Banks To Be Protected From Consumers


Banks to collect fees before credit cards are used

The Consumer Financial Protection Bureau is changing its mission. The agency was formed in 2009 to protect consumers from exorbitant—and often hidden—fees. That role posed a problem for those banks that now want to sign up consumers with poor credit card histories. Solution? Change the Consumer Financial Protection Bureau’s mission from protecting consumers from banks to protecting banks from consumers. Mission accomplished:

People with “impaired credit records” or “tarnished credit histories” are a risky bunch, but they are also perfect targets for Fee Harvester Cards, a bank product designed to collect highly profitable fees—the processing costs only pennies—that build a cushion for defaults sure to follow. The new upfront fee is collected before the card is ever used, like a $25 fee for a card with a $300 credit limit.

The banks worried that the Consumer Financial Protection Bureau would object to this latest fee scheme. However, with the once troublesome Elizabeth Warren out as bureau head, the banks hoped her replacement, Richard Cordray, would be more cooperative. Was he ever! The CFPB said nothing, thus letting the banks have their application fee.

For more, see the New York Times, Consumer Bureau Declines to Resist Upfront Credit Fees of April 13, page B1 by Tara Bernard.

Personal Note:I am a deadbeat. Banks call credit card holders like me “deadbeats” because we pay in full each month to avoid huge interest fees. You can read about winning bank battles in my

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