Payday lenders and check cashers have never been more popular with consumers. There are more payday lenders in the U.S. than there are McDonald’s locations and Starbucks combined. Yet their business practice of charging extremely high fees and interest rates is widely condemned.
Do alternative financial service providers merit their reputation as rip-off artists? Why do their customers choose to remain “unbanked?”
To better understand how these businesses operate and why people choose to patronize them, Lisa Servon took a break from teaching at the University of Pennsylvania to work as a teller in the South Bronx and Oakland. She discovered that traditional banks are neglecting the poor and bilking the middle class, leaving payday lenders and check cashers to fill a crucial need.
Reason’s Todd Krainin spoke with Servon about The Unbanking of America: How the New Middle Class Survives, a first-hand account of what may be America’s most widely misunderstood industry.
Read Finance on the Fringe, our look at alternative banking services fifteen years ago.