"Unbanked" Shouldn't Mean Unregulated
Last week, we blogged about the dangers associated with prepaid debit cards and the additional costs associated with not having a standard bank account.
This week, the Washington Post published an article that sheds a light on the lifestyles of the “unbanked,” the most common users of unregulated services like check-cashing stores, prepaid debit cards, and payday lenders. This article provides a good illustration of the reasons why people avoid or are prevented from using mainstream financial products. Some people don’t trust the financial system, while others don’t have enough savings to open an account, and still others have past debts that make new loans impossible.
While a low-balance checking account makes more financial sense than these other products, consumers should have a choice of how and where they want to store their money. But in the current system, it’s up to state governments to regulate these non-bank lenders; federal agencies have no jurisdiction over these important issues.
As a result, these federally-unregulated lending products are most often used by those who can least afford the outrageous fees and ridiculous interest rates. Want to do something to change this? Ask your elected officials to support the Consumer Financial Protection Agency today.