A banking guide with more clout than ‘Occupy Wall Street’

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Even if you aren’t a member of the Occupy Wall Street band of protestors, chances are, you are thinking about shopping for a new bank or financial services provider because you are fed up with their behavior.

Banks are raising old fees, adding new ones and otherwise making it more expensive for you to do business with them.

It doesn’t matter why banks are turning the screws, only how much more it’s costing you and what you can do to plug the drain on your wallet.

Many people are choosing online banking to save money, read more to find out if it’s a good option for you.

The Center for Responsible Lending (CRL) suggests, along with checking rates, fees, extra costs, location and hours, also check any bank’s (big or small) or credit union’s lending and banking practices to make sure they work for you.

That means asking tough, direct questions to keep your bank from taking you to the cleaners .

“Just remember, the customer representative you interview may not be accustomed to discussing these specific problem practices. If you are hesitant to ask questions that may seem to challenge them, keep in mind that it shows you are a responsible, informed consumer,” CRL says.

If the representatives don’t the answers you need, they should know where to get them. If not, it’s up to you to go up the chain of command until you learn what you need to know.

To help you through the tough questions and spot the red flags CRL offers “Keep Your Balance: A Shopper’s Guide to Better Banking” to identify bank practices that are a good fit for your needs.

After asking questions about checking accounts, credit cards and cash advances, you’ll also get to rate each institution based on questions that raise either a green flag (positive response) or red flag (negative response)/

To help you get started, here are a few questions from each category, along with the red flags that should ping your radar and alert you to an incoming bad bank.

Checking accounts

Q: When I make a deposit, will you credit my account as soon as possible so I won’t get unnecessary overdraft charges?

Red Flag: Anything other than an assurance that deposits are credited as soon as possible should raise a red flag.

Q: I understand you are required to get my permission before automatically approving debit card transactions that would overdraw my account and cost me a fee. Do you have cheaper alternatives to covering overdrafts and what are they?

Red Flag: If the bank or credit union does not tell you that you can link your checking account to a savings account or line of credit, consider this a major red flag. These are potentially much cheaper ways of covering overdrafts. Also ask what they charge for moving money from these accounts to your checking account, and how often they charge a fee for this transfer, whether it is a per day, per incident or per dollar increment.

Q: Some financial institutions subtract customers’ debits from the highest to the lowest amounts, which can cause more overdraft fees. Do you do this, or do you subtract debits in the order they were made?

Red Flag: If the representative says they subtract debits from the highest to lowest, you may want to avoid this institution. Some claim their customers want it this way, but it often causes extra overdraft fees.

Credit cards

Q: What happens if I make a late payment?

Red Flag: Some credit card issuers charge harsh penalty fees and raise your interest rate as soon as one payment is late, even by a few days. If your interest rate goes up based on a late payment, you may want to avoid this institution. If the institution charges a penalty for a late payment, you should have sufficient time to avoid it.

Q: Do you sell “add-ons” to your credit card like credit protection, identity theft protection, or credit monitoring?

Red Flag: These services often cost much more than they should for very little to no benefit. If you are given these as options, consider declining them all.

Cash advances

Note: Some banks are making short-term cash advances that are paid back in full, plus interest, when the customer’s paycheck is direct deposited into their account. These are expensive and have the same “debt trap” features as payday loans.

Q: Would I have 90 days to pay back a loan secured by my direct deposit paycheck?

Red Flag: Some banks and credit unions will use your next deposit to pay back your loan or only give you two weeks to repay. Most people cannot pay a cash advance of several hundred dollars back in full by payday without needing to borrow again. Make sure your bank or credit union is giving you a loan with terms that you can meet without getting caught in a costly cycle of debt.

Q: What is the APR (annual percentage rate of interest) for this advance?

Red Flag: A short-term loan should carry an APR of no more than 36 percent. If the representative you talk to tells you the cost as a fee for every $100 borrowed, ask them the APR, which they must disclose by law. A cash advance with a fee of $10 per $100 borrowed actually carries an APR ranging anywhere from 120 percent to over 1,000 percent, depending on how long before you pay it back. If you have two weeks to pay it, the APR is 260 percent. It can be even higher if there are other fees associated with the loan, like charges for credit insurance or an origination fee.

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