Another Reason to Love the Banks

Well it's Monday and another reason to be disgusted by the banks.  Today's offender is Citi.  They offer a program for their mortgage customers called the Bi-Weekly Advantage Plan.  What it basically means is that one half of your mortgage payment comes out of each paycheck (since most folks get paid every two weeks).  This means you'll end up making 13 payments a year.  Cool.  You will be paying down principal on that 13th payment and will save thousands in interest over the life of the loan.  Felix Salmon from Reuters explains the whole process here .

Unfortunately, Citi doesn't tell you what actually happens.  You see they don't send your money toward the mortgage every two weeks.  They just take the money from payment one and bundle it with payment two.  What does that mean?  They get to use your money to the tune of half your mortgage payment for the whole year.  For this, THEY CHARGE YOU $375 to sign up to the program and the charge you $1.50 for each draft.  Pretty sweet huh?

So do you wonder what that overnight lending market means to them?  Lots.  That must be why to this day if you go to the grocery store and write a check, they can clear it immediately.  But if  you deposit a check over $5 thousand written by a multi-billion dollar local firm in the bank, they will need two weeks to clear it.  Thank goodness they do that because when asked, it was to “protect” me.

Old school reasons to hate the banks.  We should stop supporting them with our tax dollars.

Flat taxes and term limits.  Not perfect, just better.