Here's Why Banks on Wheels Are Gaining Traction in the U.S.

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page. APY = Annual Percentage Yield. APYs are subject to change at any time without notice.

KEY POINTS

  • When the nearest bank branch is located 10 miles or more away from an area, it's considered a bank desert.
  • A bank on wheels brings banking services and financial knowledge to underserved neighborhoods.
  • Between 2017 and 2020, nearly 10% of all U.S. bank branches shut down.

A lack of banking options can lead to expensive alternatives.

Imagine that the nearest bank to your home is 10 miles away. Due to the lack of competition, that bank can charge expensive fees for basic services like checking or savings accounts.

If there were more banks located in your neighborhood, they would all have to compete for your business, and you would be free to choose the financial institution that best meets your needs. However, you live in what the Census Bureau refers to as a "bank desert." And that's where mobile banking comes in.

Mobile banks

A mobile bank -- sometimes called a "bank on wheels" -- is nothing new. Mobile banking has long been used to service areas hit by natural disasters, like the places impacted by Hurricane Katrina in 2005. Today, they're used to fill the gaps in banking services.

Mobile banks are typically housed in large vans and offer most of the services offered through a traditional bank or credit union. For example, a bank customer can open a savings or checking account, take out a loan, or stop by for financial advice. Due to security reasons, mobile banks do not come equipped with ATMs, but they do make life easier in other ways.

Our Picks for the Best High-Yield Savings Accounts of 2024

APY
4.50%
Min. to earn
$0.01
APY
4.25%
Rate info Circle with letter I in it. See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
APY
4.25%
Rate info Circle with letter I in it. 4.25% annual percentage yield as of June 23, 2024
Min. to earn
$1

Say there's a 75-year-old retiree who no longer drives and they live several miles away from their nearest bank branch. If they don't have easy access to their bank, they are far more likely to fall prey to the check cashing and payday loan shops that dot their neighborhood.

If a mobile bank comes to them, they won't have to resort to paying sky-high fees to cash a check or 400% interest to take out a short-term loan.

Closing faster than they open

Nearly 10% of all bank branches in the U.S. shut down between 2017 and 2021. A full one-third of closures were in low- to moderate-income, minority neighborhoods. In 2021 alone, the number of U.S. bank closures hit a record high, leaving neighborhoods across the country either underbanked or unbanked.

When an individual is underbanked or unbanked, they often turn to alternative financial services to meet their basic needs, including check cashing and payday loan stores. These alternative financial services can trap borrowers in a cycle of debt that is nearly impossible to break free from.

The majority of bank closures occur in minority areas, leaving Black and Hispanic communities disproportionately vulnerable. A 2022 Federal Reserve report indicated that 40% of Black adults are unbanked or underbanked. Among Hispanics, the percentage of unbanked or underbanked is 30%, or three out of 10 people.

A long time coming

Despite the fact that more mobile banks took to the roads during the pandemic, minority neighborhoods continue to be underserved. Part of the problem can be traced back to the 20th-century policy of redlining.

The Federal Reserve describes redlining as "the practice of denying a creditworthy applicant a loan for housing in a certain neighborhood even though the applicant may otherwise be eligible for the loan."

In the 1930s, employees with the federal Home Owners' Loan Corporation drew lines on maps and colored some neighborhoods red. These neighborhoods were labeled as "hazardous" for bank lending because of the presence of African Americans or European immigrants, particularly Jews.

While the practice has been outlawed since 1968, that doesn't mean minority households have the same success rates with loans as everyone else. For example, in 2020, 16.1% of all mortgage applications were denied. Of those denials, 27.1% were Black applicants, by far the highest denial rate.

And it's not just mortgage loans; minorities also have a tougher time landing business, auto, and personal loans. That may be due, in part, to the relative lack of generational wealth among minority households. The hope is that banks on wheels can help reverse the trend.

For most of us, financial success begins with learning about things like debt reduction and how to invest, and that requires access to financial tools. While mobile banks may not be fancy, they can still provide underserved communities a place to learn more about how financial matters work and how to make the most of their money.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

Two of our top online savings account picks:

Rates as of Jun 24, 2024 Ratings Methodology
Advertisement
Citizens Access® Savings Capital One 360 Performance Savings
Member FDIC. Member FDIC.
Rating image, 4.00 out of 5 stars.
4.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.00 out of 5 stars.
4.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor

APY: 4.50%

APY: 4.25%

Min. to earn APY: $0.01

Min. to earn APY: $0

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow