The U.S. financial system has a massive reach — more than 4,000 banks and nearly 5,000 credit unions are scattered across the country. However, plenty of Americans never step inside their branches, download their apps or deposit money in their accounts. They’re known as the unbanked, and the most recent numbers from the Federal Deposit Insurance Corporation (FDIC) show that 4.5 percent of U.S. households — about 5.9 million people — are unbanked. A further 14.1 percent of U.S. households are considered underbanked.

If you lack a strong relationship with a bank, there are ways to join the traditional financial system. Here’s a look at six of the most common reasons to be unbanked and what you should do to improve your personal financial health if they apply to you.

What does it mean to be unbanked?

A household is considered “unbanked” when no one in the household has a checking or savings account at a bank or credit union. Unbanked individuals use alternative means to manage their money, including prepaid cards, nonbank online payment services (such as PayPal and Venmo), nonbank money orders or check cashing and cash.

The FDIC breaks down data of unbanked households, showing that of the total population surveyed, 4 percent of households are longer-term unbanked, meaning they haven’t had a bank account for at least a year, and 0.5 percent are recently unbanked, meaning they did have a bank account within the last year.

About a fifth of those recently unbanked cite losing a job or a significant portion of income as the reason for closing their bank account. Meanwhile, the top-cited reason among all unbanked households for having no bank account is not having enough money to meet minimum balance requirements.

The percent of unbanked households varies significantly by income level and race/ethnicity. While 2.1 percent of all white households are unbanked, that number increases to 11.3 percent for Black households and 9.3 percent for Hispanic households. There’s also a significant disparity between single-mother households and married-couple households: 15.9 percent of single-mother households are unbanked, compared to 1.8 percent for married couples.

What does it mean to be underbanked?

Underbanked households are those that do have a bank account but have to rely on nonbank financial services for certain banking needs, such as getting loans or a credit card. About 14.1 percent of U.S. households — or 18.7 million in total — are underbanked, according to the FDIC’s most recent survey.

Those who are underbanked may have limited access to their bank accounts or limited transactional capabilities. Only 38.1 percent exclusively used their bank account for paying bills or receiving income, compared with 81.6 percent of fully banked households. Underbanked households are also more likely to take out nonbank personal loans.

1. Your past financial behavior put you on a no-account list

Do you have a history of unpaid overdraft fees, bounced checks or other mistakes that might be deemed risky to a bank? If so, you may be blacklisted from opening a new deposit account.

“If you’re unbanked, you may have a bad ChexSystems report due to some financial setbacks or stumbles,” says Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling.

What you should do: Explore options designed to give you a second chance.

Some banks are designing second-chance products specifically for anyone with a poor credit history. Chime and Wells Fargo are two of the most well-recognized national names that offer accounts for anyone who has struggled to open a traditional checking account, but it’s also important to look closer to home and compare options at smaller institutions in your community.

“There are community banks and credit unions that have creative programs to provide a pathway toward restoring your relationship or creating a new one with a bank or a credit union,” McClary says.

2. You don’t trust banks

Some banks have made headlines for selling customers products they don’t need, creating fake accounts for customers and a range of other negative activities in the name of earning a profit. If those behaviors have made you skeptical of banks, you’re not alone: 33 percent of unbanked consumers in the FDIC’s latest research say that they don’t trust banks.

What you should do: Trust the system.

“If you do not completely trust banks, you can trust the systems in place that hold banks accountable for their actions,” McClary says. “With the banking industry, there are a lot of regulations and rules. There are consequences if a bank breaks those rules that protect consumers quite well.

“You can work with a bank knowing that your interests are protected,” he adds. “You have recourse if a bank breaks the rules and causes financial harm.”

One of the regulators that keeps banks in check and protects consumers from being exploited by them is the Consumer Financial Protection Bureau (CFPB). If there’s an issue with your bank, you can submit a complaint to the CFPB.

3. You’re worried about meeting minimum balance requirements

Many checking accounts come with a $0 price tag and an asterisk next to it: Maintain a daily minimum balance to qualify for that zero. About 40 percent of unbanked consumers say that they don’t have enough cash to meet that minimum balance.

What you should do: Look for a Bank On-certified account.

There are over 300 accounts nationwide that are part of Bank On, an initiative designed to help more people open traditional bank accounts. Bank On standards do not permit recurring minimum balance requirements or overdraft fees.

“For anyone who feels they don’t have enough money, these standards should take that worry off the table,” says Naomi Camper, chief policy officer at the American Bankers Association.

“There are very clear parameters around the accounts to avoid any surprises about costs,” she adds.

4. You’re aiming to avoid fees

Paying money to park your money can be frustrating. Nearly 30 percent of unbanked consumers cite high bank fees as a reason for steering clear of a bank account.

What you should do: Calculate the fees you’re paying for alternative financial services and consider online banks.

How much did you pay the last time you cashed a check? Now, multiply that number by all the times you need to cash a check throughout the year.

“There is a perception that it is too expensive to be banked,” Camper says. “I would argue that it is too expensive to be unbanked.”

If you don’t have a bank account, McClary says you’re most likely to pay high fees for a prepaid card or a check cashing service.

“Not only will you pay more, but your money will not be as safe due to a lack of FDIC protection,” he says.

There are also plenty of online bank accounts that have no monthly fees and charge minimal fees otherwise. These banks come with FDIC insurance and make it easier for you to manage your finances.

5. You’re trying to avoid debt collectors

If someone has been chasing you down to pay up on past bills, you may be trying to stay off the grid by keeping your name (and your money) away from the banking system.

What you should do: Stop running, and start looking for help with your finances. (You might even find it at a bank.)

In addition to basic products like checking and savings accounts, McClary says that many banks and credit unions offer valuable assistance if you find yourself in a precarious position.

“Some of these institutions add more value for someone facing tough financial decisions or obstacles while managing your debt,” McClary says. “There are many banks and credit unions that work closely with the NFCC (National Foundation for Credit Counseling) to create a direct pipeline to non-profit credit counselors.”

6. You’re young

If you’re young, you might not see the value in dealing with a traditional bank. A 2022 report by Thunes found that 62 percent of Gen Zers don’t have a bank account.

What you should do: Open a bank account today, so you can get ready for tomorrow.

As you grow up, you’re going to need a proven track record of responsible banking behavior in order to do grown-up activities like buying a car, buying a house and building a retirement cushion.

“Having a bank account is the ground floor of financial health,” McClary says. “The banking system is the entry point to higher-yield savings products, affordable loans and affordable lines of credit.”

If you’re in college, there are even many bank accounts specifically designed for students.

Bottom line

For many who are unbanked, there are reasons beyond their control that make it more difficult to open and maintain a traditional bank account. But traditional banking at a big bank isn’t the only way to get the benefits of FDIC insurance, yields, financial advising and more.

You can find alternatives that are affordable and fit your needs, whether that’s a second-chance account or one with no minimum balance needed to open. Consider looking into digital banks and local community banks that can help you get started with opening an account.

David McMillin contributed to a previous version of this article.