Nevada Writer

Beware! Credit card companies gouging before Dodd bill kicks in

by Melanie on 11/07/09 at 11:56 am

With the Dodd credit card “bill of rights” going into effect in 2010, credit card companies are starting to implement sneaky fees and increased rates to trap and deceive consumers.

Seechange, writing for the Daily Kos, notes that Chase has begun screwing people—possibly to the point of causing them to default—by upping the minimum payment due each month from 2 percent to 5 percent with no ability to opt out. And they are doing this to even their best customers.

I noted in a recent tweet that Bank of America, where I have been a good customer for the past nine years, jacked up its fees for each overdraft protection transfer from nothing to $10 or 3 percent, whichever is largest.

In addition, for those who don’t have overdraft protection, each overdraft is $39 if the overdraft is more than $5 and there will be an extra “extended overdraft fee” of $39 if you don’t pay the overdraft back within five days.

BofA, according to an honest customer service rep in Reno, notified customers with a folded over piece of paper resembling junk mail that came in the mail in May. My May statement, as on previous statements, had no notification. My June statement, which I receive as a PDF online, had a blurb at the very bottom that said:

“‘Important Reminder” This account provides overdraft protection for a checking account. Transaction fees apply to each overdraft protection cash advance. See your agreement for details.”

I cannot find my agreement anywhere online, although it may exist somewhere.

Since I do most of my banking in the online, interactive area, I rarely feel the need to review my actual statements. But even if I had, the verbiage wasn’t stark enough to make me pay attention. I was charged $74 in overdraft fees for a two-week period. I never saw the notice they said came in the mail and I was on vacation when the fees kicked in, so there was little I could do—there wasn’t even cellphone service at my campsite.

When I called to ask what happened, I was put on hold for an hour and then told that no way in hell was I getting any money back and that BofA had “informed you very well.”

By BofA’s own measure, I was charged almost 60 percent in interest for that month.

At the branch office, the honest rep mentioned above was able to extract a $37 (one-half) refund for me. She also gave me some great advice:

Even though you will incur the $10 or 3 percent fee, the interest you will pay will not be the usurious 19.99 percent, but rather the rate you are getting on your equity line, which is linked to prime and will never be as high as a credit card rate.

Balance transfers from a credit card to a checking account can be a handy way manage cash flow. They are typically special checks issued by the bank that you can use to pay vendors, but a balance transfer can also be arranged by telephone. A fee is charged for each balance transfer, but, at least at BofA, the interest rate thereafter is just 3.99 percent.

Since I didn’t realize a fee was being charged for my overdrafts, I was using my debit card whenever a vendor preferred to use a debit card instead of a credit card. From now on, I will simply use my credit card instead of of the debit card to avoid all overdraft fees in the first place.

I’m filing this post under “Psychology” and “Assholes” because the underlying problem is that some people in charge at some companies act as though the regular rules of civil behavior don’t apply when it comes to interacting with customers. Unless you are a sociopath, you would not dream of deceiving and trapping a family member, friend or colleague in this manner—it would be obviously unethical and mean. Yet, in the world of credit card companies, scamming people, as long as it’s technically legal, is par for the course.

Just weighing in.

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