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People of color pay more than double the bank commission than white Americans, according to a Bankrate survey.
When asked about fees such as ATMs, overdrafts, and routine service charges, black adults report paying an average of $ 12 a month for current accounts at banks or credit unions, and Hispanics pay $ 14 a month. average. White current account holders said they paid an average of $ 5 a month, according to the survey, which was conducted by YouGov. It surveyed 2,743 adults in the United States, including 2,339 current accounts, from December 7-10, 2020.
Whites were also more likely to have commissions without commissions, and 79% responded that they paid no commissions. In comparison, 56% of blacks and 50% of Hispanics had no monthly dues.
Americans who saw their incomes affected by the coronavirus pandemic also reported paying higher taxes than those who were not financially affected by the crisis. Those who had a mishap had a monthly average of $ 11 in fees, compared to less than $ 3 a month for those unaffected, according to the survey.
“During this time there has been an exacerbation of wealth and income inequality,” said Mark Hamrick, senior economic analyst at Bankrate.
“More than any other recession we have knowledge of in our history, this has really been a reflection of an economy that has not.”
When it comes to routine service charges, many banks require a minimum balance to avoid commission. On average, customers need to have approximately $ 594 in their account to waive the fee, according to an October 2020 Bankrate study.
The availability of ATMs is also important. If you use one outside your bank’s network, you will be slapped with a surcharge from the ATM owner, plus a commission from your bank. Surcharges, on average, cost an average of $ 3.08 for non-customers, and your bank will charge you an average of $ 1.56 to use someone else’s ATM, according to Bankrate.
Those who overdraw their account charge 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 offer low-income communities access to financial services.
The wealth gap is blatant, as evidenced by the Federal Reserve’s 2019 Consumer Finance Survey, published in September 2020. The average wealth for a white family was $ 188,200, compared to $ 24,100 for black families and $ 36,100 for Hispanic families.
The additional bank fees “make the problem worse and affect blacks and browns and minority families across the country more,” Holdsclaw said.
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He believes that in many situations, higher bank fees may focus geographically on areas with higher black, brown, and moderate income communities.
“It just creates a perfect storm,” Holdsclaw said.
“The perfect storm lies behind the communities of these minorities and the minority families who have their accounts in these financial institutions.”
How to reduce your rates
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It’s worth shopping to reduce your fees, Hamrick said.
Not just look at traditional banks, but credit unions and online institutions. Digital technology opens up options beyond what is physically close.
“Shopping for the best banking services may not have the same level of excitement as, for example, buying a new computer, electronic device, or car,” he said. “But not doing so can make the difference between achieving our financial goals or not.”
Some banks offer accounts with no monthly fees and no minimum balance. CNBC Select named the Capital One 360 checking account as the best global commission-free checking account, with Ally’s interest checking account as a finalist.
The best way to avoid ATM commissions is to use one at your bank’s network. According to Bankrate, credit unions and smaller banks tend to have networks of more ATMs available to customers without commissions. Online banks may also have national networks that can increase the number of ATMs available without any commission. Some also offer a refund for out-of-network vendor expenses.
If you still can’t find an ATM, consider getting money back when you use your debit card to make a purchase.
CDFIs are a good choice for minority communities, Holdsclaw said. There are more than 1,100 nationwide, with total assets of $ 211 billion. Some are banks and others are credit unions.
While fees will vary from institution to institution, they will generally not be large, he said.
“It is included in the missions of these financial institutions that they will not charge huge commissions to people who are already in a low or moderate income community,” Holdsclaw said.
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