Number Two: Alternative Financial Services (Check Cashing Places, Payday Loans, Pawn Shops)
Walk down any street in inner-city Black America and you will the purest exploitation of ignorance:
- The check-cashing store prays you don’t learn about repairing your credit and getting a bank account so they can keep taking 1 percent to 5 percent of your money to cash your check.
- The cash advance store prays you don’t learn about budgeting your resources so they can keep charging you a 200 percent to 300 percent interest rate (yes, it’s to borrow money from them. They love those people who are living paycheck to Tuesday.
- The tax refund anticipation loan prays you don’t learn about direct deposit so they can charge you 200 percent to 300 percent in interest to get an ESTIMATED tax return.
- The pre-paid debit card prays you don’t learn about responsible alternatives like secured cards that can actually establish your credit.
- The rent-a-rim store prays you continue to get your values from broke artists on videos so they can charge you more than 30 percent interest to make your car, that you still don’t completely own, look “dope.”
- The weave and nail shops pray you place more value on looking good than having money in your pocket.
We estimated that ONE grocery store in Detroit was earning an ADDITIONAL $500,000 per year on check-cashing fees alone. Many liquor stores have also added check-cashing to their revenue streams because they know they can capitalize off of us. How much does this industry make annually through the exploitation of ignorance…the FDIC estimates that number is $320 billion!
In order for this to work, they must demonize what actually works (banks) and embrace what is actually working against them (pawn shops, payday loans, etc.).
I did a tour through American Jewelry and Loan. They were really a cool group of people. You have seen them in the TV show “Hardcore Pawn.” I reached out to them to do financial classes because I like to teach where the people need it most and this shop gets more than a thousand people coming through their doors almost daily.
They allowed me to do some financial education workshops in the store. While touring the store they also let me check out their storage unit where they keep their pawned items. It was amazing! In one of the units, I saw a huge rack of fur coats. There was a trend in Detroit to buy the fur coat in the Fall, wear it in the Winter, pawn it in the Spring, pay to get it out all Summer, take it back out in the Fall, and start the cycle all over again. They could have bought multiple coats with the fees they were paying the shop.
There is nothing wrong with being ignorant, but there is something wrong with staying ignorant. The exploitation of this ignorance in the Black community is one of the things destroying us. Get knowledge!
I will be breaking down the other eight things destroying the Black community over the next several posts.
Ryan C. Mack’s ministry is money. Check out his book Living in the Village.
