A report released by the California Reinvestment Coalition this week revealed that five big banks have implemented new fees that cost the average American consumer between $84 and $144 to maintain a bank account due to Dodd-Frank.
The costs associated with basic banking products push consumers out of mainstream banking and pressure them to seek out banking alternative like prepaid cards, which are exempt from the interchange limits established by the controversial Durbin Amendment.
Banks now charge fees to customers who fail to maintain a minimum balance of as much as $1,500 a month on their accounts or who do not have direct deposit set up. The report also revealed that complex bank policies make it even more difficult to avoid the high costs.
Banks maintain that increasing fees is necessary to recoup revenue lost as a result of regulations like the Durbin Amendment, which limits the amount a bank can charge a merchant to process a debit transaction.
Many banks, including Bank of America, Chase, U.S. Bank and Wells Fargo, have begun to offer prepaid cards that are purchased directly from the bank and work just like those offered by non-bank competitors.
The CRC called on banks to offer an affordable banking alternative, designing its SafeMoney account as an example of a full-service, affordable banking product. The SafeMoney account provides a debit card, bill pay, money orders and remittances, though the product does not offer checks or allow overdrafts as a way to avoid uncertainty regarding payment processing times.
“Banks have knowingly increased bank account fees in order to push their most vulnerable customers out of bank accounts and into prepaid products,” Andrea Luquetta, a policy advocate at the CRC and author of the report, said. “Banks need to be responsible players in our economic recovery and help struggling households keep their finances safe and secure in products modeled after the SafeMoney account.”