So, fees at a local check cashing outlet eat up about $11 of her $386 monthly disability check.
Gray is among a growing number of people who, although they are barely making it, pay higher fees than those who use banks to handle their money. Check cashing is just part of an exploding fringe banking system that caters to Virginians who have the hardest time acquiring wealth.
These increasingly commonplace money-handling operations, including payday and car title lenders, attach hefty fees - charges that consumer advocates say keep the cash-strapped mired deeply in debt.
And these businesses are booming in Virginia.
LAW CLEARED THE WAY
Virginia laws have allowed more high-fee lenders to operate in the state over the past three years, giving residents hundreds of fast and easy options for accessing money - their own, and lenders'. Proponents say they offer credit to people who have no other options and cash to families struggling through rough times. But these options often charge what amounts to triple-digit annual interest rates, even though there often is little or no risk to the lenders, consumer groups argue.
Since the state began regulating payday lending in 2002, numerous financial companies have moved in for a share of Virginia workers' money, to the tune of nearly $1 billion last year. By the end of 2004, there were nearly 700 payday lending outlets in the state.
Del. Harvey Morgan, the state legislator who penned a bill that opened the door for the industry in Virginia, has been looking for ways to restrict such lenders as he has watched the growing effects of the law he helped pass.
"I'm not sure we did the right thing," Morgan said of the payday lending law. "We wanted (payday lending) to be available so people wouldn't have to have bounced check fees or be late on their rent. But they get caught in this thing, and they sometimes end up paying interest in the thousands."
Most disturbing, Morgan said, is the fact that many consumers take out additional payday loans to pay off the initial loans, racking up thousands of dollars in fees. Last year, 76,068 Virginia borrowers received 13 or more payday loans, according to the Virginia State Corporation Commission, which polices the lenders.
PUT IN A PINCH
Dee Bowers, a 63-year-old retired Newport News resident who lives off of less than $800 a month in alimony and Social Security, said she has been getting cash advance loans on her checks for months now. She has come to depend on them to cover basic expenses throughout the month - mainly gasoline and food.
Bowers borrows $100 a month and pays back the $115 she owes the next month. She said she didn't want to start getting loans at such a high interest rate, but decided it was a better option than what she had been doing to get cash: taking her jewelry to a pawn shop. Bowers said she was always worried that she wouldn't be able to pay the loan back and she would lose her precious few possessions to the pawn broker.
"I didn't like doing that," she said. "Paying $15 is better than losing my jewelry."
Morgan now calls the payday lending law a "boondoggle," even though it forced lower fees among out-of-state payday lenders that operated here through nationally-regulated banks. State-chartered banks could not offer the services.
The state's payday lending law requires that lenders charge no more than $15 per $100 borrowed, and certain disclosures must be made. The loan term must be at least seven days. The fee for a two-week loan, when figured as an annualized percentage rate, amounts to 391 percent interest.
Last year, Morgan drafted more restrictions for payday lenders, this time making it illegal for them to garnish military wages, conduct collection activities against military borrowers or their spouses if the borrower is in combat, or contact anyone in a military borrower's chain of command.