The massive bank bailout of the last decade, as well as the recent scandal involving the creation of millions of unauthorized credit card accounts by employees of Wells Fargo have made many consumers wary of banking, credit cards, and anything to do with the financial industry.
With the extreme belt-tightening undertaken by many of the nation’s biggest financial entities and the difficulty of many future homeowners to obtain mortgages, get credit cards, and gain approval for personal loans, the reputation of the financial industry has suffered.
Although the current state of the economy would suggest that the financial crisis and recession are over, many consumers who would otherwise be eligible for credit cards have backed away from applying for new credit.
Wells Fargo and Recent Financial Infractions
In 2016, Wells Fargo was fined $185 million for opening millions of accounts without the knowledge of customers. $100 million of that money would go to consumers, $35 million would go to the Office of the Comptroller of the Currency, and the remaining money would go to the county and city of Los Angeles.
Unfortunately, Wells Fargo’s account creation fraud was just the most recent of several similar cases the financial giant was charged with by regulators. According to an article published by USA Today, Wells Fargo was also fined because of violations connected with Federal Housing Administration (FHA) loans, overcharged credit card fees, improper debit card processing schedules, and questionable lending during the housing boom.
Other financial entities have also been fined billions of dollars over the past decade, according to the USA Today article.
“Wells Fargo isn’t alone in facing regulatory scrutiny that has led to large fines. Wells Fargo ranks just fourth among global banks in terms of total value of fines paid over the past eight years at $10 billion, Hockett says. Bank of America (BAC), JP Morgan Chase (JPM) and Citigroup (C) have paid more, $58 billion, $31 billion and $13 billion, respectively, during the same period.”
With all the apparent or suspected wrongdoing by today’s major financial institutions, can consumers expect to receive a fair deal when obtaining a mortgage, applying for a credit card, or getting a personal or car loan?
Reading the Fine Print is an Essential Step
With any financial agreement one of the most important steps is reading the fine print of the user agreement or account agreement before you sign on the dotted line (even if that signature occurs online with a checkbox and your name typed in a box).
If you’re not already aware of or cognizant of the rules that banks include in their credit card, mortgage, or loan agreements, it’s important to sit down and learn everything you can about standard terminology and general rules.
CBS News reveals the most important part of the average credit card contract that you should read before agreeing to set up an account:
“…some companies send less-sophisticated consumers flashier letters with pictures and entice them with zero-percent annual percentage rates, but fail to highlight hidden and back-loaded fees… look at the last page. That is where consumers can find all the important features, in particular, the APR, the late fees, and all the finance charges that are on the card.”
If you’re applying for a credit card (one of the types of accounts with which you might have financial trouble), make sure you’re aware of each of these costs associated with your card. The rates and costs vary for virtually every credit card available today, from regional bank cards to cards from major companies like Capital One and Discover.
- Annual Percentage Rate (APR) – When you carry a balance more than a month on your credit card, the company will charge you interest based upon this rate. High rates for borrowers with poor credit scores often approach 30%. Rates for borrowers who are an excellent risk often get rates less than 10%. Average borrowers and cardholders usually get rates between 10% and 20%.
- Annual Fee – Most borrowers try to avoid annual fees at all costs, but these fees are sometimes worth the cost when the card offers rewards throughout the year that add up to more than the annual fee would cost the borrower.
- Monthly Fees – Watch out for monthly fees. These fees are often tacked onto the cost to have a card above and beyond the annual fee. Very few worthwhile cards that offer a low-interest rate, no annual fee, and a high limit will have a monthly fee that’s worth it.
These are just some of the items you’ll need to consider as you read through the credit card agreement. You may also need to read and learn about the various legalities associated with your card. For example, does your card agreement require that you undergo arbitration if you have a disagreement with the card company rather than head to civil court?
Do You Have Questions About Your Finances and Bankruptcy?
Are you being hounded by creditors? Is it time to consider bankruptcy? Do you need advice on what your next steps might need to be to avoid foreclosure? Would you like to know how the legal team of Suburban Legal Group PC can help? Request a Free No Obligation Legal Evaluation today, and we’ll let you know your options and whether bankruptcy is the right step for you.
DISCLAIMER: All information on this website is provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.