Legal Definitions - unbanked

Definition: Unbanked refers to individuals or households who do not have a formal relationship with a bank or any other financial institution. These people do not have a checking or savings account, and they rely on alternative financial services to manage their money.

Examples: Unbanked consumers are those who use check-cashing services, prepaid debit cards, and payday loans to access their money. They may also use money orders to pay bills or send money to family members.

Explanation: The examples illustrate how unbanked individuals rely on alternative financial services to manage their money. For instance, check-cashing services charge a fee to cash a check, which can be expensive for people who receive paychecks regularly. Prepaid debit cards are another option for unbanked consumers, but they often come with high fees for transactions and maintenance. Payday loans are short-term loans that come with high-interest rates, making them a costly option for borrowing money. Money orders are a secure way to send money, but they also come with fees that can add up over time.