SALT LAKE CITY — Bank fees are certainly nothing new. They’ve long been a way for banks to rake in billions of dollars. New research showed just how much it has impacted people who likely can afford to pay it the least.
From overdraft fees and monthly maintenance fees to returned item fees and even fees for not using your card — banks raked in close to $30 billion from consumers in 2020, CNBC reported.
What’s even more troubling is who is paying them.
Folks whose income has been negatively impacted by the COVID-19 pandemic are paying more than four times more per month in fees than those whose household income has not taken a hit, according to a new Bankrate.com report.
“It’s been a fact of this heartbreaking economic downturn and burgeoning recovery is that it’s really been a tale of two cities: the haves and the have nots,” said Mark Hamrick, Bankrate.com’s senior economic analyst.
Additionally, minorities and millennials report paying higher bank fees than everyone else. That’s in line with what we know about people whose jobs have been hardest hit by the economic shutdown. It’s people of color and younger folks who have mostly filled the unemployment line.
Facing the tough choice of going delinquent on a bill or paying it with money they don’t have and then getting slammed by fees, Hamrick said people take the fees.
One bit of good news: a lot of people can slash their bank fees by simply shopping around for a new bank, Hamrick advised.
“There is lots of competition in the marketplace and none of us need to be overpaying for banking services.”
Hamrick said bank fees are just another example of the “K-shaped recovery” that is currently underway in America. People whose finances weren’t hurt in the pandemic are generally doing quite well while those who have been hit keep getting hit.
As the KSL Investigators reported last September, Americans are paying an average of $172.68 just for the privilege of having a checking account and the average overdraft fee is now $32.11.
“Most banks aren’t giving customers a break, despite the pandemic,” said Richard Barrington, senior financial analyst for MoneyRates.com, which conducted the research. “(Small fees) may not sound like that big a deal, but boy, you add them up over the course of a year and it’s like, yeah, that’s significant,” he said.
Barrington’s advice: Shop around for a better deal and don’t be afraid to break up with your bank.
“If you take a fresh look at things now you really can stand to save some money,” he said.
Barrington said less than a third of big banks offer free checking, but 45% of small banks do, and 72% of online banks.
Barrington said the COVID-19 pandemic could bring more people to online banks as customers look for ways to avoid in-person transactions.
“When you do start banking online, it’s like, hey, you know what, this is a lot easier,” he said. “I didn’t really enjoy going to my branch that much. The friendly teller wasn’t that friendly. The lollipops weren’t that good. And I can buy a lot of lollipops for the $170 a year in fees that I’m saving.”