The Operations, Appeals and
Costs of the Alternative Financial Sector: Implications for Financial
Counselors
Roger Swagler (1),
John Burton (2) and Joan Koonce Lewis (3)
Lower-income consumers use a
growing number of financial services including pawn shops, rent-to-own
programs, check-cashing outlets,
and rapid-refund tax services as alternatives to traditional financial
services. These services constitute the Alternative Financial Sector (AFS).
Compared to the traditional financial sector, AFS services are very expensive.
This article describes services offered through the AFS, appeals utilized to
attract customers, and the cost of using the AFS. The article provides financial
counselors with information to help them work with AFS users.
Key Words: alternative financial
sector, lower-income consumers, pawn shops, rent to own
1. Roger Swagler, Associate
Professor, Department of Housing and Consumer Economics, Dawson Hall,
University of Georgia, Athens, GA 30602. Phone: (404) 542-4856 Fax: (404)
542-4862. E-mail: rswagler@hestia.fcs.uga.edu.
2. John Burton, Associate Professor, Family and Consumer Studies, University of Utah, 228 AE, Salt Lake City, UT 84112. Phone: (801) 581-5156. E-mail: burton@alfred.fcs.utah.edu.
3. Joan Koonce Lewis, Associate Professor, Department of Housing and Consumer Economics, Dawson Hall, University of Georgia, Athens, GA 30602. Phone: (404) 542-4856 Fax: (404) 542-4862. E-mail: jlewis@hestia.fcs.uga.edu.
* We gratefully acknowledge the research support provided by Renee Pruitt and Richard Thompson, Graduate Students, The University of Georgia. The manuscript also benefited from comments by three anonymous reviewers and the editor of this journal. Any errors or omissions, which remain are the responsibility of the authors.