Word: overdraft
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Nonetheless, for now, Moynihan seems to be making more friends than enemies. So far, his boldest moves have to do with consumers. First of all, in February, the bank stopped charging customers overdraft fees on debit-card purchases they couldn't afford. Instead, when someone doesn't have enough money in their account to cover the purchase, Bank of America simply declines the transaction...
Many of the credit-card changes signed into law last May by President Obama took effect Feb. 22. Some key provisions: retroactive interest-rate hikes are prohibited unless the account is more than 60 days past due, users can opt out of paying for overdraft protection, and annual or application fees cannot total more than 25% of the initial credit limit. While the changes provide more transparency for the consumer, analysts warn that banks may find loopholes for new fees to make up for lost revenue...
...CFPA is its simplicity: you're for it or against it. After sketchy subprime mortgages helped crater financial markets, even laissez-faire ideologues like Alan Greenspan called for stronger regulations to curb abuses and stabilize the system. And given the well-documented outrages pervading the industry these days - exorbitant overdraft fees, late fees, nuisance fees and balloon payments buried in opaque legalese, slimy yield spread premiums that banks give brokers who push high-risk mortgages - it's awkward to argue against...
Admittedly, I would rather have these rules than no rules, but the episode is a good reminder of how difficult it can be to pass effective financial regulation, even for something as minor and clearly exploitative as overdraft protection services. It doesn’t make you optimistic about ever setting good rules on credit cards, whose effect on our society is far more pernicious. Credit-card regulation passed last spring was a good start but ultimately does little more than limit banks’ ability to market credit cards to students and require them to warn you before they...
...consequences, even if the shape those consequences might take is never entirely clear. That’s one theory. Another line of reasoning: Much of what governs people’s behavior when it comes to credit and debit cards are poorly designed rules, which allow things like overdraft services to systematically take advantage of people’s laziness or bad habits. Either way, the outcome is predatory. There is no other word to explain the fact that Americans carry an average of eight credit cards and as much as $10,000 in unpaid balances and that...