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Thursday, March 12, 2015

Why Do Mexicans Cash Their Checks Inside the Bank & Other Money Oddities

Who actually goes inside the bank these days?  Mexicans (and other Latinos) do!  When they get paid they take their checks straight to the bank.  But they pass right by the outside ATM, walking inside the branch and getting in line instead.  They get to the teller, cash their check, and walk happily out the building; until the next 15 or 30 days when they return.  Apparently, cash is king for my people.  I started wondering about this many years ago and came up with the following theories as reasons why my gente do not feed the machines!

For starters, many of their local shopping places only take cash.  The small Super Mercado owner perhaps has not yet procured (or is willing to pay for the services of) a debiting system.  Have you ever stopped at a taqueria in the Mexican part of town, ordered your carne asada burrito only to be told: "Cash only."  Should've read the sign near the register, huh?  I've done this a few times myself.  Lucky for us, the restaurant owner has conveniently placed an ATM machine inside his/her place.  Only $2.00 for $20.00.  Geesh!  Why else do Mexicans need to cash their checks at the bank ASAP?  To pay the rent!  Yes, many of them walk their envelope over to the leasing office, to their landlord, and pay with cash.  Some prefer using a Money Order.  Money Orders aren't free last time I checked, so this is just a sure way of having less money to put to work over the course of many years.

My other theory is that Mexicans don't trust banks or their ATMs with their money.  Esos pinches banqueros me van a robar!  I joke.  There is some mistrust between banks, bankers, and Mexicans, but I think it really is more about the possibility that many of my people aren't as technologically inclined as other ethnic groups, especially the older generations.  Monitoring an account online for funds is difficult to do without an Internet connection at home also.  Yet…and this challenges my theory…mostly everyone has a smart phone these days!  You can simply load an App to easily check your checking account.  I don't know.  I'm a confused Mexican.

Going inside the bank to cash a check is better than paying for check cashing service, I guess.  So I commend anyone for choosing not to waste $1 for every $100 somewhere in the city.  Still, time is equally valuable.  Spending 15 min in line to cash a check at a bank twice a month equates to 30 min per month or 6 hours a year!  That's dead time, like sitting in traffic, you'd rather have it back.  No gaste tiempo!

If you think the banking habits of Mexicans are weird, try this one: Mexicans use this money saving system called a tanda.  It goes like this.  One family member or friend gets, say, nine others to agree to contribute 100 dollars weekly into a batch or tanda and every week someone gets the "$1000."  Really $900 plus your $100 you don't submit to the organizer on your turn.  Numbers are randomly assigned.  So if you have number 1, you get the $1000 on week one.  If you have number 10, you pay $100 for 9 weeks, and get $1000 at week 10.  Get it?  

The whole idea behind a tanda is to commit to saving not just for your sake, but for others as well.  You may let yourself down not sticking to a budget, but would you let Uncle Jose or Abuela Maria down?  Probably not, unless you didn't care about being ostracized for failing to pay your part.  Can you imagine constantly getting the evil eye of your abuela at the Sunday barbecue gathering?  Oh boy.

My mother used to participate in tandas many years ago.  As an adolescent, I thought tandas were great; today I question their usefulness.  For one, can you trust that every member will pay and pay on time?  Can you trust that the organizer will be responsible enough to collect from everyone and distribute the money to its rightful recipient each week?  This is just the half of it.

Other than forced savings, there's the obvious lack of yield. A tanda is essentially an X week long, uninsured bond with 0% yield! My gente, why not instead at minimum open up a Money Market account?  You can get 0.88-1.0% right now with a MMA.  Ally Bank is a perfect destination for your $X weekly savings.  What?  You don't trust an online bank either?  You trust Uncle Jose more?  Ay caramba!

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  1. In my perspective, many hispanics like myself participate in these so called "tandas" or "ahorros" because of the commitment of saving $100 dllrs, a week.. When you participate in the tandas ypu have a responsibility of paying the amount due weekly, therefore you dont spent that money on something you dont need.. In the other hand many hispanics have debts and dont have enough money to pay on time and ask for the first numbers so that they can pay there bills.. Its a win win, knowing that you will just be paying 100dllrs weekly with no intrest rather than getting a loan..

  2. Excellent point, Armando! A tanda would be very helpful for an individual with immediate money needs, versus going out and taking out a high interest loan at the Pay Day. If the tanda is with trustworthy people, it can be of some benefit. Still, I prefer you put your money (at minimum) in a Money Market account. Rates should be getting better soon. When you have enough saved, take it to the next level and invest.