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PIRG CONSUMER WATCHDOG FACT SHEET #3 Revised Oct 1999
FIGHT FEES ALERT
BANK FEE TIPS FOR CREDIT CARD AND CHECKING ACCOUNT CONSUMERS
--CREDIT CARD CUSTOMERS: Never pay the minimum payment. Always pay on time and always pay as much as you can afford. Call Bank regulators if you have a complaint.
--BANK FEES: An October 1999 PIRG Big Banks, Bigger Fees report finds that the average consumer who can't afford to meet minimum balance requirements pays $217/year for a regular checking account, when all service fees, account fees, and ATM fees are added together.
And, incredibly, while banks earned their eighth straight year of record profits in 1998 -- $62 billion dollars -- their well-heeled lobbyists in Washington seek to roll back banking laws that protect consumers, communities and taxpayers. Their lobbyists also seek to expand bank powers to sell and underwrite insurance and securities (stocks and bonds) without consumer protections in their proposed new law.
In October 1999, Congress approved and the President signed S. 900, THE FINANCIAL MODERNIZATION BILL--IT'S A BANK DREAM BILL AND A CONSUMER NIGHTMARE. The bill legalized the merger of Citibank with the Travelers Insurance Company and encourages similar mergers between banks, stockbrokers and insurance firms. It will lead to bigger banks, with higher fees. It has numerous other deficiencies. Worse, the bank merger frenzy will only result in higher fees, because larger banks charge higher fees than small banks and credit unions do.
Banks have devised a three part strategy to gouge consumers. They raise existing fees, invent new ones, and make it harder to avoid fees, by raising minimum balance requirements, so more people pay more fees. And, even though banks have raised the interest we pay them on our credit cards dramatically, they haven't significantly increased the interest they pay us on deposits. PIRG reports document how banks charge consumers twice to use the ATM machine only once.
WHAT CAN CONSUMERS DO?
(2) SHOP FOR FINANCIAL SERVICES. This should be an ongoing process because banks are constantly changing their fee structures. Compare the costs of your accounts to those of other banks in your area. Know what types of transactions you regularly make and evaluate accounts with your needs as a yardstick. You may find a better deal at a different bank. If you don't qualify for a credit union account, small, locally-owned community banks generally have lower prices, and better service, than out-of-state owned mega-banks.
Free checking: 17% of banks in PIRG's 1999 survey offer totally free checking.(3) COMPLAIN! Banks shouldn't charge regular customers outrageous bounced check fees or alleged credit card late fees. Demand that the bank waive an occasional $25 bounced check fee, especially if it's due to the bank's complicated check availability schedules. If you can't understand the bank's byzantine fee brochures, COMPLAIN! If the bank wants to charge you a fee for innocently depositing someone else's bounced check in your account, COMPLAIN! And if the bank tries to charge you a fee for talking to a human teller or to call them on the phone, don't simply complain, VOTE WITH YOUR FEET! And send a letter to the bank president explaining that you closed your account because of outrageous bank fees.
IN YOUR LETTERS, MAKE THESE RECOMMENDATIONS:
(1) URGE LIFELINE BANKING: Bigger banks means bigger fees. But 12 million families cannot afford bank accounts. An addition 48 million have average balances below $1000 at any given time. These families need access to better bank accounts. Congress should require banks to offer low-cost lifeline accounts, as only New Jersey and New York require.
(2) URGE PRIVACY PROTECTION: The financial powerhouses created by the new law have the right to share and sell your customer information with virtually no right to privacy. See PIRG's privacy alert for more information.
(3) URGE CONGRESS TO REGULATE UNFAIR CREDIT CARD PRACTICES: Contact your Representative and urge co-sponsorship of bills similar to last year's HR 900 (LaFalce, D-NY), which would toughen up credit card regulation. Urge your Senators and Representative to oppose the one-sided bankruptcy legislation that was vetoed in December 2000, or at the lest, to add balancing provisions to regulate the credit card industry: For example,
1) Require banks to tell you on your credit card statement exactly how long it will take to pay off your credit card balance if you only make the minimum payment.
©1999 Public Interest Research Groups