Defending Ourselves from the Fee-Snatchers

This post also appears at the Drum Major Institute blog site.

A lot of us don’t spend much time looking through our bank or credit card statements. I’m guilty of this oversight myself. But, it’s amazing how many fees and finance charges creep in there if we don’t. It’s kind of like moths in your closet – you may think that if you scrape one off your wool sweater, you’re done. Truth is, there’s never just one.

So, yesterday, I got some mail from my bank, Chase. It looked like my regular bank statement. Since I don’t really focus on which day of the month they send it to me, it didn’t occur to me at first that it wasn’t my statement, even though, it was decidedly thinner. When I opened the envelope, I discovered it was a notice. Because my balance had fallen below some constantly moving level, they were going to charge me an additional $32 dollar that month. Or, they wanted more money to service less money. That’s like paying more at a restaurant to get an appetizer instead of a main course.

This reminded me of a conversation I had with my old bank, Citibank, a couple weeks before. I received a notice from them saying that I owed $18.81. Fine. But, it was on an account that I had closed two months earlier. I call. I get bounced around. I speak to someone and ask why I’m receiving a charge on a closed account. First answer was, maybe it’s a charge from before you closed the account. (Note: I closed the account originally, because it had less than a $1000 balance and they were charging me $9.90 a month for me to let them keep my money there.) Second answer. Oh, you did close the account two months ago. We’ll take care of it.

The point is: we pay more in fees if we have less money in a bank. We pay more in interest on credit cards if we are individuals instead of corporations. In fewer other worlds, do we pay more to have less serviced. The bank’s logic goes: clients with more money deserve not to have to pay for our services. Clients with less money should pay for the fewer services that lower amount will require.

With credit cards, many of us have been slapped with $39 late fees, for being late a day, and possibly had our interest rates jacked up from 10% or 20% to 29.99% for the same reason. This is completely arbitrary on the credit company’s part. And unregulated on the part of the government.

One of the women in JACKED, Margaret Bustell, is a Connecticut mother of three whose rates were hiked because she neglected to make one payment on time (for the first time in her life), having just undergone a Cesarean to deliver her third child. She said, “I would like to know, when they’re already charging interest and hiking up my rate – just exactly this whole situation costs them an additional $39 a month.”

Fact is: it doesn’t cost them. That’s why the credit card industry nabbed $16 billion in 2005 in consumer late fees. I don’t yet know the total profit the banking industry makes on additional charges to people with lower balances, but I’m working on it. Meanwhile, check your statements and bug these institutions when things don’t make sense. It’ll save you money. (Second Note: Margaret wanted me to mention that since then, she switched card providers and paid off her balance. Her new son, Henry, is doing very well.)

Comments

[Tracy Q]

I have found that, if I call and request a refund on late fees and other extras, I very often will get it. I once called my bank and said, "I wouldn't have done X if I had known this incurs a service fee." They waived it. Or, "I'd like to request that this late fee is waived because I've maintained a good payment record for the last 12 months. This happened because I had the flu and lost track of things." I've also paid down a balance and then requested the waiving of the fee. In most cases, it has been waived. I don't yell or threaten to close my account but I am assertive. When I tell them, "I'm generally a responsible customer," I see that as code for "I know I can take my business elsewhere."
I do this because I once worked in a service business, and I have serviced thousands of customers. I know that customers can and should be treated with basic respect. When I am the customer of a bank or anyone else, I expect to be treated with the same respect I gave my customers. When service work is not respected, everybody suffers -- even the customer.

[politicaltruths]

Simple solution to banks who charge fees: don't do business with them. Find a small bank even if it's out of your town or state. Stay away from the big institutions. Find out if they out-source any of their backroom operations and to what country. If they do, run like the devil. Get to know your bank's employees from the manager on down. The worker bees can make your life so much easier. Send them a large box of good candy at Christmas time with a note telling them you much you appreciate them. This pays off in the long run.