Mercutio.Mont

"This video actually showed me the VALUE that check cashing shops offer. They give you money for your check on the spot. They assume risk. They are right around the block. (Yes, you have to pay for convenience, which people do.) And the fees they are charging to cash a check to strangers, seem very reasonable. (Thank you competition)"

Exactly. Many of the posters here betray their own lack of knowledge by failing to acknowledge the service performed.

Lee

I helped some clients in the check cashing/cash advance business the implement a tracking and screening program. Most of the customers are day laborers or employees of service businesses or recipients of government assistance. A lot of them can not or would not open bank accounts as they would rather get cash right away for essentials like food, gas, utilities, etc. Most also mistrust banks for all the hidden fees, surcharges and ID requirements. The standard fee is 1% of check amount plus $1 per check. When a check bounces or has a stop payment, the bank charges no less than $25 fee and that wipes out practically the day's income for the check casher. To collect the amount would cost additional $50-100. Some customers try to double-dip and report a check lost or stolen after they have cashed it. Others have the gall to cash counterfeit checks including those issued by the government.
When banks stop their stupid fees and unreasonable holds then the check cashing businesses will start to decline as the risks they take will no longer justify their fees. Still, you will be hard pressed to find a bank open 24 hrs. 7 days a week to cash checks needed by people to buy essentials. What needs to be done is outlaw the fees charged on cashing government issued payments as the risks are almost nil.
The real "crime" is on payday advance where interest rates could be as high as 450-500% for those who can ill afford such payments.

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Chris

REAL WORLD ALERT....
From poster #14 (see above), who has been a bank customer for 30+ years... If I deposit a check at the end of my workday, it will not be available the next day, but the day after that. I've learned that the hard way. And banks will let me continue to use my ATM/credit/debit card and charge me $33 overdraft fees each time, as I bank-trustingly assume that the hard-earned money that I deposited yesterday will be available. Check cashing places that only charge $1.00 per $100.00 to cash a check are angels of charity compared to all banks. And if you have a check drawn from a particular bank but are not a customer yourself, then that bank will charge a fee to cash their own check, even a local check.

MRP

What about the increased risk of a bounced check at the check cashing places? I know a few guys who own (small - not franchised) check cashing places and they're not doing too great (they drive Toyotas, not Lexuses, for example). They have all of those fees and high interest rates to cover for the large number of people who pass them bad checks. It's not that the check cashing places are evil. It's that a bunch of the "poor" are trying to get something for nothing which raises the price of every body else.

Any commenter here that thinks check cashing places are evil and should lower their rates are free to start their own unevil-low-rate place and see how long they last. If the evil places are raking in the money, the unevil places should be able to survive and take business away from the evil ones.

Munich P

In Madison, Wisconsin theres some law that says there can only be a few check cashing stores in town. Obviously, the few stores that exist charge extra.

Likewise, if these places were truly ripping off the poor, dont you think more firms would enter the market, bringing prices down to reasonable levels?

Demonizing these check cashing places is like demonizing (semi-humane) sweatshops. The truth is, these people's lives are so pitiful that these are their best options. Banning these options would be like if they banned drinking your own pee when dying of thirst.

Lucas

Most of the people I've known who use check cashing places don't have a bank account because of overdraft fees. Having a negative balance at one bank also makes it harder to get another account elsewhere, so they have little choice but to use check cashing places or pay the similar fees at banks for cashing checks. I think that check cashing places provide a valuable service.

Coinstar machines are a "scam" in the sense that every bank I've ever been to counts your change for free--without even the need for an account. On the other hand, I suppose banks aren't open 24 hours.

Lee Marks

This video actually showed me the VALUE that check cashing shops offer. They give you money for your check on the spot. They assume risk. They are right around the block. (Yes, you have to pay for convenience, which people do.) And the fees they are charging to cash a check to strangers, seem very reasonable. (Thank you competition)

Why are the people who are so against these places the ones who aren't using them? Their arguments against them aren't really even arguments but rather vague statements that seek to associate poor people getting more poor with the evil check cashing shops.

Smart

"Demonizing these check cashing places is like demonizing (semi-humane) sweatshops. The truth is, these people's lives are so pitiful that these are their best options." (Munich P)

This sentiment has been expressed by several of the posters. I agree completely, but it highlights what I think is THE important issue -- the abundance of check-cashing places is not the problem, rather an indicator of how little is being done to facilitate attempts to rise out of these so-called "pitiful" living conditions. Poor people are not encouraged to save their money. In fact, they are often discouraged in ways both psychological and physical, e.g. (but certainly not limited to) high check-cashing place to bank ratios. The fact that there are so few banks in these neighborhoods discourages saving when the opposite message would be more valuable.

The fact that it can be against a bank's own economic interests to move to the "hood" is unarguable. Banks should not be faulted for this (and therefore, neither should check-cashing places be faulted for filling the void). However, individual economic interests and societal interests can often be at odds. I would argue that it is in society's best interest for all citizens to have access to banks, for all citizens to be encouraged to save money and spend wisely. This would require intervention (perhaps in the form of incentives) from the sector whose job it is to look out for our society's interests -- the government. This does not currently happen.

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J-Mass

The part about escaping the world of check-cashing fees and arriving into the world of ATM fees is just pure genius...

J

Charles D

This is what happens when you combine a little bit of knowledge, a lot of assumption and someone that wants to be popular on the net no matter how bad their information is.

I work at a bank so I can see things from the inside. Why should a bank open up in a poor area where they will most likely fail? It has nothing to do with surrounding businesses, poor people don't trust banks or have made another bank mad so they get on the Chex list. It is basically like a credit report but only for banks. If you overdraft your account and don't pay the bank you can forget opening up another account somewhere else.

And ATM fees? Are you kidding me? Anyone with half a brain knows to go to a store where you can get cash back and just fill up there with a minimum purchase. Get a pack of gum and $100 cash back. Of course the 'evil' credit card companies have made it possible for you to not carry around wads of cash and still be able to do business. I know it is so safe to be carrying around tons of money in a poor neighborhood, but I just don't see the point.

Bottom line is that people bring these things on themselves. People always complain about some part of the poverty cycle that kills the poor but the truth is they would find a way for their own undoing. If there wasn't X then it would just be replaced by Y which perpetuated the system the same way.

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frankenduf

another scam is the coinstar machines, which also ripoff poor people (ever see a rich guy cashing in pennies?)- all this stuff should be illegal

matthew

I'm curious: why is it distasteful for a check cashing shop to exist, with clear terms, while it isn't distasteful for McDonalds to exist? What about liquor stores?

As soon as we start judging businesses morally for providing a service the customer wants, aren't we engaging in a dangerous paternalism to the supposedly uneducated customers?

I have no problem saying it's a poor choice to use a check-cashing shop, any more than I think it's a poor choice to engage in any other self-destructive behavior. That said, I don't think there's anything wrong with enabling that self-destructive behavior.

If I am my brother's keeper, then I'd better be given the power, not just the responsibility. If you want one segment of the population to morally judge (or worse, legislate) the vices of another segment, you'd better be ready for the consequences of THAT choice.

Gordon

If people want to be outraged about the abuse of the poor they would outlaw lotteries and sin taxes.

These two things squeeze more money of of poor neighborhoods than check cashing operations could only dream of.

GreedIsNotGood

Check cashing shops are not illegal, but they are at the very least distasteful and opportunistic.

We need to educate people on how to protect their money, reduce their debt, and spend wisely.

Matthew R.

Check cashing instead of banks ... renting instead of owning ... convenience stores instead of supermarkets ... It's quite expensive to be poor, and it's hard to get ahead of that vicious cycle.

If we got rid of check cashing places by legislation, that would only hurt the people we're trying to help (with the well-meaning but misguided compassion of bourgeois White America). Those check cashing places are the only game in town not because they drove out traditional banks through competition, but because traditional banks don't want to be in those neighborhoods. Check cashing places are indeed a ripoff, but removing them without replacing them would only make matters worse for the residents of those neighborhoods.

Chris Myers

Reading these comments is hilarious. You folks have no idea about the struggle on the lower rungs of the economic ladder. Might want to look in the mirror instead of pointing fingers. I mow yards on the side, and I'm just as likely to get nickel and dimmed and cheated by people with Texans for Obama stickers on their big, fat S.U.V.'s than the by W sticker lot. I who have a bank account will still use a check cashing place instead of depositing a check in the bank and waiting 24-48 hours before I can use the money. Hope I'm not "distasteful" to you.

Tudza

Comments from someone who worked at a bank for nine years.

"I who have a bank account will still use a check cashing place instead of depositing a check in the bank and waiting 24-48 hours before I can use the money. Hope I'm not "distasteful" to you."

Clearing times used to be worse than that, but legislation in the 80's attempted to clean things up a might. The first $100 should be yours cash same day at least. There is no reason you can't write a check against funds you just deposited, but I suspect many using check cashing places also live in neighborhoods of "No checks accepted". How about Wal-Mart, they take checks don't they?

"It is apparently a matter of knowledge. If you are referring to paychecks, the paycheck can be taken to any branch of the issuing bank and they must cash it without a fee."

For many chain businesses, the issuing bank for paychecks is probably in another state. If you are lucky, such businesses can sometimes make an arrangement with a local bank they do business with to cash their employee checks, but that's a hard sell. Taco Bell for instance drops money into a local bank, but it all gets pulled out daily or weekly to corporate bank accounts elsewhere, so why should that bank allow Taco Bell employees to fill up the lobby on payday to cash checks on Taco Bell Co Bank, Delaware?

"Coinstar machines are a "scam" in the sense that every bank I've ever been to counts your change for free-without even the need for an account. On the other hand, I suppose banks aren't open 24 hours."

What planet is this on? Planet Friendly Trusting Banker obviously. Banks will *not* take rolled coin from people who don't have accounts. They will have run across the quarter roll stuffed with nickels too many times for this. Why should they count the change for you? You already know how long that takes.

Some larger banks will have coin counters you can use ( if you are a customer ) or those swell counting tubes you scoop coins into and slide the coin wrappers around. This will save you lots of time, but the bank will still want you to have an account to exchange the now nicely arranged coins for paper money.

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Karl

You're confusing the poor with people with poor credit. Those groups have a lot of overlap, but it is completely possible to be poor with good credit, if you live within your means and keep your financial commitments. I know this because I did it as a poor married college student, as do many others. Interestingly, poor people with good credit rarely stay poor for long.

It's your credit rating that makes you pay more for things, not your income. While you may not have a lot of control over your income, at least in the short term, you definitely have control over your credit rating, which is why I have a hard time feeling sorry for these people.

When I was still on an intern's salary, a relative asked if I could look at their budget to see if I could find a way to keep their house from being foreclosed, as they were six months behind on their mortgage payments. I was surprised, because I knew the approximate value of their home and their approximate income, and thought they should be able to easily afford the payments. It turned out that the amount they paid every month just in late fees, bounced check fees, credit cards, interest charges, and the like exceeded my entire monthly income!

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Smart

The Coinstar thing is a little tangential.

Those check cashing places are exploitative, and most of the exploiting gets done in disadvantaged communities. What's so bad about being morally outrage at this? When did morality become a detestable quality? Perhaps the capitalist economy has no moral obligation, but the government does. Sometimes economic interests are trumped by societal interests. I think this case -- where economic practices work to keep the poor and disadvantaged parts of society poor and disadvantaged -- falls into that category.

CompetitionRules

If some business maverick came in with a new chain of check cashing shops at half the rate of current shops, they would probably do well. Capture the market. We would likely see a price war, which would be good for the consumer.

It's the Wal-Mart way. Except nobody would shed a tear when the high-priced check cashing shop owners went out of business.