A Taco Tale

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A Taco Tale

“The $36.99 Taco”

One of my pet peeves is paying fees or charges to banks or credit card companies. It’s a pet peeve because in my opinion they really aren’t fees or charges they are loans. Banks and credit card companies have a very powerful lobby in Washington that permits them to charge loan rates that the local loan shark would consider criminal. Nevertheless we’re not going to change the way that these companies take from the poor so we must make sure that we are aware of their practices and make sure we don’t fall victim. I consider it a badge of honor to avoid these unnecessary loans disguised as fees and charges. You should too.

I review my bank and credit card statement every month and when they try to sneak something by me like the annual fee that credit card companies charge, I call to get it waived and if they won’t waive it I stop using the credit card. This tale was inspired by a recent event. It seems my son incurred a fee from Bank of America because he didn’t manage his debit card correctly. They of course call it a fee but it’s really a loan and you should think of it as such. Don’t get swayed by the lexicon that the banker or credit card company uses. It’s a loan. The highest interest loan you will ever pay so avoid them.

My son attended college in Arizona. My daughter  currently attends college in Arizona. We’ve been visiting the area for 20 years, we love it and my brother has lived out there for more than 10 years. It seems that on one of my son’s cross-country trips he committed a serious no-no in the world of Sera finance; he lost track of his checking account balance and his debit card was tied to his checking account. He was traveling with cash, a credit card as well as a debit card. The credit card was only for emergencies, the debit was the primary source for spending and the cash was secondary and for incidentals. What happened? He exceeded his balance by $97 dollars and was charged $210 in bank fees. The bank, Bank of America, had charged him $35 per overdraft on the 6 overdrafts that had transpired. One of the $35 charges was for a $1.99 that he spent on a taco, thus the $36.99 taco subtitle. When he arrived in Arizona he had a negative balance of $307. This is a significant amount of money for most people. I especially find this bank practice despicable because it affects those that can least afford it or are the most inexperienced.

Because my son is trained to count his pennies and reads his mail and his statements he was able to quickly recognize the problem and was able to negotiate the bank fees down to a very reasonable level. They weren’t completely waived but the branch manager was a reasonable person. It helped that my son said he would pay the $97 and take his business elsewhere if he didn’t receive some accommodation.

Let’s look at why this is a loan and not a fee. The bank lent my son $97 for approximately one week. In return they were going to get their $97 dollars back and receive fees of $210. If we call these fees what they; a short-term loan he was paying interest at rates that exceed 10,000% per year. Let me say with certainty. If you consistently let these types of fees infiltrate your life, you don’t fit the profile of someone that is going to be wealthy.

What should you do? Accept that large financial institutions are in the business of feeing people especially those that can least afford it. You need to take steps. Here is what I recommend. For active and often used credit cards, have your bank automatically send the minimum payment to your credit card company so that you never incur a late fee. Every month when you get your balance, pay it in full, and as always use cash as often as possible. For debit cards, set yourself up to receive text messages or e-mails that informs you when your balance dips below a certain level. In addition set up an overdraft protection to avoid periods where even if you know your balance is getting low you won’t have to pay in excess of 10,000% interest. Lastly, keep a minimum amount of money in your savings account for emergency cash transfers.

Let me close by saying that I am not picking on Bank of America. In my dealings with people and clients I have painfully learned that they are not alone. It is up to you to keep your life in order. Don’t be a victim. If you consistently pay $36.99 for a taco you will never be wealthy.

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8 Comments

  1. This is an excellent tale. How do you talk the bankers into lowering their fee prices? Does this play into ethics or is there actually a regulations practice that prohibits these fees? I am curious because I wish I would have read this before I paid $90.99 for egg’s benedict.

  2. Valentina,

    I know of no such regulatory practice. But what I know about negotiation is there are always three stages and then you repeat them over and over until you get your way or reach a compromise. The three stages are negotiate above the table, then under the table then go to war. At each stage you ask for what you want based on what you think you can get.

    When negotiating step one is, you negotiate nicely. In the case of bank fees you must do this in person with an officer that can reduce or eliminate the fees. You must be persuasive, because you are selling something. Ask for the order and don’t be shy. Your response might be negative form the officer so be prepared for step two.

    In step two, you ask the officer if the decision is final. They will usually say that it is. Here is the key. There are no final decisions until you are satisfied. You are the customer. Someone at the bank had to set the policy even if the officer gives you a “The Computer doesn’t let me make that change” or “I’m sorry but…..” You can’t take no for an answer. Ask to speak with the officer’s supervisor. Ask to speak to the person that can make the change. Ask to speak with the person that can override the computer or whatever objection they may present. They will usually throw you a bone at this time. They may say something to the tune of “Well I can’t reduce the entire fee but I can reduce part of it. How about if I waive part of the fee” If they do this then you know you have them. You know that they can waive all of the fee if they choose they just choose not to at the moment. They have contradicted themselves because they know you aren’t going away. Ask them to waive the entire fee at this time. They probably won’t but you are at least in a negotiation, which is far better than when you first walked into the branch.

    Step three is what I call war. Here is where you decide, in a very calm and convincing manner if your relationship with the bank is worth it. You calmly say that you understand that they can’t do anything more for you and that you are happy that they will waive a part of the fee and that you are very grateful that they are so understanding. You then either accept or calmly ask them to prepare a cashier’s check for the balance in your account. You explain that though the officer is very kind and understanding the bank’s policies are not something you can live with. You have put them on the spot. The decision to waive your fees has been escalated.

    It is at this time that you will get your best offer. Remember, they are not doing you a favor. They are charging you $36.99 for a taco or $90.99 for eggs benedict. They are taking money from your wallet and putting it in theirs. Also recognize that you have been very nice the entire time, you have presented your case and you have spent considerable time with the bank officer. Try to do this on a busy day. If you look outside you might even see that there are a number of people waiting to see the officer. The officer wants to resolve your situation and they like everyone is on the clock. The longer it appears that you will stay in their office the closer you are to getting your fees waived or reduced. They are at risk of having other customers disgruntled because you are taking up their valuable time. This is your strongest weapon.

    I hope this helps. Recognize that all of us are at times on the giving and receiving end of this type of situation. It’s important to get your way but don’t be obstinate. What goes around comes around. Treat people fairly and they will reciprocate.

  3. This reminds me of an experience I had years ago with what was then Suburban Bank (now Bank America). I bought a CD for $5000 when CDs were very new and the rules and regulations were not well established. I attempted to cash in the CD before the maturity date to buy a car. I was told by the Bank that the penalty was that there would be no interest earned. What a surprise! Apparently it was in the fine print somewhere. My reaction was to ask to speak with the VP in charge of CDs. After a long discussion he agreed that it probably wasn’t quite fair, and since he made the rules he could break them. They paid me the interest for the time held. It does pay to confront. It also pays to go as high in the authority chain as possible.

    Dave

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  5. That’s wonderful. Superb.

  6. Cool story bro, I give you my regards from /b/

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