Actions still needed on bank payday, overdraft fees and more
Dissatisfaction with banking practices and policies have irritated, alienated and obligated customers in ways that did not seem fair at all. Although complaints ranged from mortgage lending and servicing to credit cards, the proverbial straw that broke was a new fee for use of debit cards.
In a series of late September announcements, many major banks advised customers of new fees. While some banks preferred monthly fees ranged from $3 to $5, others would test or “assess” fees per purchase.
In the throes of a lingering recessionary economy, high unemployment, growing poverty, and not enough jobs for millions of Americans to be financially self-sufficient, consumers revolted with a coordinated national effort called “Bank Transfer Day.” November 5 was the designated day for consumers across the country to leave their banks and join local credit unions.
Yet many consumers chose to act right away. Before “Bank Transfer Day”, the Washington Post recently reported that over the past month, the National Association of Federal Credit Unions recorded a 350 percent increase in Web traffic to its online credit union locator. The portal, www.CULookup.com matches visitors with institutions they might be eligible to join based on affiliations, such as school, employer or church.
According to Bill Cheney, CEO of the Credit Union National Association (CUNA), “If all of the people signed up to participate in “Bank Transfer Day” on Saturday do so, and remain credit union members over the year that follows, those consumers will save a combined $4.8 million. Combine that with the $5 per month that they WON’T be paying in debit card fees, and you’re up to $5.1 million.”
With consumers everywhere needing to contain costs and stretch dollars further, it would be wonderful if November 5 marked the beginning rather than an end to consumers acting in concert to change bank practices. Consumers clearly understood the new debit card fee; far less clarity surrounds overdraft fees, a nagging consumer nemesis. All too often, consumers do not know of these mounting charges until they receive a bank statement. According to research by the Center for Responsible Lending, bank overdraft fees cost customers $24 billion each year.
Although the Dodd-Frank Consumer Protection Act guarantees that banks can only assess these fees once a customer opts in, there is still something inherently unfair about an average $35 fee per debit card transaction instead of just declining a purchase and avoiding the fee. CRL research also found overwhelming consumer support for the fee-free denial.
Then there is the emergence of bank payday lending. This no-lose proposition for banks deducts the full amount of an advance deposit loan — plus fees from a customer’s next deposit. The result for the customer is the same turnstile of debt wrought from storefront payday lenders. Each year, the cycle of debt caused by payday loans — regardless of the lender — costs 12 million consumers $1.4 billion in fees alone.
Whatever results from Bank Transfer Day, one thing is as commendable as it is memorable: Consumers have moved from anger to direct actions in their own defense. The collective power of millions of nameless, faceless consumers was claimed.
Here’s hoping that power will be preserved and wielded to enact more progressive change. — (NNPA)