“If someone makes you a loan that’s illegal, either because they don’t have a license or they violate usury laws, you’re not under any obligation to pay it back,” said Norman Googel, an assistant attorney general in West Virginia.
Payday lending traditionally happens in seedy storefronts, often in low-income neighborhoods and around military bases. Not any more! Eager to get in on the next big subprime lending bubble before it bursts, big banks are brushing up on their loan shark chops and opening payday lending divisions.
So what’s the problem, here? Well, payday loans from banks typically carry annual interest rates as high as 365%. That means if you took out a $10 loan, it would cost $46.50 to pay it back. It doesn’t feel so bad because payday loans are supposed to be short-terms loans, but the typical payday loan customer uses payday loans often enough that he or she is actually paying that kind of interest.
Banks are especially interested because they tend to hold the payday loan customer’s deposits, as well. Payday loan customers wind up paying more in overdraft fees, and are more likely to lose their bank accounts. In short, it’s bad news for consumers.
The Center for Responsible Lending is watching this trend, and has more information about big bank payday lending.
Whether it’s skipping checkups with your doctor, doing your own taxes, or buying in bulk, chances are good some of your attempts to save money are really just costing your more, in the long run. I’d add “going to the grocery store.” My wife and I started saving a ton on groceries when we started getting them delivered, because there are fewer opportunities to make an impulse purchase on an empty stomach when shopping online. Plus, we save gas, family time, etc.
It didn’t take long for companies to realize they could save a lot of money on personnel and supplies by eliminating paper bills and accepting online payments. For the most part, this has been a good thing for consumers. Paperless bills are generally more efficient for everyone, and online payment is really convenient.
To encourage this transition, many companies started charging for paper bills. In general, nobody cared. Paperless bills are more convenient for just about everyone, and it’s pretty obvious that sending paper bills costs more (even if it doesn’t exactly match up with what the companies charge). Paperless billing goes hand-in-hand with online payment, but companies really don’t like merchant transaction fees, and companies really want you to sign up for automatic payments, so many companies are using the same tactic to “encourage” customers to sign up for auto-billing, or else to use transaction-fee-free payment methods.
Verizon is the latest to introduce a “convenience fee” for online payment, although it’s a little embarrassing, since it comes right on the heels of its third data outage this year.
In consumer transactions, knowledge is power. If you could actually understand the terms and conditions of an account, see them beforehand, and compare them to other credit cards, you might be able to make intelligent decisions about which card to use. That doesn’t serve the banks at all. Instead, since the banks are required to disclose that information, they do it in 13-page agreements in unreadable 8-point font, using blocks of boldface and all-caps text for the most important parts to discourage you from reading them.
The point is to make it difficult, if not impossible, to compare cards and make intelligent decisions about credit. Unless the CFPB has the power to force banks to use this disclosure form, they never will.
How many of you give someone money (or a gift certificate) for the holidays? In other words, how many of you put zero thought into your gift, but just hand over some money because you feel compelled to? Or how many of you give the equivalent of a Christmas sweater, which the recipient will wear once—maybe—and then stuff in a box for the rest of the year (or forever)?
Many people simply go through the motions of giving, because it’s often really hard to get something your friends and family will really treasure. Think of all the clothing, gag gifts, and stocking stuffers that you’ve tossed in the back of a drawer, re-gifted, or hauled off to Goodwill. Every one of those gifts represents wasted money and carbon emissions. Your life, the giver’s bank account, and our planet would have been better off without them. We’ve all got enough things.
You could re-commit yourself to the spirit of the season and give thoughtful gifts, but that doesn’t solve the things problem. Or you could just opt out of gift-giving entirely, and put your friends and family on notice with this “gift certificate” from Miss Minimalist:
(There’s a full-size version you can easily print off.)
Instead, make a charitable donation in your friends’ and family members’ names (I suggest Heifer International), have everyone over for a holiday dinner (or just spend time together), or find other ways to show friends and family that you are grateful for their presence in your life.
Did you ever wonder why banks are wiling to safeguard your hard-earned cash, often for free, or even at interest? After all, it costs the bank money to have tellers and branches and the infrastructure necessary to do this.
The main reason banks want your cash is that they want to lend it to other people. In other words, when you put your money in the bank, you are really lending the bank your money so that it can turn around and loan your money to someone else.
Banks quite literally play with other people’s (your) money.
“Banks also have benefited from the large increase during the recession in unemployment insurance. Increasingly, banks offer debit cards to the unemployed to collect their government benefits. These debit cards carry a range of fees that bolster banks’ bottom lines. What’s more, states — with their budgets shattered by the financial crisis and recession — have increasingly been moving to enroll new employees into Wall Street-run retirement accounts rather than government pension programs. That’s potentially more lucrative for Wall Street, which can charge fees for managing the savings of individual retirees.”
When dealing with a debt collector, you must take careful notes of all communications. If you have to prove you made an agreement, or that the collector violated your rights, you cannot rely on the debt collector’s notes, which are usually cryptic, incomplete, and self-serving.
You should also record your phone calls, if you can. Recordings are the best proof, but notes are essential whether or not you record.
This collection log will help you keep track of collection communications.