Joe Coleman goes further. Firms like his, with regulated maximum rates, were actually a reform move by New York state back in 1944, when check cashing was a truly free market.
It was being done in bars and restaurants. It was the Wild West. They could charge you 20, 30 percent to cash a check.
And while the fees may seem high, says Servon, they’re completely transparent, unlike at banks, when you rarely know what you’re paying.
The signage that spans the teller windows looks exactly like what you would see at a fast-food restaurant like McDonald’s, and it tells you that it costs 2.03 percent of the face value of your check to cash it, $1.50 to pay a bill, $0.89 for a money order. All of that information is there.
When they come here, they can use that cash right away
If they have deposited that check in the bank, it would take three or four days to clear. And they won’t be subject to the kind of mistiming at a bank that could lead to an overdraft fee of $35.
Enough volume, and even the smallest fees add up. So, RiteCheck caters to folks that big banks aren’t much interested in.
Eighty-five percent that comes here every week. Everybody know me in the street and everything. They bring me food. They bring me presents for my kids. They bring me everything.
OK, maybe there are good reasons to use check cashers, but surely not payday lenders, so common in cash-strapped communities these days.
Servon writes that there are more payday lenders in the U.S. than Starbucks and McDonald’s combined. And she herself did a stint at one.
Where I worked in California, they cost $15 per $100 borrowed, which comes out to an APR of 400 percent or 600 percent.
Yes. That’s right. A lot of people end up not being able to pay the loan when it’s due. And this is where the problem comes in. Right? So, now you’re paying $30 on $100. Right?
There’s nowhere to go to get a couple hundred dollars. The payday industry has evolved organically to solve a short-term, immediate problem. And I don’t do the product, by the way. In New York – we don’t do payday lending in New York.
Yes, I would if I could, because it’s a reasonable product, if you use it responsibly in the way it’s designed.
The evidence has been clear and damning for many, many years that the vast majority of people that start to take out payday loans end up in a cycle of debt.
If you can’t pay that $100 loan back in two weeks, you basically end up taking out that loan again and paying another $15 for another two weeks
What’s interesting is that even my boss at the payday lender said, payday is a lousy product, but we’re filling a need that nobody else will fill.
It’s a very hard question to answer, the question really being, are payday loans helpful or harmful, or, alternatively, is very expensive credit better than no credit at all?
And I would say that the jury is still out on that question. We talk about getting rid of the lenders without recognizing that the demand is still there. And the demand is 
still there because we have had declining wages since the ’70s,. Income volatility has doubled over the past 30 years, so people have much less ability to predict how much money is coming into their household from week to week.
