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Question:


If check cashing businesses are generally known to rip people off so badly, why do these places continue to make money hand over fist? Do people not understand basic financial principles?
-PierreWS


Answer:


Some people may not be the most astute when it comes to handling their financial affairs, but you may not be all that knowledgeable when it comes to the realities of living in or near poverty. Some people simply don’t have access to banking services because banks know that it would be more trouble than it’s worth to have them as customers. Even if some bank would be willing to cater to them and their meager resources, potential customers may not live close to a branch or have a car or access to public transportation. Those potential customers may decide that the cost of using a local check-cashing service is less than the cost, in time and money, of going across town to a bank. That shows that they understand at least one basic financial principle.
-Conrad de Aenlle



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