Third of Las Vegans do ‘banking’ with pawn shops, payday lenders

Payday lenders and pawn shops may not seem like the best places to do your banking, but a rising number of Las Vegans are relying on them for personal finances.

A total of 33.2 percent of Las Vegas Valley households were “underbanked” last year, up from 20 percent in 2009, according to a new survey today from the Federal Deposit Insurance Corp., a banking regulatory agency.

The FDIC defines “underbanked” as households with checking or savings accounts that also used non-bank money orders, check-cashing stores, remittances, payday loans, pawn shops and other services.

These alternative lending options typically carry high interest rates. They’re often used by people who need cash quickly and can’t obtain the money from more traditional lenders like a bank or credit union.

Meanwhile, the number of “fully banked” households in Las Vegas is falling.

Roughly 57.3 percent of valley households last year were fully banked, meaning they had a bank account and didn’t use any alternative lending, down from 71.3 percent in 2009.

Nevertheless, the percentage of “unbanked” households improved slightly to 6.2 percent last year from 6.8 percent in 2009. Unbanked households do not have any accounts with an insured depository institution.

In Nevada, 31.2 percent of households statewide were underbanked last year, up from 21 percent in 2009. Some 58 percent were fully banked last year, down from 70.3 percent, while 7.5 percent were unbanked, up from 6.6 percent.

Nationally, 20.1 percent of households were underbanked in 2011, up from 18.2 percent two years earlier, although the FDIC cautioned that these figures “are not directly comparable” because of differences in the surveys.

Nearly 69 percent of U.S. households were fully banked last year, down from 71.4 percent in 2009, while 8.2 percent of households were unbanked, up from 7.6 percent two years earlier.

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  1. Contrary to what some may believe, not all payday loan customers are drug addicts or people living beyond their means or "just dumb."

    Nearly HALF of all Americans would not be able to raise $2,000 in 30 days in an emergency. http://blogs.wsj.com/economics/2011/05/2...

    That's what income inequality in this country really means. If the transmission falls out of the car you need to keep your low wage job(s), or if you have a kid fall and break his arm and have a big co-pay to get him treated, or if the A/C unit explodes in middle of August, a payday loan might be your only option.

    And this sad state of affairs affects all of us -- even the affluent. We live in a country in which consumer spending drives 70% of the economy. How can we expect to grow that economy when half of our neighbors are struggling with basic subsistence and effectively living in the third world?

  2. Thanks Tom, and to be fair, you're right that horrific personal decisions do lead to persistent poverty. The 16 year old girl who drops out of high school, abuses drugs and has unprotected sex is truly playing Russian roulette with whatever future she might hope to have. It's a shame that the portion of the brain that we use to assess risk doesn't develop until around age 25 (a fact, curiously enough, that rental car risk managers figured out decades ago -- but I digress).

    If she does get pregnant and carries the baby to term (which many religious conservatives would like very much to compel her to do by force of law), what sort of future will her child have? If he's expected to pull himself up by his bootstraps, he's got a long, long, long way to pull. People can boast all day long about their superior work ethic and values, but the reality is that most people would have a tough time escaping poverty if they were born into it.

    The payday loan statistics reflect a much deeper problem in this country. We should be waging all-out war on poverty, but instead we're focused on cutting taxes for those who have already made it, and we're eviscerating the programs that might help rebuild the middle class. It's all going to come back to bite us in the . . .

  3. With bankers not giving good choices for short-term loans, these pawnbrokers and payday loan places give money to people that have low or no credit. Weststar Credit Union has a P.A.L (Payday Alternative Loan) but not too many people know or have a bank account with them.