What Are "Financial Deserts" and How They Hurt Black Communities? – Financial Juneteenth
By Ryan Velez
Clayola Brown, president of the A. Philip Randolph Institute and a member of the Master Your Card African American Advisory Board, has noted two disturbing trends in the financial landscape that could disproportionately affect Black households and communities. In a Huffington Post guest blog, she writes that since 2010, more than 5,000 bank branches have closed, while expensive alternative financial providers like check cashers and payday lenders are growing rapidly. This places millions of Blacks in what she considers to be a trap.
Brown calls these traps that many Black and low-income communities are now enveloped in “financial deserts.” This is more than just a lack of good-paying jobs, though that is certainly harmful to Black communities. By this, she means neighborhoods where people do not have access to many mainstream financial tools. This, in turn, is more than just proximity to a bank branch. With no bank branches, an overload of alternative lenders, and a lack of local businesses to spend money at, many communities are the financial equivalent of a food store that only offers junk food.
“New York, Los Angeles, Chicago, Baltimore, Washington, D.C.—every major city and many rural areas in the United States have something in common. Walk through prosperous neighborhoods and commercial zones and you see a bank on every other corner, often under the buildings and businesses they’ve helped sprout,” Brown writes. Many African-Americans do not have these options present, instead relying on predatory payday lenders that hinder potential upward mobility.
While expecting banks to return to many of these neighborhoods may be folly, sadly, Brown believes there are options that Blacks can take to try and eschew some of these alternative providers. One is using prepaid cards, available at many local stores. Making the move to electronic payments over cash has many benefits, like accessible accounting tools, not waiting in line to cash any checks, being able to spend money at any time, as well as no worries about cash being stolen. Employers can also take part in the movement by shifting to payroll cards over paper checks.
“Poverty isn’t just a lack of money—it’s also the lack of equal access to the tools that are essential for managing and growing wealth,” she says. Some of these methods outlined can help build and maintain wealth in many of these underserved communities, and in time, help them rise up.
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By Ryan Velez
Clayola Brown, president of the A. Philip Randolph Institute and a member of the Master Your Card African American Advisory Board, has noted two disturbing trends in the financial landscape that could disproportionately affect Black households and communities. In a Huffington Post guest blog, she writes that since 2010, more than 5,000 bank branches have closed, while expensive alternative financial providers like check cashers and payday lenders are growing rapidly. This places millions of Blacks in what she considers to be a trap.
Brown calls these traps that many Black and low-income communities are now enveloped in “financial deserts.” This is more than just a lack of good-paying jobs, though that is certainly harmful to Black communities. By this, she means neighborhoods where people do not have access to many mainstream financial tools. This, in turn, is more than just proximity to a bank branch. With no bank branches, an overload of alternative lenders, and a lack of local businesses to spend money at, many communities are the financial equivalent of a food store that only offers junk food.
“New York, Los Angeles, Chicago, Baltimore, Washington, D.C.—every major city and many rural areas in the United States have something in common. Walk through prosperous neighborhoods and commercial zones and you see a bank on every other corner, often under the buildings and businesses they’ve helped sprout,” Brown writes. Many African-Americans do not have these options present, instead relying on predatory payday lenders that hinder potential upward mobility.
While expecting banks to return to many of these neighborhoods may be folly, sadly, Brown believes there are options that Blacks can take to try and eschew some of these alternative providers. One is using prepaid cards, available at many local stores. Making the move to electronic payments over cash has many benefits, like accessible accounting tools, not waiting in line to cash any checks, being able to spend money at any time, as well as no worries about cash being stolen. Employers can also take part in the movement by shifting to payroll cards over paper checks.
“Poverty isn’t just a lack of money—it’s also the lack of equal access to the tools that are essential for managing and growing wealth,” she says. Some of these methods outlined can help build and maintain wealth in many of these underserved communities, and in time, help them rise up.
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