{"title":"Who is paying all these fees? An empirical analysis of bank account and credit card fees","authors":"Oz Shy , Joanna Stavins","doi":"10.1016/j.jeconbus.2023.106157","DOIUrl":null,"url":null,"abstract":"<div><p>Banks impose a variety of account fees, and credit card issuers impose a variety of fees related to card usage. Using detailed data from a 2021 representative diary survey of US consumers, we investigate whether lower-income consumers and Black consumers are more likely to pay bank account or credit card fees, and how payment behavior varies depending on paying such fees. We find that the probability of paying several types of bank account and credit card fees is correlated with consumers’ demographic and income attributes. The percentage of Black consumers who pay overdraft or low-balance fees on their bank accounts or pay late fees or cash-advance fees on their credit cards is higher than the percentage of White consumers who pay those fees. We find that some fees on bank accounts and credit cards are regressive: lower-income consumers are significantly more likely to pay overdraft, bounced check, or late fees. While Black consumers were significantly more likely to pay any bank account fee, the race effect was smaller when controlling for income in the regressions.</p></div>","PeriodicalId":47522,"journal":{"name":"JOURNAL OF ECONOMICS AND BUSINESS","volume":null,"pages":null},"PeriodicalIF":3.3000,"publicationDate":"2024-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"JOURNAL OF ECONOMICS AND BUSINESS","FirstCategoryId":"1085","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0148619523000504","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Banks impose a variety of account fees, and credit card issuers impose a variety of fees related to card usage. Using detailed data from a 2021 representative diary survey of US consumers, we investigate whether lower-income consumers and Black consumers are more likely to pay bank account or credit card fees, and how payment behavior varies depending on paying such fees. We find that the probability of paying several types of bank account and credit card fees is correlated with consumers’ demographic and income attributes. The percentage of Black consumers who pay overdraft or low-balance fees on their bank accounts or pay late fees or cash-advance fees on their credit cards is higher than the percentage of White consumers who pay those fees. We find that some fees on bank accounts and credit cards are regressive: lower-income consumers are significantly more likely to pay overdraft, bounced check, or late fees. While Black consumers were significantly more likely to pay any bank account fee, the race effect was smaller when controlling for income in the regressions.
期刊介绍:
Journal of Economics and Business: Studies in Corporate and Financial Behavior. The Journal publishes high quality research papers in all fields of finance and in closely related fields of economics. The Journal is interested in both theoretical and applied research with an emphasis on topics in corporate finance, financial markets and institutions, and investments. Research in real estate, insurance, monetary theory and policy, and industrial organization is also welcomed. Papers that deal with the relation between the financial structure of firms and the industrial structure of the product market are especially encouraged.