New Orleans There is a lot of talk about reforming credit card fees and rates, but a lot of this seems just that:  talk.  The House Financial Services Committee chaired by Barney Frank has talked about capping rates, but also seems powerless in the wake of many companies (including my own Union Privilege Card offered by HSBC to the best of my knowledge!) raising the fees now ahead of any bill passage.  That’s clearly wrong.

There’s a lot of this hustle-bustle going on.  Floyd Norris made a good point about a month ago in a NY Times column about the poor subsidizing the rich when it comes to credit cards.  Not surprisingly that angle caught my eye immediately.  His point was that even though the stated price for certain items is the same (and required by law to be the same), whether we use cash or a credit card, the poor or working stiff without a credit card is laying down cash, while some of the better off are using a card, which gives the retailer less, and in some cases gives them mileage or credits back.  It’s only gas stations were over my lifetime I’ve seen a real discount for use of cash.  Norris reports, undoubtedly correctly, that the card companies, retailers and others are crying like stuck pigs and wallowing in the water to muddy it up sufficiently that it’s hard for any of us to tell what might be the best reform and whether or not the poor Joe Consumer will get a break.

A similar problem seems to be cropping up around debit cards.  I’m new to the debit card world after having heard folks swear by their benefits for years.  A note from the Center for Responsible Lending in North Carolina, which I dearly respect in these matters, recently made the point that the “free” and safer debit card that I for one will admit I used to think protected my young tribals from check overdrafts on sloppy dad-like unbalanced personal accounts.  A lot of the fault here lies in too many folks defaulting to accept so-called “overdraft” protections which are automatically allowing even debit cards to access money not in your personal bank account, and then hitting you for $17 or so for the “pleasure.”  CRL estimated that the average charges are closer to $34 on such a transaction, making it very high interest for a short term loan.

I noticed a similar problem in a weird letter from my current bank, Capital One, where I made the switch because of the way they stepped up to support New Orleans hurricane recovery.  I have a savings type account and a checking type account.  The checkbooks are identical.  I got them at the same time.  There’s no notation on the checks that one is one thing and the other is something different.  I came back from being on the road a month to have a couple of letters saying that I had written more than 5 or 6 checks from the account, and they were letting me know that each future check would involve a fee of about $10 per check.  Getouttahere!  Still nothing in the letter saying which account, but my account number was at the top of their letter.  So, I call with a head of steam asking them WTF?!?  They ask me to read the account number, and it turns out to be that when one checkbook ran out I had picked up a new checkbook, and it had been the one for the savings, rather than the checking.  Are you still with me?  So, I was fuming, but in fairness I quickly grabbed the “right” checks and they had not charged me yet, so there was no harm, no foul (at least I think that until I get the statement!).  What is painful though is that all of this is way too caveat emptor – “buyer beware”  for even me, and tens of millions of others.

We need Congress to stop wheeling and dealing here and really give us some protection against all of these hidden and predatory shell games that are now the rage in modern banking!