Nomi Prins

Defending Ourselves from the Fee Snatchers

A lot of us don't spend much time looking through our bank or credit card statements. I'm guilty of this oversight myself. But, it's amazing how many fees and finance charges creep in there if we don't. Kind of like moths in your closet - you may think that if you scrape one off your wool sweater, you're done. Truth is, there's never just one.

So, yesterday, I got some mail from my bank, Chase. It looked like my regular bank statement. Since I don't really focus on which day of the month they send it to me, it didn't occur to me at first that it wasn't my statement, even though it was decidedly thinner. When I opened the envelope, I discovered it was a notice. Because my balance had fallen below some constantly moving level, they were going to charge me an additional $32 dollars that month. Or: they wanted more money to service less money. That's like paying more at a restaurant to get an appetizer instead of a main course.

This reminded me of a conversation I had with my old bank, Citibank, a couple weeks before. I received a notice from them saying that I owed $18.81. Fine. But, it was on an account that I had closed two months earlier. I call. I get bounced around. I speak to someone and ask why I'm receiving a charge on a closed account. First answer was, maybe it's a charge from before you closed the account. (Note: I closed the account originally because it had less than a $1000 balance and they were charging me $9.90 a month for me to let them keep my money there.) Second answer. Oh, you did close the account two months ago. We'll take care of it.

The point is: we pay more in fees if we have less money in a bank. We pay more in interest on credit cards if we are individuals instead of corporations. In fewer other worlds, do we pay more to have less serviced. The bank's logic goes: clients with more money deserve not to have to pay for our services. Clients with less money should pay for the fewer services that lower amount will require.

With credit cards, many of us have been slapped with $39 late fees, for being late a day, and possibly had our interest rates jacked up from 10% or 20% to 29.99% for the same reason. This is completely arbitrary on the credit company’s part. And completely unregulated on the government's part.

One of the women in JACKED, Margaret Bustell, is a Connecticut mother of three whose rates were hiked because she neglected to make one payment on time (for the first time in her life), having just undergone a Cesarean to deliver her third child. She said, "I would like to know, when they're already charging interest and hiking up my rate - just exactly this whole situation costs them an additional $39 a month."

Fact is: it doesn'’t cost them. That’s why the credit card industry nabbed $16 billion in 2005 in consumer late fees. I don't yet know the total profit the banking industry makes on additional charges to people with lower balances, but I'm working on it. Meanwhile, check your statements and bug these institutions when things don't make sense. It'll save you money. (Second Note: Margaret wanted me to mention that since then, she switched card providers and paid off her balance. Her new son, Henry, is doing very well.)

Nomi Prins: Author Bio | Other Posts
Posted at 9:45 AM, Sep 15, 2006 in Financial Justice
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