Elizabeth Warren’s Fight Against Payday Lenders Comes to the Post Office [View all]

https://www.thenation.com/article/elizabeth-warrens-fight-against-payday-lenders-comes-to-the-post-office/

Nearly 10 million households qualify as “unbanked,” meaning they don’t have any traditional banking products such as a checking account. Another 25 million are “underbanked,” meaning they have an account but still turn to payday loans or similar products. Together, these two groups comprise nearly a third of all households in the country. The so-called alternative products they rely on—payday loans, prepaid debit cards, check-cashing services—cost them almost $90 billion a year in interest and fees, or an average of about $2,400 per family.

The United States Postal Service would be a much friendlier lender. If the USPS were to offer debit cards, savings accounts, and small-dollar loans, it could save the average underbanked family more than $2,000 a year. Even if just a tenth of the 12 million people who take out payday loans every year instead got a small loan from the post office, they would save more than half a billion dollars.

This notion might sound odd, but it doesn’t take much imagination to see how the post office could get into the business. The USPS already has a large footprint, with more than 30,000 locations across the country, including small towns and rural areas; nearly 40 percent are in places without any bank branches. The post office also offers money orders and prepaid debit cards through American Express: In fact, it sold 97 million money orders in 2014, to about 13 million people.

? We even had a rudimentary postal-banking system in the past. Between 1911 and 1967, the USPS operated a postal savings system that let people make deposits at certain locations. At its peak, more than 4 million people were using it, having deposited a collective $3.4 billion. Plus a number of other countries, from France to New Zealand, offer banking services through their post offices.