Why Are Banks Raising Fees?

As Citigroup and Bank of America Post Huge Profits, Why Are Bank Fees Going up?

(CBS)  With mortgage defaults and unemployment still on the rise, the big banks are still taking a beating on bad consumer loans. Bank of America said today that it's put aside another $13 billion to cover mounting losses. Citigroup $3.9 billion.

To offset those losses banks are hiking fees even on good customers as CBS News Business Correspondent Anthony Mason reports.

"Banks are looking to do much what airlines, state and local governments are doing. And that is fill the revenue gap by boosting fee income," said Greg McBride of Bankrate.com

Mary Gorman found that out after she her 48-year-old son died. When she went to close his checking account, Bank of America hit her with a $100 fee.

"I just didn't realize they would charge to close an account. They're taking money from a dead person," said Gorman.

Bank of America later refunded the money. But in June, it raised the fee on its basic monthly checking account from $5.95 to $8.95.

Among big banks, the average ATM charge is now nearly two dollars - up from $1.78 just a year ago. The median overdraft charge, which 6 years ago was $20, has jumped to $26 this year. The first time it's increased during a recession.

Heather Dunado got hit by those higher fees, when a loan was late being transferred into her account.

"So not only was the money for the bills gone. I also had $120 in overdraft fees," she said.

But as job losses mount, many borrowers are falling behind on their payments:

Analyst Paul Miller believes unemployment could be headed for 11 percent, and cause a lot of problems in the banks.

The banks want to raise fees now because new restrictions passed by Congress take effect in February. The fed is also working on new rules on overdraft protection.

[pepperwood2]

Fed Pushes Citi, BofA to Increase Capital......Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government's so-called stress tests. And that's the way it is.

[lluba]

What a world..
The banks extended credit where it was not warranted, it turned out bad, and I'm one of the responsible ones that has to pay extraordinary fees..and was responsible

Punch line, they won't give me the miniscule credit I want..

[Illuminated1]

I protest any changes to ATM machines and I protest the charge on your debt card at gas stations as well.
I remember the heyday of banking with real bank tellers inside the bank.
As I see it, all ATM machines did is bring in money to the banks as it was, they claim it was improving services while cutting costs.
Now it seems they are changing their basis.
DEMAND THE BANKS QUIT PLAYING WITH THEIR CUSTOMERS OR FACE LOSING THEM.

[culturechang]

So they can get more revenue and claim a bigger loss to Congress for another bailout. Remember, black is white and up is down in Washington.

[Oregon_State_OSU]

Bank of America is the WORST BANK Ever. They are Slick. I closed all my accounts with them 2 years ago and refuse to do any business with them ever.

[cyberus-2009]

Why are they raising fees?

Because they can

[Slrman]

BoA charges $100 to close an account? That's no surprise from these greedy a$$holes. They are easily the worst place to bank in America. They also treat their employees like criminal slaves, too. I will never allow these jerks to see one penny of my money. Not now, not ever.

[YCantWeAllGetAlong]

I have no credit cards and I use a credit union. I would NEVER pay money to use a checking account, nor would I EVER pay a fee to use money. If I don't have the money for something, I don't buy it. What a novel idea! These companies are raising fees because they can get away with it and they couldn't care less about you, your family or your situation. Trust me, you won't hear a peep from them unless you are a few days late. Then, they will call you night and day and hound you to the ends of the earth. Why do people continuously use these credit cards for pleasure spending? If you don't have the cash, don't buy it.

[harpoot]

Just a wee guess but I'd say they are greedy BA$TARDS.

[brianbwb-2009]

Marcus Garvey warned everybody about the dangers of credit, (being the first step back to slavery) way back when, but did any one listen?

Nah, what did he know, he was just another "n-word".

Abolish the fed, let the government print our currency, with no instant debt attached.

[ladypirate2]

I just found out about this the hard way recently when I saw my Chase credit card statement. My minimum payment went up $14.00 and my monthly finance charges went up over $23.00 from $34.00 to over $57.00! I received no advance warning that this was about to happen either!

[ladypirate2]

I make my payments on time every month, too! I haven't missed a payment in over five years and usually I make my payments several days early. They still raised my minimum payment $14.00 and my monthly finace charges over $24.00. I can understand why they would treat someone who misses payments or doesn't make their payments on time this way but I make my payments on time! I don't think it's fair!

[pepperwood2]

Bailout Banks Hike Up Charges CBS Evening News: Financial Institutions That Received Bailout Funds Also Charging Consumers Higher Interest Rates, More Fees

Please rest assured that Our President is appalled & outraged at what the bailed out Banks are doing & the Liberal Congress still insists that this is a right wing conspiracy. Don't expect any satisfaction soon. Sorry its business as usual. So Sad!

[babooph]

For the same reason a corp.bribes with lobbyists "BECAUSE THEY CAN"!

[Turbidite]

It seems that the laws against theft do not apply to banks. We should be charging them fees, on an individual basis, not through the government. The government is an even bigger thief. There is no difference between Republican and Democratic government. They both run a steam driven, pile driving machine to suck as much money from the public as possible.
Those fellows inside the Washington beltway sit an laugh every day at how stupid the American taxpayer has become.

[HGOODGUY]

WANNA KNOW WHY BANKS ARE RAISING FEES?????

IT'S VERY SIMPLE--BECAUSE THEY CAN!!!!!

[pepperwood2]

Wall St. to Taxpayers: "Thanks for the Bailouts, Have Some Higher Fees"

Wall Street is responding to new proposed regulations in classic form: They're trying to circumvent restrictions on compensation and want to pass along the cost of compliance to their clients, namely you and me.

JPMorgan Chase has informed clients its raising fees on balance transfers and cash advances to 5%, the highest among the nation's big banks. (Earlier this month, Bank of America raised similar fees to 4%.)

In a notice to customers, JPMorgan cited "new federal regulations" as the rationale for higher fees, The LA Times reports.

Get used to being nickled and dimed by the banks (even more than usual), says Diane Garnick, investment strategist at Invesco, who notes deflation has hit every other asset class in the past year, save ATM fees.

"We're going to get hit with all of these small fee coming from the banks," she says, noting banks' institutional customers are both smaller in number and much more cost conscious after the credit bust. "The way we're going to see these fees really come about will be on the retail side.
They're saying, the people who borrowed from Mastercard to pay Visa -- the little guys -- we're going to bump those fees all the way up."

Higher credit card fees: Think of it as just one more way of Wall Street saying "thanks" to the American taxpayer for bailing them out last year.

[South-of-Heaven]

Everyone needs to cancel the Credit cards in protest,
Reguardless of political offiliation.
im cancelling all my credit cards,
this is ridiculous and borderline criminal,
they used our $$$$ for the Bailouts.
they should be rewarding me for this.
F.ck the banking companies.
keep your interests and your overpaid CEO's
ill keep my cash in my pockets...

It should be clear by now that as Senator Durbin said "They own the place". Thankfully, they are gracious enough to let us hang around as long as we keep giving them more of our money. Thank you banks, thank you very much.

[RCC_Soldaten]

Greed - Corruption and a Lack of Faith

[ubrew12]

They raise fees because of a lack of competition. The entire finance sector overreached itself, the entire sector fell flat on its face, but only certain banks were picked back up by the government (no questions asked!), the others were left to die.

Lack of competition: the lucky 'survivors' can now charge whatever they want.

[John_Merritt]

'As Citigroup and Bank of America Post Huge Profits, Why are Bank Fees Going up?'

SIMPLE ANSWER: Because they can.