The stats & facts on check cashing places and payday loans are astonishing! I'll give you a few shocking figures in a minute...
But first, I want to tell you about former US President Bill Clinton and current California Governor Arnold Schwarzenegger joining forces in California to more-or-less squeeze those high-cost payday loan and check cashing places out of the marketplace (my words, not theirs).
As part of the William J. Clinton Foundation's Economic Opportunity Initiative, the two political powerhouses seek to help "unbanked" consumers in California transition over to traditional banking methods, open checking and savings accounts, and avoid paying outrageous fees to payday loan and check cashing places.
California is the kick-off state, and plans are in the works for Bill Clinton's foundation to support this initiative in other states all over the country. The foundation is already supporting efforts in Miami, Los Angeles, Boston, New York, San Francisco, Providence, Savannah and Seattle.
I think any positive effort to truly help "unbanked" consumers establish starter bank accounts, save money, avoid high-cost fees, and better manage their money is a really good thing.
I hope it's very successful! (by the way, California has already helped 11,000 people)
OK, now those facts & stats:
- Millions of lower and middle income Americans spend $8 billion per year on payday loan, check cashing and pawn shop services, which they could get for free or very low cost at a bank or credit union.
- The average unbanked full-time worker will spend $40,000 over their lifetime just to turn their paycheck into cash.
- The number of payday loan, check cashing and pawn shop places is more than double the number of McDonald's locations in the US.
- More than 20 million Americans cash $60 billion worth of checks at check cashing places each year.
- A typical full-time worker without a checking account pays an average of $40 just to cash their paycheck.
- Payday loan places sell $40 billion each year in expensive small-dollar loans that carry fees 30 times that of the average credit card.
- The majority of people without bank accounts have an average household income of $27,000, are married, have at least one child, and are employed by a small business.
- If the average full-time unbanked worker invested the money they'd otherwise spend on check cashing services (over their lifetime) in the stock market, they could create $360,000 in pre-tax wealth for themselves.
Just by reading the above, you can assess that there are many financial advantages to having a checking and/or savings account at a bank or credit union.
And by the way, if you want to read where I got all of this good info from, just click here.
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