What’s in your wallet? Answer—> The Banks!
10 Things Your Bank Won’t Tell You
1. “We’re in survival mode.”
Banks may still be a safe place to stash your cash, with the FDIC now insuring up to $250,000 per depositor. But after years of lending money to just about anyone with a pulse, the industry is paying a steep price. Losses on bad loans issued during the credit bubble could top $1.4 trillion, according to the International Monetary Fund. With their balance sheets in tatters and stock prices in the gutter, some of America’s biggest banks have been forced to merge to survive. And even with the U.S. government infusing money into the system to get banks lending again, “the days of easy credit are gone,” says Greg McBride, senior financial analyst with Bankrate.com.
2. “Our fees will only go up.”
Don’t look now but punitive fees—for overdrawing your account, say, or using a competitor’s ATM—are increasing. The average ATM service charge doubled between 1998 and 2007, and overdraft fees brought in $17.5 billion in revenue in 2006, up from $10.3 billion in 2004, according to the Center for Responsible Lending. Rubecca Hegarty, a married mother of three in Woodridge, Ill., says she often pays upwards of $100 a month in overdraft fees to Chase, since, like most banks, it changes the order of purchases so that large debts get paid first— increasing the likelihood of incurring fees on smaller purchases>. JPMorgan Chase says it does this because big payments like a mortgage are more important to consumers, so they get priority.
3. “We change our interest rates all the time.”
Regardless of what your credit card agreement says, you can never be sure how much interest banks will charge you. For example, nearly all cards have a default rate—as high as 30 percent— which banks apply when you’ve done something wrong, usually after two late payments in 12 months. But some banks have cut that to one, says Curtis Arnold, founder of CardRatings.com.
4. “College campuses are a gold mine for us.”
Students are the customers of the future, and banks are increasingly courting them, sometimes right on campus. More than 120 universities have cut deals with banks to issue student-ID cards that are also ATM and check cards. Schools can make millions from these deals, sometimes even taking a small cut of individual purchases.
Students are also a hot market for credit card issuers; banks will make private deals with alumni associations to get contact info for students, parents, and ticket buyers to university athletic events. Card companies cut deals to set up booths on campus, and Chase even inked a deal with Facebook to display ads and set up a Chase group on its website.
5. “In debt? The courts won’t help.”
Since the late 1990s, banks have been including mandatory arbitration agreements in their contracts for many of their products, including auto loans, checking accounts, home-equity loans, and credit cards. Such agreements prohibit you from suing and instead require you to use an arbitrator— someone picked by the arbitration firm named in your credit card contract to hear the dispute and decide the outcome.
6. “We’re excited about your trip to Europe, too!”
7. “For all the fine print, we don’t disclose very much.”
8. “Your money might be better off elsewhere.”
9. “When it comes to banks, smaller is sometimes better.”
10. “Your online account info isn’t necessarily accurate.”
by Jim Rendon
Tuesday, May 12, 2009
provided by Smartmoney