Blacks and Hispanics Pay Double Bank Fees Than Whites, Survey Finds

People of color pay more than twice as much bank fees as white Americans, according to a Bankrate survey.

When asked about fees such as ATMs, overdrafts, and routine service charges, black adults report spending an average of $ 12 per month on checking accounts at banks or credit unions and Hispanics pay $ 14 per month. months, on average. Holders of white check accounts said they paid an average of $ 5 per month, according to the YouGov survey. He interviewed 2,743 American adults, of which 2,339 had checking accounts, from December 7 to 10, 2020.

Whites were also more likely to have no-fee accounts, with 79% responding that they did not pay any fees. In comparison, 56% of blacks and 50% of Hispanics had no monthly fees.

Americans who saw their incomes negatively affected by the coronavirus pandemic also said they paid more in fees than those who were not financially affected by the crisis. According to the survey, those who had a setback had an average monthly fee of $ 11, compared to less than $ 3 per month for those who were not affected.

“There has been an exacerbation of wealth and income inequality during this period,” said Mark Hamrick, senior economic analyst at Bankrate.

“More than any other downturn that we are aware of in our history, this has truly been a reflection of a poor and poor economy.”

When it comes to day-to-day service charges, many banks require a minimum balance to avoid charges. On average, customers need to have around $ 594 in their account to waive fees, according to an October 2020 study from Bankrate.

The availability of ATMs is also important. If you use one outside of your bank’s network, you will be subject to an additional charge from the owner of the ATM, plus a fee from your bank. Surcharges cost non-customers an average of $ 3.08, and your bank will charge you an average of $ 1.56 to use someone else’s ATM.

Those who discover their account have to pay an average fee of $ 33.47.

For minority communities, the disparity in bank fees is indicative of the inequality they have faced for years, suggested John Holdsclaw IV, chairman of the board of the Coalition of Community Development Financial Institutions. CDFIs are credit unions, banks, microcredit funds or venture capital providers that provide low-income communities with access to financial services.

The wealth gap is glaring, as evidenced by the Federal Reserve’s 2019 Consumer Finances Survey, released in September 2020. The median wealth of a white family was $ 188,200, compared to $ 24,100 for black families and $ 36,100 for Hispanic families.

The additional bank charges “only compound the problem and take a more serious toll on black and brown and minority families across the country,” Holdsclaw said.

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He believes that in many situations, higher bank charges can be geographically concentrated in areas with black, brown, and moderate-income communities.

“It just creates a perfect storm,” Holdsclaw said.

“The perfect storm is on the backs of these minority communities and minority families who have their accounts in these financial institutions.”

It’s worth shopping around to keep your costs down, Hamrick said.

Look not only at traditional banks, but also at credit unions and online institutions. Digital technology opens up options beyond what is physically nearby.

“Shopping for the best banking services may not have the same level of enthusiasm associated with, say, buying a new outfit, an electronic device or a car,” he said. declared. “But not doing it can be the difference between achieving our financial goals, or not.”

Some banks offer accounts with no monthly fees and no minimum balance required. CNBC Select named the Capital One 360 ​​checking account as the best overall no-fee checking account, with the Ally interest checking account in second.

The best way to avoid ATM fees is to use one in your bank’s network. Credit unions and small banks tend to have networks of more ATMs available to customers at no cost, according to Bankrate. Online banks may also have nationwide networks which can increase the number of ATMs available at no cost. Some also offer reimbursement of fees from off-grid providers.

If you still can’t find a toll-free ATM, consider getting cash back when you use your debit card to make a purchase.

CDFIs are a good option for minority communities, Holdsclaw said. There are over 1,100 across the country, with total assets of $ 211 billion. Some are banks and some are credit unions.

While the fees vary from institution to institution, they usually won’t be high, he said.

“It is built into the missions of these financial institutions that they are not going to charge huge fees to people who are already in a low or moderate income community,” Holdsclaw said.

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