Mainstream financial institution alternatives to the payday loans

Abstract

This chapter identifies some of the key barriers to accessing mainstream banking services and discusses various attempts to reduce, overcome, and bypass them. It reviews the federal banking regulations intended to improve access to basic banking services and introduces readers to some of the special loan products and projects designed to provide customers with an alternative to payday loans. Where barriers to using a bank account and accessing short-term loans for emergency funding needs drive some customers to the payday loan business, this chapter profiles community-based initiatives, many in partnership with local credit unions, designed to address these barriers. It concludes with an assessment of resurrecting the postal savings bank as a nationwide alternative to the payday loan.