Most sensible people already realised as much, but today’s Evening Times has a nice bit of proof showing the way cash machine charges screw the people who can least afford to be screwed. In the Hyndland Road bit of Glasgow’s West End, an area that’s home to people in the range between “doing quite nicely, thanks” and “we wipe our backsides with £50 notes”, 9 out of 10 cash machines are fee-free. In Shettleston Road, Britain’s poorest parliamentary constituency, 6 out of 10 cash machines charge.
Cash machines really do screw the poor
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Are there any reasons given for this?
Arrgghhh! I loathe the banking industry.
The main reason is that increasingly, the cash machines are provided by private companies who argue that they have to cover their costs and that people have a choice. However, given that sub-Post Offices and small bank branches have closed in many rural areas and the banks seem to be closing or selling off many of their cash machines, it effectively becomes a tax on the poor – people who don’t have the luxury of driving several miles to find a free cash machine, and whose benefits etc are paid electronically into their accounts.
The reason it’s a tax on the poor isn’t just the location, but the charging mechanism. It’s a per-transaction charge so if you take out £50, you pay £1.75. If you take out £10, you pay £1.75. So the charges have least effect on people who take out big sums.
Surely you have to consider banking fees as a whole, per customer, rather than just for an individual type of transaction. People in those richer areas are paying more to their banks in various other ways: mortgages, loans, huge overdrafts, share dealing services, etc. Just ’cause they get free cash machines, doesn’t mean they’re getting cheaper banking overall. Doesn’t mean they’re not, either; I’m just saying I’d want to see a lot more figures before I’d conclude that the poor are being screwed.
Can I also point out that cash machines are probably, like everything else, more heavily vandalised in poorer areas and therefore cost more to run?
> People in those richer areas are paying more to their banks in various other ways: mortgages, loans, huge overdrafts, share dealing services, etc. Just ’cause they get free cash machines, doesn’t mean they’re getting cheaper banking overall
Hmmm, I see what you’re getting at but I don’t think it works like that. Every form of credit is much more expensive if you don’t have a big income or five-star credit record, and banks naturally cherry-pick the most desirable customers with lots of goodies that aren’t available to others.
For very basic bank accounts there are lots of restrictions. For example, if you get a basic cash account with most of the major banks they will charge you if you use any other bank’s cash machines (over and above any charges levied by the cash machine operator).
I agree that it’s part of a bigger picture, but equally access to cash machines is really important for people – not least because people with basic accounts can’t use switch, or write cheques, or whatever. For very many people cash machines are the only way to get *their own money*. Sure, they’re not as profitable as well heeled westenders, but I’m sure the accumulated interest on all those tenners in basic accounts generates a healthy sum for the banks that covers the costs of running their accounts.
“Them” on the bottom…
> However, if the government are insisting on benefits being put into an account, then they should be ensuring that all these post offices have non-charging cash machines on hte front.
Absolutely. Assuming any post offices remain in the area…
> It’s nothing to do with that. Banks are closing branches all across poorer areas due to unprofitability.
You can’t think of any possible link between unprofitability and vandalism? Car insurance is more expensive in poor areas because cars are more likely to be vandalised or nicked in those areas, not because car insurance companies have it in for poor people. Having seen the state of many cash machines in poor bits of the country (buttons covered in phlegm, screens scratched into illegibility, etc), I guess the same simple economics applies to them too.
Like I said in my first post, all I’m suggesting is that, in order to find out what’s going on here, you need to look at a lot more figures than merely cash machine transaction costs.
> You can’t think of any possible link between unprofitability and vandalism?
I don’t think it’s a big issue. Typically I find it’s the cash machines in ultra-busy Byres Road that get vandalised, while the ones in Maryhill tend to work.
>>more heavily vandalised in poorer areas and therefore cost more to run?
It’s nothing to do with that. Banks are closing branches all across poorer areas due to unprofitability. Then the charging companies move in to fill a gap in the market. It’s simply the free market economy in practice. then on the bottom…
However, if the government are insisting on benefits being put into an account, then they should be ensuring that all these post offices have non-charging cash machines on hte front. The cost would be sod all compared to the fees they pay to Alliance & Leicester (who jumped at the chance to run these accounts, you know how much guaranteed deposits that is…)