If you’re like many Americans, you might go months without stepping inside a bank branch. Reasonably tech-savvy individuals can satisfy most of their banking needs in minutes with just the app on their phone.
But branches still serve critical financial purposes. People often prefer to handle more complex banking matters in person, whether that’s opening an account, applying for a loan or inquiring about suspicious transactions. Business owners may visit daily to deposit cash, while some customers are simply more comfortable talking to someone in person.
While many may have a convenient branch nearby, others must travel long distances if they want to access a bank. As the number of bank branches continues to decline across the country, a growing segment of the population finds itself far from a physical branch, living in what are known as “banking deserts.” About 12.3 million Americans live in banking deserts, and another 11.1 million live in areas identified as potential banking deserts, according to Fed Communities, a collaborative initiative among the 12 Federal Reserve Banks.
For rural areas, banking deserts are defined as census tracts where there’s no bank branch within 10 miles. In suburban communities, the range is 5 miles, while urban areas are considered deserts if no branch exists within a 2-mile radius. Potential banking deserts are areas that will become a desert if one branch closes. Fed Communities maintains a dashboard that shows all the banking deserts and areas with limited banking in the U.S.
The issue of banking deserts isn’t a new one, but it continues to intensify as consumers rely more heavily on mobile banking and banks seek to shave expenses by trimming brick-and-mortar locations. A recent surge in bank mergers could lead to further closures, experts say.
“The combination of the general shift to mobile along with efforts to cut costs by banks reinforce each other and make this trend something that’s unlikely to go away,” says Adam Rust, director of financial services at the Consumer Federation of America.
[Read: Best Online Banks.]
Why Banking Deserts Are On the Rise
Banks have been shedding branches since the Great Recession, but the pace of closures doubled during the pandemic, according to analysis from the National Community Reinvestment Coalition. A Federal Reserve Bank of Philadelphia study found that the total number of branches across the country shrunk by 5.6% between 2019 and 2023.
Although that trend has eased recently, a U.S. News analysis found that banks shuttered more than 300 net branches in 2025.
Much of it stems from consumers’ shift to digital banking. Only 9% of people now say they prefer to visit a branch to do their banking, according to a 2025 survey by the American Bankers Association. Younger respondents were even less likely to do most of their banking at physical branches, with just 3% of Gen Z most frequently opting for in-person services.
As institutions increase their investment in technology to meet those demands, some are looking at ways to reduce their overall footprint and branch operating costs. Banks have little incentive to maintain branches in places where they don’t anticipate their efforts paying off.
Who Is Most Impacted?
Banking deserts exist across the U.S. in various types of communities, but the Philadelphia Fed report noted that lack of financial services may disproportionately impact certain consumers — including low-income Americans, communities of color, people living in rural areas and older adults.
About 39% of banking deserts also have limited broadband access, which can further compound the problem because online banking may not be a viable option.
Those who don’t have easy access to bank branches are often the ones who are most in need of the financial support that in-person assistance might offer, says Erin Kilmer Neel, executive director at Beneficial State Foundation, a nonprofit organization that advocates for more equitable banking.
“Physical branches provide a reliable on-ramp to financial stability,” says Neel. “They help those who need banking access most while benefiting others along the way.”
Lack of a nearby bank can also stifle small business owners. Without an established relationship or face-to-face interaction with a banker, the owner may struggle to secure a loan to get their operations off the ground. A loan application may not pass the rigid algorithmic models of national online lenders. This is especially true for entrepreneurs, says Frank Fossen, a professor of economics at University of Nevada, Reno, who is researching the impact of banking deserts on startups.
“Entrepreneurs are starting a new business, so there’s no track record of success for the business,” says Fossen. “Often entrepreneurs innovate, so they have a new product or a new service. They’re trying something new, so there’s a lot of uncertainty whether there will be demand for that product.”
Some business owners may also need to make regular trips to the branch to drop off deposits or make other transactions. “If that’s a 30-minute drive, that’s a big problem,” says Rust.
[Read: Best Checking Accounts.]
The Costs of Living in a Banking Desert
Living far from a bank branch can pose several challenges that cost time and money.
“People often end up paying more for basic financial services,” says Neel. “Without a nearby bank, they’re pushed toward check cashers, payday lenders and money order services that charge steep fees for things most banked consumers get for free.”
The issue extends beyond just those with no nearby branches at all, says Fossen. For example, if you’re in an area identified as a potential banking desert, you may only have one bank to choose from — which limits competition and puts you at risk if that institution pulls back on lending.
“If there’s not a lot of choice between different banks, then you’re very dependent on one,” he says.
Here are a few of the costs associated with living in a banking desert.
Limited Access to Credit
Living far from a bank often means fewer local options for loans and credit products, potentially requiring travel or online applications with higher scrutiny.
“The biggest challenge people face is access to capital,” says Mike Boden. He serves as president and CEO of OneAZ Credit Union, which operates 25 branches across Arizona, including in some areas where few other branches exist. “Institutions without a local presence are very happy to take the deposits, but they’re a little slow on lending.”
This lack of access often pushes residents toward high-cost alternatives like payday loans, which can lead to cycles of debt.
Additional Fees and Costs
If a bank branch is far away, customers may frequently rely on out-of-network ATMs, incurring withdrawal fees that add up significantly over time. Cashing checks at nonbank locations, such as grocery stores, often involves high service fees that eat into the amount received.
Increased Fraud Risk
Tellers are sometimes the last line of defense against scams and fraud, and they may be able to detect signs that a customer may be falling for a scam and prevent them from losing money. Alternatively, if you suspect your bank account was compromised, the inability to quickly visit a branch for immediate assistance or dispute resolution prolongs the period of financial exposure.
Missing Out on Interest
If residing in a banking desert discourages you from putting your savings in the bank, you’ll miss out on the opportunity to earn interest on your funds. The best high-interest savings accounts and certificates of deposit still pay around 4% annual percentage yield, which is significantly more than your mattress offers.
[Read: Best Savings Accounts.]
Don’t Live Near a Bank Branch? Here Are Some Ways to Adapt
Here are some potential solutions to the challenges of banking deserts.
Consider a Mission-Driven Financial Institution
You may want to first look into Community Development Financial Institutions, which receive federal funding and prioritize lending to underserved areas. This may be solid option if you’ve been unable to secure a loan through traditional banks or online lenders. You can use this CDFI locator tool to find options in your region or that may fit your needs.
Switch to an Online Bank or Credit Union
If you have reliable internet and are comfortable navigating apps and websites, you may want to explore online-only banking options. These typically offer higher interest rates and lower fees than traditional brick-and-mortar institutions because of their reduced operating costs.
“Removing those extra costs helps reduce friction and ensures members aren’t penalized simply because of where they live,” says David Benavides, head of digital, design and member experience at Alliant Credit Union, an online-only institution.
They generally provide robust mobile apps and online platforms that allow you to manage most transactions remotely, from depositing checks to paying bills.
Establish a Strong Relationship with a Credit Union
Even if there isn’t a branch in your immediate vicinity, you may benefit from opening accounts and building a relationship with a credit union that specifically serves your state or region. As community-minded nonprofits, credit unions may have a better understanding of your area and they may also be more likely to work with you on loans or other more complex banking requests.
Boden says AZOne Credit Union reaches customers all over the state, even in banking deserts where it doesn’t maintain a branch. He says a credit union will understand the nuances of the local economy, and it’s likely to consider factors a national bank might ignore when determining whether to approve a loan.
Seek Out Mobile Branches
These bank branches on wheels resemble and operate a bit like a food truck, visiting various communities to bring banking serves to their customers. For example, PNC Bank sends its fleet of mobile branches out around more than a dozen urban areas across the U.S. Some regional credit unions also use branches on wheels to reach customers.
Prioritize ATM Networks and Mobile Deposits
When you’re comparing banks or credit unions that don’t have a nearby branch, pay close attention to their ATM networks and policies. Many institutions partner with ATM networks that boast 50,000 or more free ATMs nationwide, while others will reimburse you for out-of-network ATM fees. Also, find out whether the institution you’re considering has a mobile check deposit feature, which can eliminate the need to use pricey check-cashing services at stores.
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Banking Deserts Are Becoming More Common. Here’s How to Survive originally appeared on usnews.com