By Jim Gallagher, Courtesy of The St. Louis Post-Dispatch
jgallagher@post-dispatch.com
Payday loan companies often give this response to complaints from consumer groups; “We’re cheaper than the banks.”
Their charge, typically about $17 on a two-week loan of $100, is below the cost of bouncing a check, which can run more than $30.
Now, payday lenders and check-cashing companies are getting some support from an unexpected source, Lisa J. Servon, a professor and poverty researcher at the New School, a university in New York City.
It’s not that the check cashers and payday shops are a good deal for the poor. It’s that banks are so bad at serving people without much money.
Servon spent months working as a teller at a check casher to get a firsthand picture of the problem, and she describes it in an article in the New Yorker.
She found that customers are confused and surprised by bank fees on checking accounts. They feel they’re treated better at the check-cashing and payday shops, and they know what they’ll be charged. Unless a customer qualifies for a credit card, banks aren’t interested in making small dollar loans to low-income people, but payday lenders are happy to oblige.
Jim Gallagher is a reporter at the Post-Dispatch
