Banks aim to lure clients from check cashers, payday lenders

[babylonsister]

Banks aim to lure clients from check cashers, payday lenders
By Tony Pugh | McClatchy Newspapers

* Posted on Monday, December 10, 2007


WASHINGTON — After years of watching check-cashing stores and payday lenders steal potential customers, banks and credit unions are beginning to offer the same services and products, but in more affordable and responsible ways.

The movement comes as federal bank regulators focus their attention on the estimated 73 million Americans who are underserved by the nation's banking industry.

The hope is that mainstream financial institutions can convert the check-cashing customers and payday loan-seekers of today into the sought-after depositors and low-risk borrowers of tomorrow.

"A large number of banks and financial industry players are going after this market because they do think this is a growth opportunity. They can make money on these consumers and they can do it in ways that are mutually beneficial for them and the customer," said Kimberly Gartner, associate director of the Chicago-based Center for Financial Services Innovation.

The dynamic growth of the alternative finance industry, which includes car title lenders, has proved the dire need among many Americans for convenient small-dollar loans and immediate check cashing without bank delays.

more...

http://www.mcclatchydc.com/226/story/22683.html

[blondeatlast]

1. Yikes. I now find myself in the uncomfortable position of cheering

on the banks.

I feel itchy or something.

[Viva_La_Revolution]

2. I understand,

Since Oregon passed new laws last year limiting the amount these payday loan sharks can charge, 3 of them have closed down in my neighborhood. That makes me so happy!, but hearing that banks are actually considering serving these people again makes me even happier. They never should have had to go to the sharks in the first place.

[Kingshakabobo]

4. I don't know about that.

Color me skeptical.

What do they mean by more affordable? 150% APR versus 300% APR? The APRs charged by the pay-day loan lenders are already astronomical.

It seems to me, they are opening up a whole customer base of suckers - people that wouldn't dare walk in to one of those juice loan outfits but wouldn't think twice about clicking the mouse on the bank's website.

[hobbit709]

3. When I was cashing my checks at the check cashing place

it was because if you tried to cash a check at the bank it was drawn on and you didn't have an account there, they wanted not only ID but fingerprints. I didn't feel like being treated like that just to cash my paycheck. At the check casher all I needed was an ID. At some banks, if you didn't have an account and you wanted to cash a check from an account at their bank, you had to go to the lobby-you couldn't use the drive through.

[jayfish]

5. ...and $8.00.

It's ridiculous.

Jay

[Wizard777]

6. Not only that if you don't have an account with the bank. They charge you a fee for cashing it.

I've even seen notices printed on payroll checks. "If you do not have an account there will be a 4.00 fee to cash this check." One of my God Children laments that the first half hour of her work week goes toward getting her money at the end of her work week. She says in a labor exchange she has to work for a half hour to get the bank to do 5 minutes of work in cashing her check. She say the fee is no better than the bank telling her. Now that your work week is over. You have to mop our lobby before we give you the money you've earned. Personally I think it should be illegal for a bank to charge a fee to honor their own draft.

[truebrit71]

7. Have her open a bank account would solve the problem no?

:shrug:

[Wizard777]

9. No, opening an account only increases your fee liability. n/t

[flashl]

8. The estimated 73 million is an incentive to create illusion

of cash flow in the banks. "small-dollar loans" = bank fractoral money-making.