Those of you who have read my book know that I have much to say about the credit card industry, and the financial giants who benefit from government-escorted profits. In a few words, there's no free market here. Favorable legislation's done much for their bottom line. It has also made the industry fat and lazy (see Chp. 2 of my book). Little has changed.
It turns out that the credit card industry is busy racking up billions more in overdraft and other fees. Their argument, according to the NY Times, is that "they are merely charging a fee for a convenience that protects consumers from embarrassment, like having a debit card rejected on a dinner date."
Concerned about public embarrassment on a date? Give me a break. The industry sees an opportunity to get people on a debt treadmill and take it, plain and simple.
Some, no doubt, will agree with Scott Talbott, the finance and credit card companies chief lobbyist, who said: “Everyone should know how much they have in their account and manage their funds well to avoid those fees.”
All I have to say to this is, Where was this guy when all the finance companies were busy purchasing toxic instruments with money they didn't have? Where was this guy when the financial titans of America lost track of how much they were on the hook for as their brokers made these irresponsible purchases? Where was this guy when the financial giants of America racked up responsibilties that drove their company - and our nation's economy - into the ground?
If there ever was a double-standard, the bailed-out-with-taxpayer-dollars financial sector now owns it.
Currently banks routinely cash the largest checks of customers first so that accounts are drained for later, smaller, checks. Worse, the banks don't have to let customers know they're doing this, nor do they have to warn customers when they're reaching their limit because of this tactic. Their rationale is simple. If you cash several smaller checks, and then have one $1,500 check bounce, you can only charge one overdraft fee (typically $12-$35). But if you cash the $1,500 check first, so ten smaller checks (for utilities, credit cards, etc.) can bounce, you now have a new source of income.
How much is this worth, you ask? According to the NY Times, this year alone, banks are expected to make $27 billion by covering overdrafts on checking accounts. Typically these are tied to debit card purchases or checks that exceed a customer’s balance.
Things have gotten worse ever since the financial giants were able to get congress to write legislation that allows the credit card industry to jack up your rates if you're in trouble elsewhere, even if you're current on your account with them (this is called "universal default"). As a result, the first round of bounced checks and overdraft charges inevitably lead to another round of late and over-limit fees elsewhere. In this way, the overdraft cash cow, in many ways, is little more than a government escorted piggy bank for the financial sector.
Hey, doesn't the Bible say something about exploitation and oppression (and hypocrisy)?
Just asking.
- Mark
No comments:
Post a Comment