Monday, September 17, 2012

The Unbanked $

The term unbanked refers to those who do not have a bank account. According to the FDIC 10 million American's do not have a checking or savings account, and 22% of all African-Americans have no checking or savings account. Most live in poor urban areas and rely heavily on check cashing institutions, and pawn shops, for all of their financial transactions. Check cashing places have proliferated certain neighborhoods so much so that they have become as much a part of the urban landscape as malt liquor billboard's and cigarette ads. Such places always charge a fee to cash checks, pay bills, and to wire transfer funds. For example, a check cashing place charges about $20 to cash a $600 check. If a patron were to cash a check twice a month the total amount spent in fees is $40 per month. In a years time that is a total of $480 is spent in fees.. In comparison, there are many banking institutions that will allow you deposit your payroll check for free provided that you have an account with them and some will even allow prospective account holders to open an account with no initial deposit. The same $480 spent in fees could be deposited into an interest bearing savings account or a checking account.
It would be easy for me to follow a familiar narrative, and write about greedy corporations like Western Union, which is one of the largest proprietors of check cashing places across the country, profiting from urban blight, and poverty. and it didn't come as a surprise when I discovered that they use sophisticated software in order to pin point prime locations predicated upon the number of desperate, poor and disenfranchised people, who live in areas where banks are few and far between. Their research has shown that these elements create repeat customers. It is not unusual for corporations to use target demographics in order to make such a determination because their main concern is profitability. There is no doubt that they are turning a profit by taking advantage of those who are at a disadvantage because of poverty, old age, infirmity or lack of transportation. But, in my opinion there is still something to be said for personal responsibility. Many of the people in these areas who are unbanked will gladly travel to another part of town to see a movie, buy the latest in footwear or see a show. But they will not take the time to travel to the nearest bank. We live in a day and time when immediate gratification has become the norm. It seems as if, as long as  needs and desires are met immediately there is no thought or value put into long term planning, just momentary satisfaction and accessibility. Believe it or not there are those who will gladly stand in long lines to be taken advantage of, if it is more convenient to do so. So paying a $25 fee to cash a check is worth it in the minds of some people if it means that it is simply the easiest option.
I am not saddled, and perched on my high horse being critical of anyone, because I've been there. I have stood on line at check cashing places and I have paid upwards of $25 or more just because it was convenient, and I have payed more than a few bills for a fee just because it was easier. But, there has to be a point in life where we decide that enough is enough. Making mistakes is a part of life, but making the same mistake over and over again is insane. Quick fixes are only temporary, and while I do have some objectivity given the fact that some people just don't know any better, there are many people who do. It has often been said that knowing is half the battle. But in all honesty, those who know, and still insist on defeating themselves have no one to blame but themselves for losing the battle.


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