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Consumer Law

: Caveat Emptor

Helping the unbanked

By Nick Slade

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Bill Clinton and Arnold Schwarzenegger are heading up a great initiative to get people to open bank accounts rather than use check cashing centers etc. that charge what is often a hefty a fee to cash their paycheck. In a commentary in the WSJ, they point out that: the number of check cashers, payday lenders and pawnshops is more than double the number of McDonald’s franchises in the United States. More than 20 million Americans cash more than $60 billion in checks each year at check-cashing businesses. Full-time workers without a checking account typically pay $40 on average to cash their paychecks. And payday lenders sell an additional $40 billion in expensive small-dollar loans each year that carry fees 30 times the average credit-card rate.

I have long been an advocate of people joining credit unions because they often have lower fees than banks and will work harder to provide their members with services such as car loans further saving people money. Maybe with a little luck this initiative will catch on nation wide.

Full post as published by Caveat Emptor on January 24, 2008 (boomark / email).