June 2022

Cost of Banking for LMI and Minority Communities

Marco Migueis, Michael Suher, and Jessie Xu


Bank accounts are critical for participation in the modern economy. However, these accounts frequently require maintenance fees and incur overdraft charges. We assess whether minimum account balances to avoid fees, account maintenance fee amounts, and non-sufficient funds charges are systematically different in LMI and majority-minority communities, and find that they are generally higher. For example, the minimum account balance to avoid fees in a non-interest checking account is about $50 higher in LMI Census tracts than in higher income tracts, and $75 higher in majority-minority tracts. Differences in bank fees between LMI, majority-minority, and other communities result from various factors, including bank lending income, bank operating costs, and bank size.

Accessible materials (.zip)

Keywords: Bank fees; deposit accounts; LMI; majority-minority

DOI: https://doi.org/10.17016/FEDS.2022.040

PDF: Full Paper

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Last Update: August 01, 2022