The Secret History Of Payday Loans Near Me US | Победа с Педуниверситетом

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Table of Contents

The way Postal Banking Works

Postal Banking and the Unbanked

Current Status of Postal Banking Proposals

Frequently asked questions

The Bottom Line

Personal Finance Banking

What is postal banking?

Financial services that are available at the post office can help a lot of Americans

By Kat Tretina

Updated April 28, 2022

Reviewed by JeFreda R. Brown

The factual information is verified by Skylar Clarine

In postal banking, your local post office provides the basic financial services like commercial banks. Postal banking is a common practice in much of the world and was once in the United States. Now some advocates believe the return of this service could be a cost-effective solution for the nation’s vast unbanked population.

The most important takeaways

Postal banking is common in other countries , but it isn’t seen in the United States for decades.

Many believe that returning it can make low-cost banking accessible to those with low incomes Americans.

About 7.1 millions American households don’t have savings or checking accounts.1

Minimum fees and fees for accounts frequently stop people in opening new accounts.

Customers who aren’t banked depend on merchants for financial services such as checking cash or making payments on bills, which can be expensive.

How Postal Banking Works

With postal banking, the post office at your local location acts as a bank branch. For example, it might offer cash for checks processing for bill payments, and even small loans.

Today, U.S. post offices don’t typically offer these services, though they may offer postal money orders as a convenience for people who need to pay off a debt or to transfer money securely to someone, but do not have accounts with a checking account. The recipients can also cash their money orders at the post office.

In the past, post offices weren’t that restricted. From 1911 to 1967 until 1967, there was a time when the U.S. had a Postal Savings System, where Americans could deposit their money in savings accounts that were backed by the government and earn interest. As commercial banks increased the interest rates for savings accounts, the demand for the Postal Savings System declined, and the program came to an end in 1967.2

Postal Banking and the Unbanked

Within the U.S. in 2019, the most recent year for which figures were available in 2019, more than 5percent of households (about 7.1 million in all) were not banked, which means that nobody in the household has a savings or checking account with a bank or credit union.1 For those who live in these households, banking services such as the ability to cash the check could be prohibitively expensive.

According to a survey conducted in 2019 by the Federal Deposit Insurance Corp. (FDIC) the majority of unbanked households are low-income and don’t have access to a credit or bank union for reasons that include:

Account minimums are too high. The most often mentioned reason was that the household didn’t have enough funds to satisfy banks the minimum balance requirements.

Lack of trust. A lot of people have said that they don’t believe in banks’ ability to manage their money.

Fees. Unpredictable (and frequently excessive) fees—such as overdraft fees or monthly account charges and withdrawal fees—block some individuals from opening or keeping accounts.3

With no access to a check or savings accounts, households that are not banked are forced to use check-cashing establishments as well as payday loan centers to conduct financial transactions, such as cashing checks as well as paying bills for utilities. In one check-cashing store in California for instance fees can be as high as 1.79 percent to 14.99% of the face value according to the nature of the check.4

Postal banking advocates say that a postal banking system would not only permit low-income people to cash their checks at lower rates , but also keep them away from lenders who are predatory. Being able to go to the post office to get small loans can help them stop relying on costly alternatives, like payday lenders.5

Current Situation of Postal Banking Proposals

In 2014, the postal banking industry saw renewed interest due to the release of a white paper by the U.S. Postal Service Office of Inspector General. The report stated that the underserved households spent more than $2,400 a year on average on interest and fees from alternative financial sources, and postal banking could reduce the cost dramatically.6

The white paper sparked fresh discussions on options for the under-served Americans. In 2020, Sen. Kirsten Gillibrand (D-N.Y.) sponsored a bill—the Postal Banking Act, which would allow to the Postal Service to provide basic financial services. Gillibrand was joined by co-sponsors senators. Bernie Sanders (I-Vt.) and Sen. Jeff Merkley (D-Ore.).7

In the month of October, 2021, the Postal Service, in partnership with the American Postal Workers Union, launched a small pilot post-banking program for four towns. A few post offices would provide services like cash checking as well as bill payment as well as ATM withdrawals.

Postal Banking Act and the postal banking pilot program have faced significant opposition. Postal Banking Act and the postal banking pilot program have met with massive criticism from both Republican leaders in Congress as well as the banking industry. The American Bankers Association (ABA) released a statement that said, «The American Bankers Association has long been a vocal opposition to postal banking and has also previously stated that it might be viewed as a government-backed provider competing with taxpaying banks, and could pose risks that USPS is not suited to manage.»

The ABA maintains that, rather as it being the Postal Service, the answer to the problem of the unbanked is to be found at its branches. «It’s much easier than ever before to create a bank account in this country, including Bank On-certified accounts. They are now accessible in more than 50% of U.S. bank branches, and have low cost, no overdraft fees, robust transaction capabilities like a debit card or prepaid credit card, and online bill payment,» the ABA says.8

Is postal banking a thing?

Postal banking is the practice of providing basic banking services in local post offices. It could be things like check cashing, bill paying and even small loans.

What are the benefits of banking via postal mail?

Advocates argue that postal banking may offer financial services to millions of Americans who are currently unbanked offering them a cost-effective alternative to costly check-cashing outlets and payday loan providers.

What is the argument against postal banking?

A large portion of the U.S. private banking industry maintains they believe that the U.S. Postal Service is ill-equipped to add banking to its other offerings and that a lot of banks are now offering low-cost services which could be better suited to those who are currently not banked.

The Bottom Line

Postal banking is increasingly cited as a possible solution for people with low incomes who don’t have access to traditional credit unions or banks. Although postal banking has gained some traction in Congress in recent years, it faces significant opposition from bankers. If postal banking does not become widespread and widely accepted, the majority of people will still rely on credit unions and banks (or check cashing stores or payday loan purveyors) for banking services.

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