Home Loan Focus

Archive for the ‘bad bank charges’ Category

Maybe you have heard of this bill with the cute catch phrase.  It sounds like just the thing most of us need to get a little protection from banks that are trying to get back to profitable with our fees and interest charges fueling their way. 

Well don’t hold your breathe on this one. Sure its going to pass, but its not going to do you a bit of good.

Want to know why?  Read the last ‘Right’ in the provision.

The Credit Cardholders’ Bill of Rights:

1. Protects cardholders against arbitrary interest rate increases
2. Prevents cardholders who pay on time from being unfairly penalized 
3. Protects cardholders from due date gimmicks
4. Shields cardholders from misleading terms 
5. Empowers cardholders to set limits on their credit
6. Requires card companies to fairly credit and allocate payments 
7. Prohibits card companies from imposing excessive fees on cardholders
8. Prevents card companies from giving subprime credit cards to people who can’t afford them
9. Requires Congress to provide better oversight of the credit card industry
10. Contains NO rate caps, fee setting, or price controls

Yep, that’s right.  Your Credit Cardholder bill of rights, if it passes will not prevent banks from continuing to raise your rates sky high!  Sure, they may not be able to nickel and dime you to death, they won’t have to.  They can kill you with a bazooka of an interest rate.

Plus, this law will not be retroactive to say the first of the year or something.  All the banks have been rapidly raising rates and doing all of the things that this bill would block already, so that the changes will be in place before the law is ever signed.  They won’t be able to do these things in the future, but they won’t need to.  The damage will already be done.

What options does this leave you?

The only right you really have left to protect yourself from the credit card companies is either to not use a credit card or if its too late and you can’t pay them all off tomorrow, take a look at bankruptcy.

Yeah, I know.  Congress is really doing you a big favor with this.  Its called pandering.

For more info on this you can visit House Rep Maloney I’m not saying she’s a bad person, but I am saying that this bill of rights is more bill and too few rights.

Here’s another great video in the series from Money Talks News offering ways to reduce your mortgage fees by pitting them against each other.

The key here is to stop and take time to go over the paperwork, one page at a time.

I recently established a new home equity loan. I signed up for the automatic withdrawal plan. My payment would be withdrawn from my checking account on a certain day of the month and I would save a quarter point on my interest rate. I also saved a quarter point for another reason as well.

The first payment due date rolled around and hit on a Saturday. My mortgage holder and bank, which happens to be Bank of America, did not process the payment on Saturday.

I phoned on Saturday to check on it and they could not contact the Home Equity Loan department. They were supposed to be at work, but no one answered the phone when other bank employees tried to hone them? Must have been a Saturday pool party at the bank . . .

I phoned back on Monday and they informed me that the payment could not be made on a weekend in their system. Translation: Someone somewhere in the bank had to process a batch file manually and that wouldn’t happen till Monday. Hence my payment would not show up until Monday at 7 PM.

Interest Charges on the Loan

That raises the potential for miscalculation and possibly abuse by the bank. They could conceivably charge me interest for the time from Saturday till Sunday and then Sunday to Monday.

Two days of interest on a Home Equity Loan. They do compound daily so over time that could add up. For a single incident, that means I would pay $19.73 if I had a loan of $40k at 9% interest (40,000 x .09 x 2 days / 365 days for the year).

If a Saturday payment occurs 2 times per year and I pay this loan for 20 years, that would total up to ($19.73 x 2 x 20) $789.04 plus the interest charged on this interest!

Bank of America Resolution

Bank of America informed me that they would back date the transaction from Monday to Saturday, and so I would not be charged the interest.

I won’t know if that is correct until this evening, but you can bet I will be paying attention!

You should check as well if you have an automatic withdrawal. An extra $500 – $1,000 over the life of your home equity loan is not insubstantial. You should check to insure that your bank is not over charging you and that they have provisions to back date appropriately.