Consumer Financial Protection Bureau says rural areas face unique difficulties accessing banking services

The Consumer Financial Protection Bureau, an independent agency Congress created during the Great Recesssion, launched an initiative last month to focus on financial issues rural Americans disproportionately face. This week, CFPB issued a follow-up report detailing the banking disparities rural Americans often contend with.

"The report highlights that many of these communities lack access to physical bank branches, are more likely to seek credit from nonbanks, and are heavily affected by medical bills. The CFPB will be expanding its efforts to address these and other challenges facing the people and families of rural America," CFPB reports. "Local financial institutions, such as community banks and credit unions, often offer products and services that fit the local economic terrain. However, rural communities are experiencing a fast-paced exodus of in-person banking services, with rural communities 10 times more likely than urban communities to be located in banking deserts. In fact, the Federal Reserve has identified more than 2,100 existing and potential banking deserts across the country with more than 1,500 located in rural areas."

Other key findings of the report:

• Rural Americans are more likely to depend on brick-and-mortar bank branches and smaller banks.
• Rural Americans are less likely to have a credit history (i.e., have held and used a credit card). Lack of a credit card, or the credit history to get one, makes it more difficult to address short-term financial emergencies, seek new opportunities (such as moving or starting a business), or fill short-term income gaps.
• Unpaid medical bills affect rural access to credit, housing, and unemployment. Also, health-care and insurance costs tend to be higher in rural communities than in suburban or urban areas.

As part of its Rural Initiative, CFPB is conducting more research to figure out root causes of rural financial disparities, and plans to conduct roundtables with rural stakeholders across the country, as well as work with federal partners to improve rural financial policy. Rural residents are encouraged to use the CFPB's complaint tool to bring attention to shady, inadequate or inaccessible financial services.