They brought cookies. Two representatives from a local bank came to our ESL ministry with cookies. They responded to an invitation to share how to open a checking account with the students. The students had asked for help with that. Many lacked a bank account. They operated in the alternative economy using check cashing services and payday lending. Not the optimum way to do one’s banking.
So, many banks are eager to do outreach and share financial literacy materials. And many literacy programs have taken advantage of these resources. My first thought was to share this and encourage the use of financial literacy tools from banks as a way to meet students’ needs. Then, I did a little research. Just a little, but it was eye opening.
In an article last fall in the Atlantic Cities, Lisa Servon provided keen insight into why the poor use the alternative banking system. See The Real Reason the Poor Go Without Bank Accounts.
Are check cashing services more expensive than using a bank where one has accounts? Yes.
Is payday lending a scourge on the poor? Yes. But Dr. Servon helps us understand why the alternative banking system has traction. As we seek to help our students better use their money, may we be more sensitive to their life situations. Financial literacy resources are a good idea. Let’s mix in more understanding of the life situations of those using the alternative banking system as we seek to help.