Coming to a Post Office Near You: Loans You Can Trust?
Source: Huffington Post
The poor pay more.
According to a report put out this week by the Office of the Inspector General (OIG) of the U.S. Postal Service, about 68 million Americans -- more than a quarter of all households -- have no checking or savings account and are underserved by the banking system. Collectively, these households spent about $89 billion in 2012 on interest and fees for non-bank financial services like payday loans and check cashing, which works out to an average of $2,412 per household. That means the average underserved household spends roughly 10 percent of its annual income on interest and fees -- about the same amount they spend on food.
Think about that: about 10 percent of a family's income just to manage getting checks cashed, bills paid, and, sometimes, a short-term loan to tide them over. That's more than a full month's income just to try to navigate the basics.
The poor pay more, and that's one of the reasons people get trapped at the bottom of the economic ladder.
Read more: http://www.huffingtonpost.com/elizabeth-warren/coming-to-a-post-office-n_b_4709485.html?utm_hp_ref=politics
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
truedelphi
(32,324 posts)And the sooner the better.
Kingofalldems
(38,498 posts)Watch the republicans scream at this one.
greiner3
(5,214 posts)And a lot of these franchised ones are really big business and guess who this would hurt if they lost billions in interest (the old tried and true, follow the money).
cosmicone
(11,014 posts)and millions of poor people benefit. While banks only set up branches in affluent areas, a post office is everywhere.
One can open an account for as little as 20 rupees (about 33 cents) and get 4% interest if you save regularly.
http://www.indiapost.gov.in/posb.aspx
defacto7
(13,485 posts)They call it the PostBank.
closeupready
(29,503 posts)
sheshe2
(83,977 posts)Just think, with affordable care in place. Fair pay and access to affordable and fair financial services can follow.This would make a diffence to a lot of people!
http://www.huffingtonpost.com/elizabeth-warren/coming-to-a-post-office-n_b_4709485.html?utm_hp_ref=politics
blur256
(979 posts)Part of the reason I am in a financial mess right now is because to get by for awhile I had to take out a few payday loans. Paying those back has been a nightmare because of the high interest rates. And they have all but ruined my credit. So now, if I need to take out a loan again, my credit prevents me from getting anything but a payday loan. If people could get out of that cycle, it would be such a big help.
cstanleytech
(26,337 posts)there might be a way to fix your credit a bit and its something my brother did 5 years ago (not sure if works now though).
What you need to do is take some of your tax return (assuming you get one this year) and open a checking account and then see if the bank (or credit union) can use say 1000 or so as collateral that you then take a loan out on which you then pay back over say a 6 month to a year.
Will tie up the 1000 of course but it might help put you back on the road to fixing your credit sooner.
7962
(11,841 posts)They give you a credit line equal to the amount in your acct. Just use the card and pay off the balance every month. With a little time, they will increase your credit. All the payment history shows on your credit report. Eventually you end up with a better credit score.
cstanleytech
(26,337 posts)he didnt get the card from a bank so maybe that was why.
SheilaT
(23,156 posts)You're still going to need to pay bills, and to do it by money order is inordinately expensive.
About twenty or so years ago my now ex was the IT guy at a company that was switching over from giving people paychecks to direct deposit. Several people actually quit rather than do that.
7962
(11,841 posts)I handle some rental property and so many people would pay rent with money orders. I tried to get them to open an acct with a credit union but they just wouldnt do it. And if u dont have a bank acct, your job pays you by loading a debit card. Which costs you fees to withdraw cash. I'm like you, I just dont get it.
I know some banks will do a credit check before allowing you to open an account though.
SheilaT
(23,156 posts)What it costs to pay with money orders is extortionist.
I do recall that back when my now ex was doing the direct deposit thing, at least one employee told him that they didn't want the direct deposit because they didn't want an ex to know about it.
Really? How would they know if you didn't tell them?
I had a job -- with the Zales Corporation -- where my first two or so paychecks were given to me as debit cards. Until they could get it set up for a regular paycheck. Or maybe direct deposit. It's sufficiently long ago that I don't recall the details. I do recall that this particular set up at least did allow me to phone in and find out my current balanced on the card with no fee. Nonetheless, it was quite annoying not to have real money in my checking account.
In a related issue, my brother, because of a couple of bounced checks (his fault, he should have known better) found himself unable for several years to open a checking account at any bank. It finally occurred to me to suggest that he open one directly with the credit union affiliated with his employer, which worked.
the bank wants to charge me $7 a month just to have an account, unless I have Direct deposit (not offered by my current employer) or a $5000 balance. I can buy money orders for 25 cents. You can get more expensive ones, but a local store offers them for a quarter. Or maybe its gone up to 45 cents. I would need money orders to pay my mortgage, my student loan, and my car insurance. All the other things I do could be switched to cash, with a slight inconvenience of having to stop at utility offices.
So $7 a month or $1.35 per month. Not counting the cost to cash a check, which i know can be pretty ridiculous.
In the end, I just opened another credit card that I wont use but once a year, and they knocked off the monthly fee. But I do understand why it happens. If you dont have money to keep a balance, its hard to not get screwed by bank fees. And then you accidentally use the wrong card, and there's an over limit fee, and it spirals, and now you owe the bank hundreds of dollars you dont have, and your afraid to even go in to a branch, and you really dont know what your rights are in regards to this money they say you owe.
Ive not been in the situation myself, but Ive seen it happen to others, and tried to help them detangle the resulting issues.
SheilaT
(23,156 posts)I got free checking with no minimum balance required with BofA several years ago by being willing to have a set amount moved from checking to savings each month. I didn't even need to keep that money in savings, but could have moved it right back to checking if I wanted. It turned out to be an easy and painless way to save, and then when cash flow crunches did come up I had the money available to move over to checking so I didn't have to fret about a check bouncing. What an enormous relief that was.
More recently, when I decided to move my business to a local bank, I discovered they were happy to give me free checking with no minimum or savings requirement at all, although I continued the automatic transfer of funds.
One reason I really dislike debit cards is that it is far too easy to overdraw and get into that spiral of fees. It happened to my son when he went off to college. I honestly thought that if you had a debit card attached to your checking account, it would be declined if there wasn't money in the account to cover the charge. Nope. We finally got the fees paid, closed that account, he opened another one without a debit card. And this is a kid who wasn't charging foolishly. I often joke that he will die a rich man simply because his needs and wants are so very modest. Meanwhile, lot's of people also don't charge foolishly but it is incredibly easy to go over what you have. Which is why I strongly recommend to people that they go on a cash basis for all day-to-day expenses if they are on a tight budget. If the money isn't in your wallet, you don't spend. It works very well for me.
quakerboy
(13,923 posts)But there again, come the fees.
I started with the direct deposit making my account free. When that job ended and i started getting paper checks from my current employers, I then got exactly the setup that you described, the monthly transfer, which made my account free. But apparently sometime toward the end of last year they quietly ended that program. I noticed the fee, which was usually charged to my account, and then refunded to my account, suddenly wasn't being refunded. I'm sure it was included in one of the notices i received, but it sure wasn't obvious, and the normally savvy me had no clue till I went in. Now, its either direct deposit of 1500+ per month, an average daily balance of 5000 or more, or have some other account with them. If I didn't have great credit enabling me to get a CC from them on a moments notice, I would have been stuck with the fees instead of having them waived.
My credit union does not have any fees that have effected me. But they are a bit of a drive, and if you dont have a car or live near them, that wouldn't be a very good option.
I recommend a cash basis even if you are not on a tight budget. The only reason I use cards is the cash back, and I keep a daily register and check it online at least weekly. If your not a numbers oriented person, cards are pretty much a bad idea, whether they be debit or credit.
SheilaT
(23,156 posts)if my local bank wanted to start charging me fees.
I will say that my personal experience has been that any time I've opened a no-fee checking account, the bank has never changed the rules and suddenly started charging me fees. Guess I've been quite lucky that way.
I am constantly preaching the cash-only thing to people, and too many of them, especially anyone under about 40, just doesn't get it.
MindMover
(5,016 posts)
penultimate
(1,110 posts)I wanted to cash a check a few weekends ago so that I didn't have to wait until Monday to get the cash from my bank if I deposited it. So I went into a check n go not knowing any better and I notice the fee posted were ridiculous. It would have cost $30 to cash a payroll check... Wtf? I left and cashed it at the issuing bank for $5. I could have cashed it at Walmart for like $6 too... So why even use those rip off companies?
yourmovemonkey
(267 posts)Is that even legal? If I write a check to someone, it is for the amount I wrote it for. My bank shouldn't take a cut if that person shows up at one of their branches to cash it.
Maybe I'm just being an 'old guy' on this, but I would have raised holy hell about something like that. In my mind, you still got ripped off.
7962
(11,841 posts)The reason I cashed it instead of depositing it at our bank is because in that extra day it takes to "clear", the money may be gone. Some of the tenants I deal with are a little shifty! So when they send a check and say "Cash it on the 15th",by gum its getting CASHED on the 15th at THEIR bank! I try to give people a break as far as the due dates, but the rents gotta be paid. If you're not careful, you'll get taken advantage of fast.
penultimate
(1,110 posts)I know both BoA and Chase do it, but I'm not sure of any others... I don't really understand the justification for them to charge a fee for cashing their own checks.
Xithras
(16,191 posts)I wrote a check to someone using my company checkbook several years ago (neighborhood teen who was mowing the office lawn...we stopped paying him cash when we learned that we needed to issue him 1099's). I was shocked when he came back and increased our monthly fee by $5 a month after that...to cover the $5 fee that Bank of America charges people who cash checks in their branches and don't have accounts. The fact that it was a BofA check written by a BofA customer didn't matter. Because he didn't have an account, he was charged the fee.
My current credit union doesn't charge any check cashing fees. It's part of the reason why they're my current credit union.
blur256
(979 posts)For instance, here in KC, there are not very many banks let alone any Walmarts in the poorer areas. There are, however, plenty of check cashing places. Check cashing places are more than willing to set up shop in poor areas because they know they have somewhat of a trapped audience (and can make a ton of money off of them because of the fees). Plenty of people living in these areas don't have adequate transportation to get to the better places (unless they take multiple buses to do so). Also, many of these places let you pay your utility bills there, which is difficult for people who don't have checking accounts, debit cards, internet access, etc. So in the end, it boils down to necessity coupled with convenience.
penultimate
(1,110 posts)who have limited options. Hopefully this post office thing will work out.
PoliticAverse
(26,366 posts)
Lefta Dissenter
(6,622 posts)I work for a bankruptcy attorney, and I've been horrified by some of the fees I've seen charged by the PayDay Loan shops. In Wisconsin, these places can charge whatever they want, so one 6-month loan I saw charged 800% interest, when all was said and done. There it was, right on the disclosure, 800%. Many people are in such a bind that they take out one loan to pay the other, and the whole thing just snowballs.
It could be life-changing for some of these people to have access to reasonable banking services.
SheilaT
(23,156 posts)Perhaps rather than criticizing those places, they should be somewhat more highly regulated. It says that New York only allows a 1.95% fee per check cashed, which strikes me as highly reasonable, especially now that I have a better understanding of who uses these places and why.
Meanwhile, regular banks, the so-called good guys, have taken up adding on all sorts of fees for all kinds of things. Like using a live teller in some places.
I decided to switch from Bank of America to a local bank a couple of years ago because I decided I'd rather give my business to the local company. The only thing I've had to give up is the ability to use a nation-wide network of ATMs. Which hasn't mattered yet. What will happen, the next time I go on an extended trip out of town, is I'll pack somewhat more cash than I normally do, and then use credit card and debit card a little more than usual, to avoid foreign ATM machines.
DeSwiss
(27,137 posts)defacto7
(13,485 posts)Theodore Roosevelt? Though he had his nasty quirks and was a Republican, he was a strong progressive about breaking up corporate controls and balancing equality for Americans more so than a lot of Democrats today. Of course the rolls of Democrats and Republicans have pretty much reversed since 1900. He wanted to establish a Postal Savings System to allow the less advantaged to save and do regular business through the US postal service back in 1904. It's an old idea.
BigDemVoter
(4,157 posts)I found it strange at first but then somebody explained the benefits-- fewer charges, more benefits, no risk. . . . And our Post Office needs business. . . I know it's faster to pay bills online, but I always mail mine with a stamp just to give them business. I know, a small contribution, but I like snail mail!
OldRedneck
(1,397 posts)I was stationed in Germany in the mid-1960's. The Bundespost -- the German post office -- operated the post office bank that, according to what Germans told me, was quite popular.
This proposal makes a lot of sense and would be a huge boost for people who are just barely getting by -- and for those reasons, it will never be approved by Congress. The Republicans and the banking lobby won't let it happen.
tofuandbeer
(1,314 posts)(1) Which will hopefully be less come the next election.
madrchsod
(58,162 posts)
malthaussen
(17,219 posts)... which is why it will never fly in the US!
-- Mal
closeupready
(29,503 posts)same reason we don't have universal health access and a reasonably generous social security plan. If it works everywhere else, we find a way to make it NOT work here.
