I am ashamed to admit my stupidity, but why do check cashing stores exist? Why don’t people just go to the bank? Also, how do check cashing stores safeguard against fraudulent and bounced checks when there is no balance to ‘hold’ against it?
Many in the lower class don’t trust banks. The only way they can cash a check is to go to a place like that.
@Sweep the Leg; actually, it’s the other way around. There are very few banks in low income, crime stricken areas. Obviously banks are concerned that they would be a prime target. When is the last time you drove through the “hood” and saw a Wachovia branch? I think there is a prime space for inner city banking but it would need to be unconventional; if you steal my idea and become the next Zipcar, I want my cut! 20%!
CFAvsMBA Wrote: ------------------------------------------------------- > Also, how do check cashing stores safeguard > against fraudulent and bounced checks when there > is no balance to ‘hold’ against it? They don’t. They charge to cash the checks and absorb the losses. I have never cashed a check at one, but suspect they charge a larger % based on the type of check.
Sure, there are fewer banks in high crime areas, but are you really saying people would rather pay a 20% check cashing fee than drive two miles to their nearest branch? It’s not the banks’ problem.
@Sweep the Leg, I never said it was the banks problem. I said, that the banks don’t trust the viability/safety, etc of inner city areas. In terms of what makes sense; well that’s an issue of financial literacy as crazy as it sounds. It may be obvious to us that you should make the extra trip downtown to the bank but I think the root issue here is simply not understanding how banking/finance really works. And not understanding simply concepts like compunding interest.
A bank will hold the funds until the check clears.
Zesty Wrote: ------------------------------------------------------- > In terms of what makes sense; well that’s an issue > of financial literacy as crazy as it sounds. It > may be obvious to us that you should make the > extra trip downtown to the bank but I think the > root issue here is simply not understanding how > banking/finance really works. And not > understanding simply concepts like compunding > interest. Which was exactly my first point. Poor people don’t trust banks.
I’m not sure why. I do know that some non profits have worked to improve a lot of poor people’s lives by getting them to open bank accounts. Apparently, once they actually get the people signed up, it’s not that much of a problem to keep them using it. So raising awareness is a big part of it and can make a big difference. As hard as it is to believe, it sounds like the poor just don’t understand that getting charged 5% to get a check cashed is costing them an awful lot. Some of it may be related to math skills… If you have $100, maybe it doesn’t feel like it is that much of a sacrifice to pay $5 to have money in your hand now. $5 feels small compared to $95, so they are more excited about the $95 than they are about the $5 they just gave up. There are other issues too. Many banks have minimum account balances that can be very hard to maintain if you are living paycheck to paycheck. I seem to recall that being an issue discussed by one of the non-profits that was working with that. Another thing has to do with the documents that are required to open up a bank account. Illegal immigrants have this problem in a big way, because they won’t have a social security number, which is required to open a bank account. Other parts of the underground economy may have to receive checks and have nowhere to deposit them. So it sounds like those are major customer sources for check-cashing places.
most of the time they can’t get a bank account. Most good banks won’t cash checks unless you have an account with them. That’s why these places exist.
i have also considered this… the poor is paying to get their funds ahead of the 2-3 days it would take to clear at a regular bank most likely becuase waiting is prohibitively expensive for them …in other words they are living hand to mouth and 3 day wait plus having to travel warrants a 5% haircut…predatory ? maybe but thats capitalism right plus the checking house assumes the risk in case the cheque doesnt clear… also another thingi experienced while living in the hood in brooklyn ( ridgewood then bushwick) was the prices charged for drycleaning was more than 3 times some place in the city…at first i thought it was a premium paid for crime but then i spoke to one of the laundry mat guys n he told me naaaah its cuz in the hood they would dry clean everything everytime …lol
Sweep the Leg Wrote: ------------------------------------------------------- > Sure, there are fewer banks in high crime areas, > but are you really saying people would rather pay > a 20% check cashing fee than drive two miles to > their nearest branch? It’s not the banks’ > problem. 1. If you’re poor you probably don’t have a car, so you use the bus. The convenience of having a check cashing place in your neighborhood is just too much when you’ve worked crazy hours all day for not so good $. On a hot summer day, hell yah I would forgo the bus or walking and go to the check cashing place next door. 2. Someone mentioned the thing about minimum balances. Bingo. Also, their credit history or past banking history prevents them to have access to a checking account (http://www.bankrate.com/brm/news/debt/20070629a1.asp). #2 is the best explanation. Lots of people know check cashing places are a rip off, but what choice do you have when you’re credit/banking history is shot and you need to cash your paycheck today to keep the electricity from being turned off. I do think just plain ignorance is responsible for them not knowing how to improve their financial record, but that’s not the check cashing place’s responsibility.
programmer is correct. I have known a number of people in the past that were here in the US illegally, and they *may* get paid by check depending on the job. Where will they cash their paychecks? They can’t get bank accounts, as they don’t have legitimate ID. They do have fake SSN cards that are good enough to get jobs as servers/dishwashers say in catering halls, which pay by check… And, I myself use a check cashing store, but only to pay my water bill as it’s right by my house and I haven’t set up the online payment yet but will now…
They are solely there to service the illegals and drug addicts
I just ate a damn good authentic fajita for lunch. I think it was made by the same beener who runs the watermelon stand next to Checks Cashed Plus + shop.
Just saw a beaner leave CFAvsMBA mom’s house…
el duque Wrote: ------------------------------------------------------- > Just saw a beaner leave CFAvsMBA mom’s house… Hey now Jose. Don’t be hatin’ that the CFAI demanded to see your greencard when you attempted to sit for L1. And for the record, he was the a laborer replacing some shingles on the roof.
Whatever, it was a forged one anyhows. That’s how we roll.
Check Cashing Stores are despicable I think those companies are the only ones who I would not work for based on moral considerations.
Canadian_Accountant Wrote: ------------------------------------------------------- > Check Cashing Stores are despicable > > I think those companies are the only ones who I > would not work for based on moral considerations. How do you propose people who can’t get checking accounts cash their checks? Edit: I think you meant Cash Advance places that charge very high interest rates for giving people money based on their future paycheck. Either way, It’s still a valuable service. Cash advance stores are taking large risks on people who have bad or no credit. And Check Cashing places are also providing a service for a small profit. Let’s not forget that these places aren’t banks and can’t make money off of loans coming from deposits. So charging for cashing a check is their only means of revenue generation. Really don’t see what’s wrong with either of them. Poor peeps need to manage their money better or make more is what it comes down to. If not, they need welfare or some other form of subsidy. That’s it. Don’t blame these places for “exploiting” them because without the services they alternatives would suck. Ib4 “Get government to do it”.