Banks are getting it rough this time. The economic mayhem coupled with the bank failures is tearing apart the very fabric of our banking system. Banks are revising procedures but not for the benefit of the customers.
Banks have long tapped on consumer finance to size up their treasures while at the same time, increasing interest rates every so often and leaving no stone unturned in extracting money in the form of personal charges, credit card fees and loan markups, among other things.
Critics have been saying this for years that customers should rise against these ‘unholy’ tactics of the banking industry but few have given heed. They used to say that it’s the right time to take your bank to task but that time never came, until today.
The financial crisis, foreclosures, extremely high credit card charges, hidden fees on personal banking and other factors have forced customers to rethink their dealing with banks.
Banks and credit card companies deny any malpractices and say that all these charges were written in the agreement which you missed reading (That fine print that we actually don’t read). They are absolutely right here that most of these charges like ATM or debit card fees, extra charges if you draw amount from ATM of another bank or the monthly service charges or charges deducted when your check bounces, just to name a few, are present in the agreement.
The catch lies in the financial statements as these charges are often not mentioned in your accounts and balance sheets. If you call your bank for an explanation, they’ll say the account is fine and only valid charges have been deducted.
Unfortunately, they are lying. The interest rates, LIBOR and service charges change every so often.
Credit card chaos:
Nickle and dime charges, as called by Kiplinger’s personal finance team, are a major headache for credit card users. These are the fees/charges/revenues charged by your company whenever you use your credit card to draw cash in advance from an ATM. We are robbed of a significant 3% of our total credit volume.
The most costly of these secret charges goes by various names such as “interchange fees,” “discount fees,” “checkout fees” or “convenience fees.” In 2004 alone, Visa, MasterCard and the banks that own them collected $27.6 billion, American Express $7.2 billion and others such as Dines Club and Discover $5.2 billion — totaling $39.2 billion, according to a research analysis.
Charging undue amounts on loans are another thing banks love to do. Compound interest rates are the culprits in this case. Although banks do have the right to make money and compound interest rate keeps on changing; they have to at least make public their rates on a regular basis.
The offer to overdraft is another trap banks use to keep customers entangled in their web. Let’s say your bank is offering overdraft at 18% but it is also ready to disburse loan at 8.9%. If you have reached the overdraft limit, there is a great possibility that the bank will succeed in selling you a new loan. By the way, the overdraft will remain the same.
Situation is almost the same in U.K.
It is customers money that keeps the bank going. We have to act now to ask this basic question from the banking industry. The economy is surely in a mess but why are the banks ripping custom