The federal government decided recently to finally do something for the consumer via the banking industry and credit agencies. But what I find disheartening is the reactions to the move by some people. On news pages run by CNN for example, I’ve run into comments about how the banks have the right to hit consumers with heavy fees because the consumers should know when their accounts are low. Well, yes, but there is a limit to this – and frankly, the banks crossed that line long ago.
I wrote about an experience I had with a bank earlier this year in “Read the Tiny Fine Print on Bank Notices”. That was when I discovered the bank charges $5 for each piece of mail the Post Office doesn’t deliver. That bank fee set off a domino effect, causing a tightly held checking account into overdraft; the overdraft sent fees into the range of the hundreds of dollars. But yet, this was my fault that the bank had this fee to begin with.
Why would the bank have these fees and finance charges? To make money; not to protect the consumer, as they often state, but to make money off of your mistake. At one time in history, not too many years ago (maybe ten) if your account was overdrawn it remained there, no charges added or fees imposed for “daily over the limit” amounts. If the account remained there for more than a week, the bank sent you a notice telling you you had so much time to clear up the account or it would be closed and written off. To get another account, you would still need to pay back that money, but that’s it.
Now in today’s commercialism, banks have a right to charge fees for overdrafts of overdrafts, daily overdrafts, undelivered mail, use of ATMs and sometimes the priviledge to even have a bank card. Oh, and let’s not forget the fees for having a basic checking account when you can’t tie up $1,000 in their bank. But the consumer is at fault for not knowing how to save up enough and budget to avoid all that.
Three reasons this whole system failed – greed, ignorance, and arrogance. Greed on the banks thinking the consumer is basically a cash cow willing to pay whatever fees they impose (see the BofA fiasco with the $5 ATM fee); ignorance on the part of the consumer for not taking the time to educate themselves about basic banking and financial principles; and arrogance on the part of people who think that since they are aware of all this, so should everyone else and its not their problem. We also have a system today where educating the consumer on financial basics has been long ignored. The beginning of the Great Recession proved that.
Somehow I wonder if the banks would like that to continue. Keep the loans amounts low, the spending high and keep the fees rolling in. Yes, I am not a bank advocate can ya tell?
So yes, I do hope the new Consumer Protection Bureau success, even with moderate success. Just the threat of having it around seems to have finally FINALLY started a discussion about things in the general public.
Do you agree or disagree? Are you in favor of some of the things banks do? Don’t be shy, I won’t bite or delete your comment. Constructive discussion is always welcome here.
