Low-income consumers deserve access to better financial services

When was the last time you went into a store to buy one item and actually came out with just that one item? We walk in for eggs and fill up a cart; we go in to pick a prescription and walk out with a new type of shampoo or four other things we “need.”

A recent news article featured the headline “7-Eleven Gives Unbanked the Opportunity to Shop Amazon.” The word “opportunity” is not one I would use, and it represents just one more way the world is preying on the un- and underbanked. What is seen as a “service” is actually just another way to drive sales – and a potentially predatory one, at that.

Let’s first talk about the target demographic. This so-called service is aimed at people who are under- or unbanked, meaning they don’t have a checking account and likely can’t get one. I have been teaching financial literacy to un- and underbanked low- and middle-income teens in Chicago for nine years. I have seen how hard it is for them to open a bank account, thus becoming easy prey for predatory financial services.

Think about how hard it actually is for someone in a low-income neighborhood to have a relationship with a financial institution — especially if they are under the age of 18. First, there needs to be a bank or credit union branch in their neighborhood. There are none; high-income neighborhoods in Chicago have almost three times as many bank branches as low-income, according to a 2014 report from SNL Financial. Most of my students live in financial services deserts.

Once they find a branch there are many other hurdles to get over in order to open an account, including ID requirements, minimum balances, parental involvement and more. I see so many teens using check-cashing or currency-exchange services to cash their paychecks (if they even cash them at all!), therefore losing some of their hard-earned money to unnecessary fees and leading them into cash-based existence. How do you save for a future if you don’t have a safe place to store your money?

Of course these teens want on shop online. They are way savvier that most grown-ups and they do have cash to spend.

This program is bringing people into a 7-Eleven store where, if they are anything like most people, they will probably buy something. So you go in to load your Amazon account and walk out with gum, chips and a water. While I do know that online shopping can save a family a lot of money, bringing them into a 7-Eleven where they are bound to spend more money is not the “opportunity” I would like to see created. We can and we should do better.

Heidi Albert is the founder of MoneyLocker.org/Live It To Learn It, which partners with credit unions, community groups and others to provide financial literacy and financial education for teens.