By Anna Bahney, CNN Business
Updated: Wed, 13 Jan 2021 20:04:19 GMT
People who have taken a financial hit during the pandemic are paying four times more per month in bank fees than those who have not, according to a new report from Bankrate.com.
The majority of people, 72%, don't pay any bank fees at all, but those who do tend to be those who can least afford it, the report found. Overall, the average US checking account holder reports paying less than $8 in fees, including service charges, ATM fees and overdraft penalties a month.
However, households that have suffered a setback in income during the pandemic -- whether it be job loss or cut hours -- pay a monthly average of more than $11 a month in checking account fees. Meanwhile, account holders who say their household income has not been hurt by the pandemic report paying an average of less than $3 per month.
"Those whose personal finances have been adversely affected by the pandemic have been hit with a double whammy of higher banking fees," said Bankrate.com senior economic analyst Mark Hamrick. "Unemployment or loss of income can be devastating, but one should try to avoid adding financial insult to injury by paying too much in banking fees when so many less expensive options abound."
Those already disproportionately impacted by the pandemic, in particular people of color, are also paying higher bank fees.
While White checking account holders report paying $5 per month in fees, Blacks and Hispanics pay more than twice that amount, at $12 and $14 per month, respectively. White checking account holders are also much more likely to say that they pay nothing in monthly fees, with 79% paying zero monthly for checking while only 56% of Blacks and 50% of Hispanics pay nothing per month.
Younger people pay more for their checking accounts than older people. Millennial checking account holders, people who are between 24 and 39 years old, report paying $15 per month in fees. Gen Xers -- aged 40 to 55 -- pay $6 a month, while Baby Boomers, ages 56 and 74, pay just $2 a month.
The average monthly fee for interest checking accounts is $15.50 and the balance requirement to avoid paying a fee is $7,550, according to a separate report from Bankrate.com. Both are at record highs, despite historically low yields.
The average overdraft fee hit a record of $33.47, while the average total cost of using out-of-network ATMs fell slightly to $4.64, the report found.
More people have turned to mobile banking in 2020, with 64% reporting that they have adjusted their payment practices to using online methods more frequently as a direct result of the pandemic.
"Many consumers are playing it smart by, in effect, engaging in social distancing with their banking and payments technologies," Hamrick added. "Once we've emerged from the pandemic and the economic downturn, it will still be wise to take advantage of newer mobile banking technologies not only to save time, but to help stay on top of account balances and fees as well as potentially costly overdrafts and fraud."
The report found that the average account holder has been with their institution for more than 14 years. There are now more options to explore when banking, with many regional banks, online banks and credit unions as well as big banks offering checking accounts with low or no fees.