This will have far reaching affects beyond just the payday industry, once they understand better the financial tools they have at their disposal they will be more inclined to make better decisions. The core problem that the poor face is that as they grew up they never had good role models to teach them the value of saving money and investing. They do not encounter bank branches in their daily lives because the areas that they live in have none, therefore they do not understand the benefits they bring. In their article The Geography of Fringe Banking the writers Christopher Fowler, Jane Cover, and Rachel Kleit evaluate what options the relatively poor and relatively wealthy have for their financial needs. They describe the current situation as “The U.S. financial service sector has become increasingly bifurcated into a two-tiered system: the traditional banking system serves primarily middle and upper income individuals, whereas a less-regulated and more expensive alternative financial service sector serves many lower income households” (page …show more content…
As a result, the authors of The Geography of Fringe Banking claim that “An estimated 60 million individuals in the United States either do not use banks or credit unions at all, or use them only sporadically for essential financial transactions like writing and cashing checks, wiring money, paying bills, and obtaining short term credit” (Fowler et al. 688). The only reason that some of these people even have a checking account in the first place is to have access to payday loans. They do not even bother with a savings account because they either do not understand the benefits that it has or they do not have any money to be saved. These are all problems that can begin to be solved by teaching the lower class financial literacy. A practical way to implement this would be to offer free classes at libraries specifically where these problems are the