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A recent report from the FDIC indicates that approximately 23.2 million Americans do not have a bank checking account.

America’s Un- and Underbank

A recent report from the FDIC indicates that approximately 23.2 million Americans do not have a bank checking account. As a result, for these Americans, pawn shops can operate as “mini-banks,” providing collateral loans for consumers in need of financial assistance.

Even for consumers that do have checking accounts, many face high fees for overdraft protection and other services. Banks love to downplay these fees. However, these fees–for overdrafts, bounced checks, and late payments—are extremely common, and they add up.

Bank Fees in Perspective

An economist at the Federal Reserve Bank of Kansas City published a study finding that if common bank fees were considered interest payments, they would be equivalent to paying more than 4,000 percent interest.

The average bounced check fee is rising. The average fee was $28.95 in 2009, and has now surpassed $30. Now, many major banks hover around $35. That represents a significant hit for one missed utility bill. Additionally, there may be other charges, like those from the company or person to whom you wrote the check. Target, for example, charges $25 for bounced checks in their store. Add these fees up, in other words, and you’re looking at an additional $59 in fees alone. Add to that reconnection fees for cable, internet, water, electricity, and other utilities if you miss a bill.

A recent survey by found that the average monthly checking account maintenance fee is now $13.58. That’s up from $13.51 just six months ago. That means that these fees will now cost you an average of $162.96 per year. In addition, researchers found that overdraft fees were “unnecessarily high.” They also cited that banks failed to disclose the costs associated with overdraft protection.

Pawn Loans An Alternative

Pawn loans, however, come with clearly stated expectations. Additionally, they are based on collateral. Therefore, you can repay a pawn loan without long-term high financial burden. After that, if you cannot or choose not to repay the loan, it does not impact your credit.

Collateral loans at pawn shops serve as an important alternative to traditional lines of credit. Traditional forms of credit are increasingly drying up. The vast majority of collateral loans are repaid, around 80 percent. In other words, most clients receive their pawned items back.

Come discover the benefits of collateral loaning at Best Collateral.

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