Steep fees for check cashing, money transfers and debit transactions eat into the meager incomes of people without bank accounts, according to financial analysts. The financial services industry is looking for new ways to capitalize on this growing group.
“There’s a lot of money to be made in dealing with the lower-income population, as long as you don’t give them a bank account,” said Richard Bove, a bank analyst based in Florida.
More than 820,000 additional U.S. households have become unbanked, a .6 percent increase, since the FDIC’s first survey in 2009. More than half of unbanked households said they don’t have an account because they believe they don’t have enough money or that they don’t need or want an account, the FDIC reported.
Payday lenders provide cash advances with annual interest rates that can be more than 400 percent. Iowa Sen. Joe Bolkcom, D-Iowa City, has proposed legislation in recent years to limit the interest rate to 36 percent, but the bills have been defeated.
Do you think Iowa lawmakers should cap the interest rates that payday lenders can charge?