Counting Coins: Bank of America is Squeezing the Little Guy
There are 22 black owned banks in the U.S.
Median income for a black household was $39,490 in 2016
Bank of America’s stock is up nearly 30% in the last year
Bank of America (BAC -1.46%) the second largest U.S. bank by deposits has done away with its free e-banking checking accounts. They’ve switched these customers into accounts that require a $12 monthly fee unless they have a direct monthly deposit of $250 or more or maintain a minimum daily balance of at least $1,500.
Why This Matters: Trying to make a dollar out of fifteen cents is only getting harder. The banking giant claims basic checking accounts run up maintenance costs. Even though they also provide a source of income through overdraft fees.The issue here is the new requirements are beyond the financial reach of many lower-income individuals and families. According to the U.S. Census Bureau the median income for an African American household was $39,490 in 2016.
As part of its consumer strategy overhaul Bank of America has also cut down its branch network to focus on major urban areas instead of what it sees as less-lucrative rural locations. I guess this plan is working out great for shareholders as the stock is up nearly 30% in the last year.
Situational Awareness: When low-income people are denied traditional bank services they are left vulnerable to costly check-cashing outlets, pawnshops, and other predatory services. According to the FDIC there are 22 black owned banks in the U.S. currently serving communities of color. The two biggest institutions Carver Federal Savings Bank and OneUnited Bank both have more than $650 million in assets and offer some free account services. It just might be time to re-ignite the #BankBlack campaign again.
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