While buying gifts this year, I found myself in the monument to consumerism, the Mall of America. To get my bearing, I did a lap to see if I could find what I wanted: a pair of shoes and an insulated travel mug for my wife. Although there were dozens of stores at which I could have bought my gifts, I only walked into two: Williams-Sonoma and Clarks.
That’s because I did not want to stand in front of a wall of insulated tumblers with no indication of which will do the best job. I just wanted a good tumbler, and I didn’t want to have to think too much about it. Williams-Sonoma only carries high-quality stuff, and as it turned out, they only carried one travel mug in two sizes. It’s awesome, and my wife loves it.
On the one hand, this is awesome. Making deposits using the camera on your iPhone or Android phone is way more convenient than going to a branch — especially if you don’t have a branch nearby. On the other hand, practically every other bank in the country has been doing this for something like five years, and Wells Fargo’s mobile app is one of the worst I have used.
Arithmetically, it makes the most sense to pay down your highest-interest debts first. But psychologically, it helps to feel like you are making progress. I linked to a calculator for using the “snowball” debt reduction method before, but I’ve never really discussed how to use the snowball method. Here’s how it works.
“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.