Many of us have been hit by an overdraft fee on our checking account before, and while it was nice to have the protection, the $33 fee — the average overdraft fee these days – definitely stung.
What if I told you that overdraft fees are a deliberate move by the wealthy few in a game that’s increasingly being rigged against the rest of us?
Banks took over $460 billion Overdraft fees since 2010. In the last three months of 2020 alone, JPMorgan Chase, Wells Fargo and Bank of America combined brought in more than $300 million in overdraft fees. A Bank CEO – Bill Cooper of Minnesota-based TCF National Bank sued by the federal government for “enticing consumers into costly overdraft services” — even naming his yacht “Overdraft.”
A small percentage of accounts — likely lower-income consumers — account for nearly 80 percent of all overdraft revenue.
It is no exaggeration to call overdraft fees predatory. That’s what the Consumer Finance Protection Bureau (CFPB) found out under 9 percent of consumer accounts pay ten or more overdrafts a year. That means a small percentage of accounts — likely lower-income consumers — account for nearly 80 percent of all overdraft revenue.
What if I also told you that it doesn’t have to be that way – that people in over 100 other countries don’t have to worry about overdraft fees? This is because these countries have publicly funded postal banking systems. People in countries as diverse as South Africa and Kazakhstan can open an account, cash a check, withdraw money or deposit at low-fee ATMs, transfer money, pay bills and more without a predatory bank siphoning off profits for their executives. yachts.
That’s why the US Postal Service needs to expand the small postal banking pilot program it launched last year — even if it wasn’t as popular as expected. The Agency only offered banking services in four locations and did little to market the program.
To be effective, the program must scale dramatically to meet demand. The number of Americans who are “unbanked” is overwhelming. One in four U.S. census districts, home to 21 million people, does not have a bank within its borders. Over 7 million people are unbanked.
It hurts everyone. Without a bank account, it can be difficult to participate in economic life. With the more commonly used direct payroll, getting a job, buying a car, or paying rent can be difficult. Instead, low-income people rely on predatory payday loans. Payday loans have an absurd interest rate – often starting at 300 percentage points that can double over time.
Payday loans, like overdraft fees, are meant to be a “short-term” solution. But they don’t shake that much in reality. About 76% of the total volume in the industry comes from borrowers re-borrowing ahead of their next paycheck.
The banks and the elected officials who carry their water call the post office “Radical.” Still, the postal service offered banking from 1911 to 1967, and reintroducing the service could generate much-needed revenue 9 billion dollars in revenue for the agency each year. One of the reasons postal banking was discontinued is that it offered relatively high interest rates associated with “more traditional banking institutions.”
Globally, 1.5 billion people receive financial services from their local post office. There’s no reason the United States can’t follow suit. youngest opinion poll shows that a strong majority of Democrats – and even Republicans – support postal banking. The only thing standing in our way is her Billions of dollars in lobbying Wall Street spends each election cycle protecting its predatory profiteering.
This column was produced by Progressive Perspectives, operated by The Progressive magazine and distributed by Tribune News Service.