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Check cashing companies provide a needed service

Consumers should be careful about the fees charged by check cashing companies
Consumers should be careful about the fees charged by check cashing companies (Chris Walker / Chicago Tribune)

The Maryland Association of Financial Service Centers, the state trade association for businesses offering check cashing services, supports financial education efforts that are factual and unbiased. While we commend the CASH Campaign for the many good services they provide to underserved citizens of Maryland, their goal to shift people from check cashing and payday lenders is biased in its very conception (“1 in 5 Baltimore households tap services like check cashing instead of banks. This group hopes to change that,” April 12).

I am only addressing check cashing services as there are no brick and mortar payday lenders in Maryland and Maryland check cashers do not offer loans. The article cites a $40,000 lifetime cost to the unbanked or underbanked. I have no idea where this figure comes from, but like so much information about check cashing, it is inaccurate. Using real numbers based on a full-time worker making $15 per hour who buys three money orders and pays three bills electronically each month, the fees would be about $435 per year. This type of factual information is what should be provided to someone seeking financial education.

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Another example of a fact that should be provided, is that in 2017 banks collected $34 billion in overdraft fees alone and that according to the Consumer Financial Protection Bureau, some of the poorest Americans are being hit the hardest, with fees averaging around $450 per year. While it’s obvious that check cashing is not designed to meet all the financial needs of all consumers, neither is a traditional bank account. The fact is, a majority of our customers either have a bank account or have used one in the past. Consumers use check cashers, solely or in conjunction with a bank account, because our services are more manageable, relevant and convenient for them.

We encourage the CASH Campaign to continue providing financial education so people who rely on bank accounts can manage them properly. Moving forward, we encourage the CASH Campaign to include unbiased education about check cashing as a viable means to conduct basic financial transactions in a business model that is transparent, understandable, manageable and provides instant access to funds. It’s misleading for the group to educate people on financial services and products under the assumption that traditional banking is always the best option and with a preconceived objective of switching people from check cashers. Financial education should include comprehensive, factual, and unbiased information, so that individual consumers can take that information and decide how best to manage their finances based on their own circumstances and preferences.

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Neil Goldstein

The writer is executive director of the Maryland Association of Financial Service Centers, Inc.

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