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Gephardt: Banks earn billions from avoidable fees

A new study finds banks are earning more from fees than they are paying in interest to their customers. (KSL TV)

SALT LAKE CITY — If you are paying anything more than zero dollars toward bank fees, experts warn you have already paid too much. This, as a new study finds banks are earning more from those fees than they are paying in interest to their customers.

The thing is, bank fees are avoidable.

The MagnifyMoney study painted a greedy picture of banks: "Banks collected $114 billion more in fees than they paid in interest over the past decade." The man who conducted the research said it is not that sinister because fees are completely in our control.

"Consumers have to be on their feet," said Ken Tumin, founder of DepositAccounts, a bank account comparison website. Tumin said he hopes his research will serve as a wake-up call to consumers who are paying bank fees when they really do not have to be.

Banks are making a lot of money on the fees their customers pay for things like bouncing checks, continuing to receive paper statements, or in some cases even just for the privilege of having an account. The average bank fees per deposit account were $60.75, which when added up netted banks close to $350 billion in the past decade.

"You definitely want to avoid those fees," Tumin cautioned.

Howard Headlee, president of the Utah Bankers Association weighed in on Tumin's study. We asked him if it makes banks look greedy.

"Yeah, but if you look at the numbers you will see that the fees have been incredibly flat the last 10 years," Headlee responded.

That is true. In fact, fees actually ticked down a bit in 2020 with banks cutting customers some slack during the pandemic. Still, Headlee agreed: Bank customers should be able to avoid paying bank fees.

"If you're paying a fee, you're doing something wrong and you need to acknowledge that and work with your bank," said Headlee. "Say, 'What do you want me to do? What product is there for me that can help me avoid this fee?' They'll tell you."


If all else fails, here is some advice you might be surprised to hear from a guy who speaks for banks: Don't be afraid to fire your bank and take your business to the bank across the street.

"Listen to the fees. React to the fees. Find something that works for you," Headlee advised.

One important note about fees: Banks say they do not need them to keep the doors open. The lion's share of their money is made on loans. Banks argue fees are a good thing because they punish just the person who incurred the fee for doing something wrong. For example, if someone over-drafted their account – that costs the bank money, and if the bank declined to slap them with the fee, it means everybody who banks there would end up having to pay for it.

Now, the American Bankers Association does have some tips on how you can avoid fees. The big one here is simply not spending more money than you have. The ABA said keeping track of transactions and account balances will help you avoid sending your account into negative territory and then paying overdraft fees. It's always a good idea to keep a cushion of money in your account to help avoid accidental overdrafts. Other tips include using only your bank's ATMs or those affiliated with your bank. Then sign up for an automatic text alert when your balance falls below a certain amount.

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Matt Gephardt


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