida took out alternative-loan products from non-bank lenders in 2017, compared to 5.2 percent in 2015, but up from 3.5 percent in 2013.

That may change, say consumer advocates, because of a relatively new Florida law that expanded the types of high interest rate loans payday lenders can offer, especially to the working poor and minorities.

“This move by the legislature increases the risk that Floridians will be bounced out of the banking system due to being trapped in harmful payday loans,” said Diane Standaert, director of state policy for the Center for Responsible Lending, a national advocacy group.

Nationwide, there were fewer households underbanked in 2017 compared to 2015 and South Florida’s 17.6 percent rate was a slight improvement over an 18 percent rate in 2015. It was still elevated compared to the 13.9 percent rate in 2013. Statewide, Florida’s 6 percent rate was up a tick from 5.9 percent in 2015 but down from 6.2 percent in 2013.

The falling numbers of underbanked households may help explain why non-bank lenders are lobbying Congress and the Trump administration to relax rules designed to protect members of the armed services and the working poor from high-cost loans. The Trump administration has signaled it plans to relax enforcement of rules that limit an annual interest rate of 36 percent for non-bank loans to active duty service members.

And, a coalition of non-bank lenders, led by payday groups, has brought a federal lawsuit seeking to thwart implementation of rules that would require them to measure a borrower’s ability to repay a high-cost loan.

“Payday lenders have been pushing hard to loosen rules that make it easier to trap more people into debt-trap loans,” Standaert said.

Kevin G. Hall: 202-383-6038, @KevinGHall