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July 16, 2012

Do Banks Ever Listen to their Customers?

Filed under: Finance — Edgar (aka MrConsumer) @ 5:30 am

This week’s installment is about a “gotcha” without a fine print warning. It offers lessons for both consumers and bankers.

MrConsumer is in the habit of making deposits and withdrawals at the ATM machine at Century Bank, a local bank with 25 branches. One of them is only a few blocks from home, and they are part of a network that serves the bank where my account is actually located (a few miles away).

For the past 14 years, after making a withdrawal that is solely composed of $20 bills, I will go inside and ask a teller for smaller denomination bills for one or two of the twenties. Last week, when tendering a $20 bill under the glass, the teller asked if I had an account there. After I said no, she informed me that bank policy had just changed and they no longer make change for non-customers. What?

MrConsumer went home and proceeded to send the following email to the bank’s Chairman, and to its President and CEO:

I should note that the cc: on the email was to the banking reporter at the Boston Globe. Just a bit over an hour later, the President of Century Bank wrote back:

Wow, wow, wow. Isn’t that impressive from so many standpoints? I wrote back immediately to thank him for his swift action. Too bad bigger banks can’t be persuaded to come to their senses as easily.

• • •

June 25, 2012

Bank Fine Print: You Pay for Our Lawyer (Even if We Lose)

Filed under: Finance — Edgar (aka MrConsumer) @ 5:42 am

Pew Charitable Trusts released two studies over the past couple of years about checking account agreements that only a lawyer would understand.

Buried in these lengthy documents are some nasty clauses, including one like this:

*MOUSE PRINT:

Disputes Involving Your Account

You agree to be liable to us for any loss, costs, or expenses, including reasonable attorney’s fees, that we may incur as a result of any dispute involving your Account. You authorize us to deduct any such loss, costs or expenses from your Account without prior notice to you. This obligation includes disputes between you and us involving the Account and situations where we become involved in disputes between you and an authorized signer, another joint owner, or a third party claiming an interest in the Account. Also, it includes those situations where you, an authorized signer, another joint owner, or a third party take some action with respect to the Account which causes us to seek the advice of counsel, even though we do not actually become involved in the dispute. -PNC Bank disclosure

In plain English, this says that if they have to hire a lawyer because of a dispute relating to your account, whether you sue them or they sue you, or something else causes them to consult a lawyer, they can deduct the cost from your account without notice. They make no exclusion should you be right and win your case.

According to the Pew study, four of the 12 banks they examined had clauses similar to this, including HSBC Bank and TD Bank. They are asking the Consumer Financial Protection Bureau (CFPB) to look at issues like this, and require better disclosure or elimination of unreasonable contract terms.

For more information about this sneaky practice, you can read this LA Times story.

• • •

June 11, 2012

Incredible Bank: “No Pain” Checking?

Filed under: Finance,Internet — Edgar (aka MrConsumer) @ 5:40 am

Incredible Bank is a teeny tiny division of a teeny tiny bank in Wisconsin, that has consistently offered very attractive interest rates on deposit accounts.

Last year, they were offering a checking account that paid 1.35% with “no pain.”

They even reimburse ATM fees nationally and offer free bill pay.

However, like most banks, they have some fees. And they warn that some fees might reduce earnings.

*MOUSE PRINT:

Just how painful are the fees?

*MOUSE PRINT:

They charge $20 per check? On a checking account? That’s pretty painful. Their explanation is that they offer free ATM withdrawals and free bill payments, so to keep costs low, they want to discourage the use of checks. So why is it called a checking account? A bank representative said it was because you could get checks printed on your own and use them with this account, thus providing a means of paying others.

• • •

March 5, 2012

“If Your Credit Card Expires, We’ll Charge it Anyway”

Filed under: Finance,Internet,Retail — Edgar (aka MrConsumer) @ 5:05 am

et bookTo entice people to sign up for an annual subscription to their Entertainment coupon books, the company recently offered an enticement: pay just $10.50 for the 2012 book (and agree to buy the 2013 book, and those printed in subsequent years, for $5 off when they become available).

Like a book club, they say they will give you advance notice before the new book is shipped and give you an opportunity to cancel. That’s fair and reasonable.

To prevent some clever consumer from just cancelling the future editions in order to snag a bargain on this year’s book, they buried in the fine print, this bit of protection for themselves:

*MOUSE PRINT:

6. If you cancel prior to receiving your first book through the Annual Renewal program (2013 Edition) your credit card will be charged a $5 cancellation fee.

That also seems fair, and the consumer is still getting a bargain price on the 2012 book.

What seems to cross the line, however, is this:

*MOUSE PRINT:

5. If your Credit Card reaches its expiration date, your failure to cancel after receipt of our notification will constitute your authorization for us to continue billing your card.

What? They are going to send you the book, knowing that your credit card has expired, and deem this fine print provision to be your authorization to engage in this questionable practice?

Somehow, I don’t think that Visa and MasterCard would look kindly on a company that deliberately puts charges on a card it knows is no longer valid.

• • •

January 16, 2012

Suze Orman: Advisor or Pitchman?

Filed under: Finance,Retail — Edgar (aka MrConsumer) @ 6:32 am

Financial counselor Suze Orman just came out with her own prepaid debit card called the Approved Card.

It is a MasterCard that you can use in retail stores to make purchases, but only up to the amount you have deposited onto the card. It is promoted as an easier, smarter way to be debt-free. Upfront she touts that it costs “only $3 a month if you use it how I tell you to.”

The card’s homepage goes on to tout nine benefits of the card including “free Transunion credit score, reports, and monitoring”, “safer than cash”, and “teach your teens financial responsibility.”

A closer look at the fee structure reveals some costly provisions besides the $3 monthly maintenance fee.

*MOUSE PRINT:

CARD PURCHASE FEE — $3
ATM WITHDRAWAL FEE — $2 (if you do not have direct deposit)
OVER-THE-COUNTER CASH WITHDRAWAL — $2

While these fees are less than other competing prepaid cards, this whole genre of card is set up to cost you money rather than save you money.

Making a deposit via direct deposit or transferring money from your checking account electronically to the car is free. (But would someone really put their entire paycheck or social security check onto a prepaid card every month? And if you already have a checking account, might not a regular debit card or ATM card be offered by your bank for free?

*MOUSE PRINT:

Conspicuously missing from their fee list is the cost to deposit money onto your card at an ATM or in person at a store.

Apparently you can only add money at locations that support either Moneygram or Western Union payments. The cost, they say, is typically $3.00 – $4.95. Whatta deal.

Here is another surprise.

*MOUSE PRINT:

If you only read the headlines about the free TransUnion credit score, report and credit monitoring benefit, you may miss the fact that the service is only free for the first year. After that, if you want to keep it, it is $143.40 a year.

Lastly, Suze proudly proclaims:

*MOUSE PRINT:

As she admits in smaller print, debit card purchase information is not part of anyone’s credit report and does not affect your credit score. She merely has a desire to see whether providing card use and purchase behavior to Trans Union will be considered in the future as a predictor of creditworthiness. Put another way, Suze has put a clever spin on the fact that she is sharing your purchase history with an outside company.

Prepaid cards have become popular as moneymakers for issuers particularly since they fall through the cracks of federal reform legislation that covers conventional credit and debit cards. If you must have a prepaid card for some reason, a better choice is the virtually fee-free American Express prepaid card. There is no monthly maintenance fee. In fact the only stated fee is $2 for ATM withdrawals after your first free one each month. Depositing money at a retail location incurs the same approximately $4.95 charge as does the Approved Card.

• • •
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