Daily Archives: January 8, 2010

Killing Democracy

So listening to Terry Gross on NPR the other day I heard the news. No more free checking. Since banks have been told they can’t charge ridiculous fees on ATMs and overdrafts and credit cards, the free checking’s on its way out. When I got home DH told me CNBC said banks are going to start charging annual fees on the credit cards you don’t use.
The guest on NPR said banks used to make money by making sound loans and earning interest on those loans. No more.
He called the “fee” practice smoke and mirrors. He said banks say the new consumer protection laws are going to bankrupt them, and in his opinion, any business that couldn’t exist without fees wasn’t really a business.
I tend to agree with him.
I’m no financial guru. I just began balancing my own checkbook when we started Dave Ramsey’s FPU. But I know banks have gone out of their way to make us want what we can’t afford. Used to, I thought the credit card Priceless ads were the sweetest commercials on TV. I grew up using a credit card. Carrying a small balance was fair trade off for the opportunity to enjoy the finer things in life.
And then Capital One zinged my interest rate from 3% to 16% for no reason. I used my savings account and paid that card off quick as I could. My story’s not unique. I imagine most fiscally responsible people did the same thing I did. Now the banks have plenty of people with cards and debt, BUT many of those aren’t solid risks.
It reminds me of when our district raised insurance rates by over 50% in one year on our family plan. Most healthy people I knew left the family plan and found their own insurance. The only people left were teachers (high stress, relatively high medical expenses compared to other professions) and their sick family members with pre-existing conditions. That insurance company set itself up for huge failure because they wanted to earn more money. In the end, I bet they about broke even. They weren’t our insurance provider the next year, and a handful of years later, they declared bankruptcy.
Big banks are in a big mess. They have lots of pre-exisiting condition customers.
I’m sure glad we’re committed to debt-free living. I wish I’d have learned the financial peace lessons about budgeting and savings and retirement and real estate and insurance years ago. I think some of the people running our financial institutions need to take FPU before they kill democracy one bankruptcy at a time.