By Andrea Frey
Did you know that San Franciscans spend over $40 million per year at check cashers and payday lenders? That there are more check cashers and pay day lenders in the United States than there are Starbucks and McDonalds combined? In the Mission alone, there are over 40 check cashers earning almost a million from those without checking or savings accounts who have no bank to which to turn, an estimated 50,000 in San Francisco and 20 million nation wide.
On April 1st, for the MiCoCo Gathering, special guest Marco Chavarín from the Mayor’s Office of the Treasury provided an enlightening discussion on financial empowerment and it’s importance in helping people access resource to make informed financial decisions. One of the topics mentioned was pay day loans, which are often positioned as a way to surmount temporary financial hardships, but Marco pointed out with just how steep a cost they often come. Annualized interest rates in the form of fees are often 400 percent or more and combined with the high fees just to take out the loans, many times creating a cycle of debt for many clients. For this reason, the City has began Payday Plus SF which offers loans to borrowers with low or no credit small dollar loans of $50 up to $500 and repayable over six to twelve months while in the process, building a better credit score. Read more about Payday Plus SF here.
Bank on San Francisco was created to also ease the trend of unbanked San Franciscans by offering accessible entry level checking account products at 14 financial institutions thereby significantly reducing the barriers to mainstream banking. So far it has helped over 25,000 city residents open up accounts! In the case one was denied, the client would then qualify for the program Balance which trains and advises clients to get their credit back on track. To learn more or for more surprising facts, check out Bank on San Francisco’s website.