- Payday loans
- Prepaid debit cards
- Short-term emergency loans
- Money wire services
- Check cashing options
While these products can be very useful, they often have very high fees.
In one example, a customer of U.S. Bank in Minneapolis opened a checking account. He borrowed $1,000 in a short-term emergency loan. The “origination” fee of the loan was $100. When a loan payment is due, the bank takes the money directly from his checking account even when there is not enough money in the account. This can lead to overdrafts and penalties up to as much as 300 percent a year.
Customers with a “convenient cash” prepaid card from U.S. Bank pay a $3 fee to enroll, a $3 monthly maintenance fee, a $3 fee to visit a bank teller and a $15 lost card replacement fee..
Capital One charges prepaid card users $1.95 for using an A.T.M. machine more than once a month. Wells Fargo charges $1 to speak to a customer service agent more than twice a month.
Banks are opening offices to look like payday loan places. They say customers will feel more comfortable banking in familiar settings.
Government agencies and advocates for low-income individuals and families say these new banking practices and hidden fees will hurt already financially stressed people. They are investigating to see if standards of fairness are being met.
Banks say they are bringing financial services to people who need them.