Entry #661055, added on 07-27-09 @ 7:17 pm EDT
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Banks are there to make a profit, usually in the form of interest and bad check fees. But they can be very creative about many ways to make money off the average consumer.
In this state, it's ok to charge up to $50 for a bounced check. Bad checks do require a small amount of labor to process. Considering the low wages paid to people who do that work, it probably runs $6 -$25 per bad check, depending on how difficult it is to collect. Now the rest is not all profit. There are a few checks that will eventually require filing a warrant, etc., and a few rare ones will never be collected. So the expense from those checks makes up another portion of the fee. The average bad check probably breaks even or makes a small profit. However, check writing is dwindling as the debit card use rises.
The fees I object to are over-the-limit fees and late fees. They're meant to be punitive, but these are excessive in practice. If someone has been over the limit two months in a row and you continue to add punitive fees-I've asked around, and it seems most banks charge $39-that customer will always be over the limit. If he can't pay it down in two months, it's not going down any time soon. That's when the bank should cut off use-no new charges-until it's below the credit line. If it's only one month, then it was just a mistake, and he/she paid it down right away. Two months in a row should be the absolute maximum for over-the-limit fees. And it should not go over $25.
Late fees are also around $39, and will accumulate regularly, even if you're making monthly payments. When a person goes through a divorce, loses a job, or goes into the hospital, payments can't be made on time or a month will be missed. If the balance is close to the credit line, and the customer has a disaster and can't pay until the last minute, the payment arrives one day after the billing date, and he gets the extra fees. The minimum payment will never be as much as the two fees plus interest, until the account gets huge with fees.
I ran into this problem when my husband was unemployed for an extended time, right after making some large purchases. A balance of $2100 quickly grew into $3500, even though I cut up the card and made payments every single month. I just couldn't pay as much as they were demanding. So the fees were $78 and the interes was higher. The balance just kept growing, and there was nothing I could do about it. I have never used a credit card since then. My credit was ruined, and I had to sell my furniture and beg from relatives to get it to stop.
Now I have to pay more for car insurance because of my credit record! I haven't had any tickets, my record is good, I haven't made any claims in 15 years. But I'm a rick to the insurance company because of my credit. Now there's another industry as crooked as banks: insurance! |
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