Why It's More Expensive To Be Poor

All of these are ways that people with less money end up paying more for banking services EXCEPT...
 

• Banks charge more account fees for customers with lower balances

• Banks charge higher interest rates for customers with lower balances

• Banks will refuse to hold money for customers below certain income thresholds

• Bank ATM fees end up being a higher percentage of money withdrawn in small amounts

What is the average APR (annual percentage rate) on a credit card versus a payday loan? 

• Credit Card: 18%

  Payday Loan: 0%

• Credit Card: 0%

  Payday Loan: 100%

• Credit Card: 18%

  Payday Loan: 800%

• Credit Card: 800%

  Payday Loan: 0%

How are grocery shopping and food purchases more expensive when you are poor? 

• Low-income people typically buy food in bulk which costs a lot more money. 

• Low-income people typically pay with a debit card and incur additional fees with their bank. 

• There are few grocery store chains in low-income areas, forcing those people with low mobility to shop at convenience stores whose prices are much higher. 

• There are few fast food chains in low-income areas, so people in these areas often cook at home which costs more money. 

TRUE OR FALSE: Because of inflation, a poor person will see their year-over-year expenses go up at a higher rate than a wealthy person. 

• TRUE

• FALSE

Why is it more expensive to be poor? (choose all correct answers) 

• Many poor people pay additional bank fees such as overdraft fees and ATM fees because of their low balance. 

• Many poor people lack the mobility to shop at chain grocery stores and are forced to pay more for the same item at a nearby convenience store.

• Many poor people have a lower APR on their credit cards, thereby paying less interest on purchases. 

• Many poor people turn to a payday lenders or other high interest/high fee products because of decision fatigue.