Housing Counselor’s Corner: Make These Considerations When Choosing a Bank
Have you ever thought about the cost of banking? How much does it cost to cash a check or avoid minimum balance fees or start a new account? How much does it cost if you overdraft your account? You would think the cost of banking is the same across the country. Recent studies have shown that the cost of banking and which banking options are available depend on your address.
The effects of our country’s history of segregation and redlining are still felt today in banking options African American and Latinx people have. It cost African American and Latinx people $12 more to open an account and $123 – $245 more to keep the account open without being charged fees.
There are many quick but expensive alternatives to traditional banks in neighborhoods with a majority of African American and Latinx people but few traditional banking options. You may see check-cashing services, payday lenders and car title lenders. You may notice a lack of credit unions or big banks in those areas. If traditional banking options are available in communities of color, it may cost more to open an account, keep the account open or the bank has higher fees.
Take some time this year to do a banking tune-up! Decide how you want to use your checking and/or savings account. Make sure you’re comparing your options and don’t be afraid to mix and match! If you’re not sure where to start here are 7 things you should ask when you are reviewing bank accounts:
- How much does it cost to open a checking account? How much does it cost to open a savings account?
- Can you use an ATM for free?
- What is the interest rate for the savings account? The national average is 0.09%.
- How much does it cost if you overdraft? The average overdraft fee is $34.
- How much does the bank charge to cash a check? How can I avoid that fee?
- Does the bank charge monthly maintenance fees? How can I avoid that fee?
- Does the bank charge a fee to get paper statements? Do you need paper statements or are electronic statements okay?
Still not sure what you should do? Talk to a housing counselor! We can work with you to review your bank statements, banking habits and weigh the pros and cons of your banking options.