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Published on January 12th, 2012 | by Luis Cavalcanti

2

Why I’m Going to Leave Chase Bank

Ok, so if you read this blog, you know that I’m not an Occupy Sympathizer. I don’t write that much about banks. And, frankly, I’m not opposed to big banks. I do have an aversion to the bailouts. I believe strongly in the power of markets, and I am not a fan of the idea of Too Big to Fail. I’ve never had a problem putting my money into namebrand banks, and have sort of taken for granted the reality of banking fees. Banks gotta make money somehow.

Then I saw this commercial:

It’s interesting to note that while Ally may have been the inspiration for my own actions, I would never put my money there. Ally bank is 74% owned by the US Government, and 10% owned by General Motors (GM) and companies directly related to the beleaguered auto maker. The US Government also has a large stake in GM, though its ownership has definitely changed since GM’s IPO, meaning that the share of ownership, and thus the risk to which the government is exposed to by taking ownership in this bank, is bigger than it might seem. The reason I wouldn’t ever put my money here is because I believe that public/private partnerships may be the most unholy union ever to have been forged and I refuse to support them with anything other than my coerced tax dollars.

And while my independent mind is a bit embarrassed to admit the efficacy of a commercial, it appealed to my sense of optimization. I have lived my life with a view toward optimizing and innovating everything. Banking is a product of the ancient world, though it’s not as old as you might think. Modern banking is routed in the 14th century. Banks were structured to facilitate the transfer of money from one person or group of people to another person or group of people. If you’re interested in reading a comprehensive account of how banking started, I suggest Niall Ferguson’s The Ascent of Money. In America Wells Fargo spurred quite a bit of innovation in both security and the facilitation of moving money.

Banking has seen numerous innovations since it’s inception. But while computers and the internet in general have effectively made the transaction costs of moving money from person to person $0 (we no longer need stage coaches and their shotgun rider, for example), banking fees on the deposit side have gone ever ever up. Now I understand that much of that is a result of federal regulation. But let’s be honest, banks made their bed when they tightly wrapped themselves into the fabric of government in the 19th century. Oftentimes regulations limit the ability of small banks to compete, while buttressing the position of larger banks. The designation “Too Big to Fail”, for example, meant that while small banks might disappear if they couldn’t meet their financial obligations, big banks (unless you were Lehmann Brothers) would assuredly be saved, or the government would negotiate on your behalf. Needless to say, innovations within deposit-taking institutions is a much-needed development and big banks don’t seem to have any interest in trailblazing deposit-side advancements.

One of the most important things a business can do in this highly technical era is have incredible, useful and most importantly unique products. It’s one of the lessons of Apple’s meteoric growth. The once-fledgling tech company taught us that the most important thing a business can have is a relationship with their customers who absolutely love their product. When you get down to it, Apple just sells computers. The iphone is just a computer, the mac is just a computer. But they have so fundamentally changed the way we interact with the machines, and they have so radically transformed our experience with their company, that they are one of the few companies that actually enjoys the benefit of consumer loyalty. Ultimately, the goal of business is to make money. In the case of of low-margin businesses, like banking, the goal should be to have volume enough to reap impressive profits. If being good to consumers is expensive, consumers are willing to pay a bit more to cover that cost; Apple proved that.

That said, banks have a very low bar to meet when it comes to treating us well. In the age of computers, they make it difficult to pay credit cards; In the age of computers, they pretend like making small changes to one’s account is an arduous project that takes upwards of 10-15 days. Now, I’m not going to complain about missing a payment on my credit card or mortgage. As of today, my credit score is hovering around 780. I’ve never missed a payment on anything, and I have very little debt.

While I would never begrudge a bank the opportunity to make some money where the convenience of using their service is actually worth something, one thing I will not stand for are crooked and dishonest business practices. The following picture is a check that Chase wrote me. This check represents hours and hours of work. I was called names, lied to, obstructed, and eventually paid… well, given my own money back. Then I was written an apology letter that said something to the effect of “we’re sorry that you were disappointed by some service or product that Chase provided you….” They were right, I was disappointed. Chase stole my money for nearly 6 years, and I didn’t even notice.


This image took me at least three phone calls to get. First, I was told that it would appear in my account within a few hours. I called the following evening. I was told it actually took 48 hours. I waited a few days, it still didn’t appear, and I called again. I was told that I couldn’t even get the image online and that I had to go into a branch in order to get a picture of the image. All of this made me even more determined to finish this article.

Chase Amazon Visa Card

It all started way back when I was in college. I saw an advertisement for a credit card on Amazon that would give me some money off my books for the semester and a percentage of my purchase would come back to me in Amazon credit. I’m sure a lot of you have the same card.

I spent enough money over the years to get a couple hundred dollars off books. Since then, I’ve discovered credit cards that give me 2% cash back, or miles, or other neat, more adult-ish, advantages. But while I was in college, the 3% cash back on Amazon books saved me a lot of money each semester.


Mint’s Logo

At around the same time, a bank account monitoring site became popular. This site, later bought by Intuit the company that makes Quicken, allowed you to input all of your bank accounts, credit cards, student loans, and whatever else you wanted it to monitor. I fed all of my accounts into the program, and began the process of watching them closely.

Back in June, Mint updated their site. I got an alert that said that Chase had charged me a fee. I was a bit shocked, since I had never noticed a fee before. So I went to investigate. And when I did, I found that Chase had been charging me a payment protection plan fee since I had first gotten the card. Now, if you’ve ever registered for a card, you’ve probably had an opportunity to register for this payment protection plan. It’s a 3rd party vendor that charges you 1.5% interest each month based on your balance with the promise that should you be injured and unable to pay your minimum balance they will cover it. Even if you pay off the full balance every month, you end up paying the 1.5%. It’s a terrible deal, basic math pretty well shows the idiocy of the plan. Initially, my payments were $1 and $2 a month. As my spending power went up, I spent a bit more each month. Suddenly, I was being charged $10 to $15 each month. Since it was a small fraction of what I was spending, I never noticed the charges.

When I did the math, I realized that Chase had taken nearly $500 in fees over the course of the last five years. Now, in the grand scheme of things, $500 is not that much money especially when it’s taken over a period of time. Like a frog in slowly heating up water, I hadn’t even felt the trickle of money from my account into Chase’s coffers. But the fact that they’d done it had gotten me angry.

I know what you’re thinking, you think I probably signed up for the protection plan. Well, I was pretty sure I hadn’t. I wasn’t positive, we all have weird lapses in judgment. So I called the bank. During the course of my first call, I told the banker that I was pretty certain I hadn’t signed up for it. She told me that I was lying and that Chase had proof that I’d signed up for the plan. Then she provided me the most laughable option I’ve ever heard.

“Do you want us to research this all the way back to the beginning, or do you want the last two month’s refunded?”

“I can only choose one?”

“Only one.”

So suddenly, I’m forced to chose between definitely being paid $60.41 of my own money or possibly being given something like $500 of my own money. What do you think I told her? Obviously, I told her that I wanted them to research the transactions all the way back.

Four days later, I logged into my bank account. And wouldn’t you know it, Chase had refunded me the last two month’s payments.

I figured they’d come to their senses and might be sending the rest of the money in a check through the mail. I waited a week and no check came. So I called Chase and asked where we were in the research process.

“I’m sorry sir, we refunded you the last two months. We can no longer send this back to be looked into.”

“But I didn’t ask to get the refund, I asked for the matter to be researched,” I told the lady.

The woman put her supervisor on the phone. I told her supervisor how unhappy I was, and probably got a bit testy with her; I wanted my money back. Somehow, she was able to escalate it, and send the whole account back for research. They told me that they had a recording of me telling them that I wanted to be signed up for the program. She said I was lying about not signing up and that Chase doesn’t sign people up for the program unless they have explicitly stated that they wanted to be part of it. Likely story, considering how many people online claim to have been enrolled against their will:

Not to mention the class action lawsuit about this exact issue.

That’s just a very brief synopsis of these calls, by the way. I probably had 2 or 3 other phone calls in between each of these, not to mention that each call took more than 45 minutes to resolve. In all, I probably spent 8 to 10 hours on the phone with Chase’s call centers being told I was a liar. And it wasn’t just an oblique reference to the fact that I probably had my facts wrong, or that I’d maybe forgotten about giving permission. They out and out told me that I was dishonest.

Needless to say, I was right. When all was said and done, I got a check in the mail for $428.61 which represented the full amount of money plus interest that Chase had taken from me since 2006 less the initial refund that I’d already received. In all, the total came to $489.02.

So two things to take away here. First, Chase offers a program which is incredibly detrimental to its customers. Second, Chase does whatever they can to squeeze a few extra bucks out of you in a way that you don’t even realize what’s happening. The former demonstrates an incredible lack of care for the people they are doing business with, the latter represents a win-at-all-costs sort of attitude to business. It indicates to me that Chase cares more about making money than providing services worthy of that money. It’s completely different than the Apple model and it’s worse than any bank I’ve ever dealt with.

This is my brother proposing to his girlfriend (now fiancee). Chris, I hope you’re okay with me posting this. I figured it was fine since it’s already been blogged about elsewhere by our alma mater’s lesser read blog

That said, there are a lot of big banks out there. Recently, Bank of America started charging my brother fees. He is a college student who just got engaged last week. He’s been applying to grad schools and probably has $30 to his name (rings are expensive, after all).

He told me that he started getting notices that his BoA account was a dry hole. He owed money to the bank…. He owed money to them because they decided it was important to suddenly, without adequate warning, start assessing his account some sort of fee. Basically, he was being charged to put his money into a free student checking account that exists in order to have a place that will safely house the money of a person who doesn’t have much of it yet. Now there’s more to the story, but I already told you all about my experience at Chase and won’t make you sit through another example of a poor banking experience; I’m sure you all have your own stories. Needless to say, the problem is pervasive. Big banks think financially, not relationally. Ignoring the relational component of business, however, is precisely the reason so many people are beginning to pull their deposits from these banks. Whether we like to admit it or not, the tangible cost and inefficient, non-scalable effort of forging strong customer relationships is reaped ten-fold in the intangible loyalty of customers.

Ultimately, I don’t want to be banking at a place that forces me to wonder if I have the wrong idea about what banks are supposed to do. So far as I know, banks are supposed to be a place where I can put my money and keep it safe. When a bank disappears your money, they do something that runs counter to their mission. To be honest, it’s worse than putting all my money underneath a mattress. A world in which banks find more and more ways to bilk their youngest, poorest depositors of their currently meager deposits, is not a world full of hope and possibilities. And let’s be honest, that’s what banks are supposed to be. To finance an entrepreneur’s venture, to own a home, to pay for college… whenever we need to get ahead we turn to our banks. And those are services I’m willing to pay for. Whether the cost is a service fee or some sort of interest, the bank should exist to help me build my wealth. When I build my wealth, my deposits increase, and when my deposits increase, our fractional reserve banking system helps build the wealth and dreams of those in my community.

On the other hand, stealing my money is not a strategy that will lead any bank to a future of prosperity and longevity (lest the government bails them out again). So I have decided to join the big-bank exodus. I will be defunding my Chase bank account, I will not be using my Chase credit card, and I will be moving to a small, local or alternative bank-ish program. I’ve been researching a few, and I’m trying getting ready to try them out. I’m young. I make enough money that a bank will want my business, but not enough that they will care that much if they don’t get it.

But I have the rest of my life to earn enough money to matter to a bank. It’s too bad for Chase and their big-bank compadres that when that day comes, the way they treated me today means that they won’t get the chance to benefit from my hard work tomorrow.

LIST OF BANKS/CREDIT UNIONS I’VE CONSIDERED OR AM CONSIDERING
KEY:

– Institutions I have accounts in and am satisfied with.
– Institutions I do not have accounts at, but would be willing to deposit money in.
– Institutions I have pulled my money out of or would never put money into.
  • State Farm Bank – Yup, I didn’t know it either. State Farm isn’t just an insurance company. I actually already got a bank account here. The online system looks terrible, but the two times I’ve called them, my experience has been incredible. Also, pretty much all of their services are free, and they have ridiculously awesome ATM fee compensation available. It’s a mutual company, which means that it’s shareholders are its customers. FULL DISCLOSURE: I am an owner in a company that consults with State Farm agents (which is how I found out about SFBank).
  • Simple – When I applied for an account here, I was put on a waiting list. I received an email, however, that invited me to “ask a question, rant a rant, or start a discussion on the state of consumer banking in the US, if that’s your thing. You can also just reply to this email if you’ve got a longer story to tell. Bring it on; I’m here :) “. The prompt is what inspired this blog post. I don’t know much about Simple, but they seem to understand that they are actually trafficking in hope and dreams. They manage your deposits by putting them in a network of small local banks, which means that they are FDIC insured (maybe they can helpfully, effortlessly distribute those who reach the $250,000 limit in bank accounts). In all, using local banks means that your money will go to actually helping local businesses in a community somewhere in the US. As far as I know, their deposit-taking banks are just that, which means they aren’t going to be using your deposits to fund their weird, mal-investments. No bad investments means that there is a low chance of Simple’s network of banks going under. And since money is distributed to a network of bans, it is hard for them to become too bloated to fail. Everything I’ve read about what they are doing, I like.
  • Fidelity – I have had a money market account with Fidelity since… forever. They give me check writing access, direct deposit, and other nonesuch. They don’t have a minimum to have in the account, and a lot of the other banking rigamarole is not there since Fidelity is not primarily a deposit-taking institution. I have considered just using them instead of Chase. Weird that a deposit-taking bank would be worse at taking deposits than a brokerage firm.
  • Ally – Since Ally started me down the road to defunding my Chase account, you might think that I would give them a try. Well, there is 0% chance of that. Guess who owns 74% of this bank…. The US government. General Motors owns another 10%. Before GM’s IPO, the government owned about 27% of them as well. It’s easy to win the game when you are the referee. There is no way I’m getting in that bed.


About the Author

Luis Cavalcanti



2 Responses to Why I’m Going to Leave Chase Bank

  1. david says:

    chase bank dont care who anyone is ..i have tried for years to get help with my payments and i never have got a letter or anything..when i cant pay for my house i will leave and take what i have done here …and as far as the gov..bailing them out ..why they screwed us and wont help..but yet show millions in profits..who are crooks….you got it big banks..

  2. Jared says:

    Large banks are not in the business of serving little people. Indebted newlyweds, college grads who owe $900 a month for the next 30 years, widowed wives who inherit the bad financial decisions of their husbands–big banking is immune to sob stories. The only good thing about little people is that there are MILLIONS of the them who, when combined, are making an astronomical daily deposit. Providing good service to all those individuals is far too expensive. Its much more cost efficient to build self-animated websites, and wherever possible put the consumers themselves to work (e.g., the advent of self deposit slots at ATMs, remote deposits using your iPhone, various apps–there are dozens of tricky examples that have “empowered” the consumer). And let us not forget about the endless service charges: Account Access Fees, ATM Access Fees, Other Bank ATM Fees, Non-suffiencient Funds Fees, Foreign Transactions Fees, Checks Fees, Document Copies Fees, Excessive Activity Fees, Overdraft Fees, Money Order Fees, Stop Payment Fees, Verification Fees, Wire Transfer Fees. These are only broad categories and when looked at individually, banking fees are hilarious. Don’t expect the service fees to abate any time soon either, the list will only grow from here on because consumers have no representation.
    Banks are interested in lending and underwriting very large corporations and they’re especially interested in lending to governements going to war. Military conflicts cost bucks and banks are where governments get their funding. Try to imagine the money that is lent to sponsor a war and then try to imagine the money that is made on that loaned money and then know that you’re imagination falls short of the enormous proifits that are paid for by soldiers and you, the tax payer. Governments pay bankers through the nose when they go to war, and bankers know this. That’s why bankers effectively write the bills in congress and all the government officials pushing for wars are more or less working for the bankers who sponsor them. The U.S. government has no money–they owe trillions to the federal reserve and countries around the world. Where does all their non-existent money come from? The Federal Reserve System, controlled by privately run banks.
    Keep in mind that at the top of the banking world newcomers are not welcome and competition does not exist. Banking is a club that’s comprised of very intelligent people and it has the backing of the foulest corruption congress can sale. And the next time you’re upset at a local branch keep this in mind: The real bankers don’t give a damn about the workers at their little branches–they’re almost as unimportant as the little people handing over their pitiful $1,100 biweekly paycheck. Don’t unleash on the teller, shift supervisor, or branch manager. They’re powerless. They have nothing to do with the policies they are given. And you? You’re a miniscule speck on the monitor of a very large playing field and your voice will not be heard.

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