'Unbanked' and 'underbanked' consumers turn to alternate credit sources

A new report suggests the number of consumers turning to alternate credit and lending options may be increasing, as more leave "traditional" options behind. This week, the Federal Deposit Insurance Corp. released a new survey, revealing the number of households that are "underbanked" or "unbanked" has grown since 2009. According to the survey, nearly 10 million American households have no checking or savings accounts. An additional 24 million households, or 51 million adults, are believed to be "underbanked," meaning they lack access to full banking services or choose to use alternative services instead, such as short term loans or other short-term lending options. Consumers' reliance on services such as short term loans was found to be spurred by a belief among U.S. adults that banks don't provide "small-dollar" loans. This belief also contributed to the use of pawn shops among 17.5 percent of households. While consumers may be increasing their use of alternate credit options, many state and local governments aren't in favor of the entities. Pennsylvania is currently considering legislation against short term lenders, for example.