Las Vegas Sun NewsThird of Las Vegans do ‘banking’ with pawn shops, payday lenders
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12 September 2012
12:35 p.m.
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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I just can't under any circumstance understand someone who uses a pawn shop or payday loan company on a regular basis. Either you're an addicted gambler, can't live within your means or you're just dumb. Maybe I don't get it.
no, tom, looks like you get it perfectly.
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?
@Emthree
I'm not going to dispute what you say but I will go out on a limb here and state that a lot of those who can't make a co-pay payment or can't fix the air conditioner likely have a nice 46" flat panel TV and one of the latest smart phones. I see it everyday...not a pot to piss in but they have the latest gadget. Life is about choices for the most part. Did you finish school (did you go to school?), did you go to college?, learn a trade or were you pushing out babies at 18 or impregnating your girlfriend at 17?
I'm sure there are a lot of people who can't put together 2 nickels, but man o man they always have children. It's rarely a single person, no kids. Whether its 2 or 3 kids...well, how did you expect to accumulate anything with 3 mouths to feed and a GED?...If that.
A person who doesn't need credit can actually experience financial comfort in Las Vegas, without the expense or hassle of a bank account.
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 . . .
People with drug alcohol problems? Glenn Beck, Rush Limbaugh, Betty Ford, George Bush...Did they make the wrong decisions? Some of them had some marital problems (3 times) as well. Did they make the "wrong decisions?" Judge not lest you be judged. Not all the poor are stupid, uneducated addicts. And not all the rich are smart people that walk the straight and narrow.
Great link, Emthree--I recently saw the new documentary on DVD "Weight of the Nation" about the obesity problem in the U.S. and I couldn't believe some of the figures reported--like how a child born in the U.S. has a 30% chance of developing type 2 Diabetes. That figure goes up to 50% for blacks and Latino children. In some poor neighborhoods like the South Bronx, many kids start living on junk food from the time they are born. There's a Frontline docu on pbs.org "Dollars and Dentists" about the child dental care crisis. I think we are already a third world country like Greece. If you have Netflix then check out "Pruitt-Igoe", about the huge public housing project in St Louis that was demolished in 1976--it is a study of how attempts by the govt. to cure poverty can fail big-time.
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.
Fully Banked - Under Banked! Ohh that's rich!
Let's cut to the chase - The people who use these services are the ones who can LEAST afford (and might not understand) the 360% interest rates that are hidden in a 7 page contract and presented as 7% weekly or in some other smoke & mirror fashion. The various lobbies for these insidious lenders will say...Hey! We are providing a service that no one else will! Hogwash! These loans are always collateralized in some way or another...beit the wedding ring, car title, gold bridge (dental) liver, kidney or first born. These lenders are nothing more or less than loansharks - with state government indorsement.