Growing up in the middle class, my most prominent experience with financial institutions was going through the drive through at the local bank with my mom.
As a piano teacher, my mom received much of her income via personal checks that she would then deposit into her checking account. I especially loved going through the outer lanes at the bank drive through because I was fascinated with the process of retrieving and sending the plastic tube-shaped capsule.
She would put her checks in the capsule and press the button to launch it over to the teller. I watched as the teller would receive it, then smile over in my mom’s direction. She would say a few friendly things into the microphone, which we would hear through the small speaker near our car.
When the transaction was complete, she would send the capsule back through that amazing system. I can still hear the sound the capsule made as it was sucked up and then arrived in the tube.
My mom would swing the lid open to get her receipt and maybe some cash. If we were lucky, the teller would send along several Dum-Dum suckers for my siblings and me. It paid to go to the bank with mom.
Between direct deposit and scanning checks from my smart phone, I’m sad to say that my kids haven’t ever experienced that. I’m sure they would not only be fascinated by the vacuum capsule system, but they would have lots of curious questions about banking and finances too.
My first checking account
As a child I never had my own bank account. I signed my babysitting checks over to my parents and they’d give me the cash.
After driving me 2,000 miles away from home to go to college, my dad helped me get my first apartment set up. Then, we went to the local bank to set up my first checking account. I was feeling pretty grown up.
Learning to hate payday loans
I was in college when I first heard about payday loans. Sure I had seen those places popping up on street corners all over with their big neon signs, but I had never been in one or known anyone who used one.
I thought I understood the concept just from the name. They would give a loan to people who couldn’t wait until their paycheck to get money.
At college I met a girl who had taken out a payday loan to cover one month’s higher-than-usual cell phone bill. She rolled that first loan into another and another, and eventually owed thousands of dollars, and even lost her car, in repaying it.
I don’t recall the amount of interest or the terms of her loan, but I do remember how I felt when I heard about it. I was completely and absolutely disgusted. From then on, I saw payday loan places as filthy, predatory businesses that made my skin crawl.
I never imagined myself actually walking into one.
A taste of the payday loan culture
Fast forward more than a decade. As a winner of the #FinHealthMatters essay contest, I was invited to participate in a simulation called FinX put on by the Center for Financial Services Innovation (CFSI).
To say it was eye-opening would be an understatement.
In teams of three (I got to be with Aja and Jessica), we were dropped off in various inner-city San Diego neighborhoods to complete assignments that simulated typical financial tasks of people who are un-banked or under-banked.
— Jessica Garbarino (@JessGarbarino) September 21, 2016
My team’s scenario was that we were on a lunch break on payday and needed to cash some checks, pay some bills, and take care of other financial tasks before returning to work. We started with an $85 payroll check and a $15 personal check. Our team’s payroll check was written out to me, which seemed advantageous since I conveniently have a California license.
We couldn’t find a bank in our area, but there were payday loan stores in every direction. We knew the check-cashing fees would be steep at a payday loan place, but we didn’t have many options since our time was very limited.
As I waited in line with my ID in hand ready to cash my check, I was overwhelmed with all the signage full of numbers, disclosures, disclaimers, rules and fees. I had no idea how much this was actually going to cost me.
I thought I would have no problem cashing my payroll check with my in-state license. However, the worker said she didn’t recognize the employer so she wouldn’t cash the check.
Just like that we were out of luck.
Several doors down, there was a convenience store that had a sign on the window advertising “Check cashing here.” When we went in to inquire, the clerk told us, “Yeah, I know the sign says we cash checks, but we actually aren’t approved to do that yet.”
Just a case of false advertising.
— Increase Laws (@increaselaws) September 21, 2016
The third time’s the charm, right? We came to another payday loan/check-cashing center. I pulled the door to go in, but it was locked.
“That’s odd,” I thought. “It’s definitely normal business hours.”
Then one of my teammates noticed that the worker inside was signaling for me to take off my glasses. How odd! I wasn’t wearing sunglasses, just my regular glasses!
Apparently the store had a no glasses policy. After I took off my glasses I must have looked safe enough, because she unlocked the door and allowed me in. When I tried to cash the check, though, she said she could give me a Visa gift card, but she couldn’t give me cash. I didn’t even stay long enough to find out what the fee would be. We needed cash not a gift card.
Needless to say, none of the places offered us Dum-Dum suckers either.
The bank wins
Finally we found a bank. Never before had I noticed or appreciated the atmosphere and feel of a bank like I did then. I felt safe and comfortable when I walked in. I wasn’t bombarded with signs and disclaimers I didn’t understand. The workers smiled and were friendly. They educated me on my options. I wan’t interrogated or treated like a criminal.
— Increase Laws (@increaselaws) September 21, 2016
Still, to cash a check, no matter the amount, at a bank cost me $8 because I didn’t have an account with them!
The teller was helpful though. Knowing that $8 was a high fee for my $85 check, she explained how I could open a free checking account. She even said that if I opened one in the next week they would reimburse the fee.
Who knew that cashing a check could be so complicated?
I was frustrated that everything took so long and had so many fees attached.
I was disappointed and turned off by the lack of customer service, confusion over policies, and the inconsistency in answers.
I was angry that real people with so little were being taken advantage of in such a big way.
I was sad to think of people doing finances like this because they don’t know any other way.
I was grateful for the opportunity to see from a different perspective.
I am thankful for my own financial health.
That was the point
In my case, feeling frustrated, overwhelmed, and angry was the point. The whole FinX experience was to help participants (in this case bloggers and financial service providers) to gain a deeper understanding of the complexity of consumers’ financial lives.
Knowing that I have readers who have used, or even rely on, these alternative financial products and services makes me even more motivated to spread the message of financial health. I’m even more convinced of the value of financial education, something that’s not even taught in schools!
Our experience wouldn’t have been complete with a good debrief and discussion on what can be done to improve financial health, the whole mission of CFSI. The answers aren’t simple or clear.
While changes in policy, education, and financial products and services themselves are all part of the needed solution, I feel my role is a little smaller and more personal, like the man who stood on a beach full of washed-up starfish, throwing back one starfish at a time.
My goal is to help on an individual level, making a difference by helping one person at a time improve their financial health by getting out of debt and making smarter financial goals.
- Have you ever used any alternative financial products or services like payday loans, check-cashing, pre-paid reloadable cards, pawn shops, money gram, etc?
- What do you think is the answer to increasing overall financial health in our communities?
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