By Robert J. Semrad | Published January 15 2016 |
How Bank Overdraft Fees Punish the Poor
Last year, CNN Money reported that the big three banks in the United States – JPMorgan Chase, Bank of America and Wells Fargo – had made $1.1 billion on overdraft fees in the first three months of that year alone. Obviously, overdraft fees are a big money-maker for the banks, but who is most likely to pay these over draft fees? We can arrive at an answer to this question by considering the factors that prevent overdraft fees from being charged:
- Bank customer isn’t overdrawn — That’s right. As long as you keep a positive sum of cash in your checking account, you won’t be overdrawn.
- Bank customer has overdraft protection — Banks can link a checking account to a savings account or credit card. If the balance of the checking account dips below a certain amount, that can trigger a transfer from savings or a cash advance from a credit card.
So, if you have plenty of cash on hand, or have secure enough credit to receive a cash advance on a credit card, you need not fear overdraft fees. In other words, you’re safe as long as you’re not poor. If you’re poor, you can expect a $35 overdraft fee on occasion. You can also expect these bank fees:
- Monthly charge for maintaining your account — Get ready to pay $12 a month or more, because you don’t keep a high enough balance to have this fee waived.
- Late fees on credit card payments — If your next paycheck comes after your next credit card payment is due, you could get charged $35 for a late payment, and have your interest rates raised as a result.
Considering all these factors, banking is disproportionately more expensive for the poor or for consumers struggling with debt. If you’re burdened with excessive debt, bank overdraft and late fees can eat up any progress you’re making in paying down what you owe. When your progress paying down debt stalls, it’s time to call DebtStoppers.
Our firm has solutions for consumers laboring under a mountain of debt. Our bankruptcy attorneys can help you get a fresh start. Call DebtStoppers at 312-913-0630 or contact our office online to schedule a free appointment.