Static Zombie

Briefly: These check cashing shops feed of the high cost of being poor. There are some people who simply cannot afford to open a bank account because they litterally live pay check to pay check. They do not have the credit rating to get even a credit card and forget having an ATM card. They are forced to use the check cashing shops to get cash and loose 10% of their income to these leeches.

Plus, they are garish and eyesores.

Check cashing stores, payday loans, auto title loans, rent-to-own outfits...all are basically in business to exploit the poor and financially uneducated. They tout the easy money aspect, deceiving people into thinking they can truely participate in the "American Dream" of consumerism, while they rape their customers with steep fees and interest rates.

It also points out how poorly our education system is in teaching people about money, finance, and how the economy works.

Welcome to the real world Pete. Banks don't really do that stuff for free either. They have all sorts of fees they charge if you mess up, and if you have no credit rating the usually have a monthly fee for a simple checking account too - plus the costs of the checks, ATM fees, etc... The higher level accounts don't have many of these things, but people who can't get these accounts are kind of stuck.

So, many of them avoid the bank when they can. Their employers give them a check though, and they need to cash it quickly to pay bills. So, they go to one of these places and pay the fee, because they can't wait 5 days for the bank to clear it. If they do wait, they will be late paying something or bounce something, incurring more fees, which may well cost more than the check cashing places charge.

Plus, lots of people can't get bank accounts for whatever reason (usually for having written bad checks or overdrawn or whatever in the past). You can, in theory, take the check to the bank on which it was issued and they have to cash it (in America, anyway, in the UK you simply cannot cash a check without a bank account, period.), but it doesn't solve problems like a tax refund check or even a paycheck from a big employer where that particular bank may not exist in that area...

Once you're bank account blacklisted, you're stuffed.

You may also want to consider the ethnic makeup of your neighborhood. Without getting into the fairness and propriety of attributing poverty to any particular ethnicity, the plain facts are that check cashing places (like any other business) follow the influx of the populations that use them, and these days that's typically Hispanics. At least where we're talking about new storefronts. They've always been present in black neighborhoods.

I imagine that check cashing places are also popular among illegal immigrants, who need to cash paychecks without leaving the paper trail a regular bank account creates.

Peter,
A Defense of Capitalism can be found at:
http://reason.com/0204/fe.ml.finance.shtml

That is a VERY interesting article. Though some of it sounds like it was written by a check cashing store owner, a lot of it makes sense.

It makes sense in that it restates the obvious -- that check cashing places serve a community that needs them. What the need is for infusing the article with references to "wonks" and "do-gooders" is I don't know.

Of course, that's a lie. The truth is that you can't get published in Reason without that kind of liberal-baiting, no matter how good (they think) your base argument is.

It is, of course, snobbery to think only of low-end "fringe bankers" as operating outside the traditional banking system and not to include high-end folks with personal bankers. But to suggest that all check cashers are doing all their customers a big favor based on the fact that the author was able to find one pleasant woman who was happy using check cashers because she doesn't like standing in line betrays a similarly narrow viewpoint. The very same viewpoint, perhaps, that allows us to come away with the impression that the Shaw's Supermarket in New Haven is a marvel of the Invisible Hand, rather than the product of years of work by neighborhood-based Community Development Corporations that put federal block grant funds into preparing the Whalley Ave. site, training workers, and rolling out the red carpet for Shaw's. As CDCs do every year across the country.

The success of the Shaw's site, with its Fleet Bank branch inside, can only be attributed to the existing need for more traditional banking services in neighborhood where Check King thrives. That Check King does continue to thrive indicates only that there's room in the market for both, though that's a conclusion you have to draw for yourself, because it doesn't serve the article's argument. Meanwhile, who built the successful Shaw's, where area residents are in fact enjoying low-cost banking services? "Wonks." Par for the course.