Board of Governors of the Federal Reserve System

Banking and Credit

Access to financial services from banks and credit unions can be important for people's financial well-being. Most adults had a bank account and were able to obtain credit in 2022, but notable gaps in access to financial services still exist, particularly among those with low income, Black and Hispanic adults, and those with a disability.

Use of relatively new financial services like cryptocurrency for transactions and Buy Now, Pay Later (BNPL) remained low compared with use of traditional payment and credit methods. That said, while still low overall, use of these products tended to be higher among lower-income adults and among Black and Hispanic adults.

Bank Account Ownership

Six percent of adults were "unbanked" in 2022, meaning neither they nor their spouse or partner had a checking, savings, or money market account. This share was unchanged from 2021.

Unbanked rates were particularly high among adults with low income. Seventeen percent of adults with income below $25,000 were unbanked compared with 1 percent of adults with income of $50,000 to $99,999. Unbanked rates were also higher among younger adults, Black and Hispanic adults, and adults with a disability (table 16).

Table 16. Unbanked rate (by demographic characteristics)

Overall, 11 percent of adults with a bank account said they paid an overdraft fee in the prior 12 months, unchanged from 2021.

Certain population segments were more likely to have paid an overdraft fee. For example, banked adults with income less than $50,000 were more than twice as likely to have paid an overdraft fee as people with an income of $100,000 or more. Across races and ethnicities, a larger share of Black and Hispanic adults paid an overdraft fee in the past 12 months than Asian or White adults (table 17).

Table 17. Paid an overdraft fee on a bank account in the prior year (by demographic characteristics)

Nonbank Check Cashing and Money Orders

Thirteen percent of adults used nonbank check cashing or money orders, unchanged from 2021, and down 3 percentage points from 2019.

Both banked and unbanked adults used nonbank providers to conduct financial transactions, but the unbanked were much more likely to have done so. Twelve percent of banked adults used a nonbank money order or check cashing service, compared with 31 percent of unbanked adults (figure 22).

Use of nonbank money orders and check cashing has fallen among both unbanked and banked adults since 2019, although it has been flat among banked adults over the past two years (figure 22). The market for financial products and services continues to evolve, particularly in the digital space. As a result, people may be substituting away from money orders and check cashing services to other nonbank products and services not asked about on the survey.

Similar to demographic patterns in bank account ownership, use of nonbank check cashing and money orders was more common among those with lower income, Black and Hispanic adults, and adults with a disability (table 18). Use among Black adults was particularly high at nearly 3 in 10.

Table 18. Use of nonbank check cashing and money orders (by demographic characteristics)

Cryptocurrency

Cryptocurrencies are relatively new digital assets that may be held as an investment or used for conducting financial transactions.³¹ One in ten adults held or used cryptocurrency in 2022, down 2 percentage points from 2021. This overall decline reflects a drop in the share of adults who bought or held cryptocurrencies as an investment, which fell from 11 percent in 2021 to 8 percent in 2022 (table 19), potentially reflecting a response to declines in cryptocurrency asset values prior to the survey.

Table 19. Cryptocurrency use

The share of adults using cryptocurrency for financial transactions was unchanged from 2021. It also remained less common than holding cryptocurrency as an investment. Overall, 3 percent of adults said they used cryptocurrency to make a financial transaction in the prior 12 months: 2 percent used cryptocurrency to buy something or make a payment, and 2 percent used it to send money to friends or family (table 19).³²

The survey asked those who used cryptocurrency to make financial transactions for the main reason they did so (table 20). The three most cited reasons for using cryptocurrencies for transactions were that the person or business receiving the money preferred cryptocurrency, to send the money faster, and privacy. Each of these reasons was cited by about one-fifth of transactional cryptocurrency users.

Use of cryptocurrency varied by people's willingness to take financial risks. Adults who said they were very willing to take financial risks were more likely to use cryptocurrency, either as an investment or for transactions. Just above one-fourth of those very willing to take financial risks used cryptocurrency in the prior year, compared with only 4 percent among those not at all willing to take financial risks.³³

Table 20. Main reason people used cryptocurrency for financial transactions

Use of cryptocurrency also differed across demographic and socioeconomic characteristics (table 21). Use was more common among younger adults and men, both for investment and transactions. This was the case even after controlling for people's self-reported willingness to take financial risks.

Table 21. Cryptocurrency use (by demographic characteristics)

In contrast with age and gender, patterns by income, race, and ethnicity differed by whether the cryptocurrency was used for investment purposes or to conduct financial transactions. Adults with income of $100,000 or more were more likely than adults with lower incomes to hold cryptocurrency as an investment, whereas those with income less than $25,000 were more likely than those with higher incomes to use cryptocurrency for financial transactions. Looking across race and ethnicity shows that holding cryptocurrency as an investment was most likely among Asian adults. In contrast, use of cryptocurrency for financial transactions was more common among Black and Hispanic adults than White or Asian adults.

One in ten adults held or used cryptocurrency in 2022, down 2 percentage points from 2021.

Use of cryptocurrency for financial transactions was more common among the unbanked, as well as those who used nonbank check cashing and money orders. Five percent of unbanked adults used cryptocurrency for financial transactions, compared with 3 percent among banked adults. Regardless of bank account ownership, those who used nonbank check cashing or money orders had a greater propensity to use cryptocurrency for transactions—8 percent among those who used nonbank check cashing or money orders compared with 2 percent among those who did not. That said, use of cryptocurrency for financial transactions remained very low, even among groups who were more likely to use cryptocurrency in this way.

Credit Outcomes and Perceptions

Thirty-five percent of adults applied for credit in 2022, down 3 percentage points from 2021. And among those who applied, the share who were either denied credit, or approved for less credit than they requested, rose 2 percentage points to 30 percent.

Consistent with the higher denial rates, consumer confidence about credit card applications declined. Sixty-three percent of adults were "very confident" that their application would be approved if they applied for a credit card, down 2 percentage points from 2021. Similarly, the share of adults "not confident" that their application would be approved rose 2 percentage points to 14 percent.

The share of adults who were denied credit, or approved for less than requested, differed by income level. Forty-six percent of credit applicants with income below $50,000 experienced such actions, compared with 13 percent of those with income above $100,000.

Denial rates also differed by race and ethnicity, with Black and Hispanic applicants being particularly likely to report a denial or an approval for less credit than requested. Moreover, Black and Hispanic adults saw higher denial rates regardless of income level (figure 23).

Credit Cards

People use credit cards in different ways. Some use credit cards merely as a way to pay expenses, paying off their balances in full each month and avoiding any interest costs. Others carry a balance and thus use credit cards as a true source of credit to defer paying expenses.

Eighty-two percent of adults had a credit card in 2022.³⁴ They were nearly evenly split between the people who paid off their balances in each of the previous 12 months and people who carried balances from month to month at least once in the prior year. Among those who carried a balance at least once, 73 percent were carrying a balance at the time of the survey.

Almost all people with an income of at least $100,000 had a credit card. At lower income levels, having a credit card was somewhat less common, though adults at these income levels who did have credit cards were more likely to use them to carry balances from month to month. Consequently, middle-income adults were the most likely to have a credit card that they used to finance purchases by carrying balances from one month to the next. Almost half of people with income between $25,000 and $99,999 carried a balance on a credit card at least once in the past 12 months, exceeding the shares of adults with either lower or higher income levels who did so (table 22).

Table 22. Credit card access and usage (by demographic characteristics)

Credit card usage also differed by race and ethnicity, age, and disability status. Over 90 percent of Asian adults had a credit card, followed by 87 percent of White adults and just over 70 percent of Black and Hispanic adults. While credit card ownership was lower among Black and Hispanic adults, those who did have a credit card were more likely to carry a balance. Young adults and those with a disability were also less likely to have a credit card than were older adults or those without a disability.

To get a sense of how credit card balances change over time, the survey asked respondents whether they had more, less, or about the same amount of credit card debt than they did a year ago. Among those with outstanding credit card debt, the share who said they were carrying more debt now than a year ago increased to 44 percent, up from the 29 percent who said so in 2021.

Buy Now, Pay Later

BNPL provides consumers the option to pay for a purchase with a small number of equal payments, often without being charged interest. For example, someone purchasing a $100 item may be able to make one payment of $25 at the time of purchase, then make three additional monthly payments of $25.

Twelve percent of people used BNPL in the prior 12 months, up slightly from 10 percent in 2021. Just under 1 in 10 adults were making payments under a BNPL plan at the time of the survey—about half of whom were paying on just one purchase.

The top two reasons for using BNPL were wanting to spread out payments (87 percent) and convenience (83 percent) (figure 24). Additionally, 56 percent of those who used BNPL cited it being the "only way I could afford it" as a reason.

The use of BNPL was more common among people with low and middle income, Black and Hispanic adults, and women (table 23). Fourteen percent of those with incomes below $100,000 used BNPL in the prior year, compared with 8 percent of those with an income of $100,000 or more. Differences by race and ethnicity were large, with Black and Hispanic adults about twice as likely to use BNPL as White or Asian adults. Additionally, very little of this difference can be explained by other factors, such as income, age, and self-perceived credit rating.

Table 23. Buy Now, Pay Later (BNPL) use (by demographic characteristics)

People also differed in their use of BNPL according to their self-reported credit rating (figure 25). Those who rated their credit as "fair" were the most likely to use BNPL, followed by those rating their credit as "poor" or "very poor." Moreover, among those who used BNPL, adults with lower self-reported credit ratings were also more likely to cite "only way I could afford it" or "only accepted payment method I had" as reasons for using BNPL than adults who rated their credit higher. Use of BNPL was equally common among those with and without a credit card.

Most people who used BNPL made their payments on time. Overall, 17 percent of people who used BNPL in the prior 12 months were late making a payment, up 2 percentage points from 2021. However, late payments were more common among those with lower income, Black and Hispanic adults, and younger adults (table 23). Fifty-five percent of those late making a payment (9 percent of those who used BNPL) said they were charged extra for being late.

Payday, Pawn, Auto Title, and Refund Anticipation Loans

Five percent of adults used a payday, pawn, auto title, or tax refund anticipation loan in 2022, unchanged from 2021. This share has remained flat in recent years, except for a slight decline in 2020, after the onset of the pandemic.

Similar to those who used BNPL, adults with lower self-reported credit ratings were more likely to use one of these products (figure 26). Nearly 1 in 5 of those rating their credit as "very poor" did so, compared with only 1 percent of those rating their credit as "excellent." Unlike BNPL, however, use of these products was much higher among those who did not have a credit card (11 percent) than among those who did (3 percent).

Adults with a lower income, Black and Hispanic adults, and those with a disability were more likely to use a payday, pawn, auto title, or refund anticipation loan (table 24). Differences by race, ethnicity, and disability status were present even after controlling for other factors like income, age, and self-reported credit rating.

Table 24. Use of payday, pawn, auto title, and refund anticipation loans (by demographic characteristics)

 

References

 

 31. Cryptocurrencies are decentralized digital assets that have a distributed ledger and can be used for peer-to-peer payments. For additional information on cryptocurrencies, see Board of Governors of the Federal Reserve System, Money and Payments: The U.S. Dollar in the Age of Digital Transformation (Washington: Board of Governors, January 2022), https://www.federalreserve.gov/publications/money-and-payments-discussion-paper.htm. Return to text

 32. Because the survey is conducted online, the sample population may be more technologically connected than the overall population, which could increase the share of adults reporting use of emerging technologies such as cryptocurrencies. Return to text

 33. Respondents were asked to rate their willingness to take financial risks on a scale of 0 (i.e., not at all willing to take financial risks) to 10 (very willing to take financial risks). Return to text

 34. This share is higher than the 72 percent of households with a credit card in the 2021 FDIC Survey of Unbanked and Underbanked Households (https://www.fdic.gov/analysis/household-survey/2021report.pdf). One potential reason for this difference is that some respondents with a debit or prepaid card may consider that to be a credit card when answering the SHED questionnaire. Return to text