Comments on: Banking and Credit Card Fees Are Good For You

By: jim

jim — Fri, 06 May 2005 00:01:47 +0000

Yeah, they're really sneaky about it too. If you're interested, it's one of the things I mentioned in Pitfalls of Using 0% Credit Card Offers To Earn Interest. Essentially, for credit cards where you can get a 0% balance transfer if you make 2 purchases (Discover is notorious for this) each month - the new purchases are at APR 89743% and you're paying off the 0% first.

By: Roland

Roland — Thu, 05 May 2005 21:24:16 +0000

Just an additional comment on cash advances or more specifically balance transfers. For the heck of it I read the fine print of one of those balance transfer checks. Check it:

We will allocate your payments to balances (including new transactions) with lower Annual Percentage Rates (APRs) before balances with higher APRs.

Talk about taking you for a ride! First you get hit with the high transaction fee and then all your future payments goes towards your lower APR balances!

By: jim

jim — Fri, 29 Apr 2005 15:53:47 +0000

That is true, it wouldn’t be difficult, I suppose ultimately it comes down to the decision makers not caring that their software doesn’t err on the side of the consumer. Understandable, since you are right, it’s very profitable for them.

What I was trying to get at was that a person isn’t there making an active decision everytime they screw you. A person made a decision to screw you part of their procedures and when you’re unlucky, not careful, or stupid… they get you.

By: sean

sean — Fri, 29 Apr 2005 15:47:58 +0000

I think one misconception a lot of people have is that the bank is like a person, knowing exactly what it’s doing. [SNIP] It’s not that they knowingly charge him, the computer program just follows the same rule seven times.

Here’s where I’ll have to disagree – I believe the bank (or should I say, the decision makers for the bank) knows exactly what it’s doing. It’s not like it’d take great programming skill to throw a little code into their automated systems to, say, bounce everything after the first warning overdraft. They’re letting their system ding you repeatedly not only because they legally can, but, more importantly, because it’s extremely profitable, their customer be damned.

By: Flexo

Flexo — Fri, 29 Apr 2005 14:59:17 +0000

I don’t have any problems with overdraft fees or cash advance fees as long as they are completely disclosed ahead of time. I think there are many types of banking and investing fees that are scams. Inactivity fees and termination fees for investment accounts are relatively unnecessary.

By: jim

jim — Fri, 29 Apr 2005 13:22:15 +0000

That’s exactly right Sean, I’m glad what I was trying to get at. And you can’t agree and disagree, but you can definitely think I’m a touch crazy.

I think one misconception a lot of people have is that the bank is like a person, knowing exactly what it’s doing. It’s a collection of computers and some incompetant (just kidding!) people, so when you add those together with some procedures they didn’t write – you get a poor kid getting dinged seven times for overdrafting. It’s not that they knowingly charge him, the computer program just follows the same rule seven times.

By: sean

sean — Fri, 29 Apr 2005 06:42:09 +0000

How about both (all three? ?

Bank fees good for you? Up to a point, sure, and exactly in the way your example illustrates – do something stupid, get smacked upside the head for it. Only a complete idiot spends without having a clue what’s available to spend, so I don’t feel a ton of sympathy for Keeley. Nothing gets your financial attention quicker than the taking of some of those finances. But when the penalty wanders far into the usurious territory that Keeley’s did, a little common sense, nay, decency has to kick in on the part of the bank.