Boycotting Banks and Their Outrageous Behavior: Beyond Bank Credit, Loans And Financing
Sharon L. Secor
July 11, 2008
As though forced short term loans -- called, in a triumph of Orwellian Newspeak, overdraft protection or overdraft courtesy -- with associated fees that would make Larry the Loanshark cringe in disbelieving horror weren´t bad enough, the big names in banking have still more outrageous fees to pass on to often unsuspecting consumers as they scramble to cover their losses in the mortgage and lending debacle. It would be so nice if people would say enough is enough and start to boycott these institutions or at least use them as little as possible. After all, the banks are not the only game in town, not any more. There are options in between being at the mercy of the banks and that handy spot underneath your mattress.
If It Didn´t Cost So Much, It Would be Almost Funny
The bank uses consumer deposits for a variety of things, such as making loans. The interest and other monies garnered is part of how they profit. That´s fine, they are not expected to work for free. However, there is a point when legitimate earnings become excessive, even exploitive, and we have reached that point. With all their stunning losses in mortgage related financial dealings, the banks are scrambling to make up the money they lost.
So, basically the deal is this -- they used consumer money, lost big time doing so, and now are going to cover their losses by exploiting those same consumers. According to data from the Federal Deposit Insurance Corp., banks sucked $38.6 billion dollars in service charges out of their users in 2007, a figure that is on track to increase significantly during this year. For some banks, these fees are now providing as much as half of the money they are currently making.
Bank Of America , a financial institution that has had to write down billions in mortgage backed financial instrument losses and has seen stock value plummet due to their current loss level, is now treating using their bank card in a parking meter as a cash advance worthy of a $10 fee, according to a recent report at the Consumerist.com . Add that to the growing list of ridiculous fees imposed by banks today, including paying to stand in line and wait patiently until your turn arrives to speak to a bank teller.
In an article published by USA Today on October 4, 2005, the writer took a close look at what was then one of the newest bank fees. With a name that mockingly insults the intelligence, the so-called courtesy overdraft or overdraft protection pulls in huge amounts of money for banks by not denying transactions in which the funds are not there to cover them – all too often because of the bank´s very own balance updating or check clearing policies – and then charging a huge fee for the forced loan. This is an automatic "service" in many banks, one that consumers in numerous banks are not allowed to opt out of. As one who has been charged $30 for a nickel and $35 for 17 cents, this writer despises this fee most of all.
As though the initial fee isn´t bad enough, some banks are starting to add even further fees, compounding the original fee if the overdraft is not repaid within a certain amount of time, which can be as short as three days. For the consumer that is unaware of the overdraft, that period of time can easily pass without the individual ever even realizing that there is a problem. Interestingly enough, recent studies have determined that, in terms of loan cost, the much maligned payday loan is a better deal for many consumers than the so-called courtesies extended by banks. With that in mind, for those tired of being subjected to the rapaciousness of banks today, it may be well worth investigating other options.
There Are Options Beyond The Bank Or Your Mattress And Piggy Bank
If you are dissatisfied with the grasping, greedy fees and other outrageous actions of your bank, you are not alone. In fact, many people are choosing alternative means of managing their financial lives, for their checking accounts, or for obtaining loans of various types, ranging from fairly standard business loans to quick payday loans to bad credit loans.
Investment houses, as recently reported by National Public Radio, such as Fidelity and Charles Schwab, have begun "to offer checking account and other banking services," acting in direct competition to banks. Notable benefits include significantly better interest rates for checking accounts and far fewer fee hassles. Peer-to-peer lending is a thriving loan option, as well as an investment opportunity for those choosing to make loans. As the name indicates, banks are cut out of the process with peer-to-peer lending, as the loans are made via websites in which people bid on the opportunity to provide the loan, thus earning money through the loans interest. In some systems, loans – and the risk that comes with them -- are spread throughout multiple participants, each contributing a portion of the loan and gaining a portion of the profit as the loan is repaid. Ethnic and ideologically based communities have been using a similar model for centuries.
Small personal loans are increasingly being sought through payday lenders, and even pawnshops are seeing an increase in use in recent times. Part of that rise, however, has been attributed to increased legislative efforts to obliterate payday lenders. After all, in many cases, payday loans can be less expensive to the consumer than the forced short terms loans that are so lucrative for the banks these days. While lawmakers paternalistically determine that consumers need to be protected from payday lenders, they seem to have little interest in the almost routine abuse of the consumer by banks.
A monopoly is never a good thing for the consumer. Without competition in the market, it is virtually sure that the consumer will pay more than necessary for just about any given service or product. Traditional banks can act so outrageously because, for a very long time, they have had little or no real competition in the world of money and finance. However, that is changing, and as more people take advantage of the other options available, it will change faster. Once they have to deal with serious competition, financially hurting banks – and with the mortgage and lending melt-down, the sub-prime debacle, and the credit crisis, they are already in a world of pain – will scramble to reclaim their share of the consumer base with a return to reason in terms of fees and customer service.
If It Didn´t Cost So Much, It Would be Almost Funny
The bank uses consumer deposits for a variety of things, such as making loans. The interest and other monies garnered is part of how they profit. That´s fine, they are not expected to work for free. However, there is a point when legitimate earnings become excessive, even exploitive, and we have reached that point. With all their stunning losses in mortgage related financial dealings, the banks are scrambling to make up the money they lost.
So, basically the deal is this -- they used consumer money, lost big time doing so, and now are going to cover their losses by exploiting those same consumers. According to data from the Federal Deposit Insurance Corp., banks sucked $38.6 billion dollars in service charges out of their users in 2007, a figure that is on track to increase significantly during this year. For some banks, these fees are now providing as much as half of the money they are currently making.
Bank Of America , a financial institution that has had to write down billions in mortgage backed financial instrument losses and has seen stock value plummet due to their current loss level, is now treating using their bank card in a parking meter as a cash advance worthy of a $10 fee, according to a recent report at the Consumerist.com . Add that to the growing list of ridiculous fees imposed by banks today, including paying to stand in line and wait patiently until your turn arrives to speak to a bank teller.
In an article published by USA Today on October 4, 2005, the writer took a close look at what was then one of the newest bank fees. With a name that mockingly insults the intelligence, the so-called courtesy overdraft or overdraft protection pulls in huge amounts of money for banks by not denying transactions in which the funds are not there to cover them – all too often because of the bank´s very own balance updating or check clearing policies – and then charging a huge fee for the forced loan. This is an automatic "service" in many banks, one that consumers in numerous banks are not allowed to opt out of. As one who has been charged $30 for a nickel and $35 for 17 cents, this writer despises this fee most of all.
As though the initial fee isn´t bad enough, some banks are starting to add even further fees, compounding the original fee if the overdraft is not repaid within a certain amount of time, which can be as short as three days. For the consumer that is unaware of the overdraft, that period of time can easily pass without the individual ever even realizing that there is a problem. Interestingly enough, recent studies have determined that, in terms of loan cost, the much maligned payday loan is a better deal for many consumers than the so-called courtesies extended by banks. With that in mind, for those tired of being subjected to the rapaciousness of banks today, it may be well worth investigating other options.
There Are Options Beyond The Bank Or Your Mattress And Piggy Bank
If you are dissatisfied with the grasping, greedy fees and other outrageous actions of your bank, you are not alone. In fact, many people are choosing alternative means of managing their financial lives, for their checking accounts, or for obtaining loans of various types, ranging from fairly standard business loans to quick payday loans to bad credit loans.
Investment houses, as recently reported by National Public Radio, such as Fidelity and Charles Schwab, have begun "to offer checking account and other banking services," acting in direct competition to banks. Notable benefits include significantly better interest rates for checking accounts and far fewer fee hassles. Peer-to-peer lending is a thriving loan option, as well as an investment opportunity for those choosing to make loans. As the name indicates, banks are cut out of the process with peer-to-peer lending, as the loans are made via websites in which people bid on the opportunity to provide the loan, thus earning money through the loans interest. In some systems, loans – and the risk that comes with them -- are spread throughout multiple participants, each contributing a portion of the loan and gaining a portion of the profit as the loan is repaid. Ethnic and ideologically based communities have been using a similar model for centuries.
Small personal loans are increasingly being sought through payday lenders, and even pawnshops are seeing an increase in use in recent times. Part of that rise, however, has been attributed to increased legislative efforts to obliterate payday lenders. After all, in many cases, payday loans can be less expensive to the consumer than the forced short terms loans that are so lucrative for the banks these days. While lawmakers paternalistically determine that consumers need to be protected from payday lenders, they seem to have little interest in the almost routine abuse of the consumer by banks.
A monopoly is never a good thing for the consumer. Without competition in the market, it is virtually sure that the consumer will pay more than necessary for just about any given service or product. Traditional banks can act so outrageously because, for a very long time, they have had little or no real competition in the world of money and finance. However, that is changing, and as more people take advantage of the other options available, it will change faster. Once they have to deal with serious competition, financially hurting banks – and with the mortgage and lending melt-down, the sub-prime debacle, and the credit crisis, they are already in a world of pain – will scramble to reclaim their share of the consumer base with a return to reason in terms of fees and customer service.
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