Low income consumers without a bank account pay dearly for financial services - often by way of the thriving " fringe banking" industry. Some check cashing outlets charge 6% of the checks value. Pay day lenders - who make short-term loans secured by a postdated check - have charged interest rates up to 1,000 percent a year.
"You see the individuals who have the least, charged the most," says Chet Luney of the Tampa Hillsborough Action Plan, a Florida group thats working to change things.
Congress is considering legislation that would address fringe banking. Also this year, several states will decide whether to cap interest rates on some services; 19 states now allow short term loans with triple digit rates. Texas has already outlawed payday loans, which may beef up enforcement.
Source: Market place: cashing checks for less. (1999, June). Consumer Reports.
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