ó From behind the Plexiglas window at the back of his
Brooklyn Park shop, Charlie Ward spotted one of his
regular customers coming toward him.
here!" Ward exclaimed, arms out to Roy Wasmus, who
has been coming to the Brooklyn Park check casher for
close to 30 years, first to cash his paychecks from
General Motors and now for money orders.
than a quarter of Baltimore residents donít have bank
accounts or, like Wasmus, donít use them exclusively.
Instead, they manage their finances through check
cashers like Charlie Wardís and with other alternative
financial services such as prepaid cards.
cashers ó distinct from payday lenders ó typically
also allow customers to pay bills, get money orders and
wire money, which makes them especially popular in
years, consumer advocates criticized check cashers as
part of the problem in low-income neighborhoods, saying
they exploit residents by charging high fees and
perpetuate poor financial habits. Yet, despite those
fees, a research suggests their customers prefer check
cashers to banks for their familiarity, convenience and
simplicity. Some use check cashers because they canít
qualify for a bank account.
as much as check cashers fill a community need, consumer
advocates and bankers argue their popularity highlights
the need for better financial education so people become
more financially stable and understand the role of bank
accounts in establishing credit, securing loans and
cashers proliferated after the 1980s when bank
deregulation prompted of consolidation that closed many
branches, especially in low-income neighborhoods. As of
June, there were 421 licensed check cashing businesses
in Maryland, up from 340 the year before but down from
517 in 2010, according to state data.
are found mostly in low-income neighborhoods, regardless
of their racial or ethnic make-up.
has always been about a relationship," said
Cassandra Jones Havard, a law professor at the
University of Baltimore who studies the financial
services industry. "So much of what happens with
money is cultural and ingrained."
customers of Charlie Wardís donít go there simply
because they donít have a better option. Ward
estimates that between 30 percent and 40 percent of them
have bank accounts.
prefer Ward, with his jovial greetings, to the
library-quiet bank branches where tellers address people
as "sir" and "maíam," not only
because itís polite, but also because they donít
always recognize their customers.
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do I come here? Because I like him, OK?" Wasmus
said. "Heís like me ó heís got a bad leg, his
hair is kinda receding like mine.
itís close to home."
who opened in 1975, is aware of his industryís
reputation for being predatory, but he thinks itís
better than the banks," Ward said. "For a lot
of people weíre just a lot more reasonably priced ó
and Lord knows we try to be a lot friendlier than any of
cashers are licensed by the state, which caps the fees
they can charge. Charlie Wardís charges between 1.5
percent and 2 percent to cash a check over $100. Checks
under $100 are $1. Money orders are 25 cents and itís
$2 to load a prepaid card.
also sells bus passes, does wire transfers and can pay
customersí utility bills. He charges fees to cover his
costs and risks and to make a profit. The fee for each
service is detailed in bold font on fliers tacked above
into a bank and you donít see anything like
that," said Lisa J. Servon, a professor of city
planning at the University of Pennsylvania, who worked
as a clerk at a check-cashing business in the South
Bronx, N.Y., for four months to study customersí
habits. "Even if you do open a checking account,
you have a 45-page disclosure."
who live from one paycheck to the next are willing to
pay the fees because they often canít wait the days it
takes for a check to clear at the bank and canít risk
overdraft fees, which are often more than what it costs
to cash a check, Servon said.
to the federal Consumer Financial Protection Bureau, the
median bank overdraft fee is $34. The fees typically are
incurred for each item that bounces, which can quickly
add up. While banks donít charge fees for depositing
checks, many do charge maintenance fees for accounts
that fall below a minimum balance, which can be
difficult to maintain for someone living paycheck to
paycheck or with irregular income.
argue that their fees are necessary to cover the cost of
offering services like checking accounts and debit
cards, but theyíve also increased bank profits in
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banks offer low or no-minimum balance accounts for
customers who have their paychecks directly deposited
into the account, said Kathleen M. Murphy, president and
CEO of the Maryland Bankers Association.
direct deposit, people donít have to wait for their
check to clear because the money is instantly available,
she said. Online and mobile banking also make banks more
accessible to people who donít live near ó or donít
want to go to ó a brick-and-mortar branch.
thing a branch provides is the opportunity to talk
face-to-face to someone," Murphy said. "I
think the most important thing is for individuals and
businesses to fully understand what the array of options
are for them, and thatís one thing you can do when youíre
visiting face to face."
though Jessica Fields has a bank account for direct
deposit from her job as a manager at McDonaldís, she
cashes other checks at Charlie Wardís.
OK," she said of her bank. "But all the fees,
man, sometimes itís like, ĎWhat the hellís this
fee even for?í"
State University recently released a report, funded by
Master Your Card, MasterCardís financial education
arm, that focused on "financial deserts,"
places that have adopted their own financial norms in
the absence of banks.
are not places where thereís dead space and no
economic viability, itís just that the nature of that
economic viability is not mainstream," said Kim
Dobson Sydnor, dean of Morganís School of Community
Health and Policy, and the reportís author.
said she thinks check cashers are detrimental to the
people who use them and their communities. But when the
researchers conducted focus groups in Baltimore
neighborhoods without banks, they found that even though
people generally described such alternative financial
centers as "sharks" many still preferred them
to banks, which they described as untrustworthy and
stateís Office of the Commissioner of Financial
Regulation receives relatively few complaints about
check cashers. Out of 1,154 complaints about banks,
collection agencies, credit reporting agencies, payday
lenders and other financial service providers regulated
by the office in fiscal 2016, only four were about check
cashers, said Commissioner Gordon Cooley.
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advocates are more critical of payday lenders, which
offer short-term loans as advances on customersí
paychecks, charging high interest rates. While Maryland
allows payday lending, the state caps the interest rates
at level lower than other states.
researchers learn more about why people use alternative
financial services, they are looking for new approaches
to improving financial well-being that could be more
effective than simply trying to get people to switch
from check cashers to checking accounts.
a correlation between people who have checking accounts
and who use them, and people who have savings and good
credit history, said Rachel Schneider, a senior vice
president of the Center for Financial Services
Innovation and the co-author of a forthcoming book about
financial habits. We all assumed that because there was
a correlation, that if we got people into bank accounts
they would be better off. I am currently deeply
skeptical about that correlation."