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Language barriers in banking
The costs of not having a bank account
Overcoming Language Barriers in Banking
What is it being unbanked or underbanked?
What percentage of people living in United States are unbanked?
What issues do bank language barriers cause?
Are banks equipped with translators?
The Bottom Line

Personal Finance Banking

The challenge of overcoming language barriers in banking

Language barriers make it hard for some people to be able to access banking services
By Rebecca Lake
Published December 02, 2022
Fact checked by Suzanne Kvilhaug

Within the United States, language barriers hinder non-English-speaking people to use banking services. Therefore, the process of paying bills and saving may be more difficult.

Around one-in-12 residents within the U.S. speak limited English, and many are unbanked.1 Today, however, banks like the Consumer Financial Protection Bureau (CFPB) and community banks are making efforts to close the language gap to help more people have access to the banking services they need.

Let’s look at the impact of bank language barriers and how they can be dealt with.
The most important takeaways

People who speak limited English on the United States may not have the ease of access to banking services that they need.
A total of 4.5% of the U.S. population is unbanked, meaning that they don’t have a bank account or have access to traditional banking products and services.2
Hispanic households comprise 12.2 percent of the unbanked population.
Language obstacles can make it difficult for non-native English people to get access to banking services. This can make things like making payments as well as saving cash more difficult.
Initiatives of initiatives of the Consumer Financial Protection Bureau (CFPB) and community banks are helping bridge the language gap.

Language Barriers in Banking

The language barrier can affect people’s access to financial services. About 5% people within the U.S. were unbanked, or had no bank account, in 2020.3 However, the proportion of communities in which English isn’t the main language is significantly more. For instance, among Hispanic households, where Spanish is usually the predominant langue, 12.2% are unbanked, according to the 2019 Federal Deposit Insurance Corp. (FDIC) data.4

A whopping 22 percent from the U.S. population speaks a language other than English at home, which is 67.3 million people.5 Many of these people are proficient in English however, many of them don’t. More than one in 12 people older than 5 are restricted English skilled (LEP), meaning that they speak English less than very well.1

Communities and individuals who aren’t proficient in English may have difficulty to get banking services within the U.S. Even if banks offer basic account information or customer services in a range of languages, financial disclosures and written documents might not be available in languages other than English. In addition, immigrants may have difficulty understanding how bank accounts, investments and other financial products work in the U.S.1

The Consumer Financial Protection Bureau (CFPB) provides numerous online tools to help Spanish speakers learn more about U.S. banking concepts, products and services.
The Price of Not Being Banked

It could be expensive to have a language barrier leave you unbanked or underbanked, meaning you have a checking account with a bank, but you also have other financial services.

The people who aren’t serviced by banks that are mainstream typically rely on more more expensive financial services. For instance, cashing check services may charge fees that range between 1% and 12% from the cheque amount.6 It could cost you between $10 and $120 to cash a $1,000 check. Banks are able to pay checks to non-customers but this can still entail paying a fee of 5 to $10. If you are paid by check because they don’t have a banking account, these fees can be thousands of dollars per year.

It can also be costly if you depend on other banking services. Solutions such as payday loans or car title loans are significantly higher in rates of interest than traditional personal loans. Payday loans, often with annual percentage rates (APRs) that are 300% or greater, can create the cycle of debt that’s difficult to escape.7

Each state has its own set of laws regarding payday lending and the interest rates and fees may be charged by lenders. Some payday loans are considered predatory and are regulated in specific states.8
Banks: Overcoming language barriers

In recent time there has been increasing awareness of the effects of language barriers to access to financial services and banking. Both financial service companies as well as federal agencies are working to address this problem.

For instance, Mitchell Bank in Milwaukee is one of the banks that are opening branches in underserved areas. The bank has a branch named Cardinal Bank in a Milwaukee high school, which has a 70 percent Hispanic immigrants population.9 Cardinal Bank offers financial literacy programs, helps customers without Social Security numbers to apply for Internal Revenue Service (IRS) Individual Taxpayer Identification Numbers (ITINs), and uses an FDIC money smart program in order to help develop the financial literacy of students and their parents.63

Individuals with limited English proficiency can also seek out government programs for assistance with banking needs. Numerous states and major cities have local advocacy for immigrants organizations that can direct people to local banks offering services, education, and outreach in different languages.

Finally there is the Consumer Financial Protection Bureau (CFPB) offers support for people who do not have English proficiency. Contact (855) 411-2372 to get assistance in more than 180 different languages. The CFPB also provides free education materials about banking in dozens of languages.10
Note

Along with addressing the issue of language barriers, bank and other financial establishments are also taking steps to make banking accessible to people with hearing and speech disabilities, cognitive disabilities, and visual impairments.
What is it to be underbanked or unbanked?

Being unbanked implies that you don’t have an account with a bank. Being underbanked means the fact that you do have a financial institution account, but you also utilize other financial services, such as check cashing services or payday loans.
What percentage of people living in United States are unbanked?

About 5percent from the U.S. population, or 7.1 million households, were not banking in May 2021. The percentage of households that were not banked was higher in Hispanic, Black, and low-income families.3
What are the problems that language barriers in banking cause?

The language barrier can make those who have limited English competence (LEP) less likely to seek out banking and financial services. In turn, this can make it more difficult for them to manage their finances, pay bills and save money. They may also be more likely to use costly banking alternatives, like check cashing services or payday loans.
Are banks equipped with translators?

Banks can make use of automated translation and interpretation tools to communicate with customers with only a little English proficiency. The banks are now hiring translators and interpreters who can talk to customers on the telephone or face-to-face.
The Bottom Line

Language obstacles can make it difficult for those with limited English to obtain the banking products or services they require, however initiatives are being taken to tackle this issue within the U.S. As the banking industry expands those with limited English proficiency may find it easier to open bank accounts or apply for loans and monitor their finances without having to pay large fees.
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