GUESTWORDS: Fees, New and Improved

By James Monaco

   I’ve always been fascinated by credit card fees. When your bank is already charging you any interest rate they like, why antagonize their customers further with hefty nuisance fees? It doesn’t seem to make marketing sense. (Just bump up that “default” rate to something even more usurious than it was before; most of your customers won’t notice.)
    I’m old enough to remember when a credit card was a simple and honest relationship between you and your bank: You paid an annual fee for the service and they charged you an honest interest rate for the money you borrowed. (They also collected 2 or 3 percent from the vendors.)
    But starting in the 1980s, as credit card regulations imploded, you began to see those extra numbers on your statement. For a long time it was just the late fee: Pay before 5 p.m., you win; pay after 5 p.m. — whoops! (Sorry, Hawaii, we’re on Eastern time.)
    Then a few years ago a consultant by the name of Bill Strunk invented the “over-limit fee.” I thought this was sheer genius! What Strunk realized was that you could take a contractual obligation (the limit on your credit), loosen it unilaterally just a little, make it look like a service, and charge whatever you liked for this “service”!
    Now it looks like the Consumer Financial Protection Bureau is going to put a damper on these fees. The banks will need more creative thinking. Here are some suggestions:
    My wife’s credit union charges her a “rush payment” fee if she pays online after 4 p.m. the day before the due date. (It doesn’t matter, of course, that rush payments arrive at the same time as non-rush payments.) This concept has possibilities: Expand the time frame by a day or two and charge for semi-rush payments made less than 24 hours before the due date.
    No-call fee. I’d be happy to pay, say, $9.95 to eliminate dunning phone calls for a month. Better yet, charge me $14.92 for no phone calls, period, or $4.99 for no phone calls from machines, only humans who dial the number themselves.
    Automatic transaction fee. An increasing number of transactions are automatic monthly subscription payments. I haven’t signed a receipt for these; they are risky for the bank. What if I refuse to pay? What if I’m dead? The bank should charge me $12.95 for each of these risky charges.
    Billing fee. A number of banks have offered me $5 (five American dollars!) if I switch to e-mail billing. Time to reverse this: From now on, if I want a paper bill mailed to me each month I should pay for the privilege — $17.76 sounds about right ($24.95 if I still use those quaint old paper checks and require a return envelope).
    Unredeemed fee. If I foolishly neglect to trade in my bonus points for — whatever — the bank has the extra burden of continuing to account for them. I should pay for my lax behavior and the trouble I cause them. Think of all the bits and bytes they have to spend. I’d say $19 per 10,000 unredeemed points per month would sound about right.
    Then again, maybe there is a bank somewhere whose business plan suggests they can thrive collecting 3 percent of each charge transaction from the vendors and, moreover, charging as little as prime plus 8 percent for money borrowed. (How greedy do you have to be not to be satisfied with a 14-plus percent return on the cash flow running through your bank?)
    They can even add a fee if they want: Call it the “no-fee fee.” Charge me almost anything per year so I don’t have to play this shell game with you. That would be a fee I’d welcome!
    Sounds like a lucrative deal to me. If such a bank, say, Bailey Savings and Loan, offered a charge card on those terms I’d jump at it. So would another one hundred million Americans. Bailey would own the market.
    But that would cause another crisis for the banks that are too big to fail. And another trillion-dollar bailout. Bill Strunk, I hope, would find a way to stop that.

    James Monaco is a writer and publisher in Sag Harbor. He offers a spreadsheet template to help you analyze your credit card overcharges at