The pandemic has disproportionately impacted low-earning Americans and many are paying higher bank fees for their misfortune, according to a new survey.
Those financially hurt by COVID-19 are paying checking account fees that are four times higher than unaffected households with uninterrupted employment and income, a new Bankrate survey found. YouGov interviewed 2,743 adults online from Dec. 2-4 on behalf of Bankrate.
Households that have experienced financial hardship since the onset of the pandemic report average monthly checking account fees of $11.41. Meanwhile, those who’ve managed to weather the pandemic unscathed report paying $2.79 per month, the survey found.
“Those whose personal finances have been adversely affected by the pandemic have been hit with a double whammy of higher banking fees,” Mark Hamrick, Bankrate’s senior economic analyst, said in a press release.
Read more: How to choose the right checking account
Roughly 50% of households have had an income interruption during the pandemic, an earlier Bankrate survey found, and Hamrick told Yahoo Money that the financial fragility lower-income earners typically experience has only been “exacerbated” by the economic downturn. A confluence of factors contributing to financial decay has “hit certain cohorts harder than others,” he said.
Minorities and millennials — two groups that have suffered high rates of unemployment and income loss since March 2020 — reported paying the highest bank fees.
For reporting millennials, the monthly average fee was $15.32 compared with $6.18 for Gen Xers and $2.38 for Baby Boomers. Black and Hispanic respondents said their checking account fees averaged $12.07 and $13.96 per month, respectively, nearly three times as much as white checking account holders who paid $5.37 per month on average.
How to avoid bank fees
Many banking institutions may waive fees or interest if you contact them to report a financial hardship. It’s always best to get in touch as soon as your income is disrupted and before you incur an overdraft fee or other penalty.
If poor money management is the problem, begin with establishing a budget and identify where the “potential conflict with income and expenses” is, Hamrick said. Maybe you need to spread out your bill payment deadlines, so they aren’t bunched together, causing cash flow problems. You can ask lenders if you can reschedule these deadlines.
He also considers it a good idea to link a checking account to a savings one that can be drawn on if you overdraft as a backstop.
Hamrick also suggested shopping around for a financial institution with products designed to match your needs if your current one isn’t working for you. Pay close attention to overdraft and ATM fees to break the destructive cycle and help you “ get back on your feet financially,” Hamrick said.