No doubt over the holiday period, a festive family event has grown frustrating when one of your boomer relatives has eyed up your new item of clothing and questioned how much you paid for it. And before you’ve even finished saying that, actually, you haggled with a 16-year-old on Depop for it, they’ve launched into a tirade about how young people these days are spending all their money and not saving anything. As we all know, the financial struggles Gen Z and millennials are facing are actually a result of the rising costs of living despite stagnant wages, but a new study has found that financial institutions are also charging young people more in banking fees than those in older generations.
According to a survey by BankRate through YouGov, 18 to 25 year olds with an adult checking account in the US pay $19 per month on average in banking fees. Those fees include general banking charges before your account balance reaches a certain amount, ATM fees and overdraft charges. Similarly, millennials (defined as those aged between 26 and 41) are paying marginally less, with an average of $16 per month. In comparison, those within Generation X are only charged $4 by their accounts whilst over 60s boomers generally hand over a mere $2 each month in fees.
A large part of this disparity is due to a difference in lifestyle. A lot of Gen Z and millennials are having to fund studies alongside living expenses, accommodation and a social life — often on incomes that simply don’t cover their needs. This means they’re more likely to resentfully venture into their overdrafts than someone who has already climbed the corporate ladder. An earlier study by BankRate also found that overdraft fees are currently at a record high — on average $33.58 each time you go into it — while the base balance required before you’re no longer charged fees on your account has risen to $9.8K from $7.5K last year. Basically, what that means is that banks are making it harder for young people – who generally haven’t had the time to earn enough to be financially stable – to avoid having to pay banking charges.
Mark Hamrick, one of BankRate’s senior economic analysts, argues that those under 40 tend to look for convenience above other incentives when it comes to their finances, which means they are more likely to stick with their current banks and not look for better deals elsewhere. “They are in the early stages of their careers,” he says. “There is a lot going on when one is a younger person, and one is trying to sort things out.” Though there are fee-less banking options out there, the task of shopping around the different options and moving your personal finances can be an arduous and stressful task in itself.
The fact that the wealthy individuals behind financial institutions are playing on the difficult situations young people face, especially during a global pandemic, sucks. So next time one of your relatives decides to go on a rant about spend-happy Gen Z and millennials, remind them that it’s actually the wealthy in their generation profiting off keeping young people financially struggling and that, ultimately, the only option is to eat the rich.