Instead of turning to credit unions for financial security, many low income people are going instead to big retailers like Walmart and Best Buy to cash paychecks, pay bills, and buy prepaid debit cards. Is this a good thing? In the big picture, the answer is a resounding no. But from a more limited perspective, these big retailers do provide people with a more financially sound option than street-corner check cashing services that generally charge a fee of between two percent and four percent of the transaction. By contrast, Walmart’s flat rate of $3 to cash a check saves most people some money.
Cashing your check at a retail store also means that you’ll be more likely to spend that money right away instead of putting some of it into savings, and Walmart is counting on this. By utilizing the services provided through credit unions, unbanked people could save money on fees and interest, gaining financial security and increasing their savings.
Perhaps the most critical factor at play is the general distrust that people feel for financial institutions. Cashing your check at Walmart comes along with one straightforward fee, while banking at a traditional financial institution often carries hidden or surprising fees down the line. Credit unions have their work cut out for them to help the unbanked and underbanked realize that CUs are different from the big name banks, and that many of the services they offer aren’t available at Walmart.