Tipping the tellers? Not at my bank

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Signs of an industry's demise can come from strange corners.

For big banks, it's coming in the form of a study done by Lisa Servon about an alternative financial system: check-cashing stores.

Servon, an urban policy professor at the New School, spent four months working as a teller for RiteCheck, a check-cashing store in the South Bronx.

She went in expecting to find cynical co-workers devoted to preying on their low-income clientele. What she found was an astonishing focus on customer service with the goal of making every transaction feel like a visit with a friend.

"When I asked them why they brought their business to RiteCheck instead of the major, well-known bank three blocks away," Servon wrote on The Atlantic Cities website, "they often told me stories about the things the RiteCheck tellers did for them."

I was floored when she reported that it was not unusual for grateful customers "to bring us coffee in the morning. They often tipped us …"

When was the last time any of us ever thought about tipping the teller at our too-big-to-fail bank?

I once had a checking account that charged me $8 if I ever went into a branch and dared to speak with one of the bank's tellers.

Indeed, fees like that turned out to be the other big reason RiteCheck was popular.

All of the charges at the check-cashing store are clearly posted on the wall. Customers can get cash and pay their bills without any nasty surprises.

Contrast that with the plethora of monthly fees and penalties that come with a traditional checking account.

"The primary critique of check-cashers is that they are expensive," Servon wrote. "When I interviewed my customers, however, I learned that for many lower-income people, commercial banks are ultimately more expensive. The rapidly increasing cost of bounced checked fees and late-payment penalties has driven many customers away from banks, particularly those who live close to the edge, like many of my RiteCheck customers. A single overdraft can result in cascading bad checks and hundreds of dollars in charges."

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A good checking account should be cheap and easy to use. It should free (or nearly free), have no minimum balance requirement and not make you jump through hoops to access your money. A survey by the U.S Public Interest Research Group found while only 24% of big banks offer free checking, 60% of small banks and credit unions continue to do so.

So the choice seems to be between an impersonal bank itching to nail you with all sorts of fees or a check-cashing store where everyone knows your name and there are no nasty surprises.

I can understand that decision.

This isn't to defend check-cashers and payday lenders. They can be beyond predatory. In 2010, check-cashing transactions brought in more than $58.3 billion, up from $45 billion in 2010.

I still think a lot of Servon's customers would be better off if they found a free checking account, although those aren't so common anymore, especially for people who are working two or three jobs to make ends meet.

Her study shows why check-cashers are the first choice for a lot of people.

I also see Servon's study as a callout to banks.

Banks have become cold and sterile with an ever-changing staff trained to follow an unfriendly corporate script.

They have moved away from making money by lending deposits and instead become fee-hungry monsters that ring up customers like cash registers.

No wonder we avoid them, or use them while holding our noses and noting that we hate them.

Do I think Servon's study will change how banks operate? Probably not. But it does give us a window into why some people are making financial decisions that don't, on the surface, make sense. And it reminds us of what banking used to be.