8 Things to Know About Poverty and Access to Financial Services

8 Things to Know About Poverty and Access to Financial Services

Note: For additional information, click the number in parenthesis following each tip.

  1. Be aware of red-lining. Mainstream businesses choose not to do business in impoverished areas. Insurance is not provided in some cases. Mortgage companies don’t want to lend money in some areas. Grocery stores don’t want to provide services in certain areas. (100)
  2. Read about sub-prime lending and housing, and about lending at pay day loan establishments, but also about credit in general. See chapter two of The Working Poor: Invisible in America by David Shipler. (101)
  3. Most banks now charge a certain amount for a checking account. You don’t get free checking unless you maintain a minimum balance. Well, if you have a minimum wage job and you’re living hand to mouth, you’re not going to be able to keep a minimum balance in your checking account. It’s sort of one of those things where those who have get and those who don’t have get to pay the fees. (102)
  4. The poor have no access to financial services. When you start seeing pawn shops pop up in communities you need to be aware that the economic structure has broken down. It means we have more and more people not having access to traditional forms of loans and can’t make it from pay day to pay day. (103)
  5. Consider these questions: How much do poor people rely on Unbanks and what do they charge? What do banks charge for the same services (or do they even offer them)? How have poor people been used in the sub-prime mortgage market? What do tax preparers charge for advances on refunds and are there ways to get taxes done free? How do pawn shops operate?
  6. Journalists should be trying to investigate what it takes to get access to certain programs and what it’s like to be a poor person trying to get access. I think you would find that it’s a lot harder to actually get help than one would realize and that it takes a lot of work. (105)
  7. Our financial institutions are geared toward people that already have some degree of wealth. The poor pay incredible interest rates for pay day loans, exorbitant fees to cash their checks if they don’t have a regular bank account, and fees to wire money to family if they don’t have a checking account. They pay higher rates for routine financial services than middle class people do, which makes their already limited resources go even less far. I don’t think reporters write about that much. (106)
  8. More often than not, it takes money and education to access financial services. One of the terrible ironies of poverty is that it is expensive to be poor. (107)