As consumers, we accept pesky — and exorbitant — bank fees as a regular part of our everyday lives. To many of you, these fees are as commonplace as paying “service” fees when purchasing concert tickets.
So, why exactly do big banks charge fees? Besides trying to turn a major profit, banks charge fees to cover operating expenses — paying employees, developing technology, and covering other overhead costs. Yet, here’s a truth bomb: While bank fees are oftentimes considered the cost of doing business, big banks are profiting big-time off these fees. In fact, according to a 2017 analysis by CNNMoney, the three biggest banks — Wells Fargo, Bank of America and JP Morgan Chase — earned more than $6.4 billion in ATM and overdraft fees. Another sad truth: It turns out that eight percent of customers pay 75% of overdraft fees, per the Consumer Financial Protection Bureau.
Just imagine what you could do with your hard-earned money if you didn’t have to pay bank fees. But first, let’s take a closer look at exactly how much the big banks are raking in. From there, we’ll look at all the awesome, amazing things you could do with that staggering sum instead.
The Top 10 Biggest Banks in the U.S.
While there are about 5,800 banks in America, just 0.2% hold more than two-thirds of the industry’s assets.
Ready for another jaw-dropping statistic? The 15 largest banks collectively hold a total of 13.7 trillion in assets. Here’s the breakdown:
- JPMorgan Chase & Co.: $2.53 – $2.62 trillion in assets
- Bank of America Corp.: $2.28 – $2.34 trillion in assets
- Wells Fargo & Co.: $1.87 – $1.95 trillion in assets
- Citigroup Inc.: $1.84 – $1.93 trillion in assets
- Goldman Sachs Group Inc.: $917 – $957.19 billion
- Morgan Stanley: $852.86 – $865.52 billion
- U.S. Bancorp: $462.04 – $464.61 billion
- TD Group US Holdings LLC: $380.65 – $380.91 billion
- PNC Financial Services Group Inc.: $380.08 – $380.77 billion
- Capital One Financial Corp.: $362.91 – $365.69 billion
What Kinds of Fees Do Big Banks Charge Consumers?
While you most likely are familiar with ATM and overdraft fees, you might find it surprising to know that you could get dinged with other kinds of bank fees. Lest you get blindsided, here are 10 ways banks make money off you:
1. Overdraft fees
You’re charged an overdraft fee when the amount of your transaction is greater than your bank balance. When you have overdraft protection, the bank will cover the shortfall, and charge you a fee for doing so. The most common amount for an overdraft fee is $35.
FYI: The US Bank overdraft fee is $36 if the amount of the overdraft is greater than five dollars. The Wells Fargo overdraft fee is $35 per transaction, and you can be charged up to three times a day. Yikes.
2. ATM fees
This is a fee that banks charge for using an ATM. For example, your bank might charge you a fee if you use an out-of-network ATM. This fee can be anywhere from two dollars on up to six dollars if you’re making a withdrawal from a non-network international ATM.
Here’s a closer look at what the big banks are charging: Bank of America’s ATM fees are $2.50 and five dollars for international transactions, while Chase ATM fees are also $2.50 and five dollars respectively. Wells Fargo ATM fees are $2.50 for non-network withdrawals in the U.S., and five dollars for international ATMs.
3. Maintenance fees
A bank might charge you a monthly fee if you don’t meet certain criteria. For instance, some banks charge fees if your bank balance drops below an amount or you fail to make the minimum number of transactions on your debit card. Bank of America and Chase both have a monthly maintenance fee of $12. In 2017, Americans spent 3.5 billion in monthly maintenance fees alone.
4. Returned deposit charge
If there’s not enough money in your account to cover a transaction, the bank might “return” the item — usually a check — and you’ll in turn be dinged with what’s known as a returned deposit charge. The average charge is $35 per item.
5. Lost card fee
Misplace your debit card? You might need to pay a fee to get it replaced. For instance, Bank of America charges its customers five dollars to get a replacement card, and $15 if you’d like it rushed.
6. Minimum balance charge
If your type of bank account requires a minimum balance and you don’t meet the threshold, you could end up paying a fee. Wells Fargo charges a $10 monthly fee if you don’t keep a minimum of $1,500 in your account.
7. Foreign transaction charge
If you’re traveling out of the country and swipe your debit card, there might be a foreign transaction charge.
8. Inactivity fee
If your account is idle for a set amount of time (i.e., you haven’t made any deposits, withdrawals or transactions), you might need to pony up a monthly inactivity fee.
9. Paper statement fee
If you prefer to get paper statements, you may need to pay a monthly fee. US Bank charges two dollars a month to receive statements via snail mail. IMHO, this feels like a trap. Many people are cool with receiving digital statements. They just don’t know about the paper statement fee, or forget to opt out.
10. Account closing fee
If you’re over your bank and want to close out your account, you might be dinged a fee.
4 Things You Could Buy With Fees Instead of Paying Big Banks
Here’s the fun part: Imagine what you could buy with the crazy high amount big banks rake in from bank fees.
To keep things simple, let’s play around with the $64 billion that big banks made in ATM fees alone. These fees could fund a number of extravagant purchases, solve national debt problems, and achieve the unachievable.
Here are a few examples:
1. Student Loan Debt
According to the Federal Reserve Bank of New York, as many as 44.7 million Americans are burdened with student debt. That’s one in five Americans. As of the end of 2018, the student loan debt had climbed to a staggering $1.47 trillion.
That cool $64 billion that banks make in ATM fees could handle 43% of the student debt crisis.
2. Household Incomes
Per the U.S. Census Bureau, the median yearly household income in 2017 was $61,372. With those $64 billion in ATM fees, you can cover the annual income of 104,282 households in America.
3. Avocado Toast
We wanted to point out that millennials can have their toast and, well, save on bank fees too. Avocado toast is the latest “whipping boy” as to why millennials don’t have as much in savings and retirement as they should.
Let’s throw it back to whoever came up with this ludicrous statement, shall we? If the average cost of avocado toast is $12, ATM bank fees can pay for $5.3 million plates of avocado toast.
Who doesn’t like a sweet beverage from Starbucks? With the average cost of a Starbucks latte at $3.45, you can buy more than 18.5 billion lattes. With 7.7 billion humans on planet earth, you can pay for each person — man, woman, and child — to enjoy 2.4 lattes.
How Much Can You Save When You Switch to a Bank With No Fees?
Let’s say your bank charges a monthly maintenance fee of $15, and you get dinged with an overdraft fee three times a year at $35 each. This tallies up to $285 a year.
Here’s the good news: There are banks that don’t charge fees. That’s right. No monthly bank fees. Zip. Zilch. Nada.
With your saved $285, you could pay off credit card debt, stash it toward an emergency fund, or put it toward something you really want.
No-Fee Banking When You Switch to Chime
Here’s a side-by-side glance at how much fees can cost at some of the big banks:
|Chime||JP Morgan Chase||Wells Fargo||Bank of America|
|Minimum balance requirement (to waive the monthly maintenance fee)||$0.00||$1,500||$1,500||$1,500|
|Monthly maintenance fee||$0.00||$12||$10||$12|
|ATM fee (non-network, within the U.S.)||$0.00||$2.50||$2.50||$2.50|
When you bank with Chime, you’ll be a member of a bank with no fees. What’s more, we offer a handful of nifty features to help you save money. No, we’re not a unicorn bank. We’re just doing what we think should be the status quo, not the exception.
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.