Building the New Normal

[cjppjc]

Re: Building the New Normal

You'll stop doing that about the time they charge you a service fee to answer that phone call. .

You need a magnifying glass to read the phone number on the statement. :mad:


BTW: Somewhere in a boardroom of a Fortune 500 company, a CEO is saying "I like the way that cow thinks."

[GRG55]

Re: Building the New Normal

At times it seems a free-for-all has been declared on what wealth remains in the middle class.

Sure does...

Goldman and the rest of the gang know their world is never going to be the same again...this is the last hurrah and they know they have state sponsored immunity from any consequences no matter what they do.

Even if the next and final crisis comes sooner than expected, they know the fall guys are in the West Wing, not on Wall Street...

[Aetius Romulous]

Re: Building the New Normal

Very funny.

Funny until Krugman puts it in a column....

[don]

Re: Building the New Normal

Banks Apply Pressure to Keep Fees Rolling In

By ANDREW MARTIN and RON LIEBER

For many households trying to improve their finances, tossing out pitches from the bank has become almost automatic. But in recent weeks, Chase has been fanning special letters out to consumers with an offer that it urges them not to refuse.

“Your debit card may not work the same way anymore, even if you just made a deposit. Unless we hear from you,” the message, emblazoned in large red type, warns. “If you don’t contact us, your everyday debit card transactions that overdraw your account will not be authorized after August 15, 2010 — even in an emergency,” with “even in an emergency” underlined for emphasis.

As the government cracks down on the way banks charge fees for overspending on debit cards, the industry is mounting an aggressive campaign aimed at keeping billions of dollars in penalty income flowing into its coffers. Chase and other banks are preparing a full-court marketing blitz, which is likely to include filling mailboxes with various aggressive and persuasive letters, calling account holders directly, and sending a steady stream of e-mail to urge consumers to keep their overdraft service turned on.

Starting this summer, banks must get consumers to agree, or “opt in,” to a service covering purchases on a debit card when there is not enough money in their account. The Federal Reserve has ordered the same restriction for banks that want to let people withdraw more than their balance at an automated teller machine. Many banks now automatically provide such coverage for fees of up to $35 or more.

So many people now dip their balance below zero that banks generated an estimated $20 billion from overdraft fees on debit purchases and A.T.M. transactions in 2009, according to Michael Moebs, an economist who advises banks and credit unions. All of this revenue is potentially at risk, since these are the two areas that the new Federal Reserve regulations cover. (Banks generate an extra $12 billion by covering checks and recurring bills; under the new rules, they can still cover those and charge fees without customers’ consent.)


“Doesn’t it make sense to try and protect this revenue stream and encourage these customers to opt-in?” said Eric Wittekiend, strategic adviser at Raddon Financial Group, in a report aimed at banks and credit unions. “Right now I’m favoring an aggressive opt-in strategy to protect as much revenue as possible,” he said.

Another consultancy, Pinnacle Financial Strategies, advises an “Opt-in Total Solution” program for banks and credit unions trying to stem losses in overdraft fees. Pinnacle’s briefing paper urges an “account holder identification process” to zero in on consumers who pay such charges repeatedly and persuade them to keep the status quo.

The banks’ marketing campaigns range from subtle to alarming. In recent weeks, Chase has tested several direct-mail pitches to see whether an assertive or alluring tone will drive people into a branch to sign up for overdraft coverage. “Watch your mailbox so you can say ‘Yes’ to continue Chase debit card overdraft coverage,” read one note, a toned-down version of an alternate letter warning consumers that their debit card might not cover unexpected emergencies, like a highway tow.

A spokesman for Chase said: “We have begun to reach out to customers and are encouraging them to sit down with a branch banker to make sure they understand overdraft services, which can be confusing. We want them to make an informed decision.”

When consumers get to the bank, another pitch awaits. Mark Sorenson went into a Dallas branch of Bank of America to turn off the overdraft function on his debit card recently and got a distressing response.

Beware, his banker cautioned. If Mr. Sorenson used the card to buy gas, the station might place a hold on his account and he might not be able to fill up at all, even if he had enough money in the bank to cover a full tank.
“My impression was that it was something he’d been briefed on,” said Mr. Sorenson, an architect who said he had tired of paying multiple fees when the bank automatically covered shortfalls on his debit card. “He was trying it out on me.”

http://www.nytimes.com/2010/02/23/yo.../23fee.html?hp

[ggirod]

Re: Building the New Normal

Beware, his banker cautioned. If Mr. Sorenson used the card to buy gas, the station might place a hold on his account and he might not be able to fill up at all, even if he had enough money in the bank to cover a full tank.

That is true even now. If you use your debit card at the pump the system encumbers a ridiculous amount, like $100 for a fill-up and then does the transaction later for the actual charge. The hold is not removed immediately and your money can be tied up for a day or so ... Credit cards are just checked for legit and the charge occurs once, and for the actual amount.

My solution -- Cash -- Don't leave home without it.

Not to mention, some stations offer discounts for cash ... so it is an even better deal.

[GRG55]

Re: Building the New Normal

That is true even now. If you use your debit card at the pump the system encumbers a ridiculous amount, like $100 for a fill-up and then does the transaction later for the actual charge. The hold is not removed immediately and your money can be tied up for a day or so ... Credit cards are just checked for legit and the charge occurs once, and for the actual amount.

My solution -- Cash -- Don't leave home without it.

Not to mention, some stations offer discounts for cash ... so it is an even better deal.

American Express is running ads up here in Canada trying to get people to "remember" that they can buy gas and groceries with their Amex card.

I can't think of a more stupid use of credit than to purchase short term consumables. I'm with you, I always use cash to buy this sort of stuff.

[don]

Re: Building the New Normal

This campaign for FIRE Fees may not seem relevant to us iTulipers. Who among us is foolish enough to voluntarily run up ATM overdraft charges, despite the ;) bankster propaganda. But in the New Normal there are new personal scenarios being written as well.

I have a friend in the Tampa area that works as a construction superintendent. To get his current job he had to take a $20,000 plus salary cut, with heavier medical costs. The job is near Daytona, a 3 1/2 hour drive. He works a 10 hour/4 day week, sleeping in a rental with some other members of the construction gang, and drives home on weekends. His wife works two part-time jobs as a seamstress. They have one teenage daughter.

He told me that can't quite make the month. He comes up about 3 days short. They live modestly, cut costs, and when their rental lease expires, will move to a cheaper place. (This one was 'cheap' less than a year ago- they're cheaper now. A good example of equity loss being one of the few decision points for falling salaries/rising basic food costs, and the ever-present medical gouging.)

He's in the ATM overdraft rifle sights, if he knows it or not.

These changing scenario remind me of those movies from the Yuppie Era where someone inadvertently ended up in a part of town they only joked and pontificated about at work. Now they were in a social milieu they knew nothing about, but soon would.

[thriftyandboringinohio]

Re: Building the New Normal

American Express is running ads up here in Canada trying to get people to "remember" that they can buy gas and groceries with their Amex card.

I can't think of a more stupid use of credit than to purchase short term consumables. I'm with you, I always use cash to buy this sort of stuff.

I'm with you guys, we run almost exclusively on cash, even for purchases up through appliances, tires, and vacations (though oddly, my single weakness is the gas pump; I always use a credit card and never check the price to buy on wednesdays when it's cheap. Call me reckless. I did once try to put half an Acura TL on my credit card; the dealership reminded me they pay merchant points and politely declined.):rolleyes:

[don]

Re: Building the New Normal

Banks May Use Payday-Style Loans to Replace Lost Overdraft Fees

By Jeff Plungis

Feb. 23 (Bloomberg)

-- U.S. banks may expand their short- term lending at interest rates of 120 percent or more as they seek to replace more than $15 billion in lost revenue because of regulations limiting overdraft fees.

“The smarter banks are trying to resell overdraft protection to consumers as a different product,” said Elizabeth Rowe, group director of banking advisory services at Mercator Advisory Group in Maynard, Massachusetts.

Banks including Cincinnati-based Fifth Third Bancorp, San Francisco-based Wells Fargo & Co., the fourth-largest U.S. bank, and U.S. Bancorp, based in Minneapolis, are already making such loans, usually from $100 to $500, at annual rates of 120 percent if repaid in 30 days. They’re known as “checking advance products.” That puts them in competition with so-called payday loan stores, which make loans with similar terms to customers who generally don’t have credit cards to bridge the gap until the check comes, according to Rowe, whose firm advises banks.

The banks don’t call the advances payday loans because it’s a “very tarnished, negative brand,” said Rowe, who estimates U.S. banks may lose from $15 billion to $20 billion in revenue when Federal Reserve rules take effect July 1. The rules will prohibit banks from charging overdraft fees at automated teller machines or on debit cards unless a customer has agreed to pay for exceeding account balances.

For consumers, getting a short-term, high-interest loan from a bank might be worse than going to a payday store, said Lauren Saunders, managing attorney with the National Consumer Law Center in Washington. A bank has direct access to consumer accounts, meaning its loans will be paid off first, ahead of food, housing or utilities, she said.

Replacing Income

“They’re looking for ways of replacing their overdraft income,” Saunders said. “Instead of pricing their products openly and up-front, they seem addicted to back-end ways of making profits.” The Center has represented plaintiffs in lawsuits against banks and hasn’t filed any lawsuits over the loan programs, Saunders said.

Banks caution customers that the loans are an expensive form of credit. Alternatives “may be more suitable to your long-term needs,” says a statement on Fifth Third’s Web site.

At U.S. Bancorp, customers using “Checking Account Advance” may borrow from $20 up to a preset limit. The fee is $10 for each $100 borrowed. Loans are repaid from the account’s next direct deposit. Wells Fargo’s “Direct Deposit Advance Service” works the same way and allows a line of credit of up to $500. The bank, one of the two biggest U.S. home lenders in 2009, has been offering the loans since 1994.

“There’s an awful moment when they have to come to a teller,” Rowe said. “It’s the most unwelcoming moment. It’s absolutely terrifying.”

Priceless....

http://www.bloomberg.com/apps/news?p...d=a25EweZDVeAU

[santafe2]

Re: Building the New Normal

The banks don’t call the advances payday loans because it’s a “very tarnished, negative brand,” said Rowe...

Any payday loan operation working for less than 400% a year is under charging. The banks are aimed at a different clientele, someone who actually has a checking account. Using the pay day loan model, banks are slicing and dicing the clientele like a cheetah chasing the herd. That's the heart of the new normal. The middle class is being sliced into many levels and one level will turn against a lower level, not unlike the way most people disdain those that use pay day loans. Divide and conquer.

[Fiat Currency]

Re: Building the New Normal

American Express is running ads up here in Canada trying to get people to "remember" that they can buy gas and groceries with their Amex card.

I can't think of a more stupid use of credit than to purchase short term consumables. I'm with you, I always use cash to buy this sort of stuff.

This might be the first thing you've posted that I disagree with :p

Why use only one worthless fiat currency when you can use 3 ??

1) Cash
2) Credit card
3) Air Miles / Points

Yes - get a big stash of cash (3 months or more worth) and stick it in your favourite safe. You'll need it in about 18 months. ;)

Buy everything on the credit card. Use the points for crap that only lasts a few years anyway. We just had Christmas for free iTouch, iPhone, digital camera, flights etc.

I pay the bills off with "cash" in my eBank - before the statements even get mailed out - just to rub their faces in their stupid currency system.

I don't know where you live - but here if you try to use a $50 or $100 bill they look at you like you're a leper, and tell you they won't take it !!! Even retailers don't trust the worthless $hit. Pay with a gold Visa and they treat you like a king. Go figure - because that reduces their profits.

Think about that.

[thriftyandboringinohio]

Re: Building the New Normal

Any payday loan operation working for less than 400% a year is under charging. The banks are aimed at a different clientele, someone who actually has a checking account. Using the pay day loan model, banks are slicing and dicing the clientele like a cheetah chasing the herd. That's the heart of the new normal. The middle class is being sliced into many levels and one level will turn against a lower level, not unlike the way most people disdain those that use pay day loans. Divide and conquer.

First they came for the communists, and I did not speak out—because I was not a communist;
Then they came for the trade unionists, and I did not speak out—because I was not a trade unionist;
Then they came for the Jews, and I did not speak out—because I was not a Jew;
Then they came for me—and there was no one left to speak out for me.

-Martin Niemöller

[flintlock]

Re: Building the New Normal

I use a credit card for convenience, the cash back, and the doubling of the warranty it gives me on most things I buy. I couldn't even tell you the interest rate because I pay it off every month, at least one week early. It's also a good way of knowing exactly what you are spending. Cash tends to disappear and you don't even remember where it went. I can look at the statement and see if I'm spending too much on booze and hookers every month. I got $75 off a TV I bought at Christmas just for using one card. If you are clever you can find tons of ridiculous deals out there as the credit card companies try to outdo each other trying to get you into debt. If you shop mainly online like I do, its also about the only good way to buy things. But cash is good too. Makes you think twice when you are pulling out those hard earned Benjamins.

We refuse to have a debit card. Those scare me.

[thriftyandboringinohio]

Re: Building the New Normal

This might be the first thing you've posted that I disagree with :p

Why use only one worthless fiat currency when you can use 3 ??

1) Cash
2) Credit card
3) Air Miles / Points

Yes - get a big stash of cash (3 months or more worth) and stick it in your favourite safe. You'll need it in about 18 months. ;)

Buy everything on the credit card. Use the points for crap that only lasts a few years anyway. We just had Christmas for free iTouch, iPhone, digital camera, flights etc.

I pay the bills off with "cash" in my eBank - before the statements even get mailed out - just to rub their faces in their stupid currency system.

I don't know where you live - but here if you try to use a $50 or $100 bill they look at you like you're a leper, and tell you they won't take it !!! Even retailers don't trust the worthless $hit. Pay with a gold Visa and they treat you like a king. Go figure - because that reduces their profits.

Think about that.

Your approach makes sense, but not for me. I can't stay interested in playing the game to spend the reward premiums, and my wife finds our cash budget highly intuitive and hassle free-when the pocket with the eating out money is empty, we stay home and cook our own steaks.

[GRG55]

Re: Building the New Normal

Banks May Use Payday-Style Loans to Replace Lost Overdraft Fees

...“The smarter banks are...

"Smarter banks"?

Now there's an oxymoron...