Lost in the outrage of the Dick Durbins of the world regarding the new consumer fees banks are lately imposing in the wake of Dodd-Frank is this salient fact: a lot of banking customers won’t be paying any new fees at all. Their checking will still be free. At the typical bank, for example:
– If you have direct deposit, you won’t pay a fee.
– If you maintain a nominal minimum monthly balance, you won’t pay a fee.
– If you use your debit card at ATMs, but not for purchases, you won’t pay a fee.
– If you maintain a minimum balance among all your accounts, including savings and CDs, you won’t pay a fee.
I’m sure I’m forgetting other exceptions, but you get the picture. The fact is that the banking industry has figured out ways to make to make money from plenty of its customers without having to sock them with extra charges. (At the same time, banks lose money on a lot of their customers, too. Why the industry shouldn’t charge for a service customers willingly sign up for and find value in is beyond me.) Anyway, this new-bank-fee handwringing is way overdone. Whether they know it or not, many bank customers won’t likely be affected.
Ironically, the people who will be affected the most are the ones who can least afford it: low-income consumers. People on low incomes tend to be less likely to get paid via direct deposit, for instance. Often, they don’t have enough extra funds lying around to maintain a minimum savings balance, either. So many low-income consumers will either end up paying the new fees or will leave the banking system altogether. That’s not good, either for them or the system.
As often happens, new regulations hit the poor hardest. When Dodd-Frank and other recent banking regulation was being debated, this outcome was entirely predictable. Congress, notably Senator Durbin, only has itself to blame.
What do you think? Let me know!