I’m very proud to announce that a team of NBC journalists I was on has won a Peabody award for an extended project called, “In Plain Sight,” about the struggles of ordinary Americans trying to survive under difficult economic circumstances. I wrote two pieces for the project: One on the unbanked, and one on payday loans. It’s exciting this series won because it’s such an important topic. Hopefully we made some people think. It’s stunning how much poverty and struggle is all around us, hiding in plain sight. Here are links to those pieces:
Sabino Fuentes-Sanchez hid $25,000 all around his house because he didn’t trust banks. Lasonia Christon receives her Wal-Mart salary on a pre-paid debit card. Kim James was homeless for most of the past decade in part because she had no place to save money.
There are plenty of reasons people still live all-cash lives, but the sheer number who do it might surprise you. At a time when the majority of Americans use online banking, and some even deposit checks using their cellphone cameras, roughly eight percent of America’s 115 million households don’t have a checking or savings account, according to census data compiled by the FDIC.
The numbers are far higher among minorities: More than 20 percent of African-Americans and Hispanics are essentially left out of the American banking system.
Frozen in the cash-only past, they face myriad “kick-them-while-they-are-down” situations where getting money costs money. Banks typically charge $6 to cash checks. Want to secure an apartment? Fee-based money orders are the only option. Without credit cards, they must turn to triple-digit interest rate payday loans for emergencies.
Lasonia Christon of Jackson, Miss., tries to avoid getting paid in checks, but when her state tax refund for $231 arrived recently, she had to pay $7 to cash it at a nearby convenience store.
Christon works at Wal-Mart. Her paychecks are deposited onto a prepaid debit card — an improvement over old-fashioned paper paychecks, which led to high check-cashing fees. It’s hardly a good substitute for direct deposit, however. One cash withdrawal per period is free, but others cost $2. She can avoid the fee by shopping at Wal-Mart and getting cash back at checkout.
For Raymond Chaney, taking out a payday loan was like hiring a taxi to drive across the country. He ended up broke — and stranded.
The 66-year-old veteran from Boise lives off of Social Security benefits, but borrowed from an Internet payday lender last November after his car broke down and didn’t have the $400 for repairs. When the 14-day loan came due, he couldn’t pay, so he renewed it several times.
Within months, the cash flow nightmare spun out of control. Chaney ended up taking out multiple loans from multiple sites, trying to to stave off bank overdraft fees and pay his rent. By February, payday lenders — who had direct access to his checking account as part of the loan terms — took every cent of his Social Security payment, and he was kicked out of his apartment. He had borrowed nearly $3,000 and owed $12,000.
“I’m not dumb, but I did a dumb thing,” said Chaney, who is now homeless, living in a rescue mission in Boise.
Twelve million Americans take these types of high-interest, short-term loans annually. Most don’t have the cash to cover regular expenses and can’t turn to credit cards to cover a shortfall. Instead, they turn to what the Federal Deposit Insurance Corporation (FDIC) calls “Alternative Financial Services” — services outside typical banking systems that low-income consumers depend on, such as storefronts that offer check-cashing for people without bank accounts and high-interest payday loans.