In recent years, banks moved out of lower-income neighborhoods. Payday lenders moved in. Payday borrowers pay a lot in fees and interest — about ten percent of their income. Credit is what makes the economy work. Building credit is the way for families to get the things they need. Paying huge interest rates and fees sets them back.
Post offices today offer money orders. Now, the U.S. Postal Service wants to go into the Payday loan business. There is a history to the Post Office’s interest. Years ago an official said, “Its mission is to encourage thrift and economy among all classes of citizens.”
The U.S. Postal Service has issued a white paper. The paper tells how the post office used to have postal savings for “recent immigrants and the poor.” Now it wants to make lower interest loans to borrowers and to issue prepaid debit cards.
The Post Office is not without self-interest. It believes these programs would bring in a lot of money. However, the Post Office program would be much cheaper than Payday loans.
Payday lenders use Indian Tribes as fronts. They are expert in using the Internet. States keep trying to stop them.
Payday lenders and banks know this idea is a big threat to them. One banker said, “It was the worst idea since the Ford Edsel.”
That must mean it is a great idea.
Source: The New York Times February 7, 2014