Bank of America Announces a New Plan for Taking Money from Those Who Can Least Afford It

Image

Recently, Bank of America announced a new debit card where card holders will be charged $4.95 per month for overdraft protection.  The pitch to cardholders is that if they overdraw their accounts they will not rack up sizable overdraft fees.  On the surface, this might sound like a good deal to people who keep a low balance in their account and worry about accidentally triggering overdraft fees.

But, the reality is quite different.  That’s because bank customers can’t overdraft their accounts unless they opt in for overdraft protection.  Gone are the days when banks could opt you in (without your knowledge) for overdraft protection  and then charge you hefty fees ($35 per overdraft)  for going pennies below your balance when you use your debit card.

Allowing unaware customers to overdraft their account and then forcing them to pay $35 for this “privilege” mobilized consumers and their advocates to press for reform.  Thanks to banking reform legislation passed in 2010 (which Green America and its members supported), bank customers have to opt-in for overdraft protection.  If they don’t opt-in for the protection, and they attempt to overdraft their account, their card is simply rejected and no fee is charged.  Unfortunately, many consumers don’t understand this.  A 2011 survey of consumers who opted in for overdraft protection found that 66% of them mistakenly signed up for the service because they thought that if their debit card was rejected for trying to make an overdraft they would be charged a fee simply for being rejected.  They didn’t realize that the law prohibited the bank from charging any form of overdraft (or attempted overdraft) fee without the customer’s consent.

Bank of America is preying on this misperception to offer consumers a new “benefit” – an account that prevents overdraft fees – that no one actually needs.  And, consumers will pay almost $60 per year for this faux benefit.  Sadly, it is consumers who have the most to lose, those that are low- or moderate-income, that will fall for this latest megabank scheme to help the gullible part with their money.

Consumers would be much better off banking with a local community development bank or credit union that doesn’t seek to profit from gotcha clauses and ever-expanding fees.  You can bring in $60 to open an account, and support your local community.  Hundreds of options are available at Green America’s Break Up with Your Mega-bank site.  And, while you’re at it, if you are still carrying a Bank of America credit card, you can get a great credit card from a community development bank or credit union with Green America’s Take Charge of Your Card campaign.  Then, make sure to let Bank of America know you are leaving them because you don’t approve of the way they do banking.

 

This Valentine’s Day: Ditch a Megabank Zero and Take Up With a Hero

Valentine’s Day is a time to celebrate the ones we love.  But what if your love is one-sided and you are on the losing end?  If you are giving your hard-earned dollars to a megabank – such as Citi, Bank of America, Chase, Wells Fargo – you might want to look at ending your relationship soon.  Ask yourself these questions:

  • Do you want to be in a relationship where your partner abuses the planet?  If not, you should be aware that Citi, Bank of America, and Chase are all major funders of coal mining and coal-fired power plants.
  • Do you want to be in a relationship where your partner rips you off?  If not, you should know that all the major banks and credit card issuers have been sued by federal and/or state authorities for abusive mortgage, credit cards, or other products.  And, big banks keep looking for ways to pile on fees.
  • Do you want to be with a partner that has a total disregard for others and takes no responsibility for its actions?  Chase, Wells Fargo, Citi, and Bank of America were all involved in fomenting the mortgage crisis that crashed the economy in 2008. They gambled with our money and then made us bail them out.

It can be hard to leave a long-term relationship.  You get used to a bank and think that it will be a big hassle to change, or you’ll lose out on some key benefits you love.  But, consider this:

  • Responsible credit card issuers that use your funds to actually help build communities offer credit cards (Visa or Mastercard) with all the benefits you have come to expect – online billing, points that you can use for merchandise or travel, and acceptance worldwide.
  • Responsible community development banks and credit unions offer checking, savings, and certificate of deposit accounts with competitive rates and more and more offer online banking.
  • Responsible banks and credit unions offer accounts and credit cards with lower fees, and are more upfront with their customers about fees (they don’t try to sneak the fees in or trick you into signing up for “programs” you don’t need or want).

Ready to make a responsible bank or credit union your Valentine this year?  Go to www.breakupwithyourmegabank.org to find hundreds of great banks and credit unions nationwide.  And, go to www.takechargeofyourcard.org to find responsible credit cards.

Credit Cards 101: Responsible Credit Cards for Young Green Americans

www.freefoto.comAccording to a recent poll, 34% of Americans aged 18 to 50 do not have a credit card. For most young people, the word “finance” conjures up little more than images of suits on Wall St and a dangerously low checking account balance. Fears of crippling debt (often the result of massive student loans), predatory mega-banks, and identity theft deter us from applying for a credit card. Paying for all of your expenses with cash is a responsible option, and it is entirely possible to live a life without credit. There are, however, many advantages to educating yourself about credit cards and using them wisely. They’re small, convenient, and easy to monitor, and they allow us to accomplish a range of activities that we couldn’t with just cash or a debit card. Here are a few examples:

–          Housing – Before you sign a lease on a house or apartment, your landlord will want to check your credit as a gauge of how good you are at paying your bills. If you have bad credit or no credit, a landlord will be very wary of renting their property to you. Utilities companies also use credit as a gauge of financial responsibility. Even if you can convince a landlord to rent you their property, convincing the electric utility to turn on your power without good credit could be a real challenge.

–          Employment – Employers may check candidates’ credit to judge financial responsibility. Your credit is a reflection of your expenses, and many employers want to make sure that you are not in serious financial difficulty that could compromise your work.

–          Travel – You will need a credit card to rent a car, and book a hotel if you plan on doing any traveling. This is to cover the costs of any incidental damage to the vehicle or room.

–          Loans – Having a good credit history is crucial for securing longer-term loans for a variety of purposes. This could include a mortgage, financing a car, or even taking out a loan to start your own business. Lenders will be more willing to do business with you if they can see that you pay your bills on time.

–          Get Free Stuff- Who doesn’t love gifts? As an incentive to use their credit card, many financial institutions offer rewards to their customers. Based on the amount you spend, you can receive cash back or points that you can redeem for merchandise, travel expenses, and a wide range of offerings.

If you think you may be interested in any of the things above, then it might be time to seriously consider building a good credit history. Your credit score is a number that is calculated based on your expenses, and is meant to reflect how quickly and thoroughly you pay your bills. Your credit score is shared with anyone who might be in a position to lend you money, and by paying your balance in the full amount, on time, you can make the most of your borrowing abilities. To be a responsible credit user, you must internalize one golden rule: don’t spend more money than you have. This will help you keep track of your spending and avoid debt that can add up rapidly. It requires organization and self-control to responsibly use credit, but you can increase your long-term purchasing power to a large extent.   Responsible spending is also good for the planet; purchasing only what you need lowers your impact on the environment.

At Green America, we encourage responsible consumers to obtain “green” credit cards, offered by community investment banks and credit unions. These cards are unique in that they donate a portion of their transaction charges to organizations that support the environment and communities in need. Most major credit cards, by contrast, direct their transaction charges to executive compensation or investing in environmentally harmful activities, like coal-mining. If you are thinking that using credit is the right next step, we urge you to look at our list of recommended green credit cards. You can begin building a stable financial future for yourself, prevent your purchases from supporting harmful mega banks, and support the environment and communities in need.

Image

The next step is up to you: by learning to responsibly use credit and choosing a card that benefits the people and the planet, you can be a part of the generation that changes the credit industry for the better! If you’re curious to learn more about credit, here are some great resources.

Take Charge of your Card – Switch to a Credit Card that Supports People & the Planet

Today, Green America is proud to announce our newest campaign:  The “Take Charge of your Card” campaign urges consumers to move their money away from mega-banks with questionable environmental practices, restrictive fees and interest rates, and outlandish executive compensation and into smaller community development banks and credit unions. One of the best ways to remove support from banks that fail to serve people and the planet is to reject their line of credit and start using a “green” credit card to make your purchases.

OPCBbigMega-banks collect upward of $60 billion each year on credit card transaction charges alone – just a few different institutions control a very significant piece of the credit market. By diverting the charges collected each time you swipe your credit card from a mega-bank to a bank that serves communities in need, you can be confident that your money is actually supporting something good.

And increasingly, consumers have a choice of where their transaction charges can go. Green America has compiled a list of socially responsible credit cards that direct funds to support education, green businesses, local development projects, and the environment. This means that the next time you swipe your credit card, a portion of that purchase could fund environmental protection efforts in the Amazon Rainforest, rather than going towards an extravagant executive salary. Community cards increasingly offer benefits like points that may be used for travel or merchandise, in addition to the causes they support.

Green America urges you to check out our resources on socially and environmentally responsible credit cards. You can find useful information on the pros and cons of different types of cards, a list of community development banks and credit unions offering credit cards, and resources on how to ditch your mega-bank and redirect your transaction charges to a purpose that benefits people and the planet. With your help, we can weaken the influence of large financial institutions, strengthen responsible banking, and promote a forward-thinking and green economy.

Please share our Facebook Page and let your friends know that you will no longer support the mega-banks that place strain on our environment and our economy.

 

 

Newsflash: Regulating Banks is Good for Credit Card Customers

Image

When Congress decided to reign in the abuses of the credit card industry four years ago through the Credit Card Accountability Responsibility and Disclosure Act (the Card Act), a lot of industry observers declared that increased regulation would lead to high costs for consumers overall.  Not so.  As reported in the New York Times, a recent study by Neal Mahoney, an economist at the University of Chicago found that federal regulation of credit card abuses has been unequivocally beneficial to consumers, to the tune of $20 billion per year.

Before the Card Act, megabanks would regularly charge excessive fees and interest rates to cardholders, particularly low-income cardholders.  For example, banks would regularly jack up the interest rate on credit card holders for no reason – the cardholders were not delinquent in their payments – often to rates exceeding 25%.  Banks also played with the due dates for payments to engineer more late fees, and charged customers extra for paying by phone or over the internet.  These interest rates and fees boosted profits at megabanks, and acted as an enormous transfer of wealth from mostly working class and poor Americans to our wealthiest financial institutions, helping to drive record salaries for CEO and upper management.

When the Card Act passed in 2009, the industry warned that consumers would be penalized overall with less access to credit and higher rates in general.  Overall, that has not happened.  While banks have pulled back on the credit lines offered to riskier customers and been a bit stricter about giving out cards on the whole, they’ve continued to offer competitive rates to lure in new customers.  The major difference now is that credit card customers are not being ripped off on a regular basis with no recourse.  Collectively, these customers have $20 billion more in their pockets than they would have had if banks were permitted to keep overcharging them.

The regulation of the credit card industry demonstrates that cracking down on the worst practice of megabanks is good for consumers, and that more regulation of the industry is needed. Overall, megabanks are still charging high fees on bank accounts and are failing to lend to the small businesses that need capital to grow, while continuing to support coal mining, tar sands excavation, and other destructive activities.

For these reasons, many consumers have long ditched megabank cards.  For any consumer that wants to break with their megabank now and support responsible institutions, they can choose from a growing number of credit cards issued by community development banks and credit unions.  Green America’s Take Charge of Your Card campaign has options from leading banks and credit unions nationwide.  Apply for a responsible card today, and take our pledge to let us know that you are breaking up with your megabank.

Tell the Mega-Banks: No More Abusive Payday Lending!

What’s a fair amount of interest to pay on a loan?2013PayDaySidebar

Think of your answer, and then ask yourself another question: Could you do business with a bank that you know is charging some customers as much as 365 percent interest on a loan?

That’s exactly what is happening at some corporate mega-banks offering new loan products with names like “Checking Account Advance” or “Direct Deposit Advance.” These products offer a customer an “advance” on the next direct deposit into their checking account, which is then deducted automatically by the bank – at a hugely inflated interest rate – upon their customer’s direct deposit. These are nothing more than payday lending schemes by other names. They carry very little risk for the lending bank (which has control over the direct deposit) while keeping low-income borrowers in an endless cycle of debt and borrowing.

Can you take a moment to send a message to four mega-banks offering payday products, and tell them you don’t approve of their unfair practices? Continue reading “Tell the Mega-Banks: No More Abusive Payday Lending!”

Growth in Socially Responsible Investing & Banking

A new report by US SIF, the association for socially responsible investment (SRI) professionals and institutions, shows that assets in SRI continue to rise in the United States. More and more investors are clearly realizing that their long-term financial well-being is best served through investments in companies that pay attention to their social and environmental impacts and that have sound corporate governance. Likewise, use of banks and credit unions dedicated to community development is also on the rise. These are great signs for moving our economy in the direction needed!

The new research tracks an increase of 22% in SRI from 2009 to 2011, bringing professionally managed SRI assets to in the US to $3.74 trillion as of December 31, 2011. The findings, announced yesterday in the 2012 Report on Sustainable and Responsible Investing Trends in the United States, indicate that SRI now constitutes 11.23% of all US, professionally-managed assets. Significantly, community development banks showed an increase of 74% and community development credit unions showed an increase of 54%.

If you have not yet switched to a community development bank or credit union – now is the time to join the increasing number of people using financial institutions that support people and the planet! Visit www.BreakUpWithYourMegaBank.org for tips on how to “break up” with your conventional bank and find a better bank that meets your needs while supporting communities from coast to coast. We’ve added even more banking options to our GreenPages Online – so also check-out greenamerica.org/go/banking to find a bank or credit union that works for you!