Financial Reform: Obama's New Tax On The Poor...

[Obama 2012 1,714]

The road to hell is paved with good intentions.

I've seen a few financial experts say this is coming now thanks to the reform bill. Guess who it impacts? Not the rich, not the upper middle-class. It directly impacts the poor and lower middle class who cannot maintain the minimum daily balances required in this situation...

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http://money.blogs.time.com/2010/06/17/bank-fee-watch-no-more-free-checking/

The End Of Free Checking?

When Bank of America eliminated announced it was eliminating debit card overdraft fees, many observers were puzzled. Why would BoA give up such a big money-making scheme entirely, rather than simply tweak it to fall into line with new regulations regarding overdraft protection and fees, like most other banks are doing? And, more importantly, what kind of new fees would BoA try to push onto consumers to make up for the cash it wouldn't be pulling in with overdraft charges? Now, it looks like we have the answer: checking fees.

Specifically, monthly maintenance fees for customers who don't meet minimum balance requirements, and who don't otherwise do much business with the bank. The specifics haven't been stated, but a new slew of fees and fine print is expected to be introduced in early 2011, reports the WSJ:

Executives have ruled out a flat monthly fee for all customers and are developing a tiered structure that encourages customers to increase banking activity or use other services to avoid future charges.

Bank of America customers who only want a low-volume checking account will likely be asked to pay for it. Fees will likely be waived for customers who keep their balances high, use bank credit cards or tap its investment advisers.

How much will Bank of America charge? That info hasn't been announced, though various pricing strategies are being tested around the country. A couple of smaller banks that currently charge checking maintenance fees take from customers as much as $10 or $15 monthly, which adds up to as much as $180 a year.

Again, BofA is expected to roll out the new fee structure sometime in early 2011—so if you're a customer, you have plenty of time to shop around for an online bank, credit union, or other institution that'll treat you better.

The WSJ piece offers a little history on free checking, or fee checking, if you will:

Banks typically didn't charge for checking in the 1970s, but began imposing fees in the early 1980s to offset higher interest rates they were paying on savings accounts.

Oh, so maybe the banks now want to reinstate checking fees because they're dishing out such amazing interest rates on savings accounts. Could that be the case? Not a chance: A regular savings account with Bank of America pays out an interest rate of 0.10%.

Everybody should be monitoring how this end-of-free-checking scenario plays out. My guess is that many banks will look at this as an opportunity to steal away some BofA customers, and the best way to do that is by differentiating themselves from fee-crazy banks by continuing to offer free checking and other services. But there will probably be some others that will follow Bank of America's lead and introduce new fees of their own. One lesson I've learned: Most banks will add fees anytime they can get away with it.

[PaigeOsvald 2]

The road to hell is paved with good intentions.

I've seen a few financial experts say this is coming now thanks to the reform bill. Guess who it impacts? Not the rich, not the upper middle-class. It directly impacts the poor and lower middle class who cannot maintain the minimum daily balances required in this situation...

------------

http://money.blogs.time.com/2010/06/17/bank-fee-watch-no-more-free-checking/

The End Of Free Checking?

When Bank of America eliminated announced it was eliminating debit card overdraft fees, many observers were puzzled. Why would BoA give up such a big money-making scheme entirely, rather than simply tweak it to fall into line with new regulations regarding overdraft protection and fees, like most other banks are doing? And, more importantly, what kind of new fees would BoA try to push onto consumers to make up for the cash it wouldn't be pulling in with overdraft charges? Now, it looks like we have the answer: checking fees.

Specifically, monthly maintenance fees for customers who don't meet minimum balance requirements, and who don't otherwise do much business with the bank. The specifics haven't been stated, but a new slew of fees and fine print is expected to be introduced in early 2011, reports the WSJ:

Executives have ruled out a flat monthly fee for all customers and are developing a tiered structure that encourages customers to increase banking activity or use other services to avoid future charges.

Bank of America customers who only want a low-volume checking account will likely be asked to pay for it. Fees will likely be waived for customers who keep their balances high, use bank credit cards or tap its investment advisers.

How much will Bank of America charge? That info hasn't been announced, though various pricing strategies are being tested around the country. A couple of smaller banks that currently charge checking maintenance fees take from customers as much as $10 or $15 monthly, which adds up to as much as $180 a year.

Again, BofA is expected to roll out the new fee structure sometime in early 2011—so if you're a customer, you have plenty of time to shop around for an online bank, credit union, or other institution that'll treat you better.

The WSJ piece offers a little history on free checking, or fee checking, if you will:

Banks typically didn't charge for checking in the 1970s, but began imposing fees in the early 1980s to offset higher interest rates they were paying on savings accounts.

Oh, so maybe the banks now want to reinstate checking fees because they're dishing out such amazing interest rates on savings accounts. Could that be the case? Not a chance: A regular savings account with Bank of America pays out an interest rate of 0.10%.

Everybody should be monitoring how this end-of-free-checking scenario plays out. My guess is that many banks will look at this as an opportunity to steal away some BofA customers, and the best way to do that is by differentiating themselves from fee-crazy banks by continuing to offer free checking and other services. But there will probably be some others that will follow Bank of America's lead and introduce new fees of their own. One lesson I've learned: Most banks will add fees anytime they can get away with it.

What specifically are you referring to within the bill?..what income bracket are you referring to based upon the national poverty limit...i'm curious.

[Obama 2012 1,714]

What specifically are you referring to within the bill?..what income bracket are you referring to based upon the national poverty limit...i'm curious.

the new bill controls the way financial institutions can institute fees. Be it overdraft fees, excess funds, etc. They can still charge these fees, but not the way they used to...

This leaves banks with the option of charging for checking accounts to make up the money lost that they won't be able to get on these fees anymore. After all at the end of the day, the bank is a business trying to make money. This directly hits those who cannot hit the bare minimum in a checking account daily. For many banks, this is about $5k. Some have it set lower than that, but maintaining a balance of even $1k is hard for those in the lower income brackets.

[PaigeOsvald 2]

the new bill controls the way financial institutions can institute fees. Be it overdraft fees, excess funds, etc. They can still charge these fees, but not the way they used to...

This leaves banks with the option of charging for checking accounts to make up the money lost that they won't be able to get on these fees anymore. After all at the end of the day, the bank is a business trying to make money. This directly hits those who cannot hit the bare minimum in a checking account daily. For many banks, this is about $5k. Some have it set lower than that, but maintaining a balance of even $1k is hard for those in the lower income brackets.

OK, I can see your point. However, I do feel that the stronger regulation is appropriate...for instance with the whole credit card situation...yes, the companies jacked up the APR before the law took hold, but overall there will be a benefit towards the average consumer (most don't read the small print). As for the banks, I belong to a credit union and they had to always get permission for overdraft protection...which I'm not sure standard banks had to get (correct me if I'm wrong) so I'm used to that process. In addition, the bill would create more than 20 "offices of minority and women inclusion" at the Treasury, Federal Reserve and other government agencies, to ensure they employ more women and minorities and grant more federal contracts to more women- and minority-owned businesses..this is helpful especially since I'm a self-employed African-American woman.

I'm marrying a Norwegian man, and needless to say we have many conversations regarding the differences between our 2 countries. In Norway, they have a very strong consumer protection system..here..we do not, and this new bill introduces that, and I for one am glad. Living in Philadelphia, which is pro-union (which is made up of mainly the working class) the bill will be beneficial. Written into the bill under the "proxy access" provisions is language that allows for a veto on state rules in corporate director elections. This will essentially force "companies and their shareholders to to subsidize director elections by special interest-shareholder - such as unions, environmentalists etc...I don't think that is a bad thing.

So in closing,overall I'm glad this was created and passed and will be enforced. =0)

Edited July 16, 2010 by PaigeOsvald

[DukeOfYork 28]

Ally Bank (formerly GMAC) has no minimum balance limits on their interest checking. I'm seriously considering switching to them, if I can convince myself to bank with a "virtual bank" with no branches. All ATM fees are refunded at the end of the month and for those of use who have to get incoming international wire transfers, those are free.