People don’t like to be played for suckers, and the Biden Administration is doing something about it
People without a bank account have to spend a lot of money on check cashing services. These can run from 1 to 12 percent of the check amount, plus a flat fee. Unsurprisingly, those without banking accounts are disproportionately low income, and can ill afford to reduce their paychecks or benefit checks by such fees.
Why don’t they get bank accounts? Because they also cost a lot. And banks have been unrelenting in socking people with one fee after another – costs that hit people with low incomes hardest.
President Biden told a crowd enjoying a brilliant day in the White House Rose Garden that people don’t like to be “played for suckers,” and that his Administration was working to shut down junk fees, whether imposed by banks, hotels, ticket brokers, or rental companies. Some of these are infuriating charges the consumer doesn’t know about until it’s time to press “pay” online, making it impossible to comparison shop. Some, such as fees for the most basic banking services, hit people with the lowest incomes hardest.
The Biden Administration has been engaged in a comprehensive effort to reduce or eliminate these junk fees. Working in tandem with the independent Consumer Financial Protection Bureau and Federal Trade Commission, they are either persuading or requiring banks and other corporations to stop junk fees.
The Consumer Financial Protection Bureau has already been working to reduce bounced check fees – they released new findings to show that those fees are down more than 86 percent since 2021, saving consumers nearly $2 billion. Nearly two-thirds of large banks have stopped imposing these fees entirely. But in new actions announced today, the CFPB will require large banks and credit unions to provide basic information to consumers without fees. What do they mean by basic information? Simply asking what your checking account balance is can cost a fee. You can be charged for asking what amount is needed to pay off a loan, or to get information needed to fill out applications. Under the new CFPB proposed rule, these kinds of junk fees will not be allowed. They will also require banks and other financial institutions to provide transaction information to other banks, to make it easier for people to move their money from one institution to another.
The Biden Administration and the Consumer Financial Bureau have been at this for awhile. The new $2 billion in reduced fees is added to $5.5 billion previously saved in banking fees – saving consumers subject to fees an average of $170 a year. And today, the CFPB announced new consumer refunds of $140 million from junk fees illegally imposed by banks, auto lenders, and companies sending remittances (paid by immigrants to support their families in other countries).
These are notable efforts to stop corporations from charging fees for just one reason – because they can. Up to now, consumers had little recourse but to pay. But the continuing work of the Biden Administration is paying off. If you buy event tickets or travel, you can now save some money and feel less like a sucker. If you’re struggling to pay your bills and can’t afford one fee after another from banks, these savings will help.