Source: Business Pundit

Wal-mart is now advertising a new “low” rate for cashing checks of only $3.…[T]he annual cost of check-cashing for this couple even at Wal-mart prices: $150 a year.

That $150 is a poverty tax — a fee paid by the poor because they are poor.

But then calling it a poverty tax isn’t accurate. It’s a poverty surcharge, not a tax. If it were a tax, then the couple in Wal-mart’s ad would eventually see some kind of indirect benefit from that $150. The poor families paying this surcharge receive no benefit — direct or indirect. All they get in exchange is access to their own money. This $150-a-year surcharge is simply a transfer of wealth from them to much richer people, a direct, you-have-no-say transfer of at least $3 subtracted from every paycheck.…

There’s the rub. To cash your paycheck without paying a fee, you need a bank account, and for working-class people, a bank account costs a great deal more than $150 a year.

People who don’t realize that — who don’t appreciate the enormous, steady cost of a marginal bank account — tend to think that those who rely on check-cashing agencies are just being stupid and wasteful. The couple in the Wal-mart ad, for example, who are paying $150 a year to cash their paychecks could instead open a $100 no-fee savings account that would allow them to cash their paychecks for free. That account would only “cost” them $100 — but even that money would still be theirs, sitting in their savings account and even earning a modest rate of interest.

The problem, though, is that such no-fee accounts are money-losers for the banks themselves.[…]

So seeing no incentive to provide such low-balance, no-fee accounts…the bank will instead try to push them into something more lucrative — into the kind of account that generates a steady stream of nickel-and-dime revenue from ATM fees, minimum-balance charges, late fees and, above all, “overdraft protection” charges.

Last year, U.S. banks collected about $36 billion in overdraft protection fees. This year, they expect to transfer about $38.5 billion out of customers’ accounts in the form of such fees.

$38.5 billion. $105 million every day. $4.4 million every hour. $73,250 every minute. More than $1,200 a second. Transferred directly from the poor to the rich.

Read the full article here.

On another note, if you’re in the U.S. and would like to have slightly more say over your money, you should visit America’s Credit Unions to find a Credit Union near you.

And for more data on American poverty, view the full image linked above.

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