Banks want to lower costs by encouraging customers to use an ATM machine for simple transactions. Since you must be literate to use an ATM machine, this trend further penalizes uneducated, often poor, consumers. Poor and minority consumers have difficulty obtaining not only checking services but also loans from major banks. Similarly, between 1985 and 1993, the Chevy Chase Federal Savings Bank gave only three percent of its loans to property owners in predominantly African-American neighborhoods. The agreement to locate branch banks in minority neighborhoods illustrates that geographic constraints have limited some consumers' access to traditional banking services.
Banks are often absent from poor and minority areas.
In August, The News and Observer reported that Wachovia Bank was closing a branch in a working class area of Durham because of crime. When people are denied service from traditional banks, they turn to such places for cash advances and loans. Credit Cards Credit card companies also target low-income consumers and college students who do not have access to a lot of cash and offer them credit cards that generally have higher than average interest rates. Like bank fees, the people with the least money pay more. Since the early 1990's, banks have increased credit card limits by more than a third.