Posted by Christopher Stevenson
This past weekend, I happened across this article on Yahoo News about the number of people in the United States who don't use traditional financial institutions. It came as no surprise to me (and probably won't surprise the people who read this blog) that many people don't have bank accounts and use check cashers instead. But something caught my attention in the article.
One of the appeals of check cashers to the "unbanked" is that all the pricing is posted clearly in the shop. In other words, the people who pay the fees to get their checks cashed know how much they are paying (up to 10 percent of the check's value) and don't mind paying it because the fees are explained to them up front in an easy-to-understand way. The check cashing outlets' openness seems to lend them respectability in the community. On the other hand, according to the article, many people are suspicious of the fees associated with banks (and I assume CUs, although they weren't mentioned outright).
There is a check cashing outlet close to my office, so I stopped by on my way home from work last night. Prices for all services were clearly posted in big print on the wall next to the cashier. It was like a McDonalds' menu for financial services. The shop makes no bones about what they charge. Given, folks who use check cashers may not be making the leap from "It's only 10 percent of my check" to "Oh, that's half of one day's pay," but they trust the check cashers because they are up front about what they charge.
How does that compare to credit unions? Undoubtedly, fees and rates are clearly disclosed in print materials and explained by MSRs when someone opens an account, but what steps are we taking to make it even simpler for people to understand, especially those people who mistrust banks and credit unions. Many credit unions have great, simple products, but to find out about them, a potential member has to sort through a rack of brochures or sit down with an MSR to get more information (a potentially intimidating situation for someone suspicious of banks). If reaching the unbanked is part of your CU's mission, take a lesson from the check cashers: Make it simple and straightforward, because you can't reach the unbanked if they don't trust you.
