Monday, October 12, 2009

Nickeled, Dimed, and Fee'd to Death

A post by Richie Jay

This is a letter I've been meaning to write to Chase ever since the federal government decided that it would be good for the American people to spend hundreds of billions of dollars supporting banks that are "too big to fail," while consolidating the banking industry into the hands of just a few enormous banks who couldn't give a crap about their customers, and don't really have to, since their market share is so great and the competition is not.

This letter specifically lists the concrete changes that Chase has made to the accounts of millions of assimilated WaMu customers like me, in an effort to reduce our benefits, no matter how trivial the cost, and increase our fees, no matter the impact.


To Whom It May Concern:

From my most recent statement:

"Starting 11/2/2009 there will be no Chase fee for the first two non Chase ATM inquires, transfers and withdrawals each statement period through 2/2/2010. After 2/2/2010, all non Chase ATM inquiries, transfers and withdrawals applied to your account will be assessed the standard non Chase ATM fees. Please call us at 1 800 935 9935 if you have questions."

I'd like to formally express my displeasure with the way that Chase has handled my checking account since taking over WaMu. At WaMu, I grew accustomed to straightforward account terms with no hidden fees and common sense benefits. After Chase took over--despite gaining millions of valuable new customers and tremendous market share in the process, and despite significant assumption of debt by the government to sweeten the takeover deal--things changed for the worse, and continue to do so. Just a few examples of the loss of benefits and addition of fees that Chase has applied to my account, and perhaps those of millions of other former WaMu customers like me:

1. At WaMu, debit cards paid either a 3 cent reward for every transaction, regardless of PIN or signature use, or gave a donation to a school of my choice with each swipe. Chase's free rewards programs are more limited (no PIN use, for one), and in fact my debit card appears to be ineligible for any free reward program at this time.

2. At WaMu, one returned item or overdraft fee was waived automatically each year, and the credits accumulate for each year as a customer. At Chase, I can special request one waiver per year after getting hit with a fee, and there is no carryover.

3. At WaMu, I could make free external transfers to and from personal accounts at other banks online. At Chase, this service costs $3 per transaction. This change is listed only deep in the fine print, and not in the summary of account changes in the merger booklet. (Update: Chase states that this fee is still waived for former WaMu customers)

4. At WaMu, most deposits became available same day. At Chase, most deposits become available next day.

5. At WaMu, free ID theft services were offered to all customers. At Chase, this free service is not offered.

6. At WaMu, high-yield savings accounts were offered, even to customers who maintain only modest balances. At Chase, the savings account rates are laughable--there are no options that allow anyone with less than $15,000 in the bank to earn more than 0.02%, which in essence means that Chase is marketing no-interest checking accounts with greater restrictions as savings accounts and money markets. Holding on to literally trillions of dollars in deposits and $2.1 trillion in assets, and leveraging them to lend even more, Chase can certainly afford to be a little more generous without harming profitability, and to fulfill its stated goals of helping Americans through very difficult economic times and giving back to the communities it serves.

Warm-fuzzies, from Chase's own literature: "We believe that building a strong, vibrant company, one that stands the test of time, will eventually benefit not only our shareholders, but everyone we touch. It is what enables us to give back to our communities. In one sense, we view ourselves as a small business. If we were the neighborhood store, we would give kids summer jobs, sponsor local sports teams and support local organizations. We operate this way in many of our communities around the world, striving to be as supportive as we can."

7. For several years, even as a checking customer at WaMu, I used a credit card issued by Chase. After taking over WaMu, Chase changed the terms of the credit card rewards program so that only Chase checking customers could receive the existing rewards program. Chase treated me as a non-Chase customer at the time (even though WaMu was fully owned by Chase for half a year before this change in terms occurred), and dramatically cut my rewards program. After my WaMu checking account became a Chase checking account, it still took several months--and the hassle of opening, and then closing, a new Chase credit card, and getting different answers from phone reps and branch bankers--until the Chase checking customer rewards were restored to my credit card (although less generous than they had been).

8. Lastly, one of WaMu's most important common-sense and customer-friendly policies was the lack of WaMu fees on ATM transactions. Customers were still incentivized to use WaMu ATMs to avoid steep fees assessed by other banks at their ATMs. Now, however, Chase has decided to profit from the misfortune of customers not near a Chase ATM, charging $2 per transaction--on top of the up to the $3 charge by the ATM owner--for any non-Chase ATM transaction. This is a sleazy move especially considering that the continued lack of ATM fees was explicitly announced in the merger materials, and it is one that will cost customers millions, if not billions, of dollars, for a service that probably costs Chase virtually nothing at all. Furthermore, Chase still collects millions, if not billions, of dollars from all non-Chase customers who use their ATMs. Those fees alone should be sufficient for Chase to continue extending this modest but well-loved courtesy to former WaMu customers (heck, let's not be selfish. They should extend this courtesy to all customers, as many other banks do. Some banks are even more generous, refunding the fees that other banks' ATMs charge, but I'm willing to start small here.)

9. This one's an afterthought, because these are policies that don't affect me or other former WaMu customers, but it should be noted that customers who have the misfortune of having started at Chase (rather than WaMu) lack even more no-nonsense benefits like free checking accounts with no minimum balance, that also come with free cashier's checks and money orders, free booklets of standard checks, and free outgoing wires; These remain grandfathered to former WaMu customers, but unavailable to regular Chase customers (Some Chase customers can get some of these benefits, but none of them can get all of them in a standard free checking account). I fear it is only a matter of time before these benefits--like the ATM fees--get 'ungrandfathered' as Chase adds billions of dollars in fees to its former WaMu customers.

Taken alone, each of these policy and term changes may seem to be a minor nuisance. In fact, I am personally unaffected by several of them. But, taken together, they demonstrate the worst proclivities of the most enormous American companies, the strenuous drive to profit at all costs, even if it means causing measurable financial harm to the very customers (and/or taxpayers) who keep you in business, as you slowly nickel-and-dime them to death.

That'll be $2.50,
Richie Jay


Postscript: While this blog post is ostensibly about my mundane personal experiences with and observations of Chase Bank, the larger point I am at least trying to make through this one example is that a barely-regulated, highly-concentrated, too-big-to-fail financial industry is bad for all Americans. Fortunately, Robert Creamer did that for me today on the Huffington Post. You can dismiss mine as a rant about minutiae, but I hope you find his to be an intelligent analysis about the state of our nation.

UPDATE: It is worth acknowledging that a Chase customer service representative actually responded to this message within hours, and did so quite thoroughly. While the answers may have been somewhat scripted, many of her responses were actually thoughtful, and she addressed nearly every point I made above, in order. Though the bank merger guide does not waive the external transfer fee for standard WaMu accounts (and does explicitly for other account types), she stated that the $3 fee is waived for former WaMu customers. However, I am also told that I can enroll in the free debit card rewards program, but Chase's own website refuses to enroll my card, deeming it ineligible.


Jack said...

Stop wasting yout time bitching about these things and vote with your feet. There are so many regional banks hungry for your business with more favorable terms. Take your money out of Chase and put it where it'll be appreciated and move on.

Richie Jay said...

Jack, I have actually taken my money elsewhere (well, I leave a near-empty checking account so that Chase won't revoke my credit card points), to a regional bank that sucks a whole lot less. But, I was trying to make a larger point that the companies that have benefitted most from the financial crisis, massive federal subsidies yet lax oversight, are the ones who treat us the worst. Furthermore, while I can vote with my feet, Bank of America, Citigroup, and Chase have such a commanding hold on the market that they have the power to drive benefits down and fees up across the board--which is exactly what they do.

I also think that people shouldn't hesitate to point out the sins of businesses in these poorly regulated, too-large-to-fail industries like banking and health insurance. If we don't complain, how will things get better?

Jack said...

I get it. That's why I use PNC Bank and do not have any problem with the seven accounts I have there. They care about their business while the big guys will only respond when enough people take their business elsewhere. Complaining has no useful purpose save getting the frustration off your chest.
Using your reasoning of too big to fail, who you gonna complain to if God Forbid the gov't gets their hands on health care?

Richie Jay said...

Ooooh, don't get me started on health care. If the government gets their hands on my health care, I'll be the first one to sign up (or, at the very least, benefit from more choice in the market, rather than the loosely regulated near-monopolies held by the insurance giants). And I also discovered this morning that our family probably has a taxable 'Cadillac' private health plan, because our premiums, especially by 2013, will be much higher than the taxable threshold, even though we have the highest deductibles, the highest prescription co-pays, and the highest out-of-pocket maximums possible in order to keep our premiums below stratospheric levels. I want my Medicare...and I don't want to wait another 37 years to get it! I hope to post more on this in a few weeks when we get our 2010 premiums. Stay tuned.

Jack said...

You brought it up, not me. I'll happily stay tuned as my interest lies with the outcome of near monopolistic private insurance vs. 100% monopolistic gov't run health insurance.
It's interesting to note how Europe, Canada and the UK are going in an opposite direction from the one the Obamacrats want to take us.
Still want to know who you gonna complain to.

Richie Jay said...

Jack, a government option is just that: an option. It ADDS choice and competition to health coverage, it does not create a government monopoly, and arguments based on that premise are straw men. Even if Americans wanted single-payer health care, the insurance lobby, combined with right-wing anti-government ideology, is way too strong to ever let that happen. In fact, even with Medicare, a single-payer government health system, millions and millions of seniors pay for private supplemental coverage and private drug coverage, netting billions and billions in profits for the private insurers. I wouldn't worry about choice--I'd worry about health care access and outcomes (France, with the best health care in the world, has a 3-year longer life expectancy than the US)--and I certainly wouldn't worry about health insurer profits.

Jack said...

Since you brought it up. Very debatable items.
Many believe, and justifiably so, that the U.S has the best health care in the world.
Further, while many are upset by ObamaCare's one trillion dollar price tag, Congress is contemplating other changes with little debate or analysis. These changes would create a massively unfair form of income redistribution and create incentives for many not to buy health insurance at all.
Start with the basics: Insurance protects against the risk of something bad happening. When your house is on fire you no longer need protection against risk. You need a fireman and cash to rebuild your home. But suppose the government requires insurers to sell you fire insurance while your house is on fire and says you can pay the same premium as people whose houses are not on fire. The result would be that few homeowners would buy insurance until their houses were on fire.
The same could happen under health insurance reform. Here's how: Obama proposes to require insurers to sell policies to everyone no matter what their health status. By itself this requirement, called "guanteed issue" would just mean that insurers would charge predictably sick people the extremely high insurance premiums that reflect their future expected costs. But if Congress adds another requirement, called "community rating," insurers' ability to charge higher premiums for higher risks would be sharply limited.
Thus a healthy 25 yr. old and a 55 yr. old with cancer would pay nearly the same premium for a health insurance policy. Obama and his Congressional cronies emphasize the benefits for the 55 yr. old. But the 25 yr. old, who may also have a much lower income, would pay significantly more than necessary to cover his expected costs.
Like the homeowner who waits until his house is on fire to buy insurance, younger, poorer, healthier workers will rationally choose to avoid paying high premiums now to subsidize insurance for someone else. After all, they can always get a policy if they get sick.
To avoid this outcome, Congress will combine guaranteed issue and community rating with the requirement that all workers buy health insurance, that is, an "individual mandate." That solves the incentive problem and guarantees that both the healthy poor 25 yr. old and the sick higher-income 55 yr. old have health insurance.
The combination of a guaranteed issue, community rating and an individual mandate means that younger, healthier, lower-income earners would be compelled to subsidize older, sicker, higher-income earners. Because these subsidies are buried within the health insurance premiums, the massive income redistribution is hidden from public view and not debated.
If Congress succeeds with this plan, health insurance premiums will increase dramatically for the overwhelming majority of people. Even with the individual mandate many will choose to go without and pay the tax penalty. If you think people are dissatisfied with healthcare now, wait until they understand that Congress voted to mandate hidden premium increases and lower wages.

Richie Jay said...


A couple of points.

1. The NJ individual health insurance market already has fixed pricing and no denials for pre-existing conditions. As such, healthy 25 year olds and sick 55 year olds already are compelled to pay the same exact (outrageously high) prices. In practice, this means that relatively poor, relatively healthy 25 year olds cannot afford insurance anyway. Or, if they do buy insurance, it bankrupts them. Then we ALL subsidize them when they get sick or injured and end up in an emergency room, both through higher medical costs AND higher taxes.

2. Public services are not offered in a traditional competitive marketplace, nor should they be. There's no reason we need private competition to fire protection or the army or the courts. Then again, you could say that about public schools and public transit, but there are private alternatives (like parochial schools and limousines), so if people want a private alternative, the market will support it, and it will exist. If they don't, then they have 'voted with their feet'. It should also be pointed out that private health insurance does not operate in anything resembling a true free market, but rather a grossly distorted one where consumers are provided with little choice, little information, and misleading and confusing terms and conditions that are applied capriciously, while the few companies that run private insurance have tremendous power to fix prices to ensure large profit margins, and to strong-arm doctors, hospitals, and patients to follow their whims. A true free market would require much better information, much more choice, and much more power in the hands of doctors and patients.

3. Few believe that the US has the best health care in the world. Many will argue, with much justification, that we have the best doctors, hospitals, medical schools and researchers, but very few will argue that this means that Americans, as a whole, have access to the best health care. As a result of our privatized insurance system, only some people get access to adequate care. Talk about rationing: the US has plenty of it. The objective statistics--life expectancy, for one, infant mortality, for another--prove that we do NOT have the best health care on earth.


Richie Jay said...

4. Whatever 'Obamacare' might cost over 10 years, it pales in comparison to the cost of the Iraq War and the Bush tax cuts for the wealthiest 1% of Americans. Redirect our national priorities, and--voila--no problem funding health care.

5. All taxes and government services can be seen as forms of wealth redistribution. But without them we'd live in anarchy, and we wouldn't have the basic, essential services and protections we all take for granted (even the wealthy need roads and airports). But, under George W. Bush, tax policies and lax regulations that benefited only the super-rich led to the largest income disparities in the US since the Great Depression. Of course, people with greater ability to pay foot more of the bill for highways, schools, the army, congress, and everything else the government provides. The trick is to make sure that the taxes, services, and regulations are fair, rational, efficient, and neither harm the economy (which Bush's policies demonstrably did, causing the greatest recession in 70 years), nor the well-being of many Americans (ditto).

6. All of the problems you point out--individual mandate, high premiums, community rating, and guaranteed issue--are the result of, or haphazard solutions to, a fundamentally broken private, for-profit health insurance system. These problems would neatly disappear if we had a single-payer government system (like Medicare, which doesn't suffer from any of the aforementioned problems), and a rational, progressive tax code to cover the costs. As a country, we would spend less on health care overnight without changing a thing (since more money would be spent on actual care, much less on overhead and profits), before we even talk about reducing waste and increasing efficiency in the delivery of the care itself. And businesses would benefit from having the enormous burden of healthcare lifted off their shoulders. That's right, universal government healthcare could be good for the working poor and the CEOs!

Jack said...

Richie Jay,
How I wish I had more time to debate this with you. You're very intelligent and knowledgable and a great adversary for debate. I've enjoyed the challenge you present with your passionate argument. But I must point out some flaws:
1. I agree the system is broken and needs repair badly. Wish I had the answers. I don't. But I do know there's no free lunch. Even if we taxed the highest 5 to 10 per cent of all wage earners 100 per cent of their earnings it would not even begin to cover the burden of deficit spending Obama has placed on Americans. As Mrs. Thatcher wisely quipped "The trouble with socialism is that you eventually run out of other people's money."
2. Your statement that Bush's policies caused the greatest recession in 70 years is false and misleading. The seeds of this current debt crisis began with pres. Clinton's passage of the Fair Housing Act with its resultant unintended consequences, and it was further exacerbated by Greenspan's easy money policies.
3. Your point 1 re NJ supports my argument, thank you. Until there's a better solution I'd prefer the ER route.
4. EVERY major government program has managed to spiral out of control. No exceptions. Social Security and Medicare and Medicaid are doomed to bankruptcy in a few years time. A single-payer gov't system will never happen here (for that reason) and would never work. Revert to Margaret Thatcher.
Thank You.