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‘Trapped Cash’ Phenomenon Labeled an Overstatement

By Siobhan Hughes

Big American companies have long complained that an estimated $1 trillion in cash is trapped overseas—all because the U.S. corporate tax rate of 35% keeps companies from bringing it home. A new report from a California tax-law professor counters that argument, calling it an “overstatement” advanced by large, multinational corporations with significant foreign operations.

Ed Kleinbard, a professor at the University of Southern California who was previously chief of staff at the Joint Committee on Taxation, examines why so many companies are seeking to reincorporate overseas for tax purposes, a practice known as inversion. Companies are advancing a “false narrative,” he says, that they are pushed into inversions because “their love goes unrequited by a country that cruelly saddles them” with “the highest corporate tax rate in the world.”

Instead, U.S. multinationals take advantage of a “feast of tax planning opportunities” to end up with corporate tax rates that are “the envy of their international peers,” he writes. A May 2013 report by the Government Accountability Office found that for the 2010 tax year, the effective tax rate paid by profitable companies was 17%, factoring in foreign and state and local income taxes. The effective rate was 22.7% when unprofitable companies were included – still well below the top rate of 35%.

As an example, Mr. Kleinbard cites Apple Inc. The maker of the iPhone held $113.3 billion in cash and other instruments in overseas subsidiaries as of Sept. 28, 2013. In May 2013, it issued almost $17 billion in debt. Under the U.S. tax code, the interest earned on the overseas cash is taxable in the U.S. At the same time, the interest payments on the debt are tax-deductible in the U.S. The interest earned on the overseas cash investments can be used to pay the interest on the loan, and the company, Mr. Kleinbard says, “is left in the same economic position as if it had simply repatriated the cash tax-free (plus or minus a spread for differences in interest rates between the two streams.)”

“As Apple Inc. demonstrated in 2013, large multinational firms often can access their offshore earnings without incurring a tax cost, simply by borrowing in the United States and using the earnings on the offshore cash to pay the interest costs,” he writes.

The idea that current tax rules trap cash overseas, Mr. Kleinbard concludes, is a “great overstatement.”


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[…]

American Apparel lender Lion Capital demands $10-million loan be paid

The wealthy playboy behind American Apparel Inc.’s latest crisis isn’t ousted Chief Executive Dov Charney. It’s a London financier named Lyndon Lea.

American Apparel told securities regulators Tuesday that Lea’s private equity firm, Lion Capital, has formally demanded repayment of the nearly $10 million it lent to the Los Angeles retailer, which carries a sky-high annual interest rate of 20%.

A default could throw the company into bankruptcy by triggering demands for repayment on additional debts. Those debts include a $30-million loan from Capital One and $206 million in senior secured notes — a kind of corporate IOU.

“It’s like pulling on a thread of a cheap suit, and the whole thing just falls apart at the seams,” said Craig Johnson, president of consulting firm Customer Growth Partners.

It’s like pulling on a thread of a cheap suit, and the whole thing just falls apart at the seams.- Craig Johnson, president of consulting firm Customer Growth Partners

American Apparel said it doesn’t believe Lion Capital’s claims are valid and may seek damages against the London investment firm for improperly accelerating payment of the loan, according to a filing Tuesday with the Securities and Exchange Commission.

The company’s directors last month voted Charney out as chairman and chief executive, citing misconduct, including allowing the online posting of nude photos of a former employee who was suing him. The board’s vote immediately suspended Charney from his CEO job, pending an ongoing investigation into his behavior, although a 30-day wait is required for termination under his employment contract.

American Apparel argued Tuesday that Lion Capital can’t call in the loan until July 19, when Charney is slated to be officially fired as CEO, according to the filing.

Representatives for Lion Capital and American Apparel declined requests for comment.

The latest turn of events adds even more uncertainty.

lRelated Company TownAmerican Apparel sorry for using Challenger disaster photoSee all related8

American Apparel is seeking permission from other lenders to pay Lion. If it can get that approval, American Apparel said it would be able to pay off the loan.

But the company warned that if those lenders don’t permit the repayment, other defaults may loom, which “could result in a material adverse effect on the company and its business.” Although American Apparel didn’t name Capital One in its filing, it has previously said that its revolving line of credit with that company could be called because of a provision that links it to the Lion loan.

The move by Lion raised speculation that the private equity firm, whose purchases have included luxe shoe brand Jimmy Choo and Bumble Bee Foods, is interested in taking over the troubled retailer instead.

American Apparel’s interim chief executive, John Luttrell, has said that the company is not interested in a sale.

Lion Capital, which holds the right to buy a 12% stake in American Apparel, has been lending money to the company since 2009, when Charney first turned to Lea for a cash infusion.

Its current lending agreement includes an unusual provision that allows Lion to call its loan if Charney leaves his CEO job.

Jerry Reisman, a corporate law expert who has worked with the retail industry, said Charney himself may have pushed for that requirement to be written into the loan deal.

“Perhaps Dov had that clause inserted into the loan agreement as a covenant to make sure the company didn’t fire him,” Reisman said.

A person familiar with the matter said that Lea has been supportive during Charney’s time as CEO and would welcome his reinstatement.

The two men appear to share a taste for headline-making pursuits.

Charney has talked openly about having relationships with employees and has been sued several times for sexual harassment. He has personally photographed women in provocative poses for company advertisements.

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Lea, a former director of American Apparel, has developed a reputation for throwing decadent parties in his California mansion, where sushi reportedly has been served on the bodies of scantily clad women.

Both men are 45, born days apart in January 1969. Both have ties to Canada: Charney was born in Montreal, and Lea went to college at the University of Western Ontario.

Observers say that it’s too early to tell what Lion’s plan is for American Apparel, and whether the investment firm really backs Charney.

Some say the company may be finally throwing in the towel and walking away from a highly risky bet; others say the company may have called in the loan to pressure the board to accept a buyout offer.

“Lion is first and foremost not a lender, they are a private equity firm that makes controlled investments in consumer brands,” said Lloyd Greif, chief executive of investment banking firm Greif & Co. “It’s right up their alley to potentially buy the company.”

The American Apparel board may have few options left.

The company could pursue a bankruptcy, possibly with a buyer already in place to take it over afterward, said Johnson, the consulting firm executive. Other options include trying to sell more shares, liquidating some assets or finding another lender. But Johnson said that, given the chaos, it is highly unlikely a reputable lender would extend a loan.

“Capital One is probably worried about getting out with the money” already lent out, Johnson said. “The question is, is it throwing good money after bad?”

American Apparel could still be saved with funds from Standard General, the New York hedge fund that controls a 43% stake in the company after reaching a deal with Charney.

Standard General said in a letter to investors last week that it plans to introduce new board members and improve the retailer’s management. The firm said it may use its resources to help American Apparel avoid a bankruptcy or liquidation.

But analysts say that scenario is unlikely.

“I would highly doubt that Standard General is in a position to double down the risk by stepping in and effectively taking the place of Lion Capital,” Greif said.

Greif pointed to Standard’s letter as one sign that the firm’s investors didn’t cheer the deal with Charney.

“The only reason you send a letter like that is if they felt compelled to explain their rationale to all of their institutional investors, to explain why they are dealing with a guy like Dov Charney,” Greif said. “That was a defensive posture.”

Even if American Apparel avoids default, it faces other financial problems. The company has lost nearly $270 million in the last four years and is more than $200 million in debt. It will owe bondholders $13.5 million in interest in October.

For his part, Charney has been keeping a relatively low profile. But photos showing a man who appeared to be Charney visiting an American Apparel store in New York popped up Monday on Instagram.

Jen Snow, who snapped the photos of the man wearing a bright blue T-shirt and white pants and shoes, wrote on Instagram that she asked store employees if the man was Charney.

“One nodded ‘yes’ tentatively,” she wrote. “And the other asked me, ‘And how was your day at work?’ with an intonation of palpable discomfort.”

The visit — if it was by Charney — may have violated the terms of his suspension. A termination letter obtained by the social network Whisper said that Charney is not allowed to visit company facilities, including stores or apartments, during his suspension period.

shan.li@latimes.com

andrea.chang@latimes.com

Twitter: @ByShanLi, @byandreachang

Copyright © 2014, Los Angeles Times […]

Are workplace loans the new payday loans? – ktar.com

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Payday loans have never been the dandy of consumer advocates who say the short-term, high-interest loans can trap people in cycles of debt.

Defenders of the loans, however, say payday loans fulfill an essential need for a temporary financial need — such as a car repair.

But now there is a new type of loan surfacing across America. They are called workplace loans and some experts fear that they are just as bad as payday loans.

The Wall Street Journal, using industry-provided information, estimated that more than 100,000 employees in the United States have access to workplace loans — a number that could expand to more than 10 million employees in a few years. But while the types of payday loans do not have a lot of differences, workplace loans can be all over the spectrum.

“Workplace loans come in a lot of different varieties,” said Lauren Saunders, associate director of the National Consumer Law Center, a consumer advocacy group in Boston. “They run the gamut. Some are similar to payday loans with high interest rates and a short term. Others have lower rates with longer terms.”

Available to employees through their workplaces, the loans are offered by third parties — alternative lending companies that may be contracting with other lenders such as credit unions or banks. The employers tout the loans in the same way they might talk about a health and wellness program.

“It is pitched as part of a benefits package,” Saunders said. “And certainly employers know that their employees may struggle with expenses from time to time. And it may sound like a good thing, and some of them are. I don’t want to condemn them all.”

Like payday loans?

Employers offering financial products to employees is nothing new. In the early part of the 20th century, mining and other companies offered employees scrip or company “money” that could be used in the company store to purchase items. The high prices led some workers to feel like they sold their “soul to the company store,” as the song goes.

Technically, this “money” was similar to an advance on wages, a practice that many employers may give to workers who fall on hard times.

The twist is that workplace loans can be set up to take the money directly out of the borrower’s paycheck. There are other methods of paying back the loan, but this feature is the most troubling to Nasir N. Pasha, the managing attorney for Pasha Law, a law firm that specializes in workplace law in San Diego. “It doesn’t seem right to me,” he said. “It is like borrowing money against their future wages. That seems troublesome. It is getting close to being an indentured servant — it isn’t quite there, but on the spectrum of things it is moving closer to that.”

Pasha worries that employees in lower-paying jobs may be tempted to use the loans to meet everyday expenses. He also sees similarities between the loans and how some employees will occasionally ask for an advance on their wages.

“For an employee it is attractive to get a loan from an employer,” he said. “But that really changes the dynamic. It is like borrowing money from friends. You shouldn’t do that — especially if it is a long-term relationship.”

Handling debt

Richard W. Evans, an assistant professor of economics at Brigham Young University who did some consulting work for payday lenders back in 2009 and 2010, says the “smell test” for workplace loans is “if you see it tied to budgeting and helping consumers change their behavior … then it sounds altruistic.”

Less than one year ago, the Hyatt Regency hotel in New Orleans began offering workplace lending as part of a larger employee financial wellness program offered by Emerge Workplace Solutions Inc., based in Nashville, and funded by Liberty Bank in New Orleans.

La Tonya Hunter, the hotel’s human resources director, has seen employees take advantage of the unique lending program in the few months it has been available. “Emerge offers short-term lending with low interest rates for emergency situations, and about 20 to 30 employees have utilized Emerge services since its inception,” Hunter says. “However, the program is about more than lending. It also provides associates with education on planning and saving, at no cost.” Emerge Workplace Solutions’ financial planners also help hotel employees manage budgets, assess their current finances and discuss saving for retirement.

But Evans isn’t optimistic that workplace loans will solve the problems of debt for some people. For example, some people wouldn’t even have the option to borrow against a 401(k).

“There is something fundamental about some borrowers,” he said. “Some of us can’t handle debt.”

Finding solutions

To help somebody stuck in debt, he said, requires somebody to take a risk on that person — and, from a business perspective, often that person will not merit the risk, Evans said. “It is really a tricky problem,” he said. “It is hard to find market solutions to that problem.”

Bankruptcy is a government solution, he said. But other solutions may require charity.

Like Pasha, Saunders with the National Consumer Law Center doesn’t like the idea of workplace loans being used for everyday expenses. She said that it may be that employers could have a role to play in providing “low cost, safe loans for occasional use.” But she warns that the interest rates need to be lower, 36 percent or below. And the loans should not require budget-destroying lump sum payments, but smaller payments. She also advocates that the loans be restricted to once or twice a year.

Having the money taken directly out of the paycheck also bothers her. She said employees should be in control of how they pay.

“I have seen too many (workplace loans) that are very expensive, lead to a cycle of debt and skim the employees’ pay in a way that could make it difficult for them to meet necessities,” she said.

Evans, however, said that having the money come directly from the paycheck may be precisely the “collateral” that keeps the interest rates down.

Staying out of trouble

He also points out that one of the appeals of payday loans is that, for the most part, they are outside normal credit reporting. There is an anonymous aspect of taking out payday loans. Getting a workplace loan removes that secret aspect of the borrowing. “But if you are doing it at your workplace, it is almost like a signal that you are in trouble,” he said. “And that is a bad thing to signal to your employer, that you are in trouble.”

Staying out of trouble in the first place is the best solution, according to Saunders.

Like Evans, she gives some deference to workplace loans that are closely tied into financial well-being and budgeting programs at work. But the better route is for employers to take preventative measures to help employees.

“An employer is better off promoting savings programs than promoting loans,” Saunders said. “The workplace is a great place to promote savings programs.”

Instead of taking small payments over time to pay off a loan, workplaces could encourage employees to set up automatic payments into savings accounts — before a loan might be needed. Saunders points out that many so-called unexpected expenses are expected — such as an older car breaking down.

“Credit is not the answer,” Saunders said. “Taking on more debt is not the answer.”

Email: mdegroote@deseretnews.com Twitter: @degroote

[…]

If payday lenders are quitting Britain, what comes next? | Jennifer …

Image A-payday-loans-sign-is-se-007.jpg

‘The Consumer Finance Association, the trade body for payday lenders, has repeatedly expressed concern about the impact of regulation on the industry, arguing that a regulated and innovative financial services industry will be replaced by unregulated and illegal lenders.’ Photograph: Suzanne Plunkett/Reuters

It appears that half of all payday lenders have pulled out of the UK market in the last 18 months, according to news reports. The increased focus by the Financial Conduct Authority (FCA) on the business practices of payday lenders and the prospect of greater regulation is clearly having an effect. The UK’s high-cost short-term credit market has been coming under relentless pressure from the media and campaigners to change its ways. There was a story this month about loan sharks using dangerous dogs to intimidate parents to pay back loans when they collected children from the school gates. It emerged that the Illegal Money Lending Team in England is offering schools readymade lessons to warn pupils about the dangers of loan sharks.

The FCA is only part of the way through its thematic review of payday lenders and will consult on a cap on the total cost of credit for all high-cost short-term lenders in the summer, to be implemented early next year.

But even if they are leaving the market, not all are going quietly. Quick Loans Dot UK Ltd, which trades as QuickLoans.co.uk, has recently stopped lending, citing regulator and political interference as the cause. Its director, Graeme Wingate, has launched a blistering attack on MPs, calling them hypocrites with no understanding of the lending market and a mistaken belief that less competition will benefit consumers. Quickloans claims that 16 jobs will now be lost. The Consumer Finance Association, the trade body for payday lenders, has repeatedly expressed concern about the impact of regulation on the industry, arguing that a regulated and innovative financial services industry will be replaced by unregulated and illegal lenders.

While the number of payday loan providers may be declining, credit unions and community development finance institutions (CDFIs) are slowly scaling up and offering a wider range of services, such as short-term loans, at affordable prices. Barclays has announced a £1m fund for credit unions, along with a range of other measures, including helping with access to premises. Lloyds Banking Group has revealed that it will invest £1m a year in credit unions and has piloted a project in Leeds signposting appropriate customers to the Leeds City Credit Union and local money management charities. The government is also investing £38m to support credit unions to modernise and grow. The Community Development Finance Association, the trade body for CDFIs, estimates that in 2013, almost 10,000 small and social businesses were able to launch and grow with a CDFI loan. These businesses created and saved more than 17,000 jobs, many in the UK’s most disadvantaged neighbourhoods.

But the geographic reach of credit unions and CDFIs is still patchy, and many of their potential customers are not aware of their existence. Community projects such as Big Local and Community First are helping to tackle this, but it is an uphill battle. The £38m invested in credit unions is almost the same amount as the top five payday lenders spent on advertising in 2013 (an estimated £36.3m). The financial services market is still distorted, with poorer communities offered a wealth of choice of high-cost credit providers but no choice of other types of financial services. The Guardian has previously reported on the scarcity of free-to-use ATMs in poorer areas. Nottingham University has produced research that shows similar areas bear the brunt of bank branch closures.

Of course we need tighter regulation of payday lenders. Some have cynically exploited vulnerable consumers, taken advantage of the main high street banks’ withdrawal from poorer communities and made millions of pounds worth of profits in the process. But we need to see a massive scaling up of credit unions and CDFIs as well as encourage the main high street and new challenger banks to serve poorer communities if we are going to keep the dogs from the school gates.

[…]

U.S. Cash Home Purchases Surging as Rates Rise

Greg Leffel, an investor in Columbus, Ohio, said he relishes cash deals as much as he dislikes home loans. He has spent $150,000 buying and renovating 10 foreclosed houses in the past two years and turned them into rentals.

“Lending is so tight, and even if you do get a loan you’d have to jump through a bunch of hoops first,” Leffel, 44, said. “I like buying with cash, because then I can control my investments.”

More from Bloomberg.com: Yellen Says ‘High Degree’ of Accommodation Still Needed

Investors like Leffel helped spur all-cash home purchases to a record 43 percent of U.S. deals in the first quarter, more than double the share a year ago, according to data firm RealtyTrac Inc. Cash is keeping residential sales trudging along while mortgage lending plummets, hurt by rising interest rates and stiff credit requirements. Americans seeking a loan to purchase their first dwelling are increasingly shut out.

“The cash buyers today mean that all is not well in the housing market,” said Clifford Rossi, finance professor at the University of Maryland’s Robert H. Smith School of Business. “First-time home buyers should make up 40 percent and we’re not seeing it because of mortgage rules.”

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U.S. lenders are cutting jobs as business contracts. They made $226 billion in mortgages in the first quarter, a 17-year low, according to the Mortgage Bankers Association in Washington.

Small Investors

Smaller investors, who deploy cash for homes to rent, flip, or vacation in, are finding better deals now that institutions have pared buying foreclosures, said RealtyTrac Vice President Daren Blomquist. Cash sales are rising from coast to coast, comprising more than half of all purchases in many metropolitan areas in the first quarter.

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In the Miami area, 67.1 percent of sales were cash deals; New York posted 57 percent; Detroit recorded 53.5 percent; Atlanta had 53.2 percent, and Las Vegas posted 52.2 percent, according to Irvine, California-based RealtyTrac.

In Manhattan, buyers are using cash for trophy apartments and to gain an advantage over borrowers who must depend on loans to finance a purchase. Pej Barlavi, owner of brokerage Barlavi Realty LLC in Manhattan, said three of his five current clients buying homes prevailed with all-cash offers.

Barlavi said two of them are hedge fund managers who used year-end bonuses to buy the properties: a $2.2 million two-bedroom apartment in Midtown, selling for $150,000 above the asking price; and $1.5 million for a one-bedroom in Tribeca. His client in the second transaction was “nudged higher by a foreign buyer” before being chosen by the seller, Barlavi said.

Foreign Buyers

“In Manhattan, you have foreign buyers coming in and using properties as a second, third, fourth or fifth home and hedging risks in their home countries,” said Chris Mayer, a real estate professor at Columbia University Business School in New York.

Private-equity firms, hedge funds and other institutional investors have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak and rental demand rose from the almost 5 million owners who went through foreclosure since 2008.

New York-based Blackstone Group LP (BX), the biggest U.S. single-family home landlord, cut purchases by 70 percent from last year’s peak and is now concentrating on just five markets, Jonathan Gray, global head of real estate, said in a March interview. Blackstone has invested $8.5 billion since April 2012 to amass almost 44,000 rentals in 14 cities.

Strict Credit

American Homes 4 Rent (AMH) and Colony American Homes, the second- and third-ranked U.S. home landlords, have also cut acquisitions as the rebound in prices requires them to raise capital or improve operations.

“As institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers, including individual investors, second-home buyers and even owner-occupant buyers,” RealtyTrac’s Blomquist said.

Banks’ stricter credit standards following the housing crash, in combination with rising mortgage rates, have put the brakes on lending. More than 40 percent of borrowers had FICO scores above 760 in 2013 compared with about 25 percent in 2001, according to Goldman Sachs Group Inc. analysts in a Feb. 20 report. The 4.22 percent average rate for a 30-year fixed mortgage on May 6 rose from 3.53 percent a year ago, following the Federal Reserve’s announced plan to taper its bond buying, according to Bankrate.com.

Wells Fargo (WFC)

“The increase in all-cash purchases is partly because rates are higher than they were a year ago, so it’s made buying with a mortgage more expensive on top of home price increases,” said Jed Kolko, chief economist at real-estate information service Trulia Inc. in San Francisco.

At Wells Fargo & Co., the biggest U.S. mortgage provider, home-loan originations plunged to $36 billion in the first quarter after surpassing $100 billion for seven straight quarters ending in June 2013, according to the San Francisco-based bank. Second-ranked JPMorgan Chase & Co.’s $17 billion total in the first quarter fell below the trough in originations made during the housing crash.

First-time buyers in particular are struggling to get home loans. They comprised 30 percent of total existing-home sales in March compared with an average of 35 percent since October 2008, according to the National Association of Realtors.

Without these buyers, existing-home sales are declining. They fell 7.5 percent in March to a seasonally adjusted annual rate of 4.59 million compared with a year earlier, according to NAR. The sales volume in March remained the lowest since July 2012, according to the trade group.

“With fewer first-time buyers, you end up with more all-cash buyers and less trading up in home activity,” said Columbia’s Mayer. “To get that ecosystem working, you need to have first-time homebuyers so the trade-UNp purchasers can buy bigger homes.”

To contact the reporters on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net; Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editors responsible for this story: Vincent Bielski at vbielski@bloomberg.net; Kara Wetzel at kwetzel@bloomberg.net Rob Urban

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All Cash U.S. Home Purchases Surge With Rising Rates

Greg Leffel, an investor in Columbus, Ohio, said he relishes cash deals as much as he dislikes home loans. He has spent $150,000 buying and renovating 10 foreclosed houses in the past two years and turned them into rentals.

“Lending is so tight, and even if you do get a loan you’d have to jump through a bunch of hoops first,” Leffel, 44, said. “I like buying with cash, because then I can control my investments.”

More from Bloomberg.com: Son Makes $58 Billion on Alibaba With Buffett-Type Return

Investors like Leffel helped spur all-cash home purchases to a record 43 percent of U.S. deals in the first quarter, more than double the share a year ago, according to data firm RealtyTrac Inc. Cash is keeping residential sales trudging along while mortgage lending plummets, hurt by rising interest rates and stiff credit requirements. Americans seeking a loan to purchase their first dwelling are increasingly shut out.

“The cash buyers today mean that all is not well in the housing market,” said Clifford Rossi, finance professor at the University of Maryland’s Robert H. Smith School of Business. “First-time home buyers should make up 40 percent and we’re not seeing it because of mortgage rules.”

More from Bloomberg.com: Yellen Says ‘High Degree’ of Accommodation Still Needed

U.S. lenders are cutting jobs as business contracts. They made $226 billion in mortgages in the first quarter, a 17-year low, according to the Mortgage Bankers Association in Washington.

Small Investors

Smaller investors, who deploy cash for homes to rent, flip, or vacation in, are finding better deals now that institutions have pared buying foreclosures, said RealtyTrac Vice President Daren Blomquist. Cash sales are rising from coast to coast, comprising more than half of all purchases in many metropolitan areas in the first quarter.

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In the Miami area, 67.1 percent of sales were cash deals; New York posted 57 percent; Detroit recorded 53.5 percent; Atlanta had 53.2 percent, and Las Vegas posted 52.2 percent, according to Irvine, California-based RealtyTrac.

In Manhattan, buyers are using cash for trophy apartments and to gain an advantage over borrowers who must depend on loans to finance a purchase. Pej Barlavi, owner of brokerage Barlavi Realty LLC in Manhattan, said three of his five current clients buying homes prevailed with all-cash offers.

Barlavi said two of them are hedge fund managers who used year-end bonuses to buy the properties: a $2.2 million two-bedroom apartment in Midtown, selling for $150,000 above the asking price; and $1.5 million for a one-bedroom in Tribeca. His client in the second transaction was “nudged higher by a foreign buyer” before being chosen by the seller, Barlavi said.

Foreign Buyers

“In Manhattan, you have foreign buyers coming in and using properties as a second, third, fourth or fifth home and hedging risks in their home countries,” said Chris Mayer, a real estate professor at Columbia University Business School in New York.

Private-equity firms, hedge funds and other institutional investors have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak and rental demand rose from the almost 5 million owners who went through foreclosure since 2008.

New York-based Blackstone Group LP, the biggest U.S. single-family home landlord, cut purchases by 70 percent from last year’s peak and is now concentrating on just five markets, Jonathan Gray, global head of real estate, said in a March interview. Blackstone has invested $8.5 billion since April 2012 to amass almost 44,000 rentals in 14 cities.

Strict Credit

American Homes 4 Rent and Colony American Homes, the second- and third-ranked U.S. home landlords, have also cut acquisitions as the rebound in prices requires them to raise capital or improve operations.

“As institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers, including individual investors, second-home buyers and even owner-occupant buyers,” RealtyTrac’s Blomquist said.

Banks’ stricter credit standards following the housing crash, in combination with rising mortgage rates, have put the brakes on lending. More than 40 percent of borrowers had FICO scores above 760 in 2013 compared with about 25 percent in 2001, according to Goldman Sachs Group Inc. analysts in a Feb. 20 report. The 4.22 percent average rate for a 30-year fixed mortgage on May 6 rose from 3.53 percent a year ago, following the Federal Reserve’s announced plan to taper its bond buying, according to Bankrate.com.

Wells Fargo

“The increase in all-cash purchases is partly because rates are higher than they were a year ago, so it’s made buying with a mortgage more expensive on top of home price increases,” said Jed Kolko, chief economist at real-estate information service Trulia Inc. in San Francisco.

At Wells Fargo & Co., the biggest U.S. mortgage provider, home-loan originations plunged to $36 billion in the first quarter after surpassing $100 billion for seven straight quarters ending in June 2013, according to the San Francisco-based bank. Second-ranked JPMorgan Chase & Co.’s $17 billion total in the first quarter fell below the trough in originations made during the housing crash.

First-time buyers in particular are struggling to get home loans. They comprised 30 percent of total existing-home sales in March compared with an average of 35 percent since October 2008, according to the National Association of Realtors.

Without these buyers, existing-home sales are declining. They fell 7.5 percent in March to a seasonally adjusted annual rate of 4.59 million compared with a year earlier, according to NAR. The sales volume in March remained the lowest since July 2012, according to the trade group.

“With fewer first-time buyers, you end up with more all-cash buyers and less trading up in home activity,” said Columbia’s Mayer. “To get that ecosystem working, you need to have first-time homebuyers so the trade-up purchasers can buy bigger homes.”

To contact the reporters on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net; Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editors responsible for this story: Vincent Bielski at vbielski@bloomberg.net; Kara Wetzel at kwetzel@bloomberg.net Rob Urban

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UK has a payday loan shop for every seven banks and building societies

The UK’s high streets now have at least one short-term loan shop for every seven banks and building societies, according to research prepared for the Guardian, which shows how high-cost moneylenders have become a common sight in many neighbourhoods.

Research by the Bureau of Investigative Journalism reveals that Glasgow is the payday loan capital of the UK, with 40 stores operated by the biggest quick-cash shops. On a per capita basis, the London borough of Lewisham has the most stores, with nearly eight high street lending shops for every 100,000 residents.

The data showed that the main lenders now run 1,427 shops in England, Scotland and Wales, and a further 49 in Northern Ireland. Many high streets have also seen smaller chains open for business since the start of the financial crisis, so the figures give a conservative picture of how many are now on the country’s high streets.

In contrast to short-term lenders, banks have been shrinking their networks. Barclays recently said it was looking at closing up to 400 branches around the country. A recent report from the University of Nottingham found that there were 10,348 bank or building society branches remaining in 2012.

Paul Blomfield, the MP for Sheffield who has campaigned against payday lending, said: “These shocking figures show the scale of the payday lending epidemic on our high streets. Their corrosive impact is then often exacerbated by the companies clustering their shops in areas of higher deprivation.”

Since the financial crisis, the payday lending industry has boomed, with online and high-street stores loaning a total of around £2bn to 1 million borrowers in 2012. Interest rates in excess of 1,000% APR are commonplace, and although loans are designed to be repaid after a matter of days or weeks, borrowers often roll over loans, meaning costs quickly mount up. One debt charity recently helped a client whose £200 debt had grown to £1,851 in just three months.

Most payday lending is done online, with the Competition Commission recently finding that internet lenders, including firms such as Wonga and QuickQuid, were responsible for 80% of loans. The watchdog also found that borrowers using high street firms were significantly more likely than online customers to be social tenants, in part-time work or unemployed, lone parents, unqualified or on low incomes.

The BIJ mapped short-term lenders’ branches – the first time this has been done – and the distribution of shops was compared with official government data on deprivation. The research focused on the seven biggest chains of short-term lenders – including the Money Shop, Cash Converters, Cash Generator and the Cheque Centre – and looked only at the branches advertising short-term loans alongside pawnbroking and other services.

The large lenders, many of which are owned by overseas firms, have expanded rapidly in recent years. The Money Shop, part of a US business, has grown from 168 stores in the spring of 2006 to 564 in 2013. Oakham, which is UK-owned and offers loans over three to six months, has gone from one store at its launch in 2007 to 22 today and claims to be opening branches all the time.

While the Money Shop recently opened a store in well-off Muswell Hill in north London, the mapping shows that loan shops are clustered in areas of deprivation. Lewisham is the 16th most deprived of the 326 local authorities in England, according to the Department for Communities and Local Government’s rankings.

Halton, a borough on the Mersey estuary to the east of Liverpool, had the third highest number of stores for each resident in the Bureau’s research, with just over seven stores for every 100,000 residents. The borough is the 32nd most deprived local authority in England. Nearby Liverpool, ranked the fifth most deprived local authority in England, came 12th in the ranking of stores per 100,000 residents. In total the city council has 26 short-term loan shops.

The 40 stores in the city of Glasgow are supplemented by more in nearby West Dunbartonshire and Inverclyde, which also featured in the Bureau’s top 10 for the number of stores per head of population. A recent economic profile by West Dunbartonshire council stated that 26% of children in the local authority were growing up in poverty and that one in four residents derived some or all of their income from welfare support, compared to a UK average of nearly one in seven.

In contrast, wealthy neighbourhoods such as Richmond, Kensington and Windsor have fewer than one loan shop per 100,000 residents.

Rules restricting the number of times a borrower can roll over a loan are set to come into force in July, and the sector’s new regulator has been told to introduce a cap on charges by the end of the year. However, campaigners suggest the changes do not go far enough to protect vulnerable consumers.

Blomfield said action was needed to allow neighbourhoods to refuse new shops. “Councils need new planning powers to be able to restrict the number of shops in their area, and this would allow local residents to have their say on what shops can and can’t open up,” he said.

The Consumer Finance Association, the trade body for a number of lenders including Cash Converters, Cheque Centre and the Money Shop, denied that lenders were targeting poorer parts of the country. Its chief executive, Russell Hamblin-Boone, said: “It is inaccurate to draw such conclusions. Our members’ stores can be found in population centres across the UK, in convenient locations where a broad cross-section of customers live, work and shop. There are many factors for lenders to consider when choosing store locations, including the costs of rates and rent, the local recruitment pool, prominence on the high street and competition from other stores.

Glasgow

The UK’s payday loan capital; its 40 short-term loan shops work out at nearly seven outlets for every 100,000 people. There are more on the edge of the city within other council areas. In September, Glasgow was dubbed the “jobless capital of the UK” by the Scotsman newspaper, after the Office for National Statistics said 30% of households had no one aged between 16 and 64 in employment during 2012; across the UK the figure was 18%. Last year, the average wage in the city was £20,799, below the Scottish average of £21,608.

Lewisham

The south London borough has 21 outlets of the main short-term lenders on its streets – or nearly eight for every 100,000 residents. The area is the 16th most deprived in England, and the median wage is £27,521, lower than the figure for inner London as a whole.

Lewisham was hit hard by the recession, with the number of people claiming jobseeker’s allowance increasing from 5,746 in July 2008 to 9,283 in November 2010 – or 5% of its working-age population. That compares with 3.9% across London and 3.5% for the UK as a whole.

In 2012, the council’s local economic assessment said: “Lewisham is a good place to live, even though there is much deprivation and poor-quality housing.”

Halton

The major short-term lenders have nine branches in Halton, north-west England, or 7.2 shops for every 100,000 people living in the borough, which includes the towns of Widnes and Runcorn.

In January, the unemployment rate in the borough was 4.1%, with 3,292 people claiming jobseeker’s allowance – putting it 34th out of England’s 326 local authorities. Some 9% of 16- to 18-year-olds were not in education, employment or training, and it is the 32nd most-deprived English borough. However, the average salary in Halton, at £21,293, is higher than the £21,293 level for the north-west as a whole.

[…]

A payday loan shop for every seven banks

The UK’s high streets now have at least one short-term loan shop for every seven banks and building societies, according to research prepared for the Guardian, which shows how high-cost moneylenders have become a common sight in many neighbourhoods.

Research by the Bureau of Investigative Journalism reveals that Glasgow is the payday loan capital of the UK, with 40 stores operated by the biggest quick-cash shops. On a per capita basis, the London borough of Lewisham has the most stores, with nearly eight high street lending shops for every 100,000 residents.

The data showed that the main lenders now run 1,427 shops in England, Scotland and Wales, and a further 49 in Northern Ireland. Many high streets have also seen smaller chains open for business since the start of the financial crisis, so the figures give a conservative picture of how many are now on the country’s high streets.

In contrast to short-term lenders, banks have been shrinking their networks. Barclays recently said it was looking at closing up to 400 branches around the country. A recent report from the University of Nottingham found that there were 10,348 bank or building society branches remaining in 2012.

Paul Blomfield, the MP for Sheffield who has campaigned against payday lending, said: “These shocking figures show the scale of the payday lending epidemic on our high streets. Their corrosive impact is then often exacerbated by the companies clustering their shops in areas of higher deprivation.”

Since the financial crisis, the payday lending industry has boomed, with online and high-street stores loaning a total of around £2bn to 1 million borrowers in 2012. Interest rates in excess of 1,000% APR are commonplace, and although loans are designed to be repaid after a matter of days or weeks, borrowers often roll over loans, meaning costs quickly mount up. One debt charity recently helped a client whose £200 debt had grown to £1,851 in just three months.

Most payday lending is done online, with the Competition Commission recently finding that internet lenders, including firms such as Wonga and QuickQuid, were responsible for 80% of loans. The watchdog also found that borrowers using high street firms were significantly more likely than online customers to be social tenants, in part-time work or unemployed, lone parents, unqualified or on low incomes.

The BIJ mapped short-term lenders’ branches – the first time this has been done – and the distribution of shops was compared with official government data on deprivation. The research focused on the seven biggest chains of short-term lenders – including the Money Shop, Cash Converters, Cash Generator and the Cheque Centre – and looked only at the branches advertising short-term loans alongside pawnbroking and other services.

The large lenders, many of which are owned by overseas firms, have expanded rapidly in recent years. The Money Shop, part of a US business, has grown from 168 stores in the spring of 2006 to 564 in 2013. Oakham, which is UK-owned and offers loans over three to six months, has gone from one store at its launch in 2007 to 22 today and claims to be opening branches all the time.

While the Money Shop recently opened a store in well-off Muswell Hill in north London, the mapping shows that loan shops are clustered in areas of deprivation. Lewisham is the 16th most deprived of the 326 local authorities in England, according to the Department for Communities and Local Government’s rankings.

Halton, a borough on the Mersey estuary to the east of Liverpool, had the third highest number of stores for each resident in the Bureau’s research, with just over seven stores for every 100,000 residents. The borough is the 32nd most deprived local authority in England. Nearby Liverpool, ranked the fifth most deprived local authority in England, came 12th in the ranking of stores per 100,000 residents. In total the city council has 26 short-term loan shops.

The 40 stores in the city of Glasgow are supplemented by more in nearby West Dunbartonshire and Inverclyde, which also featured in the Bureau’s top 10 for the number of stores per head of population. A recent economic profile by West Dunbartonshire council stated that 26% of children in the local authority were growing up in poverty and that one in four residents derived some or all of their income from welfare support, compared to a UK average of nearly one in seven.

In contrast, wealthy neighbourhoods such as Richmond, Kensington and Windsor have fewer than one loan shop per 100,000 residents.

Rules restricting the number of times a borrower can roll over a loan are set to come into force in July, and the sector’s new regulator has been told to introduce a cap on charges by the end of the year. However, campaigners suggest the changes do not go far enough to protect vulnerable consumers.

Blomfield said action was needed to allow neighbourhoods to refuse new shops. “Councils need new planning powers to be able to restrict the number of shops in their area, and this would allow local residents to have their say on what shops can and can’t open up,” he said.

The Consumer Finance Association, the trade body for a number of lenders including Cash Converters, Cheque Centre and the Money Shop, denied that lenders were targeting poorer parts of the country. Its chief executive, Russell Hamblin-Boone, said: “It is inaccurate to draw such conclusions. Our members’ stores can be found in population centres across the UK, in convenient locations where a broad cross-section of customers live, work and shop. There are many factors for lenders to consider when choosing store locations, including the costs of rates and rent, the local recruitment pool, prominence on the high street and competition from other stores.

Glasgow

The UK’s payday loan capital; its 40 short-term loan shops work out at nearly seven outlets for every 100,000 people. There are more on the edge of the city within other council areas. In September, Glasgow was dubbed the “jobless capital of the UK” by the Scotsman newspaper, after the Office for National Statistics said 30% of households had no one aged between 16 and 64 in employment during 2012; across the UK the figure was 18%. Last year, the average wage in the city was £20,799, below the Scottish average of £21,608.

Lewisham

The south London borough has 21 outlets of the main short-term lenders on its streets – or nearly eight for every 100,000 residents. The area is the 16th most deprived in England, and the median wage is £27,521, lower than the figure for inner London as a whole.

Lewisham was hit hard by the recession, with the number of people claiming jobseeker’s allowance increasing from 5,746 in July 2008 to 9,283 in November 2010 – or 5% of its working-age population. That compares with 3.9% across London and 3.5% for the UK as a whole.

In 2012, the council’s local economic assessment said: “Lewisham is a good place to live, even though there is much deprivation and poor-quality housing.”

Halton

The major short-term lenders have nine branches in Halton, north-west England, or 7.2 shops for every 100,000 people living in the borough, which includes the towns of Widnes and Runcorn.

In January, the unemployment rate in the borough was 4.1%, with 3,292 people claiming jobseeker’s allowance – putting it 34th out of England’s 326 local authorities. Some 9% of 16- to 18-year-olds were not in education, employment or training, and it is the 32nd most-deprived English borough. However, the average salary in Halton, at £21,293, is higher than the £21,293 level for the north-west as a whole.

[…]

UK has a payday loan shop for every seven banks and building …

The UK’s high streets now have at least one short-term loan shop for every seven banks and building societies, according to research prepared for the Guardian, which shows how high-cost moneylenders have become a common sight in many neighbourhoods.

Research by the Bureau of Investigative Journalism reveals that Glasgow is the payday loan capital of the UK, with 40 stores operated by the biggest quick-cash shops. On a per capita basis, the London borough of Lewisham has the most stores, with nearly eight high street lending shops for every 100,000 residents.

The data showed that the main lenders now run 1,427 shops in England, Scotland and Wales, and a further 49 in Northern Ireland. Many high streets have also seen smaller chains open for business since the start of the financial crisis, so the figures give a conservative picture of how many are now on the country’s high streets.

In contrast to short-term lenders, banks have been shrinking their networks. Barclays recently said it was looking at closing up to 400 branches around the country. A recent report from the University of Nottingham found that there were 10,348 bank or building society branches remaining in 2012.

Paul Blomfield, the MP for Sheffield who has campaigned against payday lending, said: “These shocking figures show the scale of the payday lending epidemic on our high streets. Their corrosive impact is then often exacerbated by the companies clustering their shops in areas of higher deprivation.”

Since the financial crisis, the payday lending industry has boomed, with online and high-street stores loaning a total of around £2bn to 1 million borrowers in 2012. Interest rates in excess of 1,000% APR are commonplace, and although loans are designed to be repaid after a matter of days or weeks, borrowers often roll over loans, meaning costs quickly mount up. One debt charity recently helped a client whose £200 debt had grown to £1,851 in just three months.

Most payday lending is done online, with the Competition Commission recently finding that internet lenders, including firms such as Wonga and QuickQuid, were responsible for 80% of loans. The watchdog also found that borrowers using high street firms were significantly more likely than online customers to be social tenants, in part-time work or unemployed, lone parents, unqualified or on low incomes.

The BIJ mapped short-term lenders’ branches – the first time this has been done – and the distribution of shops was compared with official government data on deprivation. The research focused on the seven biggest chains of short-term lenders – including the Money Shop, Cash Converters, Cash Generator and the Cheque Centre – and looked only at the branches advertising short-term loans alongside pawnbroking and other services.

The large lenders, many of which are owned by overseas firms, have expanded rapidly in recent years. The Money Shop, part of a US business, has grown from 168 stores in the spring of 2006 to 564 in 2013. Oakham, which is UK-owned and offers loans over three to six months, has gone from one store at its launch in 2007 to 22 today and claims to be opening branches all the time.

While the Money Shop recently opened a store in well-off Muswell Hill in north London, the mapping shows that loan shops are clustered in areas of deprivation. Lewisham is the 16th most deprived of the 326 local authorities in England, according to the Department for Communities and Local Government’s rankings.

Halton, a borough on the Mersey estuary to the east of Liverpool, had the third highest number of stores for each resident in the Bureau’s research, with just over seven stores for every 100,000 residents. The borough is the 32nd most deprived local authority in England. Nearby Liverpool, ranked the fifth most deprived local authority in England, came 12th in the ranking of stores per 100,000 residents. In total the city council has 26 short-term loan shops.

The 40 stores in the city of Glasgow are supplemented by more in nearby West Dunbartonshire and Inverclyde, which also featured in the Bureau’s top 10 for the number of stores per head of population. A recent economic profile by West Dunbartonshire council stated that 26% of children in the local authority were growing up in poverty and that one in four residents derived some or all of their income from welfare support, compared to a UK average of nearly one in seven.

In contrast, wealthy neighbourhoods such as Richmond, Kensington and Windsor have fewer than one loan shop per 100,000 residents.

Rules restricting the number of times a borrower can roll over a loan are set to come into force in July, and the sector’s new regulator has been told to introduce a cap on charges by the end of the year. However, campaigners suggest the changes do not go far enough to protect vulnerable consumers.

Blomfield said action was needed to allow neighbourhoods to refuse new shops. “Councils need new planning powers to be able to restrict the number of shops in their area, and this would allow local residents to have their say on what shops can and can’t open up,” he said.

The Consumer Finance Association, the trade body for a number of lenders including Cash Converters, Cheque Centre and the Money Shop, denied that lenders were targeting poorer parts of the country. Its chief executive, Russell Hamblin-Boone, said: “It is inaccurate to draw such conclusions. Our members’ stores can be found in population centres across the UK, in convenient locations where a broad cross-section of customers live, work and shop. There are many factors for lenders to consider when choosing store locations, including the costs of rates and rent, the local recruitment pool, prominence on the high street and competition from other stores.

Glasgow

The UK’s payday loan capital; its 40 short-term loan shops work out at nearly seven outlets for every 100,000 people. There are more on the edge of the city within other council areas. In September, Glasgow was dubbed the “jobless capital of the UK” by the Scotsman newspaper, after the Office for National Statistics said 30% of households had no one aged between 16 and 64 in employment during 2012; across the UK the figure was 18%. Last year, the average wage in the city was £20,799, below the Scottish average of £21,608.

Lewisham

The south London borough has 21 outlets of the main short-term lenders on its streets – or nearly eight for every 100,000 residents. The area is the 16th most deprived in England, and the median wage is £27,521, lower than the figure for inner London as a whole.

Lewisham was hit hard by the recession, with the number of people claiming jobseeker’s allowance increasing from 5,746 in July 2008 to 9,283 in November 2010 – or 5% of its working-age population. That compares with 3.9% across London and 3.5% for the UK as a whole.

In 2012, the council’s local economic assessment said: “Lewisham is a good place to live, even though there is much deprivation and poor-quality housing.”

Halton

The major short-term lenders have nine branches in Halton, north-west England, or 7.2 shops for every 100,000 people living in the borough, which includes the towns of Widnes and Runcorn.

In January, the unemployment rate in the borough was 4.1%, with 3,292 people claiming jobseeker’s allowance – putting it 34th out of England’s 326 local authorities. Some 9% of 16- to 18-year-olds were not in education, employment or training, and it is the 32nd most-deprived English borough. However, the average salary in Halton, at £21,293, is higher than the £21,293 level for the north-west as a whole.

[…]

13 Reasons Why Cash Is Terrible

Thumbnail

View gallery. Wonderlane/flickr

Apparently the latest fad is to do all your spending in cash.

One of our contributors recently chronicled how debt-riddled 20 and 30 somethings turned around their lives by moving to a cash-only existence.

Plus, as the New York Times’ Hilary Stout reports, many are also now contemplating switching to an all-cash diet after high-profile cyber thefts at major retailers like Target

But there are at many reasons why cash is bad and we should be eager for everyone to stop using it.

Here they are:

#1 Cash is expensive

Cash costs the economy $200 billion, according to Tufts professors Bhaskar Chakravorti and Benjamin Mazzotta. For an individual this mostly comes in the form of fees and opportunity costs. For businesses it mostly comes in the form of theft. And for government this mostly comes in the form of lost tax revenue.Here’s their breakdown:

Fletcher/Tufts

We’ll dig more into these figures more closely as we go down.

#2 Cash is inconvenient

On average, the Tufts researchers found, Americans waste 28 minutes a month traveling to an ATM, or 5.6 hours a year. Much of that time would likely have been spent on leisure. But at the mean wage, that means $31 billion lost annually. “…It is indicative of just how much time in the aggregate is spent managing currency,” the Tufts professors write.

#3 Cash is dirty

Researchers from Wright Patterson Medical Center recently asked 68 shoppers at a grocery store to swap out dollar bills they were holding with clean ones. They got the following results:

87% were contaminated with bacteria that could cause an infection in anyone with a compromised immune system, such as people with HIV or cancer. 7% had bacteria that could cause an infection in perfectly healthy people. Only 6% were completely clean #4 Using an ATM is like going to a public bathroom

In 2011, British researchers compared the two and found, “the ATM machines were shown to be heavily contaminated with bacteria; to the same level as nearby public lavatories.”

#5 Cash is dangerous

Yes, there’s the hacking thing. But Tufts’ Chakravorti told us that the odds of your specific account getting hacked remain negligible. On the other hand, he says, the more cash you carry, the greater the risk of losing or misplacing it.

#6 Cash facilitates crime

A 2012 University of Chicago study confirmed robberies were more concentrated around places that did most of their business in cash.

#7 There are physical limits on going cash only

Chakravorti points out there are limits on how much you can withdraw from an ATM. Plus the more money you’re carrying, the more cumbersome it is to hold it. “You don’t want to be carrying a bag of money into Best Buy to buy a flat-screen TV ,” Susan Grant, the director of consumer protection at the Consumer Federation of America, told the Times’ Stout. “People shouldn’t have to resort to that for peace of mind.”

#8 You can’t order stuff online with cash

If you love inconvenience, cash is your guy. Plus it is much easier to keep track of purchases by paying with credit cards, as you don’t have to manage a bunch of paper receipts.

#9 Businesses lose tons of money to cash theft each year

U.S. stores lose $40 billion dollars to cash theft.

#10 Cash is expensive to protect

The cost of mitigating that above number runs to 0.46% of a business’ average gross sales.

#11 Cash enables tax evasion

Conservatively, the Tufts professors say, studies have shown the government loses $100 billion annually in foregone tax revenue from cash transactions.

#12 You can’t build up a credit score with cash

Credit cards can get you into debt. But they’re also basically the only way you’ll ever be able to get a loan in the first place. This is perhaps the most immediate benefit.

#13 Cash is discriminatory

The Tufts researchers found that those without access to financial instruments pay on average about $3.66 per month in fees than those that do have access, and are nearly 4 times as likely to face fees. African Americans are more than twice as likely, as measured by the logit coefficient (2.2) to pay for access to cash. “The costs of cash are disproportionately borne by poorer people who have less access to banking,” Chakravorti told us.

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