Archive for the 'bankwatch' Category

Credit unions grow in 2010

Things are looking up for us in the credit union world, according to the Detroit News:

For a second straight year, Michigan credit unions added more than 50,000 members in 2010. That’s nearly three times the 17,000 members added in 2008, then the biggest gain in five years.

Whether it was disgust with high fees, jacked-up interest rates, slashed credit lines or the handing out of billion-dollar bonuses after taking government bailouts, more recession-weary people have decided big banks look too much like Mr. Potter, the greedy banker in Frank Capra’s classic film.

This squares with the reporting from our local on businesses turning to credit unions, too.

Not to brag, but we’ve always thought credit unions were a pretty sweet deal.

Kardashian Kard kancelled

kardashian kard

Aw, shucks – the horrifyingly-bad Kardashian pre-paid debit card has been cancelled because of sky-high fees:

Those fees included a $1.50 fee for ATM withdrawals, a dollar fee if the ATM withdrawal or point-of-sale transaction was declined, and a $9.95 fee to replace a lost or stolen card. And canceling the card would have cost you $6.

With the Kardashian Kard, which was actually a very pricey prepaid debit card rather than a credit card, consumers had the choice of either a six-month plan that would have cost $59.95 or a 12-month plan the would have cost $99.95. The cost of each plan included a purchase fee, minimum deposit and monthly fee for the plan period.

A pre-paid debit card comes loaded with funds to spend, and seems like a great idea for travelers or as an alternative to gift cards. But add in all those fees, and they become a budget buster.

This is a good lesson to keep in mind for credit and store charge cards as well. No matter whose name or logo is on the card, watch out for fees and rates. Is it worth your budget to have someone’s name on the card?

Bank of America: No more free checking

BoA fees

Trying to find any source of income they can, Bank of America is waving bye-bye to free checking accounts – and saying hello to charging customers for face-to-face service, says the AP:

Bank of America, which does business with half the households in America, announced a dramatic shift Tuesday in how it does business with customers. One key change: Free checking, a mainstay of American banking in recent years, will be nearly unheard of.

…To make up for lost fees, [Bank of America CEO Brian Moynihan] also started thinking of new products. In August, the bank introduced a new “eBanking” account, where customers were offered a free checking account if they banked online. The catch: If they opt for paper statements, or want access to tellers for basic transactions, they would be charged a monthly fee of $8.95.

Did you catch that? If you want to interact with a real human being, it’s $9 a month. Amazing.

Store credit cards make more, cost more

A news item from the Wall Street Journal confirms what we’ve found – that store cards (like from Target, Kohl’s, or Best Buy) cost more than a plain old credit card:

A chunk of the customer base for these cards is made up of low-income households and less credit-worthy borrowers. As a result, these cards typically carry higher interest rates and lower credit lines than general-purpose cards.

Store label card issuers also make more off these cards.

“Issuers of retail credit cards make $16 to $18 of interest and fee income on every $100 loaned out, before subtracting expenses,” the Journal says. “Earnings on general-purpose cards typically are $14 to $15 per $100 loaned.”

That one or two dollar difference may not seem like a lot, but multiply it by thousand dollar balances and the millions of people who have store cards, and it adds up to a lot of profit for credit card issuers.

Customers think that by signing up for the store card and getting 10% off a purchase (for instance), they’re getting a good deal. Over the long term, however, these store brand cards can cost you more.

Credit One Bank: slimy new annual fee practice

Credit One Bank (not to be confused with Capital One, even though they share a similiar logo) has raised the annual fee to a whole new level of under-handed: they’ll charge it to your account in monthly installments.

That’s what we learned when one member received a Credit One Bank Platinum Visa solicitation – complete with a $7 “premium design” option.

Credit One offers “no enrollment fee” (whatever that means), but they do charge a hefty annual fee: $75 for the first year, and $99 each year after that. For your convenience, they’ll include that in your monthly bill at $8.25 a month. So no matter what, you have something to pay each month.

Isn’t that thoughtful?

But then being thoughtful isn’t part of Credit One’s business plan. There are plenty of complaints about them on the Web. Add this monthly annual fee charge to that list of complaints.

Exposed: Best Buy credit card has no good options

Best Buy, the giant electronics and appliances retailer, offers a MasterCard from “the world’s local bank” HSBC that gives you two options: a higher rate, or an annual fee. Neither option is good for you.

The tricky part is that you don’t learn this until you start to fill out Best Buy’s online application. It’s not until you’re just about ready to say “give me the card” that they let you know the bad news. And here it is:

You get the “choice” between a card with an annual percentage rate of 17.99%, 22.99%, or 21.74% if you opt for an annual fee.

If you opt for the annual fee, how much is it?

So you pick – up to 22.99% a year, one of the highest purchase interest rates we’ve seen, or $59 a year. That’s not much of a choice.

And since Best Buy hides their disclosures behind their online application, we downloaded it for you and we’re making it available. Check it out for yourself.

American 1 Federal Credit Union