The three most crooked Institutions in the world are the Catholic Church, the US Government, and Banks. I will save the Vatican and politics for another editorial; as this one is all about our friends at the Financial Institutions.
If Congress is giving all this taxpayer money to the banks as part of the bailout, why aren’t they doing anything for us? For instance, why do they still charge and average of $2.50 for “the privilege of using their ATM machines? Since each taxpayer is forking out thousands of dollars to keep their company afloat during these difficult times, don’t you think they should cut us some slack and let us have access to our money without first paying an absorbent fee? I mean, no one ever accused the banks of being customer friendly institutions, but I think, under the circumstances that our elected officials put us in, this right is due to us!
Another thing that grinds my gears about banks is how their whole system is set up. Basically, the rich always get richer, and the poor always stay that way. Most banks actually charge their customers a monthly fee if their balance is under a certain amount! What the Hell is this? Do you think people like having no money in the bank? Their account balances are low because they are struggling to make it by. It’s bad enough we are overtaxed by Washington. Banks charging people for not maintaining certain balances is like kicking someone when they are down.
Why do banks process debits before credits? There is absolutely no reason why this should be so, other than the bank wants to make more money. Processing debits first means all charges will come out of an account before any deposits go in. This means that everyone who lives paycheck to paycheck now has to wait a few extra days to pay their bills to avoid overdrawing their account, and getting penalized with $35 a pop late charges. Even people that have direct deposit are still in danger of having their account overdrawn if they have a lot of charges hitting their account the day the paycheck goes in.
As long as we are on the subject, why do banks process debits from highest to lowest? For example, if there are a $500 check and 7 transactions for $10 each hitting an account the same day, the bank processes the $500 check first, then the smaller amounts. The banks say this is because customers want it this way; so rent checks, car payments and other high charge amounts clear first which would prevent embarrassment by the account holder if the large amounts get sent back. I can say, from working at 3 major banks, that this explanation is a bunch of crap! Banks process large amounts first to drain all the money out of your account, so that the smaller transactions will put your account in the negative, and cause repeated overdraft charges. Over 90% of transactions are for small amounts. Why charge a customer only one overdraft fee for a bounced rent check when a bank can instead charge a customer 4 or 5 times for smaller amounts that didn’t clear the account?
You may say “A person should keep an accurate bank record, it’s their own fault”. While I agree with this, I must say it is much easier said than done. There are a ton of fraudulent companies out there that charge your account without your knowledge for something you never agreed to. There are also a lot of cases of stolen identity or bank errors that cause accounts to be overdrawn. There are also a ton of other cases. Some gas stations now put a $50 hold on your account when you pump gas. This is because of all the people who pumped and ran. This hold does eventually drop off, but not before it causes your account to be overdrawn for whatever portion of the $50 you didn’t put in your tank. Also, sometimes charges at a restaurant create two holds on your account, one for the initial charge, and another one for the total bill, with tip. The initial charge is supposed to drop off, but this isn’t always the case. Sometimes both charges hit your account, which can put you in the negative. Also, internet charges create holds on your account, even if the charge drops off before it posts, the money is still unavailable to use.
One disastrous personal experience I will share with you. One time, I went out to a restaurant and had dinner. The bill was $15, and I put it on my card. I signed for it, and went on my way. I accidentally grabbed the wrong receipt when I walked out. I took the one with my signature and left the yellow copy. The waitress at the restaurant took it upon herself to write in a $10 tip on the bill. I knew this was wrong, as I had the original copy on me. I was living paycheck to paycheck at the time, and I had $21.31 in my account before that meal. With the $4 I had written in, I should have still had $2.31 in my account. Not a lot, I know, but I keep meticulous bank records, and I know I wasn’t overdrawn. Unfortunately, because of the selfish, criminal act of this waitress writing herself a huge tip, I now found myself in the red with my bank account. Since I had 6 pending charges on my account at the time; each pending charge created its own overdraft fee, even though, in all, I would only have been $6 overdrawn. These 6 charges cost me $150. I eventually got this money back from the restaurant and got the waitress fired….but this is not my point.
My point is that it doesn’t take much to have your bank account go awry; and, once it does, it’s a snowball effect. One overdraft charge causes another one causes another one. It’s impossible, especially for the middle class, to get ahead.
Money is the root of all evil, and banks are evidence of this. This whole financial crisis started because the mortgage bubble burst. The mortgage bubble burst because too many banks were investing too much money in mortgages. The criteria to get a home loan became so low that many people got mortgages even though they didn’t even have jobs. The reason the rental criteria got so low is that banks got greedy. They just wanted more money. Eventually, more and more people foreclosed on their home. Instead of readjusting their criteria, in hopes of attracting better customers, the banks loosened their criteria. They figured, jointly, that if 6 in 10 people paid the loan back, they would still make money. Unfortunately, this didn’t turn out well, as most houses were so ridiculously overpriced that the homeowner couldn’t afford to pay back the loan. As a result, the financial crisis hit, as all the banks had so much money invested in mortgages that they had little capital-on-hand to loan out, or to pay bills.
I can see why all the banks got so involved with mortgages. It’s great money. Even a 20-year mortgage with a 5% interest rate will bring back twice what the original loan was. Do this a hundred thousand times or so and that’s a few million dollars profit. Greed was the problem, and a much overpriced housing market.
Another thing I despise about the greedy banks is the fact that they charge so much money for being late on a payment. This is completely not fair, and, considering our tax dollars are supporting many of them, it needs to stop. Most people in America are paid bi-weekly. This means that, often-times, they are a few days late on bills, as they don’t have money coming in every week and must wait until they get paid before they pay the bill. This isn’t the old days, when someone could mail a bill out a few days before they got paid, because they knew their check wouldn’t be cashed for at least a week. Times have changed. Most people don’t even use checks anymore. Bills are paid online the majority of the time. This is instantaneous and the money comes out of the person’s account that day. The ruthless, cutthroat banks and credit card companies charge these people extra even if they are only one day late. If the customer has the nerve to call about the charge and ask for leniency, the bank doesn’t want to hear it. They train their customer service employees to turn a blind eye; not show any sympathy. The bank wants their customer service reps to treat every customer with respect, but if said customer wants some of the banks money, the rep acts like this person just killed their puppy or something. I worked for 3 major banks, and we were explicitly told no not waive fees. If we waived too many in a months period we were disciplined harshly; sometimes even terminated. These fees are banks bread and butter. This is how they make their money; praying on the weak and poor. They don’t charge their customers with money, because they are the ones who have the high balances and allow banks to loan out money. Banks dare not bite the hand that feeds them; they instead choose to bit the hand of the uninformed public who made the dire mistake to think that banks are actually out to look out for their best interests, rather than make money.
It’s not just the banks either. The credit card companies are even more ruthless and heartless. Credit card companies shove credit card offers down American’s throat like Jehovah’s Witnesses looking for converts. People who shouldn’t have credit cards because they can’t afford them find themselves having three or four, and finding themselves thousands of dollars in debt. There are many reasons why; most notably the media cramming it down our throats saying we need this or that. A person can only ignore a message so many times before it starts to sink in.
These people get these credit cards, and buy things they don’t need. After a few months of over-indulgence, they find themselves scratching and clawing to make the monthly payments, causing them to always be broke. The worst part of this is that one unforeseen problem; like a car breaking down or a trip to the emergency room, will cause the person to miss a payment; which, in turn, will cause a vicious snowball effect. One missed payment carries with it a fee, and will also make the person have to make a double payment next month. This will cause them to default on other bills, which starts another snowball effect. Before you know it the person is in financial ruin. This one incident will serve as the straw that broke the camels back. It will cause the people to go further into debt, which is just what the bank wants. If a person is owned financially they are less likely to revolt and cause revolution.
Banks and credit card companies are the Earthly industries of Satan. They don’t care about anything or anybody, just money. They don’t care if you lose your job, or if your parents passed away, they just want their money. They won’t forgive a payment. They might work out a payment plan, but they will always get their money.
The credit card companies are doing their job, and doing it extremely well. The average credit card debt per household is over $10,700! You might want to sit down for this next part. If you make the minimum monthly payment every month on this debt it will take you an average of 58 YEARS to be free and clear. In this time you will have paid over $31,000 in interest. Next time you see a big sale at a department store remember this. Even if your saving 20% off that pair of pants, you will still pay almost triple what it cost when you factor in the interest on the credit card you use.
Banks know this! They have spent a ton of money and time researching people’s buying habits. They know that when a person uses their credit card, they don’t think about all the interest they will be paying. They just think about how much fun that Jet Ski will be. They want that Jet Ski now! They don’t want it in 5 years when they can afford to pay for it in cash. Credit cards are good for this reason. They allow a person to purchase something they might need or help them in a pinch. Unfortunately, what someone “needs” in today’s society is far different than what a person actually requires. A jet ski is just an example. The only way someone will actually “need” a jet ski is if they happen to be trapped on a desert island, and need a ride to the mainland. Unfortunately, this is a mute example because I don’t know of many desert islands that sell Jet skis…but you get my point.
Credit cards not only allow, but encourage people to live above their means. I guess its good in terms of the people are happy, but it’s bad for everyone in that the credit card companies and banks that issue them virtually own you if you are in debt to them. This is a very bad and dangerous trend that needs to stop.
The median US household income is around $52,000 per year. At a modest 30% income tax rate, that means the average take home pay per month for a household is $3,033 per month. If a person just pays the average minimum credit card payment due of $215 per month, that means that 14% of an average households salary is going towards paying off crap they already have; and that’s a modest figure. With taxes figured in, the average household spends almost HALF the money they earn on income tax and credit cards. That’s a shame.
No wonder why everyone is broke. The credit industry seriously needs some adjusting I we are to come out of this recession. It must either lower its interest rates or raise its standards on issuing credit cards drastically. We, as a society, must also come up with some kind of safety net for those who already have high credit card debt to prevent the problem from getting bigger. If banks make these, and a few other changes, our economy can get back on track, and the U.S. can once again become the greatest country in the world.
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