The Expense Of Being Poor

by Stephanie Berenbaum – June 10, 2011

Why Making Less Costs You More

Our friend Alex – who is just starting out in her career and is currently waiting tables to supplement her income – recently sent us a humorous yet poignant article from about how expensive it is to be poor.  That’s right – as if struggling to make ends meet wasn’t tough enough, to add insult to injury it turns out that being poor is quite a pricey proposition.  So, whether you’re a member of the working poor who is working hard to get your feet on the ground, or you know someone who is (and we all do), take a minute to consider the unfair reality of those barely getting financially by…

It Costs $ to Keep Your Cash in the Bank

When you have a lot of money in your bank accounts, guess what – they waive fees!  And when you don’t — the opposite is true — so the less money you have, the more likely you are to be hit with fees whether they are maintenance fees, overdraft fees, etc.

So, if you miscalculate your account balance or when a deposit will clear, you are charged around $35 for every overdraft you make- even if your balance is up by the end of the day.  Clearly this rule does not just exist for the the poor, but people struggling to pay their bills certainly can’t afford to make a $35 mistake!

It Costs $ to Cash Your Paycheck

Many of those living below the poverty level actually do not have a checking account at all.  That’s where all those Payday Check Cashing stores you see come in to play.  They are of course not there to provide a public service, and charge fees upwards of $8 a check just to give you YOUR own money.  Now, if you work by the hour in the service industry, $8 bucks could equal your entire hourly wage!

Credit Card Chaos

We all know life is easier with a credit card, but let’s say you can’t get a traditional one…then what?  Often times high risk customers are offered a “secured” credit card – meaning that you have to deposit money (usually equal to the credit line) to start using a credit card.  Therefore, the bank is holding on to your money in exchange for you having the convenience of a credit card.

Higher Interest Rates

And of course whether you are talking about credit cards or any other loans, interest rates to borrow money are always much much higher for the financially challenged!

Bad Credit vs No Credit at All

Maybe you thought it was smart to avoid the temptation of a credit card all together, or maybe you thought it was easier if your roommate had all of the bills in her name because you were out of work?  Well,  having no credit at all can be equally (if not more) damaging to your financial future.  If you show zero credit history, it is extremely difficult to even apply to rent an apartment, get any kind of loan, or even get approved for cable TV.

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