You may get annoyed when you think about all those fees you pay to the banks, but don’t expect those to go away anytime soon especially if you go to JPMorgan Chase, Wells Fargo, or Bank of America. It turns out these banks, which also happen to be the 3 biggest banks in America, earned over $6.4 billion just last year. Where did this profit come from? According to the S&P Global Marketplace Intelligence and CNNMoney, this money was earned thanks to ATM and overdraft fees from their customers. To put that into perspective, that would equal out to every adult American just handing them $25.
Needless to say, the outrage over this matter came but don’t expect anything to come from this outrage. These banks seem to show no sign of scaling back or removing these fees, especially since they just made $300 million more this year than they did the previous year.
Let’s take a closer look at JPMorgan. They had a huge jump in earnings thanks to just ATM fees, a 22 percent increase to be exact. The reason for this very large jump is because they raised their ATM fees by $0.50. This may not seem like a lot but is obviously quite substantial in the grand scheme of things. Their customers are forced to pay this fee whenever they go to an ATM that does not belong to this bank. This is the very reason why customers are always warned to look at the fine print to see what fees a bank actually charges. According to Bankrate, the average charge for this fee is $4.57 which became a huge topic for Bernie Sanders during his campaign. He had a goal that was going to limit these fees to only $2, rather than the higher rate people are paying today.
What is even more important to note is that most banks actually get their money from overdraft fees, which can cost customers $35 every time this occurs. An overdraft fee is where a person pulls money out of their account without having any money in it. The banks keep letting these charges happen because they can profit from them. The problem is that these policies disproportionally affect people of lower income. Here is a scary thing to think about: JPMorgan made $2 billion from these overdraft fees while Bank of American and Wells Fargo made $1.8 and $1.7 billion. Did you know that customers aren’t really supposed to have these fees taken without their permission? Most people don’t even realize that they consenting to these fees, which is also very concerning. You can’t even count on overdraft protections because these just help the banks get more money from their customers.
This is a broken system that people should be more worried about, especially since the young and the poor are the ones most vulnerable to these overdraft fees. For instance, there are many stories of people who are counting on checks that they cashed to clear as a way to afford things only to find out the check never cleared and they paid $35 for each transaction. The reality is that there needs to be more protections out there for people, and this is something that should be looked at carefully.