Wednesday, October 5, 2011

Banks (Nit) Pick Customers' Pockets

Banks (Nit) Pick Customers’ Pockets
Commentary by Sanford D. Horn
October 5, 2011

Ally Bank is currently running a commercial where the crux of the message is “just accept it,” regarding the fees and charges attached to the accounts of their competitors’ clients and customers.

Message to the folks: be the master of you own financial domain; don’t just accept it.

Speak with your wallets. Regardless of the situation, you are in charge of your fiscal life. You decide how to spend your money; on what, where and why. You also determine where not to spend that money and how and where to save said dollars.

Bank of America recently announced they are attaching a $5 per month charge for debit card usage on all non-ATM uses. The debit card is a convenient way to use your own money directly out of your checking account instead of writing a paper check or using a credit card, and the bank determined you, the consumer, should pay $5 for this convenience each month – the privilege of using your money – the same money the bank uses interest free to lend to other clients at high rates of interest. That’s how banks make money.

Make no mistake, I don’t begrudge anyone earning money, making a profit – the economy of the United States still functions under free market principles. Sort of. Unfortunately far too many of the free market principles are being strangled by Obama and his cronies with their overreaching regulations.

Sen. Dick Durbin (D-IL) and his other liberal Senate cohorts failed to see the consequences of their short-sighted actions. They demanded banks and credit card divisions lower the per swipe rates at point of sale and fees on their cards. The same senators also forced a lowering of interest rates or limiting the interest rate ceiling. The banks claim they have been forced to raise their fees and rates by an unfriendly Democrat-led Senate.

The Senate, no doubt in a reelection gimmick, claims they are helping consumers, translation – voters – by forcing the interest rates lower. In reality this does not help the consumers. Instead, it only helps to drive them further into debt. Consumers can run up higher and higher debt only to be made to pay a lower percentage of the total, thus prolonging the life and cost of that debt in spite of a lower rate of interest.

And let’s not lay all the blame on Bank of America. Sun Trust and other banks are also considering similar changes and charges on their account holders. Wells Fargo and Chase are now charging their customers $3 for paper billing. More and more banks are eliminating free checking or going to higher minimum balance requirements, as Citigroup has from $6,000 to $15,000.

With that $15,000 of money belonging to the bank client that is untouchable, the bank can lend that out and charge a higher rate of interest than what they pay on the clients’ account, especially as most checking accounts are non-interest bearing.

Those who stick with Bank of America and use their debit cards are giving the bank $60 a year to use their own money. If giving away $60 per annum doesn’t bother you, feel free to send it to me and then tell Bank of America where it can go.

Customers of Bank of America and any other bank charging prohibitive and unreasonable fees must speak with their wallets and don’t walk away, but run away to another more friendly financial institution that will not treat you like a moron. Or simply stop using the debit cards.

It’s times like this to demonstrate the personal discipline to use the credit cards and pay the bill in full each month. Customers pay no fees or interest and Bank of America or other banks make no money on such transactions.

Consumers must not get pushed around. Read the small print, talk with your wallet and bring your business where it will be appreciated. If you have a high rate of interest credit card, pay it off in full every month to avoid interest payments. If your bill is too high – spend less. It really is that simple. Just spend less – make no excuses – don’t be like Congress – ever.

If you are not happy with the decisions being made by your bank or financial institution, speak up! Go talk to the branch manager and tell him or her to eliminate this fee or that charge. If the answer is no, your answer is “goodbye.”

Sanford D. Horn is a writer and educator living in Westfield, IN.

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