Are you living in a banking desert? Residents in rural, South have worst access to bank branches

A host of 'banking deserts' are emerging in the rural South, experts have warned - after firms axed branches in record numbers last year.

A report by the Consumer Financial Protection Bureau (CFPB) found that there are just 3.5 bank branches per 10,000 people in the South - compared to 5 per 10,000 in the rest of the US. 

The lack of competition means Southern households suffer from poorer interest rates on mortgages, credit cards and small business loans and have limited access to ATMs. 

And it has led to a surge in 'unbanked households' - those who are not signed up to any financial institution at all - in the region.

In Mississippi, 11.1 percent of the population is 'unbanked' while in Louisiana this figure stands at 8.1 percent. The two states have among the highest rates of unbanked populations in the US, according to the 'Consumer Finances in Rural Areas of the Southern Region' report. 

A report by the Consumer Financial Protection Bureau (CFPB) found that there are just 3.5 bank branches per 10,000 people in the South - compared to 5 in the rest of the US

The main barriers to access include: not being able to meet minimum balance requirements, distrust of banks, high fees and struggles to meet identification requirements.

It comes after Dailymail.com exclusively revealed that American banks have shut down almost 10,000 branches since 2019 - leaving communities without access to basic financial services. 

A 'banking desert' is defined as an area where residents live more than 10 miles away from a bank or credit union. 

The crisis is particularly exacerbated in the South which has a higher proportion of rural areas meaning banks are less inclined to keep branches open there due to low footfall.

Of the 48 million residents in the South, around 23 percent live in a rural county - compared to just 14 percent nationwide.

CFPB director Rohit Chopra said: 'The rural South faces distinct challenges when it comes to fair access to banking.

'Understanding regional differences across the country will help us determine where financial marketplaces can work better for all.'

The report found that 27 percent of Southern, rural residents had their mortgage applications denied on average - compared to 11 percent nationally.

This is despite the fact citizens in these areas apply for mortgages at the same rate as households nationwide - 19 per 1,000 residents.

In Mississippi, 11.1 percent of the population is 'unbanked' - making it one of the highest rates i the country 

In Louisiana 8.1 percent of households remain 'unbanked.' Reasons households gave for not signing up to a financial service included: distrust of banks and high fees 

Non-white residents fare even worse, with black rural borrowers making up just 9 percent of home loans between 2018 and 2021 - even though they represent 24 percent of the region's rural population.

What's more, rural Southerners who obtain credit pay 3.51 percent interest on average - compared to 3.13 percent nationally. 

The research notes that these unfair discrepancies hit those who can least afford it - as residents of southern states are more likely to have lower incomes and higher rates of subprime and deep subprime credit scores. 

Experts have long sounded the alarm over America's dwindling bank branch access.

Data from S&P Global Market Intelligence shows 9,536 brick-and-mortar branches at small and major legacy banks have closed their doors since 2019.

In 2022, Truist Bank led the pack with the most branch closures, shutting 422 outlets across the country, while Bank of America axed 322, according to the data. 

According to the National Community Reinvestment Coalition, a third of the locations closed from 2017 to 2021 occurred in areas that were predominately lower-income and majority-minority. 

It comes after Dailymail.com exclusively revealed that American banks have shut down almost 10,000 branches since 2019

In 2022, Truist Bank led the pack with the most branch closures, shutting 422 outlets across the country

Banks are increasingly turning towards digital services - a development which was sped up hugely by the Covid-19 pandemic.

Nerves around transmitting the virus deterred households from exchanging cash and encouraged them to use digital payment apps such as Venmo and Block Inc.'s Cash App. 

A study by the Federal Reserve showed a 12.4 percent jump in digital transactions in the first quarter of 2020 alone. 

But some customers may be reluctant to use internet banking, or have limited access to these services, making them more reliant on physical outlets. 

The closures are not limited to small banks in rural communities - they are also happening to large legacy banks in highly populated areas.