credit card problems


How Many Ways are YOU Paying Your Bank?

A new consumer movement has begun that promises to spread quickly. Many people are moving their money from the big "too big to fail" banking conglomerates back to accounts in smaller local banks and credit unions.

Even politicians are questioning the wisdom of allowing banks to be one stop destinations for any and all monetary transactions.  Community banks conduct "banking" - they provide checking and savings accounts, debit cards, loans, mortgages, CD's.  They don't bundle and sell securities, participate in sales of derivatives and other risky transactions. 

If you keep accounts with the huge banks that are often in the news these days, you might be surprised to learn how many ways you are paying to keep them in business.

Larger banks have been raising service fees drastically in the past couple of months across the board.  Larger fees for various checking account transactions have been accompanied by predatory actions toward those who also have credit cards with them.  Reducing credit line amounts and doubling or tripling interests rates on credit accounts even for consumers with good credit has become the norm.

The risk taking by these larger financial institutions has resulted in the possibility that the FDIC will go broke soon.  Because it insures the accounts held at these banks, the charges against the FDIC have reached record amounts.  The insurance provided by the FDIC is paid for by levies on member banks.  Currently, there is a proposal to impose an emergency levy on those member banks to refund the FDIC and continue to protect customer's accounts.

The banks are now complaining that the government should pay for the emergency levy needed by the FDIC.

That means the same banks whose lack of diligence in making loans resulted in them being given billions in taxpayer money now wants the taxpayer to pay more to insure himself!   They also expect their customers to pay more to use their services while also complaining that the riskier side of their business practices should not be regulated.

In the end, the demise of the all-inclusive bank/financial institution may come not because of their own failures, but due to consumer's unwillingness to continue to support them.  Too big to fail - may in reality become too big to succeed.