BANKING: It Pays to Shop Around as Annual Fees Top $500

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EDITOR’S NOTE: Once upon a time banks made their money by accepting deposits, paying interest to customers on their balances and lending out the money at a higher rate than what they paid their customers. Then the new money morality took over and banks seem to think that just because they can, or they think they can, they should be making more money in more ways, which is how the whole securitization mess got started.

Bottom Line: Shop around until you find an account that serves your needs not their needs. Many people are paying over $1,000 per year in fees of various sorts all showing up on the end of month statement that nobody reads anymore. For someone earning a net of $20,000 per year, that is the equivalent of a 5% tax on their earnings — a private tax that goes directly to bankers.

Bankers should earn a reasonable fee for the services and safety they provide. Some of them — the mega banks — don’t offer safety, so you shouldn’t be paying for it. And many banks offer services bundled with the ones you want so you get a package that you really don’t want but are forced to take. That was once known as an illegal tie-in. I guess the department of justice forgot about that one.

I don’t know about you but I want a world where I pay for what I use and I don’t pay for what I don’t use. If I watch 6 channels on Directv I want to pay for 6 channels —- not 6000. If I use my bank account for the safety of having a depository institution, I want to know they are not speculating with my money in credit default swaps. If all I need is a debit card and a few checks, then I’ll pay, but only for that. And if the profit margins of banks shrink down to what they once were, then that is a good thing because it means they are earning the money and not forcing it out of me.

The “free market” is used as an excuse to stray from what we all know is the difference between right and wrong. In truth those who spout off about the free market mean that they should be able to squeeze every last dime out of you to give you things or pretend to give you things that you didn’t want in the first place. There is no free market unless there are referees on the court to keep the bullies under control. And there are no referees keeping the bullies under control if the referees are paid by the bullies.

I’m a lawyer. I expect to be paid for my time and expertise. I’m a writer. I expect to be paid for my writing. I don’t expect to get paid for preparing a will you don’t want — by packaging it with the representation you want at a real estate closing. I don’t expect to get paid for writing something unless you read it and that is the deal. Like this Blog. I don’t charge for it. I could try to force you to pay for it, and I invite members but if you choose not to be a member and the monthly teleconferences are of no use to you, and the discounts offered are of no use to you, then I don’t expect you to pay. Nobody asked me to write this Blog.

It’s just common sense. But money makes its own morality and it seems that the only thing people can agree on is that more money is better than less money no matter what the context. I don’t agree.

See Full Article on Boston Globe

by Todd Wallack

The region’s largest banks are charging consumers as much as $50 a month if they do not maintain minimum balances or meet other requirements for certain high-end checking and savings accounts.

Citizens Bank charges customers $50 a month when the balance in a top-end money market account slips below $1,000. Sovereign Bank imposes fees of up to $30 a month, and Bank of America and TD Bank each charge $25 a month whenever customers fall short of minimum balance and other qualifications for some premium checking accounts.

“I haven’t seen anything like $50 a month before,’’ said Greg McBride, an analyst with Bankrate.com, a website that tracks bank fees and interest rates. “That’s a steep price to pay.’’

The sticker shock is the latest sign that US banks are pushing fees to new heights to boost revenue and shed unprofitable customers with slim balances. Since 2009, banks across the country have more than doubled the average monthly maintenance charge for basic checking that does not pay interest, to $4.37, according to Bankrate.com.

‘We don’t want customers in accounts that don’t fit their needs.’

Jim Hughes Spokesman, Citizens Bank

 

But many of the nation’s largest banks now charge $25 or more per month for premium accounts that offer higher interest rates, free checks, or extra services.

The average fee for interest-bearing checking tops $14 a month nationally, up from $12.55 in 2009. Some institutions may waive the charges if customers complain, as is the case with most bank fees.Bank profits have been pummeled since 2008 because of steep losses on mortgages, tepid demand for loans, low yields on investments, and new regulations. The biggest banks have lost billions of dollars in revenue from new rules reducing the amount they can collect in debit card fees and limiting overdraft charges.

“Banks have been trying to recoup some of those lost revenues or get rid of accounts that are not cost-effective,’’ said Richard Barrington, senior financial analyst for MoneyRates.com, a financial website that tracks bank rates.

Spiros Aloupis, a Citizens Bank customer in Revere, said he was shocked when he received mail advertising the bank’s Performance Money Market Account and saw the $50 monthly fee for letting the balance fall below $1,000 on any day during the month. Aloupis said he thought it was a mistake, until he called and Citizens confirmed the fee.

“Isn’t that ridiculous?’’ said the 86-year-old retiree, who has a safe deposit box with the bank.

The account, launched in 2010, pays higher interest rates than some other savings accounts, although it is still well under 1 percent a year. Citizens, headquartered in Providence, is the second-largest retail bank in Massachusetts and one of the largest US regional banks.

Citizens spokesman Jim Hughes said less than 1 percent of customers were hit with the fee last year. And when customers complain, the bank will generally refund the fee and move customers to different accounts with lower fees and balance requirements.

“We don’t want customers in accounts that don’t fit their needs,’’ Hughes said. “It doesn’t make economic sense for them or for us.’’

McBride said he can’t imagine that customers slapped with a $50 fee would not either close their accounts or immediately increase their balances. “There’s no excuse to have something like a $50 fee hit your account in consecutive months,’’ McBride said.

Even a $25 monthly fee can sting.

Christine Simeone of Charlestown was shocked after discovering in November that Bank of America, the largest bank in the state, had slapped her with a $25 checking account fee three months in a row.

Simeone, who does not receive paper statements, did not immediately notice that the bank, which is phasing out its old slate of accounts, had switched her to a new premium account with a higher minimum balance and large monthly fee.

“I was stunned,’’ said Simeone, a public relations executive. “I would have associated a $25 fee as a one-time fee – like for a returned check – not a monthly fee.’’

Simeone, 44, said she switched to a different account with a lower minimum balance to avoid the monthly fee in the future. But Bank of America initially refused to refund the $75.

A spokeswoman, Betty Riess, said Bank of America decided to reverse the fees after the Globe contacted the bank about Simeone.

“We want to make sure customers are in the account that best meets their needs,’’ she said.

Sovereign Bank, third-largest in the state, said it charges $30 a month for its premier checking account if customers don’t maintain at least $20,000 in deposits, loans, or investments. A spokesman declined to comment on the fee.

TD Bank, the fourth-largest, charges $25 a month for two high-end checking accounts. Customers can avoid the fee on the TD Premier account with a daily balance of $2,500 and the TD Relationship account with balances of $20,000 or more. TD spokeswoman Rebecca Acevedo said the rates are competitive and the accounts offer “great value’’ with benefits such as no ATM fees.

But the hefty monthly fees have not stopped banks from tacking on smaller ones, too.

Next month, TD Bank plans to start charging noncustomers $5 to cash a check drawn on TD Bank at its branches. Bank of America, Citizens, and Sovereign already charge similar fees of $5 to $7.

Still, many credit unions and community banks continue to offer free basic checking accounts.

11 Responses

  1. Hi, I do believe this is a great website. I stumbledupon it 😉 I may come back once again since I bookmarked it. Money and freedom is the greatest way to change, may you be rich and continue to help other people.

  2. From the April 2011 Federal Reserve System, Office the Comptroller of the Currency, Office of Thrift Supervision (now OCC), Interagency Review of Foreclosure Policies and Practices:

    “The file reviews did not include a complete analysis of the payment history of each loan prior to foreclosure or potential mortgage servicing issues outside of the foreclosure process. Accordingly, examiners many not have uncovered cases of misapplied payments or unreasonable fees, particularly when these actions occurred prior to the default that led to the foreclosure action.”

    Well, hope the DOJs are doing this investigation that these agencies failed to do. Appears — NOT.

    You have to understand the mounds of money made by the subprime refinances. Insurance fraud included in the scheme. What a minefield when default was orchestrated. And, the money flowed. End result, again, to borrower — unsecured.

  3. Ian and Anonymous re mods:

    Excerpts from an article by Pro Publica dated May 9, 2011 regarding fine print waivers in mod agreements:

    “a lengthy paragraph involving a release of all of Bank of America’s “investors, employees and related companies from any and all claims.”

    “GMAC, for instance, the fifth-largest servicer, which oversees about 2.5 million mortgages, includes a clause in its modification agreements that the “Borrower acknowledges that Lender is the legal holder of the owner of the Note and Security Instrument.”

    “required the borrower to waive any potential defense to foreclosure.”

    “What made the agreements particularly unfair, said Justin Haines, director of foreclosure prevention at Legal Services NYC in the Bronx, was that they required his clients to waive rights without receiving a permanent solution.”

    “If these borrowers did not have attorneys to advocate for the removal of this language they would just be regularly waiving their claims for nothing.”

    “They were clearly relying upon the waiver language to try and get around all of the very complex securitization problems plaguing their case,”

    http://www.propublica.org/article/in-fine-print-banks-require-struggling-homeowners-to-waive-rights/single

  4. ANONYMOUS- of course you are correct. False default debt is what subprime borrowers are paying against. Pennies on the dollar for the debt, and borrowers are paying what they think is a mortgage for the full amount of the note which they signed. And since they are charge-offs, (the ‘lenders’ took a credit for the charge-off) they are unsecured,and whoever is collecting has no right to foreclose. The “lender” can either charge-off the debt, or hold it and collect the money. They can’t do both. Illegal. Yet, here we are……..

  5. Joanne- the modification numbers which we see bandied about cannot be corroborated, we are taking the banks and nonbank banks’ word for it, along with press releases from Treasury, HAMP etc. The new mods all include property taxes and HOA dues to lump up the monthly payment, so that the homeowners have a better chance of defaulting because the payments are much higher. I don’t know if outstanding liens (irs, other bills) transfer onto the new mortgage. Plus the entity modifying the “loan” can’t prove that they own it, except by backdated,forged,fabricated assignments of questionable notarization. So how can they modify it, is beyond me, except for a questionable power of attorney from some other entity which doesn’t own it either. What a mess. As Neil states repeatedly, they are trying to memorialize a transaction which never took place.

  6. Ian

    You are right as to loan mods today. I should have written – are supposed to be loan modifications of the original contract.

    What were modifications of the original contract were the “subprimes refinances” that were nothing more than a modification of a false default of the original contract.

    Have said this before, whoever actually funded your loan at the time of original purchase of your home, would never let you go to another “lender.” And, Freddie/Fannie – never the lender, they are an Investor, same as security investors. In order to have TILA claims, which consumer are entitled to, there must be a lender/creditor. Security investors are not the lender/creditor. Securitization, on surface, appears to remove a “lender.” But, the lender is not really removed, it is just concealed.

  7. Ian

    Re mods. Exactly right.

    It’s the cruellest sham of all and govt and all those “helping” homeowners have led lambs to the slaughter. There are even more reasons for the aps and paperwork that help the “lenders”. Even attorneys who just broker loan mods – not ok. Lawsuits just to get a loan mod not ok. Even attorneys who advertise they get it about who “owns” the loan see the end game as a mod. It’s more of the “free house – you owe someone don’t you” syndrome. Who has a right to enforce the power of sale or satiisfy the lien? Same entity has a right to modify or be paid. No one else can do any of the above unless acting for the the true beneficiary. Who is harmed by the non payment – he gets the house. Ought to be a simple determination and it would be if not hidden on behalf of those who do not have the right to enforce the power of sale. It’s the rule of law and not rocket science. AG’s and judges need to ask who is the modifier. Bring your identification papers and your receipts to the table.

  8. ANONYMOUS- good comments. But I believe that loan mods, rather than, as you stated “are a modification of the original contract”, are brand new contracts. If you read through all the HAMP guidelines. We know that a person signing a modification waives their right to sue. But now it appears as though, instead of money laundering, we get Title Laundering. The clouded titles go in dirty and come out clean. All the bogus loans sold multiple times into numerous trusts to investors worldwide now disappear-POOF! with the stroke of a pen. So the main purpose of modification is to foreclose on the borrower, after getting him to pay as much as possible, and get as much money from the Treasury as they are willing to pay to debt collectors to process the mod apps.

  9. Yes. Good advice. But, Monday morning quarterbacking. MERS is not being used now. You are lucky if you even get a loan now. Many home purchases are for cash, and refinances — few and far between. Loan mods – in whose name? MERS? Remember, loan mods are nothing more than a modification of the original contract.

    MERS real victims, at the height of the fraud, remain victims. But, believe this can be overcome. Just need to get attorneys on the ball.

  10. Extremely good advice, Charles. I was going to give the same one…

  11. Also, check if the institution is a MERS member. If they are STAY AWAY or you are feeding the banksters’ pockets and aiding in the contiuation of the evisceration of the chain of title laws on our properties.

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