Word: checking
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Aurelio Leonel Alvarez-Rosales earns about $300 a week painting houses in the sprawling suburbs north of Atlanta. He lives paycheck to paycheck and often has nothing left over at the end of each week. So on Friday nights, when Alvarez-Rosales, 21, goes to cash his check, he pulls into the parking lot at the Norcross branch of Banuestra, an alternative financial institution aimed at serving the estimated 40 million adults in the U.S. without bank accounts. For him, every dollar counts, and compared with the 24-hour Atlanta Check Cashers outlet down the road, which charges...
Banuestra is one of the new breed of financial-service providers--which now include Wal-Mart--that aim to marry the convenience of a check casher with the relative security of a bank. By offering lower basic check-cashing fees along with debit cards and reasonably priced consumer loans, these businesses hope to pocket a chunk of the more than $10 billion in fees that check cashers, payday loaners and pawn shops collect each year. Long ignored by traditional financial institutions, the unbanked get their modest earnings shaved even thinner by the high fees they pay simply to cash their...
...majority of the unbanked are American born. What these two groups have in common is low incomes, so they often may not have the minimum balance required at many banks to open a regular checking or savings account. Some people also lack the proper identification, like a tax ID or Social Security number, required to open an account, or have bounced too many checks in the past. Without a bank to cash their checks--a service generally free to account holders--the unbanked rely on check cashers, which charge up to 10% for a handwritten check. Despite decades of criticism...
...party may be ending for the nation's 13,000 check cashers. With retail banks facing stagnant revenue growth, they are vying for a foothold in what some call the "last frontier" of the domestic market. Over the past six years, Wells Fargo has opened 1 million accounts for Mexican nationals living in the U.S. by becoming the first bank to accept the Matricula Consular identification card that Mexican consulates in the U.S. began issuing after 9/11. A growing number of banks, including KeyBank and Union Bank of California, are also offering low-cost check cashing...
...biggest hurdle is getting customers in the door. "People are creatures of habit. They grew up and saw their parents going to check cashers, and they continue their parents' habits," says Ignacio Valenzuela, who runs Union Bank's alternative financial services. Another problem is perception. "Many people don't trust banks," says Hank Shyne, director of the Financial Service Centers of America, a trade group representing the check-cashing industry. "They have that fear of being overdrawn. They are much more comfortable dealing with cash," he says...