We all take things for granted. Sometimes it is our talent or even our loved ones. Human nature perhaps. The times that we don’t take things for granted are when they are unattainable.
In some neighborhoods, there are conveniences to which we don’t give a second thought. If for example, you forget to swing by your bank on the way out to run errands, there is typically another automated teller or drive-through in which to take care of business. In other words, options.
But what if you lived in a financial desert? Neighborhoods bereft of easy and affordable access to a banking institution need solutions. According to Clayola Brown, President of the A. Philip Randolph Institute in her August 2016 article for The Huffington Post:
The lack of banks in low-income neighborhoods forces people who are already stretched for money pay more for less at check cashers and payday lenders. These financial predators are called “alternative financial institutions,” but in reality nearly 9 million African-American households have no other alternative. Nearly 21 percent are unbanked and more than 33 percent are underbanked. Nearly 10 percent of their average household income is spent on interests and fees. That’s the same percentage the average American household spends on food each year.
Simply put, financial deserts in African-American communities drain an estimated $21.4 billion each year in fees and interest. That’s money that could go toward education, transportation, food and, most importantly, back into our community and our small businesses instead of flowing out through the pockets of money changers.
Ms. Brown’s contention is not that brick and mortar banks be erected. “The solution is to green our financial deserts with electronic payments that save time and money, and protect the money of working people.”
The longer we here at rapid! PayCard® have been in the paycard business, the more it shows itself to be a viable alternative in so many circumstances. Paycards:
- Can reduce costs, improve efficiencies for employers
- Provide access to a savings account1 for employees
- Create the ability to make purchases and pay bills1 online
- Support the unbanked who do not have traditional banking accounts
(Nerdwallet cites an interesting look into the states and metro areas with the most unbanked households per their September 2016 post.)
By allowing people who live in financial deserts to conduct their business without being penalized by check-cashing fees and being given the latitude to enjoy the simplicity of direct deposit of wages, they have a better means of helping to protect their money.
A secondary, yet distinctive benefit of paycards is that they help keep more money in the wallets of consumers and allow those funds to be available for spending in the neighborhoods in which they live.
At the end of the day, paycards can offer significant savings over cash. The total monthly cost of relying on cash can be as high as $96 not including the time spent waiting in line at a check casher or to pay bills in person. Compare this to the approximate monthly cost of using a low-fee prepaid card: $24, and less time wasted getting less for your money.