"...the Postal Savings System allowed Americans to deposit cash with certain branch post offices, at 2 percent interest. By 1947, the system held deposits for over four million customers. Though dismantled in 1967 (after banks offered higher interest rates and eroded its market share), the post office continues to issue domestic and international money orders, including $22.4 billion worth in 2011, as well as prepaid debit cards through a deal with American Express."Putting aside the sad fact that banks once offered 2% interest rates (and you would now be lucky to get even half a percent), today post offices could offer basic banking services such as check-cashing, saving accounts, and even small-dollar loans similar to payday lenders, yet at much lower interest rates which could potentially save low-income Americans thousands of dollars per household per year. The idea is so good that Senator Elizabeth Warren has now endorsed the idea.
In an op-ed for The Huffington Post, Senator Warren explains that because of the exorbitant fees that payday lenders charge, low-income Americans spend roughly 10% of their income on things like checking cashing and short term loans, which is roughly the same amount that the average American spends on food.
Having grown up in a low-income family myself, I've experienced far too many times to recall when my single mother would go to one of these payday lenders for a short-term loan just to keep the lights at home from being shut off or to pay the rent and would quickly find herself in a vicious cycle of more loans, fees, and high interest rates.
Fortunately in my adult life I haven't had to endure that same hardship, but in today's world of stagnant wages and an increasing cost of living, many Americans still turn to these payday lenders as they struggle to stay in the middle class.
As Elizabeth Warren points out, this idea has been done in other countries around the world and has been proven successful. Furthermore, not only could it help millions of Americans but it could also prove beneficial to the postal service's bottom line at a time when USPS - which employs over half a million people - desperately needs it.
This idea could easily be adopted by the Postmaster General and begin without Congressional approval, but so far he has declined to endorse the Inspector General's recommendation. But hopefully now with people like Senator Warren endorsing the idea, public pressure will mount for this idea to become a reality.
