By: Darrell Castle
Collecting a paycheck is very important. That paycheck is how you pay your bills and buy your living necessities.
But did you know the step in between collecting your paycheck and paying your bills can be just as crucial?
Memphis Is a Leader Among Unbanked Cities
What do you do with your paycheck? I put mine into a bank account. However, a large number of Americans don’t. Many Americans don’t use checking or savings accounts that banks provide. And many of those people live in Memphis.
Memphis ranks #5 among large cities — cities with more than 100,000 households — for percentage of unbanked and underbanked people.
This can mean one of two things.
1. Many people in Memphis collect no income. Meaning they’re currently unemployed. And that’s certainly a factor, as you can see in the graph below.
2. Instead of using a checking or savings account, people are turning to predatory lending services like cash checking or payday loans. And that’s not a good thing.
Predatory Lending Services
Predatory lending is an unethical practice of abusing customers with hidden fees, inflated interest rates and more. These practices are — in a way — designed to put the consumer in a cycle of debt — of owing money to those services.
This kind of lending exists in different forms. Two of which rival the use of banks to cash, store and spend money.
Check Cashing Services
Check cashing services charge a percentage of your check — up to 3%. So if you’re cashing a $500 check, then $15 of it will automatically be taken out.
That may not seem like a lot of money to some, but for those living paycheck-to-paycheck trying to make ends meet, it’s a lot. And add that up for an entire year, and you could end up spending $1,000 just to cash your checks.
Pay Day Loan Services
Payday loans are even worse. They’re a debt trap. And I explain how in this video.