Franck Bohbot photographs 'Can Science Make People Save Money?' for Bloomberg
An experimental program at a New York check-cashing company tried to incentivize savings accounts for the poor. But the psychology of poverty is hard to overcome.
By Rebecca Greenfield | October 18, 2016
Friday afternoon is one of the busiest times at RiteCheck, a 24-hour check casher in New York’s South Bronx. At the register, Dayana Machin, 29, jokes with customers as she runs their checks through a computer system—ribbing a regular for having a rival check casher’s loyalty card on his keychain, accepting compliments on the golden lion hanging around her neck. Every time she hands a customer a wad of cash she says, “Anything else, my love?”
And sometimes, with the right customer, she asks something else: “Would you like to open a savings account?”
Most of the customers at RiteCheck have never had a savings account, so Machin takes a few minutes to explains how it works: You have to come to a branch to deposit or withdraw money, but there are no overdraft fees and it takes only $5 to open an account.
“Gratis?” one man asks at least five times.
“You have to always remind them it’s totally free,” Machin says, after assuring the man that it’s “totalmente gratis.” He opens up an account and puts $300 in it. “I can tell who the person willing to open an account is,” she says. “He’s nice. You tell him something, he will trust you.”
The savings accounts at RiteCheck, called Cash and Stash, are an experiment—both for the check cashing business and for a group of social scientists with the research and policy nonprofit Innovation for Poverty Action (IPA). Originally, RiteCheck wanted to offer savings accounts as a loyalty program: If people have to come in to make withdrawals, they won’t go to a competitor. But check cashers can’t hold money for customers. So RiteCheck collaborated with IPA, along with a local credit union, to run a pilot program. In exchange for helping RiteCheck, IPA is studying how customers behave. The goal: to see if they can get people to save money by using behavioral psychology.
“You accept this fundamental principle that people are flawed,” says Jeff Mosenkis, a senior policy communications associate at IPA. “How can you get flawed people to do what they want to do: save instead of spend? You build financial products that take advantage of these flaws.”
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