Thread: Bank of America's Parking Meter Play

Minyanville
Bank of America's Parking Meter Play
Thursday June 26, 10:15 am ET
By Mike Mish Shedlock

Bank of America (BAC) must be really cash strapped to pull this stunt: B of A Charges $10 Fee For $2 Parking Meter Tab.

I recently used my Bank of America credit card to pay for a multi-space parking meter in Washington DC. The type electronic meter common in urban areas for parking on the street and which accepts credit card payments. The charge for parking was $2. Bank of America treats this charge as a cash advance. They charged me a $10 cash advance fee on top. So now I will be thinking twice before using any bank of America cards. A transaction that should cost $2 can come out costing $12. Also, my card currently has a 0% promotional APR on purchases, but they put the $2 parking purchase in a separate category subject to a much higher interest rate.

Banks Begging For Regulation

Banks are just begging for more regulation. And they will get it. And they will complain. I am not in favor of more regulation, but I will not feel sorry for them one bit when it happens.

I can hear the complaints now. "Where's The Free Market?" Well I said banks were begging for regulation, but I also said I was not in favor of it. Finally, the conditions that fostered these credit excesses had their roots in cheap money from the Fed and lots of help from Congress, such as the Bankruptcy Reform Act of 2005.

In other words, the free market did not create this mess. Congress and the Fed created this mess. I am in favor of scrapping the entire bankruptcy reform act.

Bankruptcy Reform Act To Blame

The bankruptcy reform act of 2005 fostered the attitude from lenders that no credit lending was too risky to consider, that consumers couldn't default.

Armed with the idea that consumers could not default, banks engaged in all kinds of risky lending. Insane levels of risky lending was done in mortgages, credit cards, autos, home equity lines, and commercial real estate.

Yes, this was the very attitude that guaranteed a deflationary bust. And much of the attitude of banks can be traced back to that bill. I called it at the time. It just took a long time to play out.

For a more detailed discussion, please see Bankruptcy Reform Act Finally Blows Sky High.

Cash Advance Warning

Technically I see nothing wrong with charging interest on cash advances except that interest rates involved typically amount to what I consider usury. Besides, no money went directly into the consumer's hands, so this does not seem to be a cash advance in the first place. The big problem however, is charging $10 for a $2 transaction. Furthermore, I do not think there should be fees at all, regardless of the size of the advance. After all, interest starts ticking from day one, and the banks should set that rate to make a reasonable amount of profit.

This is begging for the next Congress to not only rewrite credit card legislation, but to completely rewrite the bankruptcy reform bill as well.

In the meantime, please remember that any cash or pseudo cash transactions might get you whacked for $10 or higher, plus interest.

Cash advances

If you are doing any of those things, stop now. Banks are so greedy, and/or so desperate that not only are they charging ridiculous interest rates, they are willing to ding you with a $10 fee on a $2 transaction.

And if you routinely get cash back at the grocery store, sooner or later you will get hit with a $10 charge. They will notify you of the change, but trust me on this: you will never read it or even understand what they are saying if you do read it. So get out of the habit now.

Overdraft Fees Rise

USA Today is reporting Banks raise penalty fees for customers' overdrafts.

For more than a year, Wachovia has been urging its employees not to refund too many overdraft fees because they "make up a big percentage of our revenue and is (sic) a HOT button among leadership," according to internal memos obtained by USA TODAY.

Bank of America and Washington Mutual, meanwhile, have jacked up their overdraft fees and made it easier for customers to be hit with multiple penalties. The changes come as banks grapple with growing losses from bad mortgage loans. Overdraft fees have increasingly become a source of profits. Banks and credit unions collect about $17.5 billion in overdraft fees per year, the Center for Responsible Lending says.

Fees Keep Going Up

Overdraft fees, overlimit fees, and credit card interest rates are all going up. Credit limits are contracting. Inflation? I say think again. In disinflation credit lines go to the moon. These conditions are what one would expect in deflation where banks and other lenders are worried about being paid back.

Here is another trick banks are playing. As a hypothetical example: You have $500 in your checking account and $550 worth of checks hit, as follows: $500, $25, $10, $15. The bank is apt to generate the highest amount of fees possible by clearing the $500 check and bouncing the other 3 checks. That could be, say, $75 of overdraft fees on $50 worth of checks. The payee sometimes charges a returned check fee as well. Double that and you have $150 worth of fees on $50 of bounced checks.

Bear in mind the article stated that Washington Mutual (WM) raised the number of times that fees could be generated from five to seven per day. Yikes!

The moral of the story is simple: Do not overdraft and do not take credit card cash advances. Instead, consider getting a credit line attached to your checking account for genuine emergencies, not for routine use. I have one but have never used it.

Nothing contained in this article is intended as a solicitation for business of any kind or for investment in the firm.

http://biz.yahoo.com/minyanville/080626 ... .html?.v=1

Ya gotta be a globalist nut to be banking at B of A

You should definitley go to the boycott of bank of america website. and you should close all of your accounts with them. They give debit cards and credit lines to IA"S for some time now. They are probably trying to get all of the money back for giving ia's loans then they split the country leaving you with the bill.

BOA?

When they started offering credit to un credit worthy and illegal people is when I'd had enough, jerked my accounts the next week. The more they did this, the higher the rates went, gee I wonder why. Offer credit to people whom you have no idea who they are, they run out on the loans and then the ones that do pay get hit with higher payments everytime. What happened to personal responsibility and fairness?

Remember back when Jimmy Carter was in and inflation was high?
We thought that 27% was high back then but they are already raping everyone with 30% credit card rates, hirer fee's and ect as you stated.
Where are all those republicans who bitched and moaned at the top of their lungs everyday about how the American people were being robbed and stiffled? Today the rates are alot higher than 27% for some people and they have way better credit than the people in the 70's paying 27% max interest, where are the republicans and politicians that thought it was pure theivery back then?

Now you never hear any politician other than Ralph Nader talk about how The American People are being robbed blind of they're money with outrageous interest rates, the credit card companies and banks have been doing this for quite some years now. They say they can jack your rates up to whatever for no reason at all, they say, we're paying high interest for this money we're loaning out. The thing is, when I borrowed the money the interst you were paying was low, which means the interst rates the credit cards companies where paying were even lower, they are making plenty of money on my old rate. Maybe they might be justified in raising the rate a small amount on the money I borrow from here on out, but to simply raise the interest rate on an entire $10K balance by 10 percentage points overnight when I haven't done anything to warrant it, is just plain old robbery.