In 2011/2012 as the government was implementing a number of policies that affected banks, (like limiting what banks could charge merchants for debit card charge processing), most banks complained that the hit to profits would force them to no longer offer free checking, and they changed their policies so that many if not most customers were no longer eligible for free checking accounts. Chase of course was one of the first and worst to do this.
Fast forward to today. Chase’s last fiscal year included record profits of $20 billion, about half of which CAME FROM RETAIL BANKING. So it would seem that Chase is doing just fine and could be offering free checking just like they used to.
Remember, you are giving a bank your money to play with while you aren’t using it. This is how they get much of their capital to fund loans and to do their own proprietary trading activities (i.e. London Whale). If a bank wants you to pay for the privilege of allowing them to use your money, it is time to find another bank.
JPMorgan Chase’s loss of $2 Billion in proprietary trading losses reported yesterday by egg-on-the-face CEO Jamie Dimon only helps to show the banks true colors – a relentless quest for profits above all else.
JPMorgan Chase, the largest bank in the United States, said Thursday that it lost $2 billion in the past six weeks in a trading portfolio designed to hedge against risks the company takes with its own money.
Read the entire story.
A reader remembers Dimon commenting on Google’s “Don’t be Evil” motto: “We have a motto too. It’s make more money.”
This loss can only mean that Chase will try to boost it’s profits by sucking more fees out of customers.
Chase is tooting it’s own horn about adopting simplified disclosure forms developed by the Pew Health Group. These forms are in fact quite an improvement over the typical checking account disclosures. But at least one analyst is willing to call this out for what it is:
Philip Van Doorn, senior bank analyst with TheStreet, says the bank’s effort to become more consumer-friendly is largely out of necessity.
“They had better be in an environment where you have a new unfettered [CFPB] that is going to be aggressive on this type of issue,” Van Doorn says. Essentially, Chase is being proactive about making changes that are likely going to be enforced by the Consumer Financial Protection Bureau sometime in the near future anyway, according to Van Doorn.
Regardless, the simplified disclosure form makes it very easy to see Chase for exactly the kind of bank that it is, fee hungry. For instance
- Chase charges $5 for a money order; the Post Office charges $1.10 up to $500 and $1.55 up to $1,000.
- $15 for incoming wires. My bank does this for free.
- $30 for outgoing wires. My bank charges $11.
- $12 monthly service fee unless you meet minimum balance and other requirements
- $12 per day when you draw from your overdraft protection line. My bank charges a one time fee of $10 and interest.
- $34 stop payment fee. That is very high!
- They charge YOU $12 when someone else’s check bounces!
- They charge $2 for a counter check. My bank gives these away for free.
I think this new disclosure thing might work to their disadvantage.
The court has approved class action status for a lawsuit alleging that Chase improperly violated customer credit card terms when they raised the minimum payment for some customers from 2% of the outstanding balance to 5%.
You can find more information on this lawsuit here.
From all the whining, you’d think banks loss of their golden goose, automatically signing up people for debit card overdraft protection, was all but gone now that it has been outlawed.
Well, apparently that isn’t the case. According to Bloomberg Business Week (Overdraft Fees, The Dough Keeps Rolling In), banks have been able to keep about 70% of the overdraft revenue by using every manner imaginable to cajole customers into signing up for overdraft protection, something that clearly isn’t in customers interest.
Among some of the tactics is calling up customers that have had debit cards rejected due to insufficient funds (you know, what is supposed to happen when you are out of money) and giving them the impression that they will incur fees when this happens unless they sign up for overdraft protection.
Make no mistake, overdraft protection on debit cards benefits the banks only, not the customer (unless you like spending $40 on a latte).
To add insult to injury, the article claims that most big banks are still rearranging credits and debits under the guise that it helps customers. What this actually does is, when an overdraft does occur, it increases the likelihood that more overdraft fees will be applied, as banks will debit the largest item first, regardless of what order it all happened.
Here is an accusation from someone that appears to have researched what happened to him and found plenty of others that had the same thing happen; Chase moved up his credit card due date by just a few days without any noticed, in an apparent attempt to make payments late and charge late fees.
The scam was fairly obvious to me. This particular tactic by JP Morgan Chase was to jump their customer’s due dates back in order to force a huge influx of late fees. Since only a small percentage of customers ever bothered to call in to complain (as I did), then even if they refunded the late fee in those particular cases, they were still left with a huge population of customers who simply caved in to the abuse and didn’t bother, or didn’t care enough, to complain.
It seems their strategy was to move the dates forward just enough so people were more likely to barely miss the due date.
You have to read all the fine print with Chase and their announcement that after testing debit card fees in two markets since February, they won’t be adding them, according to the Wall Street Journal (Big Banks Blink on New Card Fees, 10/28/11). However, read the article in detail and it becomes clear that they are likely punting on this plan only due to the large amount of negative publicity that Bank of American has been receiving for the $5 monthly debit card fee it announced recently.
J.P. Morgan joins U.S. Bancorp, Citigroup Inc., PNC Financial Services Group Inc., KeyCorp and other large banks that have said in recent days that they won’t impose monthly fees on debit cards. None of those banks said they made their decisions because of the outcry over Bank of America’s fees.
“We looked at all options and quickly decided it didn’t fit with our overall strategy,” said David Bowen, who runs the consumer-product business at Cleveland-based Key, which ranks among the 20 largest banks in the country.
Sounds good, right, they made a logical decision that it wasn’t in the best interest of the bank or its customers. But read on.
Chase was one of the first big banks to explore monthly fees on debit cards. The bank began testing monthly fees of $3 in Wisconsin and Georgia in February. Those tests are scheduled to end in mid-November and won’t be renewed or expanded for now, said the person familiar with the bank’s plans.
For now. Clearly they are keeping this option open and the timing makes it highly unlikely it ISN’T in response to the negative publicity.
This is good news for credit card customers who were bullied into closing their accounts or accepting rate increases by Chases raising of minimum payments from 2% to 5%. For more information on this lawsuit (and to join) go here.
Certification Granted in Chase Lawsuit
In May 2011, after extensive briefing and oral argument, the Court granted plaintiffs’ motion for class certification. This is an important ruling because it means that the case can proceed to trial as a class action, collectively representing all who fall within the class definition below:
All persons or entities in the United States who entered into a loan agreement with Chase, whereby Chase promised a fixed APR until the loan balance was paid in full, and (i) whose minimum monthly payment was increased by Chase to 5% of the outstanding balance, or (ii) who were notified of a minimum monthly payment increase by Chase and subsequently closed their account or agreed to an alternative change in terms offered by Chase.
Bad bad Chase, Fees & charges | admin May 24, 2013 | 
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