A new national survey conducted by Bankrate found that Latinos & Blacks pay more in banking fees than white Americans pay, according to this NBC News report. When asked about fees such as ATM, overdraft and routine service charges, Latinos said they are paying $14 a month on average for checking accounts at banks or credit unions, while Black adults report paying about $12 a month.
White checking account holders said they are paying an average $5 per month, according to the survey, which was conducted by YouGov. Additionally, Americans whose income was negatively affected by the pandemic also paid more than three times the average fees as those who weren’t financially hit by the crisis.
In many instances, higher bank fees may be geographically focused in areas with higher Black, brown and moderate-income communities, an official said, while routine service charges may be imposed because lower-income households can’t afford to maintain minimum balances needed to waive fees.
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Why is it important to address the issue of limited access to banking services for minority populations? Well, there are a few key reasons. Firstly, statistics show that minorities are more likely to be part of the underbanked population, which means that although they have bank accounts, the financial services provided do not fully meet their needs. Consequently, they end up paying higher fees for financial services that fully banked individuals can access for free or at a lower cost.
According to the FDIC, in 2017, nearly 20% of American households were considered underbanked, and more than 40% of them had a family income of less than $30,000. Within the underbanked population, minorities were disproportionately represented compared to their white counterparts.
Roughly 30% of black households and around 28% of Hispanic households fell into the underbanked category, whereas only 14% of white households were classified as such, according to the FDIC.
Consequently, minority households are more likely to incur out-of-network ATM fees, which can average around $4.72, as reported by Bankrate. Although some banking fees are typically waived, banks often require minimum deposits or balances to qualify for those benefits. For low-income households, meeting these requirements can be challenging.
Bankrate.com senior economic analyst Mark Hamrick emphasizes that many individuals who receive cash payments, live paycheck to paycheck, or lack convenient access to in-network ATMs are currently paying the highest fees.
However, he suggests that with a little effort and time, these individuals could save money by exploring more affordable banking options. It’s not overly difficult or time-consuming to switch accounts to another financial institution or product that better suits their lifestyle.
In conclusion, addressing the limited access to banking services for minority populations is crucial. By doing so, we can alleviate the financial burden they face, enable them to access more affordable services and provide opportunities for financial stability and growth.
