I’m undoubtedly dating myself, but remember that popular slogan in the ’60s, “You have a friend at Chase?” Nowadays, your bank is not necessarily your best friend.
In fact, although the new Credit Card Accountability Responsibility and Disclosure Act doesn’t take effect for about eight more months, banks are already figuring other ways to recoup the monies they will lose in interest and fees.
While credit card interest rates are usually tied to the prime rate, which fell from 5.25 percent a year ago to 3.25 percent now, the national average rate for credit cards has actually risen over that period to 12.4 percent.
So, even though banks are getting billions in bailout money, credit card interest rates have zoomed, and many card issuers are also slashing credit limits, which can cause immediate damage to the credit scores of consumers who carry balances.
Incidentally, if you don’t want credit card applications coming to your home, you can register at www.optoutprescreen.com. Rewards programs are also less rewarding, with banks now charging fees when you claim your reward. According to Jean Chatzky, financial editor for NBC’s “Today Show,” we also need to be on the lookout for the following, which may be in the offing:
%Higher checking account fees: Monthly account maintenance fees may be raised especially for customers who don’t maintain significant balances.
%Higher overdraft fees: We already see overdraft fees as high as $35 when you spend more than you have in your account. A new fee called the tiered overdraft fee means with each successive overdraft, fees go up. Many banks now also have sustained overdraft fees, which means if you don’t pay off the overdraft amount plus the fee, in full, an additional fee will be tacked on. These overdraft fees are often charged on debit and ATM transactions.
Debit cards make it easy to get into trouble, as most banks automatically enroll customers into their “overdraft protection” program, explaining that you will be protected if you should charge the debit card with more than you have in your account.
Actually, the one who is protected is the bank, since once you have over drafted, you have automatically taken out a bank loan at a high interest rate. Banks also do something called “stacking the debt.” Their computers are programmed to process withdrawals, not in the order you make them, but by the largest first. If the largest takes you over your funds, you will incur fees on all the smaller transactions, as well.
%Minimum balance fees: Charged on a checking account unless a minimum balance is maintained.
%Teller fees and telephone banking fees: Visiting the counter or using the phone to check your balance could cost you. Fees for mailing your bill instead of receiving it online could also incur a charge.
Chatsky suggests that smaller, community banks tend to be slower to increase customer fees, and she advises trying a not-for-profit credit union.
Lastly, before opening any account, ask the bank for a copy of the fee account schedule for a consumer account. They are required to give it to you, and you can then make comparisons among various banks and choose the one that is best for your needs.
Forewarned is forearmed. Meanwhile, remember to give Rover a pat on the head. He’s still your best friend, no matter what your bank balance.
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