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Tuesday 8 September 2009
Same to you, buddy

Wal-mart is now advertising a new “low” rate for cashing checks of only $3.

Any such rate seems like it’s too much, since the check is your money, and paying $3 for your own money is a rip-off. But, as Wal-mart points out, $3 is a lot less than many of their competitors charge for this same dubious service. Those check-cashing competitors, Wal-mart says, can charge as much as $8 per check.

Wal-mart’s TV ad for this check-cashing service actually underestimates the savings this could mean for their marks customers.  A fresh-faced young couple tells us how happy they are to be using Wal-mart’s $3-a-check service instead of the $8 alternative. The husband holds up a calculator and tells us this saves them about $200 a year. With both of them earning a paycheck every two weeks, that’s actually more like $250 a year — and that $50 difference would be substantial for the annual budget of a working-class couple outside the fringes of the banking system.

The same quick and dirty arithmetic also lets us easily calculate the annual cost of check-cashing for this couple even at Wal-mart prices: $150 a year.

That $150 is a poverty tax — a fee paid by the poor because they are poor.

But then calling it a poverty tax isn’t accurate. It’s a poverty surcharge, not a tax. If it were a tax, then the couple in Wal-mart’s ad would eventually see some kind of indirect benefit from that $150. Taxes go toward civilization — national defense, highways, sewer systems, health care, police, food safety, clean water, fighting wildfires, developing flu vaccines, etc. And taxes are part of the social contract assented to by everyone who participates in that civilization. But this $150 poverty surcharge doesn’t help to fund any of those things and it isn’t part of any social contract. It simply lines the pockets of the Walton family and the rest of Wal-mart’s shareholders. The poor families paying this surcharge receive no benefit — direct or indirect. All they get in exchange is access to their own money. This $150-a-year surcharge is simply a transfer of wealth from them to much richer people, a direct, you-have-no-say transfer of at least $3 subtracted from every paycheck.

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    There has been some wailing and gnashing of teeth recently about bank fees, and check cashing fees in particular. Some...
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