Blacks and Latinos pay twice as much in bank charges, survey finds

A recent survey from Bankrate showed that Blacks and Latinos pay twice as much in banking fees compared to White Americans.

The average Black adult pays an average of $12 a month for checking accounts and Latinos pay as much as $14 a month at banks or credit unions. This is compared to White adults who pay an average of $5 a month on checking accounts, according to the survey, conducted by YouGov. The survey polled 2,743 U.S. adults, from which 2,3399 were holders of checking accounts, from December 7 to 10, 2020.

The survey also found that Whites were more likely to have no-fee accounts, with 79% saying they paid no fees. This is compared to the 56% of Blacks and 50% of Latinos who responded they had no monthly fees.

Americans who had their income negatively impacted by the coronavirus pandemic, especially people of color, reported paying higher fees compared to those who had their income minimally impacted by the virus. Those who were hit hard said they paid a monthly average of $11 in bank fees, compared to the less than $3 the others paid, according to the survey.

“There has been very much an exacerbation of wealth and income inequality during this time,” said Mark Hamrick, Bankrate senior economic analyst Mark Hamrick. “More than any other downturn that we are aware of in our history, this has really been a reflection of a have and have-not economy.”

An October 2020 study from Bankrate also found that many banks require a minimum balance to waive routine services charges. For this to happen, a customer needs to have an average of about $594 in their accounts to avoid the fee.

There are other instances where higher bank fees could be seen. For example, if a customer uses an ATM outside their bank’s network, they’ll be faced with a surcharge from the other ATM’s owner. These surcharges on average cost $3.08 for non-customers. The customer’s bank will also charge them $1.56 for using another ATM that doesn’t belong to the bank, Bankrate found.

Those who are not aware of this may have an average of $33.47 in bank fees if they overdraw their account.

While this is the standard with most banks, minority communities still face disparities in bank charges. John Holdsclaw IV, board of chair of the Coalition of Community Development Financial Institutions (CDFIs), suggested that this inequality has been around for years. He said the additional bank charges “just make the problem worse and take a deeper toll on Black and Brown and minority families throughout the country.”

A 2019 Federal Reserve Survey of Consumer Finances also revealed that the wealth gap between White Americans and People of Color was glaring. According to the survey, the median wealth for a White family was $188,200 compared to the $36,100 for Hispanic families, and $24,100 for Black families.

Hamrick suggested other banking options minority communities can explore to lower their fees. He said shopping around will go a long way in lowering their fees. That means, exploring other financing options outside traditional banking, such as credit unions and online institutions.

“Shopping around for the best banking services fit might not have the same level of excitement associated with it as, say, buying a new outfit, electronic device or car,” Hamrick said. “But failing to do it can make the difference between achieving our financial goals or not.”

He added that the best way to avoid additional ATM fees is to use those in the customer’s bank network. According to Bankrate, smaller banks and credit unions tend to have more networks of ATMs that serve customers at no fee.

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

Be the first to comment!

You must login to comment

Related Posts