Bank Fees Reach an All-Time High in the Midst of Pandemic
COVID-19 impact survey conducted by Cushion shows that more than half of consumers don't feel like their bank has been supportive.
SAN FRANCISCO, Oct. 27, 2020 /PRNewswire/ -- Despite pandemic-related relief efforts by U.S. financial institutions, the average amount of fees accrued per person per month hit new highs, placing unforeseen stress on many consumers. According to Cushion — an artificial intelligence-enabled web app that automatically negotiates bank and credit card fees on behalf of its users — the average combined bank fees and interest charges per person per month decreased from $106.70 in March 2020 to $90.60 in April, but has since spiked to $130.60 in August — the highest average that Cushion has seen since launching in 2018. For overdraft fees alone, the average fees more than doubled, from $34 per person per month in April to $71 in August.
In August, Cushion sent out a COVID-19 impact survey to a small sample of its user base, garnering more than 4,000 responses. In the survey, less than 20% of respondents reported feeling like their bank has been supportive during the pandemic, with more than 80% saying their bank has not reached out (by phone, email, or otherwise) to inform them of their relief options.
Some respondents reported concern for how their banks handled stimulus check deposits. For more than 1,300 Cushion users, their banks temporarily refunded negative account balances in order to keep portions of stimulus payments from being applied to overdraft charges and other penalties. Within months, some of those banks unexpectedly rescinded the temporary refunds, sending account holders back into the negative to acquire more overdraft fees.
Financial turmoil and a lack of communication by banks left many consumers feeling hopeless, according to the survey. For Jenifer Royer, a single foster parent of three living in Bakersfield, California, overdrafting her account became her only option.
"When COVID hit and we didn't have the necessities that we needed, we were in that panic mode," Royer said. "I get paid once a month. When [my paycheck] fell, it fell at the beginning of a crisis and the grocery stores were empty."
Approximately 33% of survey respondents have contacted their financial institution since the start of the pandemic, nearly two-thirds of whom have left the conversation feeling dissatisfied with the results, citing insensitivity from representatives, outrageous wait times, and outright refusal to waive fees, among other things.
"There were a couple times that I was talking to customer service on the phone, and I was more or less grieving, telling them what I'm going through and that they're my financial institution — I trusted them with my money, and I'm suffering," said Alaric Von Royeaux, a business administration student from Colorado Springs, Colorado. "And they fold their hands and say, 'We're sorry for the inconvenience.'"
Although fees make up a significant portion of revenue for banks, credit unions, and other institutions, they have taken certain steps to alleviate financial strain on their customers throughout the pandemic.
"Banks are trying, but they can't react fast enough," said Paul Kesserwani, founder and CEO of Cushion. "Banks are like massive ships and cannot turn on a dime, so it takes time for those changes to propagate through the institutions and get applied — which is why customers need to be extra vigilant and stay on top of things themselves."
For additional information, contact Brooke Vaughan, or visit www.cushion.ai to read the full report.
ABOUT THE COMPANY: Cushion leverages artificial intelligence, advanced fee-detection technology, and bank-level encryption to automatically negotiate bank and credit card fees on behalf of its users. Since launching in 2018, Cushion has obtained more than $3 million in refunds for its customers.
SOURCE Cushion
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