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These "poor people" can't get regular bank accounts, so they have no way to cash paychecks. They have no access to traditional credit. The payday loan industr

These "poor people" can't get regular bank accounts, so they have no way to cash paychecks. They have no access to traditional credit. The payday loan industry is competitive, so if it could be done cheaper, someone will do it. If it can't be done cheaper, those entrants will fail (too much risk). If poor people with no or bad credit history find another way to get credit, the payday loan industry will dry up. It's business. Live with it.

omnipath 18y ago
Here is what bothers me about this. How can you not get a regular bank account? Doesn't Bank of America just require an address, plus a deposit? What else is needed? I think it's more fair to say that they don't trust banks, rather than can't get regular bank accounts.
- pchristensen 18y ago
  Doesn't Bank of America just require an address, plus a deposit? You can get a bad checking account with high monthly fees, check writing fees, ATM fees, etc. I'm pretty sure you have to submit to a credit check or have additional deposits to get a free account. While these bad checking accounts are probably less expensive overall, it's more difficult to judge the costs, especially for financially unsophisticated customers. One big fat fee from the payday lenders probably seems smaller than N smaller fees where N is unpredictable.
  - Retric 18y ago
    Most of those fees can be avoided if they treat the bank like those pay day loan processing places.
    - wushupork 18y ago
      While you and I may be financially educated and well versed, many people are not. The only reason credit card companies make money is because there are people who don't understand how credit card companies work and make only minimum payments. Not to mention there are cultural and demographical biases against banks and credit cards. When I was in China I knew many people who did not trust banks. They either did not want how much banks/government to really know how much money they had or weren't sure their interests would be looked after if something were to happen.
    - jhancock 18y ago
      really? Your sure about that? You try it. Put yourself in a life where you have no bank account, no or bad credit, and try to take the check you just received from "low income job x" and try to find a retail branch of the bank it was written against. If you're real lucky, there is a retail branch near you. When you go in, you will be presented with process barriers the bank uses to keep you from cashing the check. Are these barriers legal? Doesn't matter. You still will be sent out the door without your money...and then you go back to the loan sharks.
      - randallsquared 18y ago
        "Are these barriers legal? Doesn't matter. You still will be sent out the door without your money...and then you go back to the loan sharks." Wait, you're now arguing that the "loan sharks" are useful and helpful, after denigrating them elsethread? In any case, I agree that you can cash a check at the bank it is drawn on, and that it can be difficult. Because my newly opened account had an eight day clearing time, I needed to cash my checks and trot over to my bank to deposit cash quite a bit last year (small employer had no direct deposit). It was comical what lengths they went to to try to avoid giving me cash. "Are you a customer with us? [No.] Oh, I'm sorry." (But I didn't go away). "Oh, you'll need two IDs." (Okay, here you go). "Oh, we don't have that much money on hand." (It wasn't very much, especially for a bank). "Oh, I'll have to get my manager." (in a vaguely threatening-maybe-you-should-just-leave manner). "If you open an account with us, we can cash this." (But of course they could even if I didn't). "We can't give out that much cash. Can you come back tomorrow?" (No). "I guess we could do a cashier's check for half of that [said doubtfully]. Would you like to open an account with the remainder?" Etc. The first few times, I was polite and firm, and eventually they recognized me when I came in and I didn't get any hassle. But lots of people wouldn't know that "We can't" doesn't mean they can't.
        jhancock 18y ago
        "Wait, you're now arguing that the "loan sharks" are useful and helpful, after denigrating them elsethread?" They are only useful and helpful in the absence of forcing banks to act like decent members of society. Fix that problem (which is very easy if you focus on corruption between corporations and elected officials) and you remove the need for the loan sharks.
- antidaily 18y ago
  You can be denied an account. There's a company called ChexSystems that maintains a "bad customer" database and basically tells banks not to give you an account if you've ever bounced a check or had some other mishap.
- jhancock 18y ago
  It is sad a state of affairs that someone can receive a check and cannot cash it at no cost (not just put it into another account). There is no basis for requiring credit to receive money from an account that clearly has the funds. Between the banks and now payday companies, this state will persist until we get state politicians that aren't corrupt. Note: this goes for most states, not just the lovely one Chicago is in.
- randallsquared 18y ago
  I was denied an account at Wachovia in 2006. They invited me to apply again in the future. I won't.
cia_plant 18y ago
The company in question does not cash checks; it makes high-interest, short-term loans. A valid checking account is actually a requirement to receive such a loan. http://www.cashnetusa.com/how-it-works.html http://www.cashnetusa.com/how-it-works.html I agree that payday lending probably can't be done that much cheaper. Competition does tend to keep profits low for most businesses. However, if the only loans which can profitably be made in a given market are extortionate, then I don't think that loans should be made in that market. It's business, sure, and I do live with the fact that the world is full of businesses which profit by taking advantage of others, but I don't have to respect the kind of person who starts such a business.
- dantheman 18y ago
  So you'd rather see someone get fired, because they don't have the cash for some repairs to the car? Sure the price of the loan may be high, but in general these are risky loans and can be used when a person is in a tight spot.
  - carbon8 18y ago
    So you'd rather see someone get fired, because they don't have the cash for some repairs to the car? Sure the price of the loan may be high, but in general these are risky loans and can be used when a person is in a tight spot. That's not usually what it is. People use it once or twice and get addicted. I'm not saying these services shouldn't exist (I'm personally heavily invested in the collections industry), but the parts of the credit/loan industry that target these markets are very analogous to drug dealing because they primarily profit off of people stuck in the cycle. Also importantly, the companies have all the power, they have the law on their side and can navigate the court system.
felipe 18y ago
These "poor people" can't get regular bank accounts so they have no way to cash paychecks They don't go to a payday loan to cash a check. They go there to get a LOAN. It's a cash-advance so they can pay some bill out of desperation, like their rent or something like that. Wal-mart cashes a check for $3.

omnipath 18y ago

Here is what bothers me about this. How can you not get a regular bank account? Doesn't Bank of America just require an address, plus a deposit? What else is needed? I think it's more fair to say that they don't trust banks, rather than can't get regular bank accounts.

pchristensen 18y ago
Doesn't Bank of America just require an address, plus a deposit? You can get a bad checking account with high monthly fees, check writing fees, ATM fees, etc. I'm pretty sure you have to submit to a credit check or have additional deposits to get a free account. While these bad checking accounts are probably less expensive overall, it's more difficult to judge the costs, especially for financially unsophisticated customers. One big fat fee from the payday lenders probably seems smaller than N smaller fees where N is unpredictable.
- Retric 18y ago
  Most of those fees can be avoided if they treat the bank like those pay day loan processing places.
  - wushupork 18y ago
    While you and I may be financially educated and well versed, many people are not. The only reason credit card companies make money is because there are people who don't understand how credit card companies work and make only minimum payments. Not to mention there are cultural and demographical biases against banks and credit cards. When I was in China I knew many people who did not trust banks. They either did not want how much banks/government to really know how much money they had or weren't sure their interests would be looked after if something were to happen.
  - jhancock 18y ago
    really? Your sure about that? You try it. Put yourself in a life where you have no bank account, no or bad credit, and try to take the check you just received from "low income job x" and try to find a retail branch of the bank it was written against. If you're real lucky, there is a retail branch near you. When you go in, you will be presented with process barriers the bank uses to keep you from cashing the check. Are these barriers legal? Doesn't matter. You still will be sent out the door without your money...and then you go back to the loan sharks.
    - randallsquared 18y ago
      "Are these barriers legal? Doesn't matter. You still will be sent out the door without your money...and then you go back to the loan sharks." Wait, you're now arguing that the "loan sharks" are useful and helpful, after denigrating them elsethread? In any case, I agree that you can cash a check at the bank it is drawn on, and that it can be difficult. Because my newly opened account had an eight day clearing time, I needed to cash my checks and trot over to my bank to deposit cash quite a bit last year (small employer had no direct deposit). It was comical what lengths they went to to try to avoid giving me cash. "Are you a customer with us? [No.] Oh, I'm sorry." (But I didn't go away). "Oh, you'll need two IDs." (Okay, here you go). "Oh, we don't have that much money on hand." (It wasn't very much, especially for a bank). "Oh, I'll have to get my manager." (in a vaguely threatening-maybe-you-should-just-leave manner). "If you open an account with us, we can cash this." (But of course they could even if I didn't). "We can't give out that much cash. Can you come back tomorrow?" (No). "I guess we could do a cashier's check for half of that [said doubtfully]. Would you like to open an account with the remainder?" Etc. The first few times, I was polite and firm, and eventually they recognized me when I came in and I didn't get any hassle. But lots of people wouldn't know that "We can't" doesn't mean they can't.
      - jhancock 18y ago
        "Wait, you're now arguing that the "loan sharks" are useful and helpful, after denigrating them elsethread?" They are only useful and helpful in the absence of forcing banks to act like decent members of society. Fix that problem (which is very easy if you focus on corruption between corporations and elected officials) and you remove the need for the loan sharks.
antidaily 18y ago
You can be denied an account. There's a company called ChexSystems that maintains a "bad customer" database and basically tells banks not to give you an account if you've ever bounced a check or had some other mishap.
jhancock 18y ago
It is sad a state of affairs that someone can receive a check and cannot cash it at no cost (not just put it into another account). There is no basis for requiring credit to receive money from an account that clearly has the funds. Between the banks and now payday companies, this state will persist until we get state politicians that aren't corrupt. Note: this goes for most states, not just the lovely one Chicago is in.
randallsquared 18y ago
I was denied an account at Wachovia in 2006. They invited me to apply again in the future. I won't.

cia_plant 18y ago

The company in question does not cash checks; it makes high-interest, short-term loans. A valid checking account is actually a requirement to receive such a loan. http://www.cashnetusa.com/how-it-works.html http://www.cashnetusa.com/how-it-works.html I agree that payday lending probably can't be done that much cheaper. Competition does tend to keep profits low for most businesses. However, if the only loans which can profitably be made in a given market are extortionate, then I don't think that loans should be made in that market. It's business, sure, and I do live with the fact that the world is full of businesses which profit by taking advantage of others, but I don't have to respect the kind of person who starts such a business.

dantheman 18y ago
So you'd rather see someone get fired, because they don't have the cash for some repairs to the car? Sure the price of the loan may be high, but in general these are risky loans and can be used when a person is in a tight spot.
- carbon8 18y ago
  So you'd rather see someone get fired, because they don't have the cash for some repairs to the car? Sure the price of the loan may be high, but in general these are risky loans and can be used when a person is in a tight spot. That's not usually what it is. People use it once or twice and get addicted. I'm not saying these services shouldn't exist (I'm personally heavily invested in the collections industry), but the parts of the credit/loan industry that target these markets are very analogous to drug dealing because they primarily profit off of people stuck in the cycle. Also importantly, the companies have all the power, they have the law on their side and can navigate the court system.

felipe 18y ago

These "poor people" can't get regular bank accounts so they have no way to cash paychecks They don't go to a payday loan to cash a check. They go there to get a LOAN. It's a cash-advance so they can pay some bill out of desperation, like their rent or something like that. Wal-mart cashes a check for $3.