Having nothing else to do while I waited my turn at the Walmart customer service counter, I did a little people watching. In the 5-10 minutes I was waiting in line, I witnessed two people in front of me request to do a money wire transfer to a Walmart in another city. The recipient would then be able to get the cash at the customer service desk of their Walmart. Of course this service had a cost associated with it:
- Person #1 transferred $50, which cost them $4.50.
- Person #2 transferred $600, which cost them $9.
I couldn’t figure out why someone would do this. My mother-in-law and I transfer money between each other for various reasons all the time. We do it through our bank’s online portal and it doesn’t cost us a cent. We happen to use the same bank, but it also has the option to do a transfer to an account at a different bank.
Why would someone pay to send money, when they could do it for free?
As I continued to stand in line, I concluded that the answer is, maybe one or both of the parties involved do not have a bank account. Maybe they have had some financial management issues that have resulted in banks not allowing them to open a checking account because they just are too high of a risk.
I have no idea whether this was the case or not, and it wasn’t any of my business. But it did start my brain down the path of thinking of all the ways that bad financial management skills makes life just flat out more expensive.
- Wire Transfer Fees : The subject that started this whole thought process. If a person is unable to get a checking account due to past transgressions, they cannot take advantage of free account to account transfers. They also couldn’t just write out a check and mail it to the recipient. They have no choice but to pay for the wire transfer service, unless they want to take a very risky chance of sending cash through the mail.
- Interest Rates : People who have had past financial issues may not have a very good credit rating. This will likely result in higher interest rates for any borrowing they wish to do, whether it be for a home, car, or unsecured line of credit.
- No Cash Rewards : People viewed as high risk won’t get many offers for credit cards with rewards programs, or credit cards at all for that matter. I’ve heard of people earning free or nearly free trips all through credit card rewards.
- Check Cashing : If you don’t have a bank account, you may have to pay a fee just to cash your paycheck. Paying money to get your money sounds ridiculous, but for some people it’s a reality.
Having poor financial management skills can lead to a bad financial state that can have an impact on all aspects of life. When you have to pay fees for the most basic financial activities, it could be a spiral that’s hard to recover from as so many of your resources are used paying for the consequences of past mistakes. Once you start digging the hole, it’s hard to stop.
What do you think, Clever Friends? How else could having poor financial management skills make life more inconvenient or more expensive?
Brought to you courtesy of Brock