Want a good mortgage rate, go to a small bank

Interest rates for 30 year fixed-rate mortgages have fallen to record lows. They averaged 4.44% on Aug. 12, according to Freddie Mac, the lowest level since the organization started keeping records in 1970. But consumers can get even better deals — at smaller banks and credit unions.

At the three big banks — Bank of America (BAC), Wells Fargo (WFC) and JPMorgan Chase (JPM) — rates average 4.66% on 30-year fixed mortgages, according to Bankrate.com. The Wall Street Journal reports that “St. Louis’s Heartland Bank is offering a rate of 4.5%. Acacia Federal Savings Bank comes in at 4.25%. And Rockland Trust Co. in Boston is offering just 4.13%. (None of these offers include “points,” or extra fees to secure lower rates.)”

Furthermore, “the discrepancy is widening, and I only expect it to get wider in the future,” the Journal quotes Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter, as saying.

The reason for this trend is consolidation among home lenders during and after the financial crisis. The three large banks above accounted for 56.5% of new mortgage originations in the first half of this year, according to Inside Mortgage Finance — up from just 36.6% in 2007, reports the Journal. These banks feel less need to compete on price.

Chase faces class action against agressive overdraft opt-in campaign

This was bound to happen given the highly aggressive deceptive and fear-based tactics Chase is using to get people to sign up for their overdraft protection.

When asking Chase to waive a fee, persistence can pay off

This great article in the San Francisco Chronicle goes into great depth as to why Chase charges the amount of late fee it does (credit card) and what the author did to finally get a $39 late fee removed.

I was about to give up and pay the fee, but then I asked to speak to the rep’s manager. As I was transferred, I recomposed myself and then made the same request to the next agent, who promptly and politely said she would remove the fee!

Just like that.

So, why did the bank give in? And why didn’t I give up at the first rep’s repeated rejections?

But even more interesting is why the bank was ultimately willing to refund the fee.

But some credit-card issuers also take into account a “profitability score” when deciding whether to waive a fee — and that score doesn’t just correlate with risk, but with how much a bank expects to make from this customer. And a reliably paying (i.e., low-risk) customer is not necessarily a profitable one.

“Some people might assume that if they have a great risk score, they’re the customer that banks want,” Frank says. “But people who make payments on time are often not where the banks make their money.”

So, when I got to that second Chase rep — the one who waived my fee — she may have calculated that I was either a low-risk customer or a high-potential-profit customer, and wanted to keep me happy. And even if I haven’t been a profitable customer so far, Frank points out, there’s always the chance that I might make them money in the future.

I’ve experienced this myself.  Every few years, almost like clockwork, my credit card companies raise my interest rates for no reason.  It is often only a few points, and doesn’t really matter because I pay my card off every month anyways, but because of the principal, I will call them and ask to have the rate returned to where it was.  This work many times for my card with Citibank, which was my first card and I had it for more than 15 years.  Sometimes when they refused, I would ask them to cancel the card on the spot, and they would transfer me to the customer retention department who would agree to lower my rate again.

But one year, they simply agreed to cancel my card.  This was in 2006, just before the sub-prime fiasco hit.

This really makes me wonder, why is it that banks don’t want customers that are reliable and pay off their bill every month.  Have they become so addicted to the fee income they get from risky customers that they can’t stand having a good customer whom they make less money from?  Certainly, they make some money from me, from merchant fees.

If they are still dropping reliable (but boring) customers for sub-prime ones, perhaps we aren’t through this sub-prime mess just yet.

Banks new credit card tricks

The Wall Street Journal reports this morning on new tricks that banks are coming up with to try and regain lost income due to fees and other tactics limited by the Credit Card Reform Act of 2009.  While they don’t attribute many of the tricks discussed to particular banks, they do call out JP Morgan Chase in particular as being among those aggressively implementing these new fee income schemes.

Among the tricks to watch out for:

1. Increase in or addition of annual fees
2. Marketing “professional” (instead of consumer) cards.  These cards are marketed to individuals but act like corporate cards, and aren’t regulated the same as consumer cards under the Credit Card Act.
3. Charging a late fee when a payment is due on a Sunday but not received until the following Monday, by claiming that they DO accept payments on Sundays even though there is no mail delivery.
4. Charging high finance charges but then offering a large discount off of them via a rebate card.  The rebate card can be revoked at any time, effectively increasing the finance charge, and this isn’t regulated by the Credit Card Act.
5. Shortening the billing cycle to below 21 days, despite the fact that the Credit Card Act specifically says this is illegal.
6. Increasing balance transfer charges, or instance from 2% to 5%.
7. Raising minimum finance charges, for instance from 50 cents to $1.50.  This is what you would pay at a minimum even if you paid off your bill in full.
8. Charging up-front activation fees when you sign up for a card.  On low credit limit cards, such as those marketed to college students, these activation fees along with the annual fee, can take up most of the initial limit of the card, forcing customers over their credit limit (which then costs a fee) unknowingly when they spend a small amount.
9. Increasing foreign transaction fees, say from 2% to 3%, and being more aggressive on what they apply to.  Say for instance you purchase something from a company in Canada and the transaction is in dollars.  That might now be subject to a foreign transaction fee.

The article suggests the following ways to fight back

1. Always pay your bill on time.  Personally, I pay mine whenever I get the statement.
2. Dispute fees directly with the issuer whenever there is a fee you think is unreasonable or notice anything that looks wrong in your statement.  Raise hell.
3. Keep calling them until you get satisfaction.

Even the WSJ thinks Chase’s overdraft protection sucks

Chase was criticized in the Wall Street Journal today for continuing to push its overdraft protection while other banks drop the program altogether.

Even some bankers cringe at the fees imposed on fleetingly overdrawn customers.

Bank of America CFO Charles Noski told The Wall Street Journal that his daughter, while at college, more than once ran up a $35 overdraft fee on a $3 cup of coffee. Her mother went crazy. “That does not engender the kind of constructive, trusting relationships we should be having with our customers,” he says.

BofA has decided it will simply decline such overdraft-prone debit-card transactions, and avoid those notorious $38 lattes. Citigroup’s stance is similar. Wells Fargo is still deciding. Chase is left looking like an outlier. The J.P. Morgan Chase bank has embarked on a blitz to persuade depositors to agree to overdraft charges ahead of a rule change on Aug. 15.

Rather than protecting its own income, perhaps it should chase something that really matters—to its customers, that is.

Don’t change currency at Chase

This story speaks for itself.

Today, I went to chase bank to ask about the exchange rate from dollar to Japanese yen. The guy told me that there’s no charge for the exchange and he then checked the rate at that moment and he told me that it is 1 dollar = 86.00yen. I knew that the last few days the yen dropped. I went ahead and bought $5,000 worth of yen. When I went home I realized that the rate at that moment was 1 dollar=89.56 yen. I went back to chase after half an hour and told them I would like to cancel and want my money back. It was too late because they said they already ordered the yen. Even I don’t have the yen with me, they still would not give my money. I was furious! The more I was furious when the manager told me that to get my money back I have to sell the yen to them(crooks) and now, get back less than what it cost, even though I don’t have the yen in my possession. It would take a couple of days. So now, I lost 20,000 worth of yen. I immediately cancel all my account with chase.
Chase are liars, worst than criminals and definitely CROOKS.

How Chase gets customers to pay higher interest rates

Let’s say you are a big thoughtless bank and you some customers you inherited from other banks you stole bought, but those customers have a great deal in a low-interest-for-life loan that other banks offered as a promotion, either for a big purchase, or a balance transfer from another credit card.  Your problem is you want them to be paying a higher interest rate, but these are good customers with good credit scores who are paying on time.  Hmm, what to do.

Wait, I’ve got it!  Let’s increase their minimum payment, either forcing them to default on their loan, which allows us to increase their interest rate to something nearly illegal, or force them to agree to a higher rate in exchange for lower payments.

If you think this way, that might make you Chase bank.  Full story below.

My credit has always been quite excellent, I have never defaulted on any credit or loan. My score is well into the upper 700 range. Chase has tried to screw me several times in the pass by jacking up my interest rate within just one statement period. Worse case. From 8.98% to 29.99% in just one month. I should have learned my lesson back then. But my personal checking was with BANK ONE(now CHASE) just down the street and I know the tellers and branch manger on a personal level.
HOWEVER! The final straw!
My story: Last February or so, I took one of their “Offers” 3.99% for the life of the balance. I needed a new furnace and windows so I used just over $20,000.00. My Credit limit was also raised to around $26,000.00 during this “special offer”. I paid the 3% upfront fee and continued to make not only the min due, but pay as much extra as my monthly budget would allow. Min payment due was around $400.00
NOW HERE is the reason CHASE_SUCKS. I get my September statement. My min payment due went up to almost $1,100.00! I checked my previous statements for any warning or info about this. NONE! I called and was told that I was sent a letter about 45 days ago outlining the reason for this. After explaining to them that I am not able to shit or grow an extra $700.00 every month. I am a single parent trying to raise my daughter with no help from her mother or anyone else for that matter and the two jobs I currently have just doesn’t leave room for much else. I ask what would happen if I cant make the min. due. You guessed it. “Default account! All kinds of Fees and charges. Current rate will rise to the now default rate on 27.9%”. When I asked about our agreement and the 3.99% offer. The manager stated. “it was a business decision on our part to HELP you pay off you account sooner, as well, we are allowed by law to make changes to our offers and account terms by sending you a 45 day notice”. So in other words, Because greedy chase is not making enough money off of me, they use some loop hole to increase my min due to an impossible amount so my perfect credit history gets trashed, so CHASE can rack up my interest rate and RENEGE on THEIR own offer.
I believe CHASE wants us to default and fail, so they cant continue to receive more government money, blame their problems and their own miss management on us the consumers, so as to keep their multi million dollar paychecks and mansions. All I can figure out in this whole mess; Is that the “powers to be” must really want Anarchy.

New debit overdraft rules start!

Federal Reserve rule E took effect yesterday (July 1st) for new account holders, and August 15th for existing account holders.  Rule E directs banks to only enable overdraft protection for debit card purchases if customers specifically opt-in.

As we have previously reported, Chase trying very hard to convince customers to sign up for overdraft protection through letters and an advertising campaign, and have apparently signed up about 1/3 of their customers using their deliberately confusing and fear-based, like the following advertisement:

There are few things more embarrassing than standing in line with your purchases all bagged up and being told your card has been declined. Besides the embarrassment…

This is no deal for customers as a small purchase, which is often the cause of an overdraft, can cost a whole lot more when you tack on a $35 overdraft fee.  This works out to be thousands of percentage points of interest for borrowing a little bit of money for a short time, and WAY higher than the fees charged by the heavily criticized payday lending industry.

A better option would be to apply for a small overdraft credit line to be attached to your checking account and is used whenever either a debit or check causes your account to go negative.  I have personally done this for years, and the occasional checkbook balancing error which causes an overdraft costs me $7 for a draw from the line of credit, a much more reasonable fee.

Chase calls their new opt-in protection Chase Debit Card Overdraft Coverage, and you can find the details here.  Their existing overdraft protection program still exists and is a much better deal, as it allows you to connect your checking account to a line of credit, savings account, or credit card for overdrafts, and it will only cost you $10 each day that overdrafts are covered this way.

Also somewhat alarming if you read the fine print, is the fact that overdraft protection doesn’t actually always “protect” you, as the fine-print specifies that Chase can choose not to cover an overdraft anytime they don’t want to.  The fine-print also specifies that automatic payments may continue to be paid (and rack up an overdraft charge) when your account goes negative even if you have NOT opted-in to their program.