Baltimore Program Aims to Curb Fringe Banking

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Most people don’t want to turn to check cashers and payday lenders to do their banking, but for some people in West Baltimore, there are no legitimate bank branches within walking distance.

The Urbanite cited a 2008 Brookings Institution report on the “non-bank basic financial services industry,” which found that one neighborhood convenience store providing check cashing services for a fee is “at the epicenter of a west-side financial services desert–approximately four square miles with no convenient access to basic services such as checking and savings accounts.” No wonder we have yet to stunt the growth (out of necessity) of fringe banking practices–for many, it’s the only convenient and feasible option for paying their bills on time.

Thankfully, a new coalition has formed to help residents. The Baltimore Cash Campaign aims to help low-and moderate-income families become financially literate. The group organizes free tax preparation services at trusted community locations and helps educate and provide resources to residents on checking accounts, certificates of deposit, and savings options, with the goal of turning those initial sessions into long-term practices–an important first step toward a larger financial conversion that’s desperately needed, especially when you consider some general findings from the Brookings Institution report: Households collectively pay more than $8 billion in annual fees to these non-bank establishments, and a full-time employee can lose upwards of $40,000 of earnings by using these fringe banking services instead of traditional banks. Yow!

Source: Urbanite

The Urbanite was nominated for an Utne Independent Press Award this year for its social/cultural coverage.

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