Almost half of all bank service fee income earned by the nation’s banks during the first three quarters of 2022 was charged by three of the largest (pie chart). That makes a good headline, but that doesn’t begin to tell the story. The fact is, of the seven largest U.S. banks, there is only one that does NOT charge higher than average service fees: 4-Star CitiBank, N.A., Sioux Falls, SD.
The national average is 0.19% of transaction and savings deposits (T&SD); CitiBank, N.A. charges 0.16%. Nice. Four of the others charge between 0.24% and 0.27% of T&SD. 4-Star Wells Fargo Bank, N.A., Sioux Falls, SD charges 0.35% and 4-Star PNC Bank, N.A., Wilmington, DE charges 0.33%. This sounds awfully naughty.
At least the Consumer Financial Protection Bureau (CFPB) thinks so. It just reached a settlement with Wells Fargo that includes both a $1.7 billion penalty and $2 billion in restitution to consumers that were allegedly assessed illegal fees and interest charges. This is the latest in a long series of actions against the banking giant including illegal kickbacks in 2015, a fake account scandal in 2016, unfair student loan servicing practices (2016), and auto leading violations (2018)
5-Star JPMorgan Chase Bank, OH and 4-Star Bank of America, NC have had no such actions from the CFPB. Citibank did, back in 2018 but $335 in restitution and a remedy to its “Truth in Lending” flaws has kept it out of the CFPB’s crosshairs since.
But there are two smaller banks that we have an issue with, and we’ve mentioned them before (JRN 39:17). The bank with the highest service fees as a percent of Transaction and Savings Accounts is 5-Star FSNB (formerly Fort Sill National Bank), Lawton, OK. FSNB, a bank that “serves” our military, charges a stunning 10.72% in service charges.
The other, 3-Star Varo Bank, N.A., Draper, UT, the first “Consumer” Fintech to be granted a national bank charter by the Office of the Comptroller of the Currency (OCC), Varo touts itself as affordable and accessible, removing barriers “that are often too difficult, or expensive, for everyone to access”. But does it?
Varo Bank’s fee schedule does include a lot of $0.00s, but… out of network ATM withdrawals and over the counter cash withdrawals are $2.50 each and cash deposits by way of a third party servicer can cost as much as $5.95 each.
To date, there have been no enforcement actions against either.
