The financial crisis caused by the pandemic does not see an end, especially when it comes to bank and credit card charges. In a leading industry $ 200 billion per year, bank charges and credit card interest have found themselves in a tug-of-war between consumers and their financial institutions.
For consumers, these fees have skyrocketed like never before. Last year, average bank fees charged by financial institutions jumped 79% and overdraft fees rose about 170%, according to Cushion. Banks, however, are in an equally difficult situation. Forced to cut fees and offer very low interest rates to promote economic recovery, they are forced by shareholders to tap into proven profit drivers while finding new and innovative ways to recoup lost revenue from Last year. A major bank has already sent emails to its customers saying it will increase the maximum late fee and return fee amount in April.
Fortunately, Cushion saw a drop in fees early in 2021, which we attributed to the second round of stimulus controls and an improvement in the unemployment rate. But the question remains: what does the future hold for bank charges and is it safe to assume that they will continue to fall?
A word to the wise – don’t get too comfortable. Given that financial institutions had to offer low rates on mortgages and lines of credit in 2020 and received a lower yield on loans, we expect the effects to trickle down to customers this year, likely in the form of charges. As banks look for ways to improve their bottom line, there are several steps you can take to make sure your finances aren’t negatively impacted.
Keep an eye on the costs
Even if financial institutions by chance decide not to increase fees, we expect the total number of fees charged to increase. A new stimulus check may save your time, but it won’t be long before the fees continue to rise, as they did throughout the second half of 2020. Whether it was due to insufficient funds , excess activity or overdraft fees, there are several avenues. through which the banks can stick you with a penalty.
You should also be on the lookout for hidden charges. The terms of service are already complex, often allowing customers to accumulate fees without knowing it. When a financial institution changes its terms, these updates are sent through traditional mail or hidden behind vague emails, either straight to your spam folder or included in meaningful text. Unfortunately, many customers don’t take the time to read the fine print and end up being blind or completely oblivious as fees pile up on their account.
Even though banks charge more fees, they also become more generous with refunds, which begs the question: why don’t they just charge less fees? Well, financial institutions are banking on people not asking for refunds – no pun intended. By not challenging your bank, you are leaving money on the table.
We understood. You don’t have time to pick up the phone to speak to a bank representative, but that doesn’t mean you should forgo asking for refunds altogether. Artificial intelligence-based services can help you with bank and credit card charges of all kinds by securely scanning your bank accounts and credit cards for past and future charges. All you have to do is sign up, and for a small fee, they’ll negotiate with your bank, dispute fees and penalties, and secure your refunds.
Reassess your expenses
If overdraft fees, interest charges, and other penalties are causing you financial hardship, try to get to the root of the problem. Often times, creating – and sticking to – a budget is the first step towards a financially healthy future. Reducing waste is another effective solution, whether it’s adjusting your overdraft protection status, negotiating your monthly bills, or completely cutting unnecessary costs. By taking a strategic approach to your spending and the way you use your bank accounts, there is less chance that your financial institution can use them against you by charging fees and interest.
There are plenty of signs that banks are changing their approach to charging fees, and customers of all income brackets should be wary. In a Cushion survey, around 87% of people rated saving and reducing debt as top priorities in 2021. To prepare for financial success, it’s important to be prepared for updates, to be very attentive and proactively asking for help.