Saturday, June 25, 2011

It's expensive being poor: Poverty Business continues to expand

The Poverty Business has been steadily expanding for years

The Gateway city certainly has its fair share of what has come to be known as "poverty businesses". These  usually dot the poorer neighborhoods in towns across America and for the most part, target the working poor. Such businessess include pawnshops, payday loan companies, check-cashing offices and even rapid tax refund businesses.

Following is part of a story that appeared in the Washington Post last year. Since then, poverty businesses have continued to increase in number and expand their reach.

From the Washington Post

The rich have direct deposit for their paychecks. The poor have check-cashing and payday loan joints, which cost time and money. Payday advance companies say they are providing an essential service to people who most need them.

Their critics say they are preying on people who are the most "economically vulnerable."  "As you've seen with the financial services industry, if people can cut a profit, they do it," Blumenauer says. "The poor pay more for financial services. A lot of people who are 'unbanked' pay $3 for a money order to pay their electric bill. They pay a 2 percent check-cashing fee because they don't have bank services. The reasons? Part of it is lack of education. But part of it is because people target them. There is evidence that credit-card mills have recently started trolling for the poor. They are targeting the recently bankrupt."

Outside the ACE check-cashing office on Georgia Avenue in Petworth, Harrison Blakeney, 67, explains a hard financial lesson of poverty. He uses the check-cashing store to pay his telephone bill. The store charges 10 percent to take Blakeney's money and send the payment to the phone company. That 10 percent becomes what it costs him to get his payment to the telephone company on time. Ten percent is more than the cost of a stamp. But, Blakeney says: "I don't have time to mail it. You come here and get it done. Then you don't get charged with the late fee."

Blakeney, a retired auto mechanic who now lives on a fixed income, says: "We could send the payment ahead of time but sometimes you don't have money ahead of time. That's why you pay extra money to get them to send it."

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