May 3, 2008

• Important Progress

  Is it personal or political?  The 1960's slogan that the personal is political seems to have gone so far out the window that most of us feel apologetic if we have a "personal" problem even when that problem is obviously the result of industry wide or systems saturated unfair practices. 

  We react to people who've had problems as though the problems were their fault.  (Just scan back at all the quotes regarding people in trouble from subprime mortgages and it seems that the vast majority include some language like, "they should have read the fine print").  I think it makes us feel safer if it's possible that the victims of such things somehow contributed or brought it on themselves.  But to one degree or another we are all vulnerable and sometimes no amount of education can save us.
  
  I could play in that sandbox all day, but I'd rather make you aware of new rules announced yesterday by the Office of Thrift Supervision, the Federal Reserve Board, and the National Credit Union Administration.  Pay attention folks because these are HUGE consumer protections and they will be bitterly opposed by banks and credit card companies. 

  "For credit cards, the proposed rule would address: (1) unfair time periods for making payments; (2) unfair payment allocations; (3) unfair interest rate increases on outstanding balances; (4) unfair fees from credit holds; (5) unfair methods of computing balances; (6) unfair security deposits and fees charged to an account for the issuance of credit; and (7) deceptive offers of credit. For overdraft protection services on deposit accounts, the proposed rule would address: (1) a consumer’s ability to opt out of overdraft services; and (2) unfair fees for debit holds."

  Have you ever made a debit purchase, and then discovered that you had a "hold" on your account that caused you not to be able to access your funds?  That happened to me for the first time when I was driving across Nebraska during a family vacation about ten years ago.  We'd traveled from Kentucky to Minnesota, then I was driving to Kansas to visit my cousin, down to Oklahoma to see more relatives and then back to Kentucky to oversee the final stages of construction on our home.  Apparently every time I stopped for gas, there was a $50-$100 hold placed on my debit card even if I only purchased $10 of gas.    It didn't take very many of these until my little bank card was maxed out. 

  So I pulled up to the hotel where I'd made my reservation in Omaha and to my shock I was told that the charge was rejected and I was told that my account was overdrawn.  (Luckily, I also had a credit card with me and was able to use that for the rest of my trip.)  When I got back to Louisville I didn't let any blue grass grow under my feet before I was at the bank demanding how less than $100 of charges had resulted in overdraft fees when I had over $800 in my account.  My bank refunded the fees and released the holds as I presented them with my receipts, but they weren't required by law to do that.  That's because it has been perfectly legal for banks and credit unions to assess overdrafts based on the amount of a hold on your account rather than on the amount of actual charges.

  Have you noticed that the time between the receipt of your credit card statement and the due date has been shrinking?  I've heard reports of people receiving their bill and having the due date less than a week away.  Some credit card companies have a less than 30 day billing cycle because that trips up people (like me) who schedule their monthly payments and then don't worry about it.  The due dates change from month to month and sooner or later you will not only be late, but you'll have two payments due in the SAME month.  (Not to call any names WASHINGTON MUTUAL but it's not just the little shady companies that do this.) The new rules say that statements have to be mailed out at least 21 days before the due date to give consumers a reasonable amount of time to make payment and avoid late fees. 

  There is a 75 day window for the public to voice it's concerns and response to these new rules and you can bet every one of the $17 Billion dollars that the financial services industry raked in last year JUST FOR OVERDRAFT FEES that the big guys, your bank and your credit card company will be inundating the agencies named above with their objections. 

  Folks we can do something.  We can lend our voices in support of these rule changes.  And we need to tell everyone we know to join in and email or call.  Here's the link to the announcement on the OTS website which says that once the proposal is posted to the Federal Register it will be open for comments. http://www.ots.treas.gov/docs/7/778014.html Get ready.  Tell EVERYBODY, we all need to speak up about this.  This is our chance to see real effective change that will help people avoid unfair charges. 

  • 12:42 pm
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