Monday, February 18, 2008

An Inner City Staple...Check Cashing Stores

Through out many of Americas’ inner-city commercial corridors you will find Cash Checking stores or liquor stores that have cash checking services. In many inner-city communities Cash Checking services have replaced Banks, which have either closed down or fail to see a viable market for investment. While residents of inner city communities have a higher probability of having poor credit that would not allow them to open a checking or saving account, the lack of any banking institutions hurts a community’s chances for reinvestment and redevelopment.

Furthermore, many Check Cashing services charge high fees to a community that is already strapped for cash and may help continue bad spending habits for residents who have never a checking or savings account. To be fair, check cashing is a needed service for many people for varied financial reasons. The problem is that in the inner-city; Check Cashing services are over represented and often times replace banks as the primary financial service institution for these neighborhoods.

The combination of check cashing services and rent-to-own services in communities with poor or limited knowledge of banking will leave them vulnerable to paying higher fees and interest rates for their financial services as well as leaving them vulnerable to predatory lending such as “Payday loans.” So not only can Check cashing services lead to a lack of positive financial investment in inner-city neighborhoods, it often leads to a continuing cycle of disinvestment which will make communities even poorer and more of a financial risk to banks to invest in the neighborhood.

So what are your thoughts on check cashing services in the inner-city? Do you feel that this is a needed services that has some flaws or do you feel that stronger action needs to be made against check cashing services to help protect inner-city residents?


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