Say Check Cashing Costs Rising
WASHINGTON (AP) _ New studies show fees at check-cashing outlets nationwide continue to climb and a majority of Americans support forcing banks to offer basic services to low-income families, consumer advocates and civil rights groups said Thursday.
The organizations and a congressional backer said they will push for passage of legislation in the Senate to require banks and savings and loans to provide low cost banking services to the working poor and recipients of government aid.
″Many low-income and elderly persons can’t even find a financial institution to cash their government checks,″ said Sen. Howard H. Metzenbaum, D-Ohio, at a news conference to release the consumer studies.
However, ″Many institutions ... don’t normally maintain the cash level that could handle that sort of a mandate,″ said Jim Grohl, spokesman for the League of Savings Instititutions.
″Banks are businesses,″ said Donald G. Ogilvie, executive vice president of the American Bankers Association, in a written statement. ″They price their services in a competitive marketplace.″
Ogilvie said more than half the nation’s banks offer a basic banking account and a majority of them already will cash a government check for a non- customer.
″It’s a checkmate,″ for the working poor, said Peggy Miller, a researcher for the Consumer Federation of America.
A CFA survey conducted between Oct. 3 and Dec. 1, 1989 showed a general increase in the rates for cashing payroll checks and in the number of outlets entering the payroll check-cashing market.
A four-state study released Thursday by the U.S. Public Interest Research Group, showed only 14 percent of the financial institutions surveyed in New York, New Jersey, Oregon and California offer low-cost accounts.
Only 31 percent of the banks surveyed would cash government checks for non- depositors.
The Public Interest Research Group collected data from 499 financial institutions in the 1989 study.
Metzenbaum argued that fees for basic services and minimum deposits and balances required by many institutions for check-cashing privileges are too high for low-income, elderly and minority people.
Metzenbaum’s legislation suggests $2 be the minimum required balance for basic accounts at banks and savings and loans.
″This country’s older and poorer residents are being denied something that many people take for granted - the ability to have a basic bank account,″ said Francisco Carranco, a member of the board for the American Association of Retired Persons, a lobbying group for the elderly. AARP backs Metzenbaum’s legislation.
The National Urban League, the NAACP and the Association of Community Organizations for Reform Now joined the consumers groups in backing the senator’s proposals.
A Gallup poll released Thursday by AARP said that a majority of Americans - 73 percent of those surveyed - believe financial institutions should offer some basic banking services to low-income people.
Sixty-nine percent would support a law that required financial institutions to offer ″no-frills″ checking account to low-income consumers at a price set by the government, the AARP survey said.
The survey also found 17 percent thought the institutions should restrict their services to those most profitable for their business.
Gallup conducted telephone interviews with 2,008 adults from Oct. 9-18, 1989. The margin of error for the Gallup study was plus or minus 3 percent.