There are virtually no check cashing outlets in non-minority neighborhoods. But the report finds in neighborhoods with mostly African American or Hispanic residents, a total of 38 such businesses are in evidence. The study also looks at fees check cashing outlets charge for their services. These banks include St. Francis, First Financial, Norwest, TCT and Guaranty. Payroll and government checks are cashed free of charge at all locations and there is a flat fee for money orders.
Payday loans are another source of profit.
These loans revolve around the concept that the check cashing business agrees to cash a post-dated personal check with the understanding that it will not be submitted to the bank until the customer deposits his or her next paycheck. The annual interest rate calculated on such a loan comes to 1,092 percent. Since some banks actually transact business with check cashing outlets, the study's authors wonder if banks are underpinning a two-tiered banking system which exploits poor and minority residents. In Milwaukee, two major banks have provided loans to local check cashing outlets, while New York's Chase Manhattan Bank actually owns and operates several outlets. Hudson says credit unions are also an option for communities ill-served or abandoned by banks.