I was attracted to a post in the Huffington Post which acknowledges that many Americans are not having their basic banking needs met by the existing services. A few years back I probably wouldn’t have even noticed an article about the subject. Yes, I have seen payday loan advertisements, been at the local super market where people cash paychecks, or even seen check cashing businesses in the strip mall. However, they were just part of the background scenery. Everyone in my life knows her or his way around banks, mortgage companies, brokerages, and all that the financial world offers. Of course they offer it to us because it is profitable.
My perspective changed when I moved to a small town located on the coast of the Gulf of Mexico in Texas. The people with money are visitors, business owners, and those who own resort properties. The local workforce includes a high percentage of low-income people or those living at poverty level. No longer was I living in the suburbs where having a checking account with a debit card is a fact of life for high school students. I found myself standing in line at the post office with lots of people who were getting money orders to pay bills and send money to family members. Sometimes it actually looked more like a bank than a place to send and receive mail. That’s why this concept of basic and uncomplicated banking services at the post office seemed logical to me.
Over time I learned a lot about why the low-income people around me avoided traditional banking systems. One reason is that often they were undocumented and want to remain invisible. Even if the person does have legal status, often he or she was brought up in a family where the parents were undocumented. The children simply emulate what the parents did and the cycle of using cash, money orders, and expensive loans is perpetuated. People living in poverty or on very low incomes see banks as scary places which they don’t trust. Even those of us who are middle-income and above often have that same feeling. Things have just gotten very complicated.
According to the article, collectively those households which use alternative banking products spent about $89 billion in 2012 on interest and fees. That represents a huge cost for people with lower than average incomes.
Please click here to read the entire article. The concept of tying simple and affordable banking services to the local post office is being done elsewhere successfully. There is a very good chance that those people currently using alternative banking methods would be more trustful of a place they have visited throughout their lives, the post office, than they would be of banks which really don’t want them there anyway. There are benefits to the U.S. Postal System too!
Until next time.
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