Right now it appears that Alabamians pay more toward debt than they do toward taxes, And God knows we pay enough taxes. Many pay more toward consumer debt than they do for food.
The US Congress passed legislation in the past session limiting some of the fees that bank card users can charge the users but the banks immediately put their lawyers to work to find legal ways to raise other fees. A good friend of mine had a Bank card some years ago and the card charged a $35 late fee if the payment wasn't received by the tenth of the month. They posted all payments on the 11th. The result of course, was if you had a bank card with that institution you paid $35 a month for the privilege.
In another case the lady opened a debit card account with a $500 maximum overdraft and received a first months bill of $1155. The limit was $500 but each overdraft charge was $39 more. To me this is fraudulent charges. It is criminal. It is like someone stealing your credit card and charging on it. Current law, passed in the last session of Congress says that you cannot be charged overdraft fees for bank cards unless you ask for it. So you will never again be charged $40 for an Egg McMuffin. Maybe. If you read all the fine print you signed.
Another friend, who is monied, asked “What do banks charge for loans?” he was completely innocent in the question since he did not engage in the practice of borrowed money. I said eight to twelve percent in most cases. He was outraged. Not at the twelve percent charges, but at the two percent he was earning on his certificates of deposit. And he is right. If a bank pays two they should be able to loan the money at four. If the borrowers are willing to pay eight then the depositors should be able to earn six. This is actually the way it was when I was a lad.
At that time the bank was owned by a local person or persons who had a vested interest in the community (pun intended). Now “The Bank” is part of a “Too big to Fail” Conglomerate.
Not unlike your hospitals, thirty percent has to go to the home office for the shareholders. At two percent a thirty percent gross is one hundred percent of the profit. For a local franchised bank to be profitable there must be a five percent difference between the cost of money and the cost of lending. So if they pay three they have to charge eight. Simple. But it also means that your money goes outside the state if you deal with the big banks. And when it's gone it's gone.
What do I recommend? Deal with local banks! Even if it seems a better deal to go with the conglomerate. (That and elect someone who really cares about high interest charges because they actually owe money.) I personally recommend the Credit Unions, Especially for credit cards, with some caveat because not all credit unions are created equal. I owe money to a local land cooperative and although I pay seven percent on my loans they pay a dividend equal to one about months payment on average. Last year the effective interest rate on my loan was probably closer to six percent. Their deposits pay four.
It has become increasingly fashionable to criticize the possibility of our state government raising taxes and I may be the worst offender. But working toward financial stability for the people of the state, working to help our local banks keep our money in our state is just as important to our survival. In the long term this contributes to lower taxes. My friends are right when they point out that our banks are a greater threat to our liberty than taxes – or from foreign enemies.
Other states, including Arkansas have placed caps on credit card interest with much success. One hundred seventy years ago President Andrew Jackson and his followers rebelled against a banking system that threatened to enslave Americans in an endless cycle of debt. Reviewing the situation today I see that little has changed. But we possess the possibility of making significant changes for the future of our children by simply enacting laws limiting the actual interest rates and charges by our State charted banks. If the big banks don't like it let them go gouge the citizens of a different state.
The US Congress passed legislation in the past session limiting some of the fees that bank card users can charge the users but the banks immediately put their lawyers to work to find legal ways to raise other fees. A good friend of mine had a Bank card some years ago and the card charged a $35 late fee if the payment wasn't received by the tenth of the month. They posted all payments on the 11th. The result of course, was if you had a bank card with that institution you paid $35 a month for the privilege.
In another case the lady opened a debit card account with a $500 maximum overdraft and received a first months bill of $1155. The limit was $500 but each overdraft charge was $39 more. To me this is fraudulent charges. It is criminal. It is like someone stealing your credit card and charging on it. Current law, passed in the last session of Congress says that you cannot be charged overdraft fees for bank cards unless you ask for it. So you will never again be charged $40 for an Egg McMuffin. Maybe. If you read all the fine print you signed.
Another friend, who is monied, asked “What do banks charge for loans?” he was completely innocent in the question since he did not engage in the practice of borrowed money. I said eight to twelve percent in most cases. He was outraged. Not at the twelve percent charges, but at the two percent he was earning on his certificates of deposit. And he is right. If a bank pays two they should be able to loan the money at four. If the borrowers are willing to pay eight then the depositors should be able to earn six. This is actually the way it was when I was a lad.
At that time the bank was owned by a local person or persons who had a vested interest in the community (pun intended). Now “The Bank” is part of a “Too big to Fail” Conglomerate.
Not unlike your hospitals, thirty percent has to go to the home office for the shareholders. At two percent a thirty percent gross is one hundred percent of the profit. For a local franchised bank to be profitable there must be a five percent difference between the cost of money and the cost of lending. So if they pay three they have to charge eight. Simple. But it also means that your money goes outside the state if you deal with the big banks. And when it's gone it's gone.
What do I recommend? Deal with local banks! Even if it seems a better deal to go with the conglomerate. (That and elect someone who really cares about high interest charges because they actually owe money.) I personally recommend the Credit Unions, Especially for credit cards, with some caveat because not all credit unions are created equal. I owe money to a local land cooperative and although I pay seven percent on my loans they pay a dividend equal to one about months payment on average. Last year the effective interest rate on my loan was probably closer to six percent. Their deposits pay four.
It has become increasingly fashionable to criticize the possibility of our state government raising taxes and I may be the worst offender. But working toward financial stability for the people of the state, working to help our local banks keep our money in our state is just as important to our survival. In the long term this contributes to lower taxes. My friends are right when they point out that our banks are a greater threat to our liberty than taxes – or from foreign enemies.
Other states, including Arkansas have placed caps on credit card interest with much success. One hundred seventy years ago President Andrew Jackson and his followers rebelled against a banking system that threatened to enslave Americans in an endless cycle of debt. Reviewing the situation today I see that little has changed. But we possess the possibility of making significant changes for the future of our children by simply enacting laws limiting the actual interest rates and charges by our State charted banks. If the big banks don't like it let them go gouge the citizens of a different state.
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