Despite the advancement we’ve endured over the last 50 years, generational poverty and financial illiteracy continue to run rampant in the Black community. We’ve been able to earn substantially more over time and yet fiscally we remain disproportionately behind our counterparts.
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If financial education tops the list for why a significant gap remains, I believe our attitude and mindset towards money and wealth creation vies for a close second. Ultimately, however, lack in both areas and unprecedented exposure to the predatory practices which plague our community are what keeps us engaged in anti-wealth building behavior.
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Here are 5 financial scams I wish Black folk would just stop allowing to flourish off of our financial demise. If not for our generation, perhaps for the next.
1. Check Cashing Centers – We have allowed check cashing services to thrive on every corner in every ‘hood across our nation. Why? Because somewhere along the way we were told that they were more “convenient” than opening a bank account. Maybe the convenience comes from the fact that most centers double as the neighborhood corner store, as well. Nevertheless, the astronomical fees charged at check cashing centers cannot truly be beneficial for anyone.
For example, cashing a $1000 dollar check might incur a 3-5% fee, regardless of the origin of the check. That is an average of $40 in fees. Even a 1.5% fee would be $15, while most banks that charge monthly service fees, charge an average of $10 per month and allow unlimited check cashing privileges or better yet, direct deposit.
Even for those that would argue that a negative banking history prohibits them from enjoying a traditional bank account, there are sites like getsecondchancechecking.com that offer second chance solutions for those that have been added to Chex Systems.
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2. Pay Day Loan – I know we all trusted Montel Williams in the 90s and want desperately to believe that he could do us no wrong, but those commercials assuring that pay day loans are the most trust worthy way to handle emergencies are a death sentence waiting to happen! Why would it ever make sense for someone who earns $800 per month to be eligible to borrow $1500? So when you’re paying off this $1500 in 30 days how are you supposed to survive in the mean time? Once you give them all of your next paycheck, not only will you still have a balance, but you will incur additional interest, penalties and fees daily while still having your normal expenses to worry about. Is that really peace of mind?