New Bank Fees: What Recourse Do You Have?

By e-mail and phone, and in mostof my personal conversations with friends and family now I'm hearing stories of woe regarding a major bank.

• Subject line from a friend’s e-mail: "What the #%*&@% is THIS???" That was his reaction to learning he will be charged because he never carries a credit card balance.
• From a reader: “My husband is sick and we’re barely making it. In 4-5 months, our income will increase dramatically. We need reduced business and personal credit card payments until then, but our Bank of America branch manager warned me not to call customer service about our credit cards because they’ll cancel them. I don't know what to do.”
• And my cousin, with excellent credit scores, had the interest rate on her Discover card more than double to 24.9 percent, because she is in the midst of building a house and have carried a substantial balance for the first time in her 14-year account history.

The newest gouge to your financial well-being comes as an annual fee if you use an account infrequently. The minimal acceptable amount for annual purchases seems to be running at 10 percent, or more, of your credit limit. Or you’ll incur a fee if you're never charged interest because you pay your balance off each month. The financial institutions’ argument: People who pay their balance in full each month “cost” the bank money. Such nonsense! When you charge anything on a credit card, the merchant you purchase from pays a fee to your credit card provider – 2 percent, 3 percent – for the privilege of accepting the card for payment. Some businesses give you a small discount when you pay cash because you save them the credit card company cost, and they pass that savings on to you.  

In addition, banks are becoming more ferocious about charging ridiculous fees on checking accounts. It just happened to me. I’ve had a Bank of America account for several years. While I’ve grown displeased with their policies, I kept one small account open to pay some expenses. The balance stays very low – just enough for a handful of small payments. Early this month, I lost my debit card and called customer service, when I realized it two days later. Fortunately, it had not been used. However, there was an unauthorized debit charge pending on the account that shouldn’t have been there. I talked with the customer service rep about the charge. He assured me it would not be paid since they were cancelling the debit card and everything would be fine with the account.

I said, “I don’t want to see any odd charges suddenly appear.” He promised me that would not happen. Rather than deposit funds, as I was scheduled to do when this happened, I waited to be sure everything cleared up. Instead of “everything being fine,” they paid the pending unauthorized charge, issued an overdraft fee of $35.00, then charged me an extra fee of $35.00 because they can. In addition, they added a monthly service fee to that. Bank of America claims I owe them $86.00 because they can charge anyone any amount for any reason.

If I simply close the account and don’t pay the money, they’ll report me to Chex Systems as if my account behavior was fraudulent. The result: I would not be able to open a bank account for five years. My opinion: Their actions constitute legalized theft and blackmail. 

Small businesses are at a disadvantage with over-the-top fees. It’s difficult to combat them. Even a threat of writing about this incident didn't motivate the B of A Customer Escalation Unit to rectify the situation. So what can you do to protect yourself if you’re in a situation similar to mine?

Your greatest power: Vote with your feet. As a small business owner or a consumer, often your only power against huge financial institutions is to move before you end up in an unpleasant situation. Select a financially stable community bank or local/regional credit union. Open checking, savings, and credit card accounts with them and grow your credit limits so you’ll be able to close credit card accounts from mega-banks inflicting usurious rates and fees. 

You may be amazed by the difference in bank attitudes. Smaller financial institutions understand that more than 60 percent of workers in America are employed by small businesses. If enough small businesses and consumers move their accounts to community banks and credit unions, which demonstrate customer care, you’ll increase the robustness of smaller institutions and, eventually, those banks that are “too big to fail” won’t be so big anymore.

Unfortunately, Congress refuses to pass legislation that will actually stop major financial institutions from their customer-as-victim actions. When the Credit Card Bill of 2009 is fully effective in February, the only significant difference from today: They’ll have to notify you before they engage in despicable business practices. Most of us don’t have the time or inclination to join any movements to fight these onerous actions. However, each of us can move our accounts to smaller banks and credit unions – financial institutions that value you and your business.