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People in the South face more 'banking deserts,' report says

The lack of banking options is resulting in poor financial outcomes for many Southerners.
People in the South face more 'banking deserts,' report says
Posted at 3:37 PM, Jul 05, 2023

Communities in the South face a unique set of challenges that can prevent them from accessing money. 

The communities are in what are known as "banking deserts," where there are few banking or credit union options. 

The lack of options is resulting in poor financial outcomes for Southerners, which includes people who live in Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee. 

According to a report from the Consumer Financial Protection Bureau, Southern consumers are twice as likely to have their mortgage applications denied. That national rate for denied applications is 11%. In the South, it's 27%. 

For those who are approved for a mortgage, the CFPB says they typically pay higher interest rates. 

SEE MORE: Why you should never keep all your money in one bank

“The rural South faces distinct challenges when it comes to fair access to banking,” said CFPB Director Rohit Chopra. 

Unlike in most states, credit scores alone don't account for lower credit rates. The CFPB said race and rural residency in the South appear to be a factor in access to credit. 

"People of color are more likely to be denied credit, compared to similarly-situated white borrowers, and rural Southerners are denied at higher rates than their non-rural counterparts," the CFPB notes. 

Denials for credit and lack of access to financial institutions appear to also be contributing to unbanking rates in the South. 

Mississippi and Louisiana have the highest rate in the country of people who do not use a bank, according to the CFPB. 

SEE MORE: If cash apps fail, consumers could lose billions, feds warn

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