FDIC points to those under-served (53% of African-Americans, 43% hispanics use payday centers/pawn)

[The Straight Story]

FDIC points to those under-served


WASHINGTON, Dec. 2 (UPI) -- A Federal Deposit Insurance Corp. report says that 25 percent of U.S. households do not use banks to cash paychecks or deposit funds.

The report says 53 percent of African-American households and 43 percent of Hispanic households use check cashing alternatives, including payday lenders and pawnbrokers, USA Today reported Wednesday.

The report compiled by the Census Bureau says 30 million households with or without bank accounts use alternative services to handle their finances.

Nine million households, including a fifth of households earning under $30,000 a year, have no bank account, the report to be released Wednesday says.

FDIC Vice Chairman Martin Gruenberg said, "there's a substantial segment of American households whose financial services needs aren't being adequately met."

The FDIC said it would promote "starter accounts," which have no minimum balance requirements and do not include automatic overdraft fees.

http://www.upi.com/Business_News/2009/12/02/FDIC-points-to-those-under-served/UPI-47891259761342/

[Wapsie B]

1. I've always wondered who owns these payday loan outfits?

My first thought would be the Mafia. Much easier to legitimize theft than rob banks. Easier on the dry cleaning bill too.

[izquierdista]

2. Banks

The same big ones that get TARP funds and deal with the moneyed classes. They have a front operation, excuse me, subsidiary, that owns a holding company that is a major stockholder in the payday loanshark outfit. That way they can up the ROI on their cash on hand by charging interest rates that upper classes would refuse to pay.

[Wapsie B]

4. So it's screw the little guy anyway you can for as long as they'll take it.

[izquierdista]

10. Yes

But to them, it's "niche marketing".

[SoCalDem]

5. They probably started out as independent money-lenders, BUT

all the big banks bought them out...they are VERY profitable to the banks.. Poor people paying through the nose, for hundreds of percent interest on money they will never be able to repay:(

[TwilightGardener]

3. I can't figure this one out. Opening a basic checking

and savings account is far less expensive than using the alternatives, and you can manage your money through them. Why would over half of African Americans NOT have a basic bank account? They're getting swindled.

[The Straight Story]

6. Let's say you make 300/week and it all goes to bills

cash it wal-mart, etc, pay your bills.

Many banks you need a minimum balance, fees sneak in, you bounce checks, etc and so on.

You can cash a check for a few bucks, get a net-spend debit card for $10 initial payment and then add money to it.

[TwilightGardener]

8. Sounds plausible, but banks are still a good deal--I can't imagine being an adult and not

managing my money through an account, or being unable to write checks. They really are getting ripped off in the long term from these places that skim money off of every paycheck.

[JVS]

9. Keeping a bank account can be very expensive if the balance will often be low, and especially if...

you might bounce a check.

[michreject]

7. Remember that to open a bank account, you need ID

That deters a lot from doing so.