Chicago Bankruptcy Lawyer Blog

You can't believe everything you read - especially when it comes to your bank, say Chicago bankruptcy attorneys.

Many banks are sending out letters urging customers to sign up for overdraft protection, a program that allows your bank to authorize a debit purchase - even if there's not enough money in your account to cover it. Some letters are going so far as to threaten customers, warning that their debit cards won't continue to work unless they contact their bank immediately, according to the New York Times.

With bold font and terms like "emergency" and "contact us immediately," these messages can be unnerving - not to mention confusing - for folks who frequently rely on a debit card to make purchases. But their purpose is actually very simple - they're advertisements. And you shouldn't fall for them. Overdraft protection isn't about saving you the hassle of overdrawing; banks want you to sign up so they can charge a fee each time they authorize money because you don't have enough to cover a purchase. Here's the real story on overdraft protection.

Continue reading "Chicago Bankruptcy Attorneys Warn Consumers About Overdraft Protection Fees" »

Using cash usually makes more sense than credit. You don't have to deal with interest, you know you can't spend more than what's in your account and the act of physically parting with your money makes you less likely to splurge -- and wind up in debt.

But there's at least one pitfall to paying with paper - ATM fees. Let's say you need to take out some money and you aren't anywhere near your bank. Instead, you go to the nearest ATM. You can expect a fee of at least $3 for using an ATM other than your bank's. And that's not all. Your bank thinks it has to punish you for withdrawing money elsewhere, so you can also expect to get dinged up to $2 on the other side. If you're taking out $20, you've already spent a quarter of your money before you even break the bill.

Fortunately, the situation can be pretty easily avoided.

Continue reading "Watch Out for ATM Fees That Add Up" »

If you're in the habit of tossing mail from credit card companies before opening the envelopes, you might want to rethink your strategy.

With creditors in the process of making changes to counteract stricter regulation, it's likely that some of those envelopes you assume are just advertisements or routine legal notices are actually important updates from your credit card company of changes that could impact you financially.

For instance, both Bank of America and Citibank announced plans this year to begin testing an annual fee on certain credit cards. And American Express recently notified holders of its airline cards, including Delta, JetBlue and Hilton and Starwood hotels, that it would be revoking rewards to customers who don't pay their bills on time, whether they're repeat offenders or normally careful consumers who happened to make a one-time mistake.

Other predicted changes include higher late fees, a fee for calling customer service, receiving paper statements or merely requesting a higher credit line and higher interest rates. My words of advice? Check your mail carefully.

Continue reading "Read Your Credit Card Junk Mail Before You Toss It" »

There's a lot of (legal) pick pocketing going around, but that shouldn't mean we have to put up with it.

Remember last month when we discussed the growing cost of credit cards? In response to new legislation meant to protect consumers from unfair fees and term changes, credit card companies are lowering limits, raising rates and adding brand new costs - like an annual fee or a penalty for non-use.

Now, banks are getting in on the action by becoming greedier with their checking accounts. Unlike a credit card - which, believe it or not, you can choose whether or not to use - checking accounts are pretty much a necessity now that we don't hide our cash under the mattress like Grandma did. So it was a little disturbing when I noticed my former bank had started charging a $9 account maintenance fee each month.

Continue reading "Banks Find Ways to Make Checking Accounts More Expensive, Chicago Bankruptcy Lawyers Say" »

Imagine paying for the privilege of spending your money. Sounds a little ridiculous, doesn't it?

But it could become reality for millions of credit card holders once the last part of credit reform legislation goes into effect this February. Don't get me wrong - the regulation changes are much-needed. They'll protect consumers by eliminating things like sudden interest rate hikes, fees undetectable in fine print, double-billing cycles and billing periods that are so short it's nearly impossible to get your check in on time.

So what's the problem? Banks just so happen to make most of their money off credit card fees. In the past, they've made it easy for you to make late payments and exceed your credit limit. But without their old tricks, they're forced to come up with new ones - like annual fees. Creditors are returning to the early days of credit, when they billed charge card customers a certain amount just for holding their cards. Bank of America is one of the first banks to pilot the program, charging a $29 fee on 1 percent of its customers.

Continue reading "Annual Fees Are Back As Credit Card Companies Face Reform" »

What's the only thing worse than not paying your taxes? Not filing at all.

This Thursday, Oct. 15 is the final deadline for the whopping 11 million U.S. taxpayers who filed for an extension on their 2008 return. With the economy still down in the dumps, many folks haven't seen an anticipated improvement in their finances - consequently, some are opting to simply ignore the deadline and not file.

Here's why that's a mistake. You might be able to get away with ignoring your creditors for a while, but you can't ignore Uncle Sam. If you don't file, you're immediately going to start incurring fees - these late penalties can be up to one-quarter of your total obligation. Before you know it, your debts could be doubled or tripled. You may even face jail time.

But there's a simple - though maybe not ideal - way to avoid all that.

Continue reading "Tax Extension Filing Date This Thursday" »

When gift cards surpassed traditional presents in popularity, I knew it was only a matter of time before we started just giving cash. And then, just as I predicted, the prepaid debit card arrived.

It's sort of the equivalent of cash, but more convenient than carrying around a wad of bills (and less awkward than gifting said wad of bills). Unlike a gift card, you don't have to guess whether the recipient likes a particular store. Heck, you don't even have to give prepaid debit cards as gifts - more and more folks are buying them for personal use.

As banks like to advertise, you don't even need a bank account or good credit to take advantage a prepaid debit card. Just load the card with your paycheck and spend. Convenient, huh? Unfortunately, it's a little too convenient.

Most of these prepaid cards come with ridiculous hidden fees - take the activation fee, for instance. I mean, why would you buy a card if you weren't going to use it? And that's not all, according to the New York Times.

Continue reading "Why Prepaid Debit Cards Might Not Be Such A Good Deal" »

Big banks don't like to be told what to. So with the news that federal regulators are considering legislation to control overdraft fees, a couple of the financial companies took matters into their own hands.

Bank of America and JPMorgan Chase recently announced that they would reduce the maximum number of overdraft fees - the outrageous penalties banks charge when you overdraw with your debit card - that a customer can incur in a day. Even better, they'll make it easier for customers to choose whether to opt in to the overdraft protection program. Currently, bank customers are automatically enrolled and aren't allowed out except in very special circumstances.

But how much of a difference will it really make? It depends.

Continue reading "Big Banks Revise Debit Card Fees, But Does It Help?" »