Checks cashing and payday loans
Most charge a check-cashing fee that is a percentage of the face value of the check. Outside of a few states with more restrictive fee ceilings, it is common for CCOs to charge between 1.5 and 3.5 percent of the face value of the check for cashing payroll or government checksis CCOs also commonly sell a variety of related payment services and convenience items. At almost all CCOs, for example, customers can pay utility bills, wire money, purchase money orders, make photo-copies, and buy prepaid telephone calling cards. And, as noted ear-her, CCOs in many states have in recent years begun to offer payday loans. Over the past decade, research has provided substantially more information on the characteristics of people who use CCOs, and the findings largely confirm the picture common in the early 1990s. In 1998, for example, the Office of the Comptroller of the Currency (OCC) conducted a high quality survey on the use of financial services by residents in low- and moderate-income census tracts in New York City and Los Angeles. The survey sampled 2,006 adults asking, among other things, numerous questions about how they receive and make payments.
The one drawback to the survey is that it covered only two large cities that are not representative of the country. Both, for example, have much larger than normal Hispanic and immigrant populations. New York also has a markedly lower than normal percentage of homeowners. Nevertheless, the results are similar to those from surveys covering other areas of the country (Caskey 2002a). Table 2.3 provides an overview of the ways in which people in the OCC survey receive their incomes and where people cash checks.” It presents t he data for all survey respondents and for two subgroups—those with deposit accounts of any type, labeled “banked,” and those without, labeled “unbanked.” As the table shows, about half of the adults in the survey population receive most of their income in the form of checks.
