The sky is inky black when my alarm clock gongs at 5:30 a.m. By the time I’ve showered and left the house, it’s 6:20, and I hunch my shoulders against January’s cold, hurrying the two blocks from my still quiet house in Park Slope to the 7th Avenue F train stop. The bright light of the train is a shock against the dark, sleepy street. I find a seat easily and settle in for the ride to Manhattan, where I’ll change to the 6 train that will take me to the South Bronx. The other passengers are mostly brown people dressed in pastel-hued hospital scrubs, well-worn steel-toed boots, postal worker and security guard uniforms. My jacket conceals my own check casher’s uniform, but my jeans, sneakers, and down coat blend right in. Not fully awake yet, I try to recreate the feeling of being back home in my warm bed—burrowing into my fleece, retreating into my hood, closing my eyes.
I emerge out of the subway at East 138th Street and Alexander Avenue in the Mott Haven neighborhood of the South Bronx, next to the police precinct and across from Mitchel Houses, a ten-building high-rise public housing project completed in the mid-1960s. Commenters on a Foursquare site dedicated to Mitchel Houses warn readers: “Keep to yourself and you’ll survive,” and “Don’t come here after dark. Hide your kids. Hide your wife.” I stop at the Dunkin’ Donuts on the corner of 138th and Alexander for a large tea and a microwaved egg sandwich that will harden into a hockey puck if I wait too long to eat it. The Bangladeshi cashier, who has commuted to the South Bronx from Queens along with everyone else who works here, recognizes me and offers me a free donut. I’ve become one of the regulars. It’s 7:30. The trains have been good to me today so I’m early for my 8:00 a.m. punch-in; I’m supposed to arrive at 7:45 for the shift transition. Sitting at the counter ingesting the sandwich, I lose myself in El Diario, the newspaper of Spanish-speaking New York. They don’t sell the New York Times or the Wall Street Journal in these parts even if I preferred to read them.
“You see that? They’s white people comin’ in here now.”
Slowly I tune in to the conversation behind me and realize that the woman who spoke these words is talking about me. Indeed, I am the only white person in the store.
Dunkin’ Donuts is the only national chain on the five-block strip between the subway station and RiteCheck. It plays the same role as Starbucks does in more affluent neighborhoods, offering locals a small, affordable treat—a fancy coffee, a sugary donut—as they head off into their day.
The South Bronx is Exhibit A of what researchers call a “geography of financial exclusion,” in which low-income people, immigrants, and minorities have difficulty accessing key parts of the financial services system, like banks. Check cashers and other “alternative” financial services offer no way to save; no way to develop a cushion against household emergencies or to accumulate the assets necessary to go to college or purchase a home. But, in order to save, you first have to have extra money. The South Bronx is one of the poorest areas in the US. With a population of 660,000, it has only one bank per 20,000 residents. In Manhattan, one bank serves every 3,000 residents. South Bronx households show evidence of severe financial distress. More than half of the residents of Bronx Community Board 1, which includes Mott Haven, have no bank account; that figure is less than one in ten nationwide. Almost three-quarters of Bronx residents have no discretionary income—that means few trips to Dunkin’ Donuts, or to the toy store, or to the supermarket. But what money they do have often moves through the alternative financial services industry, an already large business that continues to grow nationwide.
Industry studies estimate that there are more than $58.3 billion in annual check-cashing transactions, $17.6 billion in money orders sold, and $13.2 billion in payday advances.1 Payday lending—which consists of small-dollar, unsecured loans—is illegal in New York and banned or otherwise restricted in 15 other states, but online lending, which is perhaps the fastest growing segment of the alternative market, allows people who live in these states to access payday-type loans. Consumer advocates argue that check cashers’ fees are too high, that these businesses take advantage of low-income people. Busy parents like the convenience of the check casher, which is more of a one-stop shop for them than a bank.
The neighborhood is awake now—mothers with children in uniforms head to school, people stop into bodegas for a quick café con leche, others hurry to the train equipped with briefcases or tool belts. Marta, my favorite tamale lady, is virtually hidden beneath multiple layers of sweatshirts and jackets, the scarf around her neck keeping her hood in place and nearly obscuring her face. Her dark eyes, the only visible part of her, greet me as she ladles steaming arroz con leche out of an enormous orange insulated container into a cup for a customer. I can smell the milky sweetness, the pungent canela, from where I stand. Reaching into her cart, Marta hands me my usual, pollo con salsa verde tamales. I have my money ready in my gloved hand and place it on her cart as she bags my lunch. She smiles and waves the next customer forward.
RiteCheck 12 sits in the middle of the block it shares with two barbershops, a bodega, a store selling medical supplies, and a large 99-cent store run by a Chinese family. Most of the two- to seven-story buildings house apartments above the shops. RiteCheck’s crisp blue and white awning looks fresher than those of the other businesses on the block, and a sign on the door advertises 24/7 hours. My sneakers squeak on the lobby’s white tile floor as I pass between the two ATMs that flank the space. Posters of happy-looking people cover the walls, announcing programs that will help customers trade in unwanted gift cards for cash, or enable them to send money to friends and family who are doing time in jail. A coin-counting machine and a copier sit along the right-hand wall, adjacent to a counter holding MoneyGram wire-transfer forms that enable customers to send money to and receive money from other countries and other parts of the US.
She lets me into the room where we work all day cashing peoples’ checks, paying their bills, and selling stamps, MetroCards, and scratch-off tickets.
Clutching my tea and tamales in one hand, I rap on the bulletproof glass of the teller counter and wave to Tiffany, who is finishing up the night shift. She buzzes me through the first door, and when it closes safely behind me, opens the second door that lets me into the room where we work all day cashing peoples’ checks, paying their bills, and selling stamps, MetroCards, and scratch-off tickets with promising names like “Set for Life,” “Lucky Dog,” and “Black Pearls.” I clock in and take off my coat, put my lunch in the refrigerator, and set down my tea and my purse.
“Good morning, Tiffany. How was the night?”
“Slow, slow, slow.”
I notice the economics textbook peeking out of her bag. “At least you got some time to study.”
Cristina, the senior teller on my shift, sits next to Tiffany. She is seven months pregnant and her posture is perfectly erect as she sits at the back computer checking the stats from overnight. Her even features and fine straight nose would be at home on the side of a coin.
I find my drawer in one of the two gray metal safes along the wall. The safe is nearly my height and stocked with wrapped bundles of singles, fives, tens, twenties, fifties, and hundreds. One of last night’s tellers left the drawer there after closing out; it is full of bills and change, a stack of neatly rubber-banded MetroCards, stamps, and scratch-off tickets balanced on top. I count everything, making sure my tallies match those on the receipt anchored by a roll of quarters in one of the drawer’s compartments.
I set up my station, arranging the drawer in a file cabinet next to me. I turn on my MoneyGram machine and log into TellerMetrix, the software program we use most often. I remove the “Next Window Please” sign from the bulletproof glass that separates us from the lobby and wave the next customer forward.
Six years ago, I met Joe Coleman, president of RiteCheck, when a friend recommended him as a speaker for my class. That week, my students in urban policy and management were reading about “alternative” financial services providers such as check cashers, payday lenders, and pawnbrokers. The criticisms were as strong as they were predictable: this shadow banking system for the poor preyed on the most vulnerable, charging usurious interest rates and high fees. I shared those criticisms and had levied them myself. I looked forward to calling Joe to account. The New School, where I teach, is eight miles south and a world away from Mott Haven.
Joe, his warm brown eyes framed by graying hair and metal-rimmed glasses, spoke persuasively about the services his chain of 12 stores provides to the people of Harlem and the Bronx. “These people don’t have any real alternatives,” he told us. “The banks don’t work for them. And to tell you the truth, the banks don’t want them.” When we asked Joe about the allegedly high fees customers pay to cash their checks, he told us that his customers would rather pay a flat fee that they understand than get hit with unexpected charges and overdraft fees at a bank. He explained that people trusted his tellers and continued to come back week after week, month after month, year after year because they value the convenience, the transparency, and the relationship.
I returned to the scholarly research, the media coverage, the reports put out by the trade associations to answer the questions Joe’s visit had raised. No critic of check cashers, pawnshops, and payday and auto title lenders seemed to have spent any significant time in these stores or the neighborhoods they serve. Policy makers try to help poor people save by getting them to open bank accounts. So why weren’t people using them? Why did people who had checking and savings accounts sometimes continue to use alternative financial services providers also? What did Joe’s customers get from him that they couldn’t get from a bank? What did the people who worked in these businesses know that the so many analysts failed to see?
Walk through any low-income neighborhood and it quickly becomes clear that check cashers and pawnbrokers are the norm, not the alternative.
The only way I could begin to answer these questions would be to follow in the footsteps of the ethnographers who had helped me understand the life of low-income people, like Carol Stack in her classic All Our Kin (1975). When other researchers and politicians blamed poor communities for an inability to defer gratification, Stack, living alongside them, came to see that low-income families engage in complex networks of sharing, giving to their blood relations and close friends to ensure their own care in difficult times. Barbara Ehrenreich’s Nickel and Dimed (2001) challenged the received wisdom that anyone who works hard in America can get ahead. Working as a Walmart associate and chain-restaurant waitress, she committed herself to living on a meager paycheck, and showed that making it to the next one, let alone climbing the American ladder of success, was nearly impossible.
I called Joe and asked him to hire me. I was fingerprinted and tested for drug use. I had my credit score analyzed, and answered 100 yes/no questions on a test to evaluate my honesty and integrity. Every question was some variation of “Is it okay to steal from your employer?” I passed six online courses lasting a couple of hours each on everything from how to spot a bad check to “smurfing”—laundering money by breaking down a large transaction into smaller ones to avoid tipping off the regulators. I shadowed Cristina at her window for weeks to learn the various software programs that pay bills and how to send money to places like Guatemala and Kazakhstan. In time, I mastered the impossible lottery ticket machine, and figured out how to add minutes to a customer’s cell phone.
Joe rejects the use of words like “fringe” and “alternative” by researchers and the media to describe his part of the financial services industry, monikers that barely conceal their moral opprobrium of both the check cashers and their clients. Walk through any low-income neighborhood and it quickly becomes clear that check cashers and pawnbrokers are the norm, not the alternative. The financial lives of the poor and nearly poor don’t operate according to the logic of mainstream institutions that serve the middle and upper classes. And RiteCheck 12’s customers are certainly not naive or unable to sniff out a bad deal. For the most part, they don’t lack “financial literacy”—although this is certainly true for some of them. Most weigh the options and choose to use check cashers because they have found the other options unresponsive to their needs. Joe prefers the term “transactional” to describe his business. Transactions are what his tellers do all day (and night) long. From the RiteCheck window, I can see that our customers live close to the edge. People purchase one stamp, a $5, two-ride MetroCard. They cash their checks within a day or two of the date printed on the front.
Some reasons why many of our customers do not have bank accounts are obvious—they lack convenient branches or the hours don’t fit well with their working lives. Others, like Carlos, have bank accounts but continue to use check cashers anyway. Carlos comes in frequently to cash checks of several hundred to a few thousand dollars for his small contracting business. One Thursday afternoon, he passes a $5,000 check through my window, smiles at me, and waves to Cristina.
“Como te sientes?” He pats his stomach as he greets Cristina, gesturing toward her swollen belly.
I input Carlos’s RiteCheck keytag number into my computer. I take his photo with the small camera attached to my counter by a flexible metal neck, run his check through the scanner, and count out his money, checking the fat stack of bills by running them through the bill counter sitting on the table behind me. I slide the $4,902.50 through the window. The $97.50 fee—1.95% of the face value of the check—is regulated by state law. New York, which is one of the most highly regulated states, has one of the lowest fees in the country. Check cashers in other states may charge up to 5% for a paycheck and 12% for a personal check. Carlos slides a ten-dollar bill back to me—my tip.
He waves and smiles as he turns to walk out the door.
I place the 10 on top of a small stack of bills on the shelf near my window and look at Cristina.
“Carlos—¿porque paga casi cien dolares para cambiar su cheque aquí? Seguro que tiene cuento de banco.” Why would Carlos pay nearly a hundred dollars to cash his check here when he must have a bank account?
Most of my customers know exactly what they are doing. Many have tried banks and rejected them.
Cristina studies me for a moment and then begins to explain in her patient, matter-of-fact way. Today is Thursday, which means tomorrow is Friday; so Carlos probably has to pay his workers tomorrow. If Carlos is like many small contractors operating in New York City, he relies at least in part on undocumented workers, who are unlikely to have bank accounts. If Carlos deposits his check in a bank, it will take a few days to clear—too late to deliver cash on payday. Or maybe the check is a deposit for a job he has just been contracted to do. Oftentimes these jobs are urgent—a cracked pipe, or a paint job for a landlord expecting new tenants. The contractor needs supplies now.
Weeks later, I am meeting with Joe at his office above RiteCheck 7, which is directly across the street from a lumberyard. Below, a steady stream of men in work clothes are coming into the store to cash checks, then driving into the lumberyard where they load their trucks with supplies before they drive off. As it is in the South Bronx, so it is in my own, more upmarket neighborhood of Park Slope. We’ve had a leak in our ceiling at home and the next morning our contractor, Tom, comes by to check it out. Still thinking about Carlos, I ask him if contractors commonly use check cashers.
“I mean, you don’t use one, do you, Tom?”
He laughs. “I got accounts at three, Lisa. Everyone does.”
“But why?” Tom has a pretty big business—several renovation projects going at once, trucks painted with his firm’s logo on the sides.
“The insurance, the taxes, the worker’s comp—it’s killing us. Some guys try to hide as much of their income as they can—they got two-million-dollar businesses and they report half a mil’. Me, I don’t do too much. But I’m tellin’ you—it’s impossible to stay afloat if you don’t. You can’t run a business in New York City and be 100% legit.”
At both banks and check cashers, checks over $10,000 draw particular attention. But it’s less likely that a check under $10,000 cashed at a check casher will. Cashing it a bank registers as a line on your statement. At the check casher, transactions are also recorded and archived, but the IRS is unlikely to go through the cumbersome process of opening those records. How much a customer relies on check cashers to conceal his or her income depends on his or her conscience and appetite for risk.
Customers like Michelle come to RiteCheck to withdraw money from their Electronic Benefits Transfer (EBT) cards. The New York State Office of Temporary and Disability Assistance (OTDA) delivers cash and Supplemental Nutrition Assistance Program (SNAP) benefits on these cards. The state deposits benefits into an electronic account that recipients can access by swiping a card at an ATM or a terminal like the one that sits on my counter at RiteCheck. I swipe Michelle’s card, she punches in her PIN, and I wait for the message: “Approved” or “Insufficient Funds.” RiteCheck charges a flat $2 fee for each transaction, and even though there are ATMs in the neighborhood where people can make two free withdrawals per month, Michelle asks me to take out $10 from her account. She will get $8 and pay what amounts to a 25% fee. Puzzled, I complete the transaction and turn to Cristina again.
It’s expensive to be poor.
“Bueno, Lisa, no puede sacar ocho dolares, o $27 dolares, de la ATM.” You can’t take $8, or $27, out of the ATM. Most ATMs only let you withdraw amounts in multiples of $20, and these customers need every dollar they can access. They’d rather pay the $2 to get the $8 they can get their hands on than wait until their account builds up to $20. This is clearly logical, albeit expensive, behavior. It’s expensive to be poor. These EBT transactions result from the same dynamic that allows me to buy 30 rolls of toilet paper at a time at Costco instead of buying the costly four-pack at my corner store. A well-paid, steady job, a car, and space to store bulk goods means that spending $200 at a clip can save money over the long term. Michelle needs her $8 right now, so urgently that she’s willing to pay 25% to get it. She can’t wait until she accumulates enough money in her EBT account to be able to pay a lower price per dollar she receives.
The banking industry and advocates for the poor argue that Joe and his colleagues across the country are taking advantage of low-income people, a criticism that implies that poor people don’t know any better. But most of my customers know exactly what they are doing. Many have tried banks and rejected them. The fees are too high and they hit when customers don’t expect them. They’re not open when customers need them. They don’t provide the services people want. RiteCheck meets the specific, immediate needs of the people who live in Mott Haven—people who believe they cannot save right now, who have been burned by banks, who are so focused on figuring out today that planning for the future is challenging.
At 3:40 p.m. I begin to close out my drawer. I sort the bill receipts into piles—ConEd, Cablevision, Verizon. I fold the ribbon of receipts from the MoneyGram transactions into a neat bundle and check them against the day’s report, then file them. Once everything is counted and entered into the spreadsheet on my monitor, I click the button signaling the computer to check my tallies.
The sun has slipped behind the buildings by the time I step back out onto the sidewalk. On the outer wall of the San Jeronimo church, glowing in the dusk, green neon lights surround a portrait of La Virgen de Guadalupe. Candles flicker in tall red and white glasses. Prayers from the holy and the needy.