Banking while poor: how banks profit from predatory payday lending

http://www.guardian.co.uk/commentisfree/2013/feb/27/banking-while-poor-predatory-payday-lending1


JP Morgan chief executive Jamie Dimon told investors this week that the practice of payday lending was 'terrible', and promised to reform Chase's involvement. Photograph: Jessica Rinaldi/Reuters

I have a friend who is quite rich. Like a lot of rich people, he's very careful with his money, by which I mean that he's constantly shifting it around to make sure it's maximizing its potential.

Sometimes, all this shifting about will mean his checking account will be overdrawn and his bills that are on direct debit should, in theory, not be paid. This, he laughingly assures me, "will never happen". His bank will not only cover his error, but they will apologize to him for the inconvenience.

Such is the privilege of banking while rich in America. Banking while poor, however, is a very different matter.

Money will still be shifted around – but not in a way that benefits the account holder. It's no secret that bankers love to enrich themselves off the backs of their poorest customers – the subprime mortgage scandal being a prime example of this. The latest scam the banks have wrapped their tentacles around is exploitative payday lending schemes that virtually guarantee their poorest customers will become poorer still.