Credit Card, Bank Fee Hikes Spark Outrage
Banks Hike Fees Despite Bailout Billions; Consumers and Congressional Panel Ask Why
http://abcnews.go.com/Business/Economy/story?id=7322929&page=1&page=1The billions of dollars that banks have received in taxpayer funds since last year have been a growing source of outrage for American consumers. And in recent months, some banks have added serious insult to injury, leaving Americans like Tony Cesnik fuming about hikes they're seeing to their credit card rates and other bank-related fees.
"The banks have been given billions of dollars of tax money and only lend it out if customers are willing to pay extortion rights," said Cesnik, a Concord, Calif., resident, in a message to ABCNews.com. "The banks need a legal spanking. They are acting like spoiled brats!!"
Myriad banks have steadily been increasing credit card interest rates for some card holders in recent months. Bank customers are also seeing spikes in other fees: charges for bounced checks and ATM surcharges are climbing, according to Bankrate.com, a Web site that surveys financial institutions.
Scores of Americans sent angry messages to ABCNews.com about bank rate hikes. But everyday consumers aren't the only ones who believe something is awry -- the congressional panel that oversees the government's bank rescue plan, the Troubled Asset Relief Program, is taking an interest in the issue.
The Wall Street Journal reported today that complaints about bank fee spikes have prompted the Congressional Oversight Panel to launch a probe into the issue.
A panel official told ABC News, however, that there is no investigation under way but rather the issue may be covered in a future report.
"The people who subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending," Elizabeth Warren, the chairwoman of the panel, told the The Wall Street Journal. "In a sense, we're asking taxpayers to pay twice."
Banks Profits Reported This Week
Outrage over the higher fees has grown even as banks, which are due to release first-quarter earnings reports in coming days, have said they've seen a profitable start to 2009.
Last week, Wells Fargo said it expected record first-quarter earnings of $3 billion. Earlier this year, executives at Bank of America, Citigroup and JPMorgan Chase also said they are seeing profitable quarters.
But despite those positive results, the banks have also raised fees and credit card interest rates. Most recently, Bank of America -- which has received $45 billion TARP funding -- announced that it was raising interest rates on credit card customers who carry a balance.
One reason for such increases, some say, is that banks are trying to compensate for rising credit card defaults. But that reasoning just isn't enough for consumers like Gary Gates, of Marcellus, N.Y.
"You might be able to justify a small increase," Gates said in a message to ABCNews.com, but the banks "go overboard."
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