Paying for ease-of-use/trust

Yesterday’s NYT Magazine article about the check cashing industry offered an insightful anecdote about the sometimes counter-intuitive tradeoffs people make:

I met Oscar Enriquez leaving the Nix branch in Highland Park, a working-class area near Pasadena. He was skinny and just shy of middle age, with a quick grin and tattoos down his sunburned forearms. Enriquez worked in the neighborhood as a street cleaner; he picks up trash and scrubs graffiti. The job paid about $425 a week, he told me, a good chunk of which he wired to his wife, who has been living in Mississippi and taking care of her ailing mother. He told me he tries to avoid debt whenever he can. “If I don’t have money, I wait until the next payday,” he said firmly. “That’s it.” But he pays a fee to cash his paychecks. Then he pays even more to send a Moneygram to his wife. There’s a bank, just down the street, that could do those things free. I asked him why he didn’t take his business there.

“Oh, man, I won’t work with them no more,” Enriquez explained. “They’re not truthful.”

Two years ago, Enriquez opened his first bank account. “I said I wanted to start a savings account,” he said. He thought the account was free, until he got his first statement. “They were charging me for checks!” he said, still upset about it. “I didn’t want checks. They’re always charging you fees. For a while, I didn’t use the bank at all, they charged like $100 in fees.” Even studying his monthly statements, he couldn’t always figure out why they charged what they charged. Nix is almost certainly more expensive, but it’s also more predictable and transparent, and that was a big deal to Enriquez.

Banks (and phone companies, cable companies, airlines, etc.) are institutions that are not easy to use. There’s a lot of fine print, arcane legalese, hidden fees, and a general lack of transparency. Here’s someone with a limited amount of income that makes the calculation and pays a significant amount of that limited income to avoid going through that. The relationship with the bank failed for Oscar, and he’s paying money to avoid dealing with them.

We normally think of the privileged as those who buy their way out of inconvenience and hassle, but really, it’s something we do at all income levels. It’s just that our experiences frame what is and isn’t a hassle. If we’re middle class then we expect to be jerked around by Big Business because we have all our lives-as-consumers. If we’re lower class and we haven’t had those experiences, it may be less likely that we’ll tolerate them.


About Steve