"Payday loans are advertised as loans that must be repaid with the borrower’s next paycheck," the OIG paper says. "However, most borrowers cannot afford to pay the loan back in full, so they renew their loan repeatedly and are in debt for an average of 5 months of the year, all while paying fees that typically equate to a 391 percent annual interest rate."
"Rather than giving borrowers the credit they need to climb out of a hole," the report notes, "these types of loans often dig borrowers deeper into debt." By contrast, postal banking would cost customers much less, increase their financial stability, and help them save.
"With affordable financial offerings from the Postal Service, the underserved could collectively save billions of dollars in exorbitant fees and interest," the OIG says. "This could make a big difference to struggling families - on average, people who filed for bankruptcy in 2012 were just $26 per month short of meeting their expenses."
With more than 35,000 post offices, stations and branches located in every city and town in America, the Postal Service has the infrastructure to provide the desperately-needed services. 59% of Post Offices are located in “bank deserts” - ZIP codes where there are zero or only one bank(s).