How To Make Your Payday Loans Near Me US Look Amazing In 3 Days

Table of Contents

What is the process of 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?

Making financial services available at the post office can aid many Americans

By Kat Tretina

Updated April 28th 2022

Reviewed by JeFreda R. Brown

The factual information is verified by Skylar Clarine

With postal banking, the post office in your area offers some basic financial services, similar to a commercial bank. Postal banking is a common practice across the globe and was once available within the United States. There are some who believe that bringing it back could be a low-cost solution for the country’s large unbanked population.

Key Takeaways

Postal banking is a common practice in many countries, but isn’t seen in the United States for decades.

Advocates believe that returning it could help make banking services at a low cost available to low-income Americans.

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

Account minimums and high fees frequently prevent people from opening accounts.

Unbanked individuals rely on retailers for financial services such as bill payment or check cashing that can be costly.

What is the process of Postal Banking Works

Through postal banking, the local post office also serves as a sort of bank branch. For example, it might offer check cashing and bill payment processing and even small loans.

In the present, U.S. post offices are not the only ones to offer these services, although they might sell postal money orders, an option for those who have to pay off a debt or to make a secure transfer of money to someone but who don’t have a checking account. The recipients can also cash their money orders at a post office location.

Generations ago, post offices were not as small. From 1911 to 1967 until 1967, the U.S. had a Postal Savings System, where Americans could save their money in savings accounts that were backed by the government and earn interest. As commercial banks increased their interest rates on savings accounts, the demand to use Postal Savings System decreased. 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 data were available, more than 5percent of households (about 7.1 million in all) were not banked, which means that nobody in the household has a checking or savings account at a financial institution or credit union.1 For those who live in these households, banking services such as the ability to cash the check could be prohibitively costly.

According to a survey conducted in 2019 conducted by the Federal Deposit Insurance Corp. (FDIC) the majority of unbanked households are low-income and lack access to a bank or credit union, due to:

Account minimums are too high. The most frequently cited reason was that the household did not have enough money to satisfy banks the minimum balance requirements.

Lack of trust. Many people said they didn’t believe in banks’ ability to manage their money.

Fees. Unpredictable (and frequently excessive) charges like fees for overdrafts or monthly account charges and withdrawal charges–deter some customers from opening or keeping accounts.3

In the absence of a checking or savings bank account unbanked households use services such as check-cashing establishments as well as payday loan centers to conduct financial transactions like cashing paychecks or paying for utility bill. Check-cashing stores in California, for example fees can be as high as 1.79 percent to 14.99% of the face amount according to the nature of the check.4

Postal banking advocates claim that a postal banking system would not only permit low-income people to cash checks at less rates but additionally keep them from predatory lenders. The possibility of going to an office in the post for small loans could reduce their dependence on high-cost alternatives, such as payday lenders.5

Current Situation of Postal Banking Proposals

In 2014, banking on postal mail was a hot topic thanks to a white paper released by the U.S. Postal Service Office of Inspector General. The paper stated that underserved households paid more than $2400 annually on interest and fees from alternative financial sources, and that postal banking could cut that dramatically.6

The white paper sparked new conversations about options for underserved Americans. In 2020 Sen. Kirsten Gillibrand (D-N.Y.) was the sponsor of a bill, the Postal Banking Act, which would allow to the Postal Service to provide basic financial services. Gillibrand was joined by co-sponsors Senator. 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 postal bank program across four major cities. At select locations, post offices would provide services such as cash checking bills, bill payments, and ATM withdrawals.

It is known that the Postal Banking Act and the postal banking pilot program have come under massive opposition from both Republican leaders in Congress as well as the banking industry. It was reported that the American Bankers Association (ABA) released a statement that said, “The American Bankers Association has been an active opponent of postal banking, and has previously noted that it may be seen as a government-approved bank that competes with tax-paying banks, and would pose risk that USPS is not suited to manage.”

The ABA insists that, more instead of it being the Postal Service, the answer to the issue of those who are not banked can be found in its branches. “It’s easier than ever to create a bank account in this country, including Bank On-certified accounts, which are now in operation in more than 50% of U.S. bank branches, and feature low costs and no fees for overdrafts as well as robust transaction options like a debit card or prepaid card, as well as bill pay online,” the ABA says.8

Is postal banking a thing?

Postal banking refers to the provision of basic banking services to Post offices in the area. This could include things like cashing check as well as bill payment, and even small loans.

What are the advantages of banking via postal mail?

The advocates argue that postal banking can make financial services available for the millions Americans who are currently unbanked and offer them a lower-cost alternative to costly check-cashing outlets as well as 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 services , and that many banks now have low-cost programs which could be better suited to those who are currently not banked.

The Bottom Line

Postal banking is being increasingly discussed as a solution that could be beneficial to families with limited incomes that don’t have access to traditional banks or credit unions. Although postal banking has gained some traction in Congress in recent years, it faces significant opposition from the banking industry. If postal banking does not become widespread and widely accepted, the majority of people will continue to rely on banks and credit unions (or check-cashing stores and payday loan purveyors) for banking services.

KAS

How To Make Your Payday Loans Near Me US Look Amazing In 3 Days

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