Beware the Credit-Industrial Complex
By Susan J. Douglas, In These Times
Posted on January 7, 2008, Printed on January 7, 2008
http://www.alternet.org/story/72522/
My daughter is a freshman in college and is learning a lot, including how to manage her money. Recently, she got a powerful initiation into the predatory practices of banks -- a lesson more and more of us are learning each month. She made a miscalculation and thought she had more in her account than she did. When she went to make a withdrawal from an ATM machine, the bank let her, even though she was in deficit. Comerica bank continued to let her make such withdrawals, and charged her $32 a pop for doing so. A $4 charge at a coffee shop became a $36 charge with the fee. A $6 sandwich became $38. She had never authorized the bank to permit deficit spending. And she, like most people, had no idea that the bank would still let her use her card if she was broke. The bank doesn't tell you it will do this. Why? Because it's a huge source of profit for them.
BusinessWeek reported on a student whose bank, Pittsburgh's PNC, allowed him to charge $230 on his debit card even though his account was in the hole. PNC charged him $217 in fees for the privilege. A PNC spokesperson says such a policy "helps our customers avoid embarrassment." The student said he would rather have been embarrassed than gouged.
In 2004, banks pocketed $32 billion in service fees, up from $21 billion in 1999. According to BusinessWeek, such fees accounted for 76 percent of profits at the Midwestern bank, TCF. Wells Fargo in San Francisco reportedly charges $2 every time someone with a low balance calls a service representative, and a whopping $30 an hour when a rep helps someone reconcile an account. Not surprisingly, the majority of these fees falls upon the poorest customers.
One out of five customers switches banks because he or she is so outraged by these charges. One estimate by Gartner Research shows that it costs banks less than 50 cents to return a payment request, while turning around and charging us anywhere from $25 to $40 fo
By Susan J. Douglas, In These Times
Posted on January 7, 2008, Printed on January 7, 2008
http://www.alternet.org/story/72522/
My daughter is a freshman in college and is learning a lot, including how to manage her money. Recently, she got a powerful initiation into the predatory practices of banks -- a lesson more and more of us are learning each month. She made a miscalculation and thought she had more in her account than she did. When she went to make a withdrawal from an ATM machine, the bank let her, even though she was in deficit. Comerica bank continued to let her make such withdrawals, and charged her $32 a pop for doing so. A $4 charge at a coffee shop became a $36 charge with the fee. A $6 sandwich became $38. She had never authorized the bank to permit deficit spending. And she, like most people, had no idea that the bank would still let her use her card if she was broke. The bank doesn't tell you it will do this. Why? Because it's a huge source of profit for them.
BusinessWeek reported on a student whose bank, Pittsburgh's PNC, allowed him to charge $230 on his debit card even though his account was in the hole. PNC charged him $217 in fees for the privilege. A PNC spokesperson says such a policy "helps our customers avoid embarrassment." The student said he would rather have been embarrassed than gouged.
In 2004, banks pocketed $32 billion in service fees, up from $21 billion in 1999. According to BusinessWeek, such fees accounted for 76 percent of profits at the Midwestern bank, TCF. Wells Fargo in San Francisco reportedly charges $2 every time someone with a low balance calls a service representative, and a whopping $30 an hour when a rep helps someone reconcile an account. Not surprisingly, the majority of these fees falls upon the poorest customers.
One out of five customers switches banks because he or she is so outraged by these charges. One estimate by Gartner Research shows that it costs banks less than 50 cents to return a payment request, while turning around and charging us anywhere from $25 to $40 fo
