The term "alternative financial services" (also known as "fringe banking") refers collectively to a variety of financial service providers that are not within the system of federally insured financial institutions. They are generally regulated by state law, and these regulations vary widely from state to state.
Examples of alternative financial services providers include:
* Car title lenders
* Check-cashing outlets
* Pawnshops
* Payday lenders
* Rent-to-own stores.
While these institutions are regulated, individuals should be aware that alternative financial services firms usually charge higher service fees than federally insured institutions (e.g., banks and credit unions).
We would like your feedback on this Personal Finance Frequently Asked Question.
