aka, How the Financial Grinches Stole Christmas…
Christmas is just around the corner. How do I know? Because one of my oh-so-thoughtful Facebook friends has already started the Christmas countdown. And, like so many people out there, my concern is with affording Christmas, especially given all the traps and fees associated with bank accounts, credit cards, prepaid debit cards and payday loans. So, to help sort things out, Pleading Ignorance is looking at the top four fees that are likely to have an impact on you this holiday season.
Why are we so concerned about fees? Well, people have complained to us over and over again that they had no idea these various fees could be charged (they’re called “hidden fees” because you’re not necessarily aware of them—like it’s some sort of game). So, while you’re out buying that super-duper, fancy-schmancy toy-thing that your child has always wanted and just can’t live without, you may find that in addition to the $50 price on the toy, you may be paying some very steep fees. That’s how the financial grinches can steal your Christmas. Here’s what they’ve got in their bag of tricks this season, and what you need to look out for…
I’ve already discussed this, but it bears repeating. Yes, some of the banks have agreed to change their overdraft fee policies. Yes, lawmakers are looking to rein banks in (although when we look at all the good it’s doing with credit cards, we have to wonder if it’s worth the effort).
The banks are being accused of automatically enrolling customers in overdraft protection, not telling them about that protection and then charging a fee for that protection (cue ominous laugh here). Even more terrible, they’re accused of reordering transactions to get the highest number of overdraft fees; processing debits before credits so that customers are forced into Read the rest of this entry »
Tyrell Blocker is a young fella with a family and doing the best he can. At 20 he has a newborn and all the responsibilities to go with it.
What he doesn’t have is a bank account. He only has one piece of ID. The bank requires two, so what’s a young father to do? Head to the check-cashing place and hope to escape with the majority of your pay in your pants once you pay the fee. Or just maybe there is another way…
Oh! But there is, says the prepaid debit card industry to the 80 million Americans who are classed as unbanked or underbanked. Just bring your paycheck to the Green Dot kiosk, or MiCash, or NetSpend, or AccountNow. Wal-Mart has one.
Our boy Tyrell hooked up with Pay-O-Matic in Manhattan. Took his paycheck and bought a Pay-O-Matic card. Note that it’s HIS money on the card. The card is worthless until it’s pre-loaded with the client’s cash. Aside from operating the storefront, printing the cards and owing anywhere from a nickel to 20 cents to the owner of the logo that emblazes the card, card providers haven’t a whole lot to lose beyond any loss associated with a bounced paycheck or overdraft.
But still, is that risk enough of a reason to charge more than two-dozen fees? That’s how many there are tagged to the Pay-O-Matic card. Poor Blocker didn’t know what hit him. As soon as he noticed the balance dropping like a rock every time he used his Pay-O-Matic card, even if he didn’t actually buy anything, he high-tailed it back to the kiosk to ask what the *@$% was going on. It was only then Read the rest of this entry »