Originally Posted By SingleParkPassholder <a href="http://www.usatoday.com/money/perfi/columnist/block/2009-10-19-bank-of-america-card-fee_N.htm" target="_blank">http://www.usatoday.com/money/...ee_N.htm</a> Early next year, Bank of America will "experiment" with charging customers a fee who pay off their balances every month. Seriously. This is in response to the new rules going into effect in February. Outside of "well, they can do whatever they want, it's within the law, it's their business", I'd like to know how this can be defended, because I can't think of a single, moral or ethical reason why this should be done. One would like to believe that being against this would be a bi-partisan effort. It's simply ridiculous. My wife and I have made a decision to migrate all our financial business to our credit unions. Screw Amex, Wells Fargo, B of A, all of them. The short-sighted stupidity on the part of banks is unbelievable.
Originally Posted By SingleParkPassholder Who needs regulations? Banks will beat the snot out of themselves this way.
Originally Posted By ecdc >>Who needs regulations? Banks will beat the snot out of themselves this way.<< I want to believe that. I really do. But the rest will follow suit. As soon as one does it and can get away with it, then the others will do it. I see it in my own industry; one company raises rates, the rest follow literally within hours.
Originally Posted By SuperDry <<< I'd like to know how this can be defended, because I can't think of a single, moral or ethical reason why this should be done. >>> I'll step up to the plate. The article stated that at least for Citi, they were considering doing this for accounts that charge less than $200 per month on average. It's quite possible that they make no money off a customer that pays no annual fee, charges less than $200/month, and always pays their bill on time. IIRC, on a "standard" account, the issuing bank of a MasterCard or Visa gets 1% of the charge amount as their portion of the discount rate (the rest goes to the bank that services the merchant). At that rate, a $200/month customer is making the bank only $2/month gross, and out of that they have to send statements, collect payments, provide customer service, issue a new card from time to time, etc. I can easily see how this is not a money-making proposition for the bank. I remember that when I got my first credit card, *all* credit cards came with annual fees to cover the cost of servicing the account. It was something like $20/year some 20+ years ago. It wasn't until AT&T Universal came around with its (at the time) ground-breaking offer of a $0/year MasterCard or Visa that the "rules" of the market changed and other banks started offering competitive products. To make up for the loss of the annual fee, they came up with all the other non-sense: over-limit and late-payment fees which were much higher than before, "universal default" to jack up the interest rate, and so on. Now that those things are being taken away to a large degree, it doesn't surprise me at all that the banks are going back to a more traditional pricing model.
Originally Posted By Mr X ***>>Who needs regulations? Banks will beat the snot out of themselves this way.<< I want to believe that. I really do.*** Believe it. ***The minute my bank does that is the minute I close my account.*** That's why. And me too, and pretty much a gajillion other people. And not just *any* people, mind you. That would constitute the bulk of the *penny wise* types (I only count myself among them thanks to Mrs. X though, she's the real frugal one in the fam and I follow suit), and it would piss them off royally. How MUCH would it piss them off? Well, those folks don't just have credit cards you know. They have car loans and home loans and boat loans and CD's and checking and savings accounts. And chances are they are the safest customers out there in terms of delinquency and risk. And if they collectively say "screw you" to any one bank (or even all of them, since many have been making the credit union argument), guess what will happen........
Originally Posted By mawnck >>The minute my bank does that is the minute I close my account.<< Why wait? There's probably a really nice credit union near you that would be glad to have your business, and would even treat you accordingly.
Originally Posted By SingleParkPassholder "I'll step up to the plate. The article stated that at least for Citi, they were considering doing this for accounts that charge less than $200 per month on average. It's quite possible....." Okay, but.... What I was looking for more I suppose was this- the vast majority of their card holders carry a balance, and now most that vast majority are paying interest rates of 20%, give or take a percent or so on either side, and some more than that. They're making their money on those people. Plus, in your formula, have you factored in the percent the bank charges the retailer? If you did I mssed it. My point of course is that they're purposely soaking the customer they've always sought, and when the customer behaves accordingly, now they're getting penalized. If the customer reacts as he should, he leaves that bank for somewhere else, as we've mentioned. The temptation/need to do that, as well as the temptation/need for others to file bankruptcy as a result of interest rate hikes, both intentional acts on the part of the banks, is stronger than it has ever been before. It's almost as if they want to tempt the consumer to force them out of business, and that's NOT what anyone had in mind when all that TARP money was handed out.
Originally Posted By Mr X ***that's NOT what anyone had in mind when all that TARP money was handed out*** Congress claims to have had a lot of things" in mind" when they granted the money (first and foremost was perhaps "this will make the banks lend again!"), unfortunately they didn't put any of it in writing. Which was kinda dumb.
Originally Posted By SingleParkPassholder And to hammer at what I was really getting at, especially from the moral/ethical standpoint, since this new practice is obviously something the Administration does NOT want them to do and it's more obviously a big middle finger to the new rules coming into effect in February, why then do it with such defiance? Where the hell they get off trying to screw the very same people who bailed them out with TRAP money?
Originally Posted By SingleParkPassholder "You speak as though these people have a sense of shame." But you have to wonder what it will take to get them to realize the party's over, that it is NOT business as usual any more or ever again. Just speaking for my wife and myself, we've already made the decision to fundamentally change the way we do our finances from here on out. We're dinks, we gross around $200K, and frankly, we've got some money to throw around, figuratively speaking. But as I said earlier, we're moving as much as we can to our credit unions. All our investing from here on out will be with our county and city plans (our respective employers), and if I can get one of our credit unions to beat the 30 year 5.63 fixed rate we've had with Wells Fargo, then that moves too. Bye bye Amex, bye bye Prudential, good riddance to all of them.
Originally Posted By TomSawyer The party won't be over until people flee the for-profit banks and move their money to depositor-owned, non-profit credit unions. Personally , I wish everyone in the country would just skip one payment in January.
Originally Posted By Sport Goofy << The party won't be over until people flee the for-profit banks and move their money to depositor-owned, non-profit credit unions. >> While I would agree that there are some good credit unions out there, I have also seem some that operate with the exact same philosophy of greed as the big banks. All credit unions are not created equal. Generally, the ones that are affiliated with a workplace or employee base are best. Beware of the ones that try to establish a membership based on a "community" affiliation or broader definition for their members.
Originally Posted By tiggertoo So, can I just leave a buck in my account, or do I have to leave a certain percentage of my credit limit?
Originally Posted By SuperDry <<< Plus, in your formula, have you factored in the percent the bank charges the retailer? If you did I mssed it. >>> I quite clearly included this, so you must not have read what I wrote very carefully. For someone that pays no interest, that's the ONLY source of income the bank has from that customer, and for the category of customer talked about in the article, it's less than $2/month. And, if every money-losing customer decided to "punish" their bank and take their business elsewhere, I'm sure that the bank would be just fine with it. And please note that I'm not sticking up for the banks in general - what they've done collectively and individually is horrible. But in the specific case that started this thread, I see it as a non-issue.
Originally Posted By SuperDry <<< So, can I just leave a buck in my account, or do I have to leave a certain percentage of my credit limit? >>> I assume that since you say "credit limit" you're referring to the situation in the OP about low-charging credit card account holders. It would be difficult to leave just a dollar owed on such an account, as generally speaking, there's a minimum finance charge of $0.50 for any account that is due any finance charge for the month, and any total balance due under $20 is payable in full. So, there's really no concept of leaving just a $1 or other small amount owned on a dormant account. And, if you're charging to the account regularly, but not what they want to see (say, you charge $100 a month on average) and under-pay your account by $1 each month, then they'd be more than fine with that, as you'd lose the grace period on all new charges and would be paying interest on every charge from the date it was made until the date it was paid.
Originally Posted By Inspector 57 <<Personally , I wish everyone in the country would just skip one payment in January.>> How would that help?
