Not having access to banking services – i.e., being “unbanked” – can be expensive. For those unbanked who rely on payday loans, the interest rates can be very high, costing individuals and families a large percentage of their annual income. A recent two cents blog discusses a solution to the problem that has been proposed by U.S. Senator Kirsten Gillibrand.
“New York Senator Kirsten Gillibrand has unveiled legislation offering one solution to the problem: requiring U.S. postal offices to offer basic financial services to customers, including checking accounts, interest-bearing savings accounts and short-term loans.”
A history lesson in a recent American Banker article reminds us that the U.S. post office offering savings accounts is not a new idea. A U.S. postal savings account program ran from 1911 to 1967, when it was dropped due to the lack of deposits.
Bringing back this program could provide some relief for those paying high interest on payday loans but would likely meet resistance politically. As pointed out in the two cents blog:
“It won’t be an easy win for Gillibrand – payday lenders are powerful in Washington (just ask Mick Mulvaney, the director of the Consumer Financial Protection Bureau). But it’s one solution to a serious financial problem worth considering.”
Overview by Ryan McEndarfer Editor-in-chief at PaymentsJournal.com
