Why So Many Are Trapped in the Cycle of Poverty

People with low incomes are fairly likely to overdraw their bank account. The banks have learned to ruthlessly make a massive profit off this fact, and in the process, have ruined the lives of poor and disabled people. This cycle of economic need and mounting debt has jeopardized many people.

by Jack Bragen

To begin with, my wife and I are exceedingly fortunate that we have families that can help us in emergencies. Thus, the hard knocks  — the hardships caused by living at the mercy of the government, and in a society that is harsh towards poor and disabled people — are softened. Yet, in our society, multitudes are reeling from those hard knocks.

People on SSI and SSDI are more likely than others to suffer from metabolic disorders. Those who are prescribed long-term medications for mental illness often find that these medications make weight loss next to impossible, even when their diet is quite normal. My wife and I eat a normal amount of food, and I cook meals that are fairly nutritious. However, I still weigh in excess of 200 pounds, when my normal weight would be about 60 pounds less than I weigh now.

With excess weight comes many health-related complications. I am battling to keep my blood sugar under control so that I won’t have to take diabetes medications. Diabetes occurs at epidemic levels among people who take psychiatric medications. I have very severe sleep apnea wherein my life is dependent upon a breathing machine.

Fortunately, my teeth are good. However, I have numerous acquaintances who have lost a number of their teeth. Mass market dentists, whose work is at the bottom of the barrel, are usually the only ones who will accept dental benefits under Medi-Cal.

With numerous medical issues, there comes numerous appointments. This is one of many factors that makes it difficult to get employment. A poor person also must have their housing regularly inspected if they receive housing assistance, and must document their income and present these documents to SSI and housing. Thus, these constitute more appointments to keep us busy.

With a mental health diagnosis and medical complications, my wife and I are constantly going to the pharmacy. I take about a half dozen or more medications daily because of my hypertension and psychiatric disorder.

We have a dog and cat for therapeutic purposes, and sometimes they too must be seen for veterinary issues. My parents and my wife’s parents have told us that they do not want to help pay for vet visits. Thus, we are sometimes surprised with expenses in the hundreds of dollars from a discounted vet clinic. The above expenses amount to a considerable burden. But what I haven’t mentioned so far is the scamming of the major banks.

Recently, through legislation, the banks were banned from providing a “direct deposit advance,” which they termed as a “financial product.” These advances allowed poor people to borrow from their next check in an emergency.

However, these advances caused a number of problems for poor people. One of these problems was the extremely high interest rate charged for the advances. One of the major banks that offered direct deposit advance offered the loan at ten percent per month, and another bank charged nearly that much. This works out to be an annual percentage rate of more than 120 percent.

When a poor person in a state of dire emergency must borrow from their next check, this jeopardizes their ability to make it through the next month. In some instances, people would borrow the following month to compensate for what was borrowed in the previous month, just to stay afloat. This is a situation than can jeopardize their ability to pay for rent, food and utilities.

This cycle of economic need and mounting debt has jeopardized many people and made it more likely for a disabled person to step into the life of being homeless. In response to this growing problem, legislators, probably with good intentions, banned banks from offering direct deposit advances. But one or more of the banks turned this to their advantage.

People with low incomes are fairly likely to overdraw their bank account. The banks have learned to ruthlessly make a massive profit off this fact, and in the process, have ruined the lives of poor and disabled people.

“Mortgage in trouble? Occupy the banks.” A sign of the times.


In the past, if there was a threat of being overdrawn, we could get a direct deposit advance and avoid overdraft fees, as well as a damaged credit rating. For at least one bank, there is a daily charge for being overdrawn. This means that if you buy a cup of coffee at Starbuck’s and overdraw your account, starting on that day and in ensuing days, you will be charged a substantial fee.

If you try to put out this fire with a deposit, it had better be a hefty sum. You must pay back not only the original overdraft, but you must also pay in excess of the fees you have incurred up to that point.

The bank has it rigged so that you’re paying overdraft fees incurred through the fees that have been already charged. Thus, if you try to put in ten dollars to pay back the Starbuck’s overdraft, you’re out of luck, because by this time, you might owe fifty, a hundred, or even two hundred dollars.

As a result, you could start the next month with a credit balance at minus hundreds of dollars, and with a damaged credit rating that adds insult to injury. Without a good credit rating, you cannot rent an apartment, you cannot buy a used car, and you begin to feel deeply that you are a reject of society.

These are just some examples of the hardships that comes with being a disabled poor person. To try to get out of that hole and look for a job, you might have additional obstacles. Background checks through the Internet are easily available for a company that wants to hire only “pristine” people. If there is any blemish on your record, a prospective employer will know about that.

Besides that, without a college degree, an individual may find that they can get only the most meager-paying jobs. And with some type of disability, an individual may find that they can’t keep up with the fast pace of most job situations. People are worked harder than they were ten, twenty and thirty years ago.

Due to all of the desperate problems listed above, there exists for many people the temptation to use drugs as a temporary escape. This only further compounds problems that are already exceedingly harsh, and adds to the cycle of poverty.

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“And Now Where?” Lithograph by Rockwell Kent

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