It seems simple enough; you receive a check in the mail and need to cash it. You drive to the local bank branch a few miles down the road, cash the check, and use the money to pay your bills. Easy!

However, that's not the case for everyone. Approximately 12 million people live in banking deserts, meaning they don't have access to a bank branch in their area. If you're in a bank desert, you have to pay more for basic financial transactions like cashing a check, and you miss out on other more robust banking services.

If you live in a banking desert, there are workarounds to get access to a traditional checking or savings account and take advantage of a bank's perks.

What is a banking desert?

Those who live in banking deserts don't have access to a local bank branch. The technical definition of a bank desert varies by the type of community you live in:

• Rural: In rural communities, those who live 10 miles or more from a bank branch are in a banking desert.

• Suburban: Those living in suburban areas are in a banking desert if they are five miles or more from a bank branch.

• Urban: Urban residents are considered to be in a banking desert if they live two or more miles from a bank branch.

FedCommunities.org, a collaborative effort between the Board of Governors and the Reserve Banks of the Federal Reserve System, maintains a banking desert dashboard. You can use it to find out how close you are to banking deserts in your area.

Causes of banking deserts

The phenomenon of banking deserts is a complex issue, and they particularly impact vulnerable communities, including seniors, disabled people, and American Indian and Alaska Native populations.

The causes of banking deserts are numerous, but in recent years, it has worsened due to several reasons:

COVID-19 pandemic

During the COVID-19 pandemic, many banks closed their branches during the mandatory quarantines or limited their operations. As a result, many people who previously did most of their banking in local branches were encouraged to use digital or mobile banking.

Even as COVID-19 restrictions were lifted, many banks opted to close branches due to issues with staffing and the decreased demand for banking services in their communities.

Bank branch closures

Banks are closing branches at a faster-than-usual rate. Between 2019 and 2023, the total number of bank branches decreased by 5.6%, and the number of Americans living in banking deserts increased by over 750,000.

Banks are trimming their branch numbers to reduce their operating costs and overhead expenses. And the trend doesn't seem to be slowing down. In 2024, major banks including Bank of America, Chase, U.S. Bank, and Wells Fargo have closed hundreds of branches.

Increased focus on digital banking

Digital and mobile banking is increasingly popular. According to a 2023 study released by the American Bankers Association, mobile apps and online platforms are the overwhelming banking methods of choice.

With so many customers using digital and mobile platforms — and even preferring it to in-person banking — there is less demand for physical branches, so banks are shutting branch doors in response.

The impact of living in a banking desert

Living in a banking desert can have a significant impact on your financial life. Some of the common issues include:

Increased costs to cash checks

If you live in a banking desert and don't have easy access to a bank account, you may have to rely on check cashing services at grocery stores, convenience stores, or check cashing providers. These services can be expensive; depending on the company and your location, the fee can be as high as 9.9% of your check amount, cutting into your hard-earned money.

Read more: Can you cash a check without a bank account or ID?

Lack of access to credit

Banks provide access to mortgages, personal loans, car loans, and credit cards. However, in a banking desert, those who want personalized assistance discussing their loan options and help with the application process may find getting credit much more difficult.

Without convenient access to a bank branch, those in banking deserts have difficulties accessing loans or credit. They may have to turn to alternative lenders, including payday loans, which can have fees that are the equivalent of 400%. These alternative loans can lead to a cycle of debt that's difficult to get out of.

Read more: Does closing a bank account hurt your credit score?

Inability to earn interest

Without a reliable bank nearby, you may not have a savings account. That means you don't have a safe place to stash your money, save for the future, or earn interest. You may keep your cash in your home, which can be risky, and you won't grow your savings.

Read more: What’s the national average savings account interest rate?

What to do if you're in a banking desert

If you're in a banking desert without a local bank branch near you, consider these options:

Credit unions

Credit unions are an often overlooked alternative to banks. Like banks, credit unions allow you to open checking accounts, savings accounts, and apply for loans. They're nonprofit organizations, so they tend to have lower fees and better rates than banks, and they're community-focused, so there may be more physical branches in your area.

Plus, your money is protected. Deposits in credit unions that are part of the National Credit Union Association (NCUA) are federally insured, so they are guaranteed up to $250,000 per depositor, per institution, per ownership category.

You can find a credit union near you through MyCreditUnion.gov.

Community Development Financial Institutions (CDFIs)

CDFIs are banks, credit unions, loan funds, and venture capital providers that offer financing and loans to underserved communities. They can be an option if you need to borrow money to purchase a car or a home and don't have a bank nearby.

Online banks

Online banking can make basic banking products, including savings accounts, checking accounts, certificates of deposit (CDs), and even some loans more accessible if you have a reliable internet connection and a laptop or mobile phone. Many traditional banks offer online accounts, and some digital banks offer higher-than-usual annual percentage yields (APYs) on savings accounts, so you can grow your money faster.

They may also offer fee-free checking accounts, allowing you to receive your paychecks via direct deposit without having to pay cash checking fees or other costs.

Read more: The 10 best online banks