Rising credit card rates and other banking fees, have caused consumers to seek other finance options such as payday loans and debt consolidation to combat financial instability in today’s economy.
Payday loans have come under a lot of scrutiny from anti industry opponents. These opponents have deceptively convinced consumers that the payday loans Industry is predatory in nature. Many of these opponents are the banks themselves who want to monopolize the loan business to their own advantage.
Ironically, some of the latest fallout from the downward spiraling of the economy is forcing the banks to increase the rates and fees they impose on consumers. Due to the severe losses the banks have incurred, they are now trying to offset the losses over the past year and a half from default mortgage loans, by imposing stricter and higher fees on their customers.
Some of the fee increases are related to the following:
Overdraft Fees
Fees, Fees, And More Fees!
Overdraft fees are probably the most famous of bank fees as their deployment on consumers has caused more than a few uproars.
These fees, which are charged when a customer overdrafts their account or exceeds their account balance, can range from a set fee per overdraft to an escalating scale of charges for each subsequent overdraft. A typical overdraft charge can be anywhere from $25 to $60, which are higher than the fees for most payday loans.
Cash Advance Fees
Cash Advance Fees are charged based upon a set percentage of the amount withdrawn from an available credit line.
Minimum Balance Fees
Minimum balance fees are charged when a customer fails to maintain a set minimum balance predetermined by the bank. These fees are in place most likely to help secure a percentage of the bank’s assets.
ATM Fees
ATM Fees are typically charged when a consumer withdraws funds from an ATM machine that doesn’t belong to their own personal bank. These fees can cost upwards of $4 per transaction depending on the bank.
Consumers Should Beware
For consumers with bank issued credit cards, it is highly advised that attention is paid to these rising fees. These banking institutions have the right under law to change their rates but are also required by the law to notify their customer base of any and all changes they make to the terms and conditions of the customers’ account.
Unfortunately however, most consumers fail to get these updates which are usually included with a mailed notice such as a newsletter or bank statement. Failure to get these mailed notices may result in fees which offset a customers’ perceived balance and eventually incur the more costlier overdraft charges.
JPMorgan Chase Raises Fees
JP Morgan Chase has publicly announced that it will be raising rates on overdraft protection, cash advances, as well as its default rate. The default rate is usually the imposed Annual Percentage Rate that is applied to accounts when a customer surpasses their credit limit or is late on their payments. Also if a larger balance has been carried for longer than two years, expect a new $10 monthly service fee to start showing up on your banking statement. Your minimum payment each month will also be rising from 2% of the total balance owed to 5%. This is obviously the bank’s attempt to motivate consumers to pay back what is owed, thus Increasing the percentage of liquid assets available to the bank.
Expect to see your minimum payments increase!
Do You Have Perfect Credit? So What!
It is nothing out of the ordinary to see someone with poor or mediocre credit to come under increased scrutiny or be penalized by banks or other creditors when applying for an account. Now however, even those who have been diligent about maintaining a high credit score will likely see their available credit dropped and the current rate on their existing balance raised.
Alternatives to consider
Unfortunately for many consumers, the banks changing of the rules at half time may prove to be devastating. The economy is picking on more than just the banking sector as consumers everywhere are struggling to make ends meet from one month to the next. For those who are currently strapped financially with economic troubles of their own, changing rates and minimum payment requirements may be the straw that breaks the camel’s back.
Are You Facing Financial Trouble?
If you happen to be one of these struggling consumers, it is important to note that the speed in which you choose to take control of your situation will prove to be the most valuable. The higher your credit score the more opportunity you may have to take control of your debt. You can read more about your available options in the following article entitled,
“Debt Consolidation | What Are Your Options.”
In the meantime, customers may find it profitable to pull payday loans to avoid pending overdraft charges from being charged to your bank account. It is more important now than ever before to both pay attention and be aware of your options.
The current climate demands more and more diligence in banking and in budgeting and financial planning, especially since so many banks and lenders are raising their rates and fees. Banks are supposed to be the most solid and secure financial institutions in America, and now they are after their customers. I don’t think that the payday loan lenders are the predatory ones.