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dalepetrie's avatar

Has corporate greed and arrogance really gotten so bad that $10 in revenue is worth more than a decades long business relationship?

Asked by dalepetrie (18009points) April 3rd, 2010

Forgive me if this sounds like a rant, it’s actually intended to spur discussion about the types of abuses being perpetrated by financial institutions in particular, and your opinions as to the short vs. long term wisdom of the types of business decisions and practices they are participating in these days.

I had been somewhat angry at the way banks had tightened up lending and credit and how all my credit cards either cancelled my accounts or jacked my interest rates through the roof (or in one case, rescinded 90% of my line of credit and jacked up the rate on the rest). This has been going on since the beginning of 2009 and it just gets worse and worse, at a time when a little short term borrowing would do wonders for me.

Even my Discover Card, which my parents opened in 1986, and transferred into my name in 1995, a card which over the past 15 years has seen on average about $3,000 in charge activity every month, which if you do the math is about half a million dollars I’ve charged on that card. And I’ve paid it off in full and on time every single month for all these years. Yet, when it became necessary for me to borrow and begin paying less than in full, accepting the 9% interest rate, which was at the time the highest rate I’d ever paid on ANYTHING, after I’d built up a balance (to keep my family afloat while I’ve been unemployed for over a year), THAT’s when they jacked my rate to 17%. And not because of my credit rating, which remains strong, but because of the “changing business environment”, all at a time when they are paying between 0% and 0.25% to the FED to borrow the money they’re lending me.

Now tell me if you think I’m missing something from a business perspective, but aside from the fact that it’s financial institutions like this one who through irresponsible lending caused the financial collapse, which drained all my ability to borrow from my open lines of credit or the equity in my home (which all evaporated), leading them to tighten up lending restrictions to the point where the small business for which I worked could not attain funding to keep the doors open, aside from that, it seems that they’re being, as the saying goes, a penny wise and a pound foolish.

From my perspective, I’m the kind of customer they should want. Even though I’d never paid them a penny in interest, over half a million in purchases on that card, just the transaction fees paid by the merchant, less any incentives they’ve given me surely add up to 10 grand or more in profit for them. And I would suspect that a) I’ll be needing a credit card for about 45 more years, and b) my wife and I will continue to make (and spend) more money as we gain more work experience and become more valuable in the market…it is after all why we have college degrees. So it seems to me that over the course of the rest of my life, I could charge (and they could earn) 10 times what they’ve gotten from me over the past 15 years.

Instead however, they charged me 8% more than I’d signed up to pay. If I keep an average balance of 10 grand for 2 years, that 8% adds up to $1,600. So, if YOU were running a business, what would make more sense to you, grabbing a quick $1,600 over the course of 2 years, or maintaining a good business relationship so you will make $100 grand over the next 40 years? And yes, not everyone is like me…not everyone is just ITCHING to get back into a position of power where I pay them off in full so I can tell them what they can do with their card and take my business elsewhere. But how many people ARE there like me? And how many of them are badmouthing these companies to anyone who will listen? How many are going to start tweeting and creating Facebook groups to decry this treatment? Can effectively doubling the interest even your best and oldest customers have to pay at a time when they are at the most vulnerable and in the most need of flexibility, really be a good long term business decision? Will they really make more money in the long run by doing this than they will lose?

So what specifically brought this up, and what I’m referring to is a situation I encountered today. I had a bank account with TCF (Twin Cities Federal) for nearly 15 years. My wife has had this same type of account for nearly 30 years. We’re talking over 4 decades combined of us having a business relationship with this bank. We had what was called “Totally Free Checking”, a service that as far back as I can remember they have offered. So, if you want to be able to use an ATM card, a debit card, and checks but don’t want to deal with a minimum balance, this has been the account for you.

Today I logged into my account and saw a $9.95 monthly service fee. Well, I simply can’t have $10 stolen from me, which is what I consider this to be, outright theft…they removed money from my account with no authorization to do so. Well, it turns out that they quietly converted everyone’s Totally Free Checking to “Convenience Checking”, which imposes a $9.95 fee for any month where you don’t have at least $100 in direct deposits (I’m unemployed, so that ain’t gonna happen) or where you don’t keep at least a $500 average daily balance (see unemployed above for explanation why this is also not feasible).

I spoke with someone at customer cuervice who explained this to me. When asked why I hadn’t been informed, I was told it was printed on January statements. I bank electronically and do not get statements. Furthermore, I log onto my account several times a month, negating any need to look at a monthly statement, as I balance my checkbook in real time. Nor did they send me any sort of email or written communication to state that there was anything on the January statement I needed to see.

Now, I’m a nice guy, and despite the fact that my keeping this account would require me to keep $500 set aside, $500 that I simply don’t have, I would have found a way, and I told them, now that I know this is the rule, I will make sure to meet the rule so as not to be charged again, but it is not acceptable to hit me with this fee at this time, and I ask as a one time professional courtesy to a long time customer in good standing to please remove this fee, and I would in exchange accept responsibility for complaince with these new rules, even though it would be difficult for me to do so in the short term.

The customer service rep said they could do nothing. So I asked to speak to a manager who has the ability to remove charges. I calmly explained to the manager my position and told her in no uncertain terms that they would be losing my business of 15 years, and my wife’s business of 30 years if they would not consider my request. She still said there was nothing she could do. I asked if there was anyone who could make a decision like this and she said, “we’re not making adjustments on this.” I once again told her very sincerly that if they insisted on keeping $9.95 they were doing so at the cost of a decades long business relationship with my family. Finally when she refused to budge an inch, I said, “well then, you’ve lost our business” and hung up on her. I called another bank that offers free checking and even gives cash back for debit card transactions, paperless statements, etc., and which offers $50 to sign up. I went to TCF, closed out my account and took the cash to the new bank, opened up an account, had my wife open up an account, got information on how to open up a savings account for my son, and applied for one of their credit cards in hopes of being able to lower my interest on some of my higher balance cards that have jacked me around.

Again, is the volume of customers times $10 a month, or 8% extra interest really greater than the fallout from pissing off your most loyal and long term customers to the point where they will take their business elsewhere, and try to convice anyone who will listen to do the same. Do they do cost benefit analysis on this, or is this just another example of how the financial industry has gotten so beligerent, so drunk with power, so greedy and arrogant that they simply can’t see the forrest for the trees? Do they habitually operate based on the idea that now is what matters and proactivity has no value to their business model, or do they honestly believe that people are going to continue to go along like blind sheep when things get better?

It seems a lot of businesses today are far more focused on attaining a steady stream of new clients than they are in maintaining long term relationships, and I’m wondering if it comes back to bite them, or if there really is some perverse logic in these business models. You can actually see the different philosophies when you compare Fluther to other Q&A sites. I feel that at Fluther, the powers that be welcome newcomers with open arms, but at the same time, they bend over backwards to keep the old timers happy by improving the things the long timers have requested be improved and not messing with what works. Other Q&A sites seem to constantly be trying to build membership while ignoring the needs of the early adopters, certainly was the case at Askville, and I’ve heard the same thing from at least 3 other sites’ refugees.

Also kind of reminds me of a big PR nightmare Netflix had when they changed their interface. I don’t currently have a Netflix membership, but the analysis I read stated that the changes they made the site seem more accessible, more user friendly, and more welcoming to new members, which may have ultimately caused more new members to enroll than old members to quit, it did away with certain functionalities relied on by the heaviest users and earliest adopters/biggest fans. And THESE are by and large the most tech savvy customers who know where and how to bitch on line to get attention. So in the long run, a lot of these new customers are going to be very temporary and say you get a million new members, and lose 100,000 old ones, that’ all well and good, except when only 50,000 of the new members stay on board after one year…by going with a short term increase in revenue, they’ve created a long term retention problem.

And that is what I’m wondering if the banks are essentially doing, if it’s something they’ve considered and determined (correctly or incorrectly) that overall it brings in more money, or if it’s really just short sightedness, living in the now and assuming that in 6 months or a year or two years when it comes time to pay the piper, you’ll have yet another scheme cooked up that will spike business. And ultimately, if the later is the case, isn’t this simply another pyramid scheme that has to blow up at some point? Is it perhaps in your opinion something they do on purpose…that is, do they purposely create bubbles like this because they know when the bubble bursts, they’ll be able to find new and creative ways to screw their customers once again? Is it the PT Barnum method of banking?

What have the banks done to you and ones you know and love over the past year or two, and what have you done or will you be doing about it? Again, sorry if this comes off as a rant at times, I’m really not viscerally angry about it anymore, I’ve had my say with the bank and done exactly what I said I was going to do, and if I were to decide to try to go viral in a PR war against any of these financial institutions, I certainly wouldn’t launch my campaign here. I simply wanted to provide the full context to illustrate even a small portion of how bad things have gotten for a customer who frankly should have banks beating down his door (and who did up until a year and a half ago). So, thanks if you’ve read this all, and what say you?

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23 Answers

Dr_Lawrence's avatar

I feel bad for you and all those who are getting screwed by banks despite having a good history of managing your accounts.

dalepetrie's avatar

@Dr_Lawrence – thanks, both for your comment and for reading my novella. I just wonder, of all the people I know, not only do I have the most money sense (being an Accountant by trade), but I’m one of the most fiscally responsible. It seems most the people I know don’t spend 1 tenth the energy fretting about paying things off, never overdrawing accounts, never paying late fees. I just wonder how badly they’re getting screwed? If they’re charging me 17%, they must be charging the late payers around 30%.

anartist's avatar

All the banks are doing it in wake of restructuring of financial systems. Where is there to go? As a newcomer you won’t be exposed to the jacking up of rates right away . . they will already be jacked up when you set up your account.

By any chance do you have a credit union membership? They are likely to keep costs down and keep their actions transparent.

And that was a horrifically long post.

escapedone7's avatar

Yes. I am in a similar battle myself but with a business. I will tell you all about it in PM after a few weeks when we are done with the court battle.

davidbetterman's avatar

And not only is that fee absurd , but if you recall, back in the olden days (60s) banks were giving us 51/4% interest on passbook savings accounts with the promise that this would only increase!!!
How much interest do they offer us now? Less than a half a percent. Thieving lowlife scumsuckers.
Don’t even get me started @dalepetrie

cazzie's avatar

You are nothing but a number to them. Credit Cards don’t constitute any sort of ‘business relationship’. The volume of business the credit card companies do, their only relationship is with their actuaries and marketing people. It’s all numbers. You’re not a name. They don’t care how long you’ve done business with them. The fact that you’ve paid the balance more often than not is actually a negative for them… they’re not earning what they could from you. They’re not there to give you ‘credit’ as a favour they’re there to charge you interest and fees. It’s not like borrowing money from your auntie.

Do yourself a favour and get rid of the majority of the cards… keep one or two for ‘just in case’ and don’t let those thieves take your money.

You know, credit card companies don’t have this same power in other countries. The lack of consumer protection in the US has let this mess fester, and with some small recent changes in the other direction, has the credit companies crying to Congress and taking advantage of their customer base before some of the new rules come into place. They are gouging the market. They are unethical, money grubbing institutions and the consumers are now finally getting a clue (because more information has to be given to them in real terms) as to how bad they are getting messed over.
sorry… this is one of my buttons

DarkScribe's avatar

I’ll wait for the Reader’s Digest version of the question.

mammal's avatar

LORD POLONIUS:

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry

That isn’t an excuse for being a tight bastard though

mammal's avatar

yes i’ve threatened court action over charges and got half back, but was embroiled in a bitter dispute over the rest, i told them in typically cavalier fashion what kind of people they are, water of a ducks back, they represent a low point in Human evolution and indeed are a hindrance to the betterment of mankind, may they be swept aside, in as clinical and deliberate a fashion as they themselves operate and may their pleas fall on deaf ears. Anyways the office of fair trading fought the banks in the courts over a year or so in the UK won the first and second rounds as to whether certain bank charges are fair or not, only to be crushed on appeal to the equivalent of the Supreme Court. All that public money wasted, all those consumers, fucked, it’s enough to make you spit.

And the banks are now so empowered and sure of being propped up by the tax payer they can’t fucking lose. because the very state itself is underwriting their parasitic villainy.

whatthefluther's avatar

Consider doing business with a reputable, strong and well managed credit union. They, or at least the one I do business with, don’t pull the kind of bullshit the banks seem to do everyday. I now use bank credit cards only to my advantage (convenience, Rewards programs, etc., with balances paid off every month) and have all my loans (mortgage, home equity, ready line of credit, VISA, auto….all approved but not all currently being utilized) through the credit union which seems to take it seriously that I am a member and not a customer. See ya…..Gary/wtf

LuckyGuy's avatar

@dalepetrie I read every word. You are now my hero. I wish you could have closed the account on the spot while the call was being “recorded for quality purposes.”
With the new truth in lending laws banks will be looking hard to make up their losses by slapping on extra fees.
I have been using cash more often. I figure I am helping the retailer and screwing the bank.

Cruiser's avatar

@dalepetrie Face it….you had no clout. Banks have to make money to survive and your balance just flat out didn’t cut it. Find a bank that cares…they are out there.

jca's avatar

i read about the first half of what you wrote – i stopped after the story of the phone call with the manager refusing to budge. i would have called her back when it was time to transfer the money to the new bank so she could personally know what you were closing your acct as a direct result of her actions. just so she knows…

kevbo's avatar

@dalepetrie, truthfully, banks prefer those credit card customers who don’t pay in full. That’s where they make their money. Other than that, I’d say you are taking this rather personally. I understand why, but I think your energy is wasted fighting this battle.

Check out USAA bank and see if that suits you. They’ve been awesome to me, and they offer a lot of great benefits.

Captain_Fantasy's avatar

Time to get another credit card if you don’t like what they’re doing.
You have power here.

jerv's avatar

@Cruiser No, there isn’t. That is why there are Credit Unions ;)

dalepetrie's avatar

FYI, I found another bank that pretty much prides itself on being customer focused. I know it’s all an act, they are after all a business. What of course this makes me think however when I see all these answers about all banks do this and so on, I’m wondering if the attitude that they’ve got you over a barrel is so pervasive that they think they can get away with this stuff? I guess that’s the heart of my question, have they determined that they’ll lose so few people that the benefit to grabbing for the gold when you can outweighs the fallout?

@cruiser – FYI, banks may need to make money to survive, but this bank survived from 1923 until now and offered free checking the whole time, even when they were paying several points interest to the Fed. Today they have over 450 branches, 18 billion in assets, 1.2 billion in equity and net income exceeding a quarter billion dollars a year. My point is, as someone pointed out, they do see me as a number, and that’s how it should be with business. What I’m questioning is, do they see all the numbers…numbers like the number of years my wife and I have used their services, the number of dollars I’ve let them have access to interest free over the years, the number of debit card transactions on which they’ve been paid a percentage, and the number of potential customers they could lose by irritating someone who lives where they are headquartered? Or do they just see, $9.95, ca-ching.

Because basically, the way I look at it, I’m getting $50 for opening a new checking account. My wife is getting $50. TCF made 10 bucks, but I turned around and made 10 times that. And M&I is not the only local bank offering money for starting an account. I could have gone a number of places who are actively trying to gain my business, the point is there is still competition, and really it’s not the big guys like US Bank and Wells Fargo they have to look out for, it’s like people said, the credit unions, and like I’m saying, the smaller, more local banks which haven’t outgrown ethical standards, the ones that realize the importance of building customer relationships…that’s where people will migrate.

So what I’m really looking for, and haven’t really seen it yet is whether businesses that get to this size at some point decide that their future success hinges more on constant recruitment of new customers to fleece, and they know that because of their size, and because it’s a pain in the ass to move around your bank accounts that most people are just going to grin and bear it. What’s the thinking is my point, and is the thinking correct, or is it myopic?

whatthefluther's avatar

Dale….Your thinking is clear and the only thing that would be myopic is if you felt your business (both current and future potential), was a loss over and above that which they had already coldly calculated and accepted, obviously without exception and expect that they should reconsider that position. They don’t give a shit if you are the one in a thousand exception that might take their business elsewhere. There are probably several more like you who do not bother to take their business elsewhere, and in their grand scheme of things, you are insignificant with an arguable estimated future worth. Fuck them…..do take your business elsewhere and may you financially prosper beyond your wildest dreams. I lurve you and feel you deserve it. See ya…..Gary/wtf

lloydbird's avatar

Banks and bankers have made a total mockery of the entire concept of money.
For individuals to get so much for doing so little is obscene.
They make sports stars’ salaries look reasonable.

Hey, but at least we now know about it.

dalepetrie's avatar

@whatthefluther – that’s kind of what I’m thinking, they have probably calculated how much business a move like this will cost them and also calculated how much new revenue it will bring in, and so they made a decision at the outset to refund for no one under any circumstances. I’m just not sure how they think they’re ever going to gain enough new business to make up for it if they get a reputation for doing things like this. Seems like another bubble to me, and I suppose why should they care, bubbles are good for them, because everyone else suffers and they get bailed out, right?

Cruiser's avatar

Sorry @jerv I do not understand the credit union part reply to my comment??

jerv's avatar

@Cruiser “Find a bank that cares…they are out there” – I haven’t found one yet, hence my preference for Credit Unions.

Cruiser's avatar

@jerv I have never dealt with one but have a friend that swear by his.

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