Comments on: Bank charge of the day, mortgage-payment edition

By: Acharn

Acharn — Sat, 07 Jan 2012 16:06:21 +0000

This is really off topic, but Citi has a branch here in Bangkok. About ten or twelve years ago a friend of mine was working for a U.S. State Department program helping to resettle illegitimate children of American servicemen, so he worked alternate months in Bangkok and Hanoi. A Vietnamese asked him to help her with a transfer of money to a branch of CitiBank in Texas. My friend went to the Bangkok branch, and after several hours of trying to find someone who knew how to do this thought he had succeeded. A couple of months later the Vietnamese lady told him the money still had not arrived in Texas. My friend went back to CitiBank, and after about six hours of looking for the right person was told that the money had not been transferred because no one at the branch knew the ABA code for the branch in Texas. When he asked why they had not notified him of their failure, they said they did not know how to contact him. He pointed out that the request for transfer had included his telephone number. Eventually, I believe, while sitting with the manager in his office he took out his cell phone and called the branch in Texas and got their code. They did not, of course, offer to reimburse him for the extra expense.

By: AbigailCField

AbigailCField — Fri, 06 Jan 2012 14:50:26 +0000

When my husband and I bought a truck, the dealer tried to sell us on a third party service to do much the same, though the fees were lower. Seemed crazy to me at the time, since we could, and do, replicate the process on our own. But Citi’s kicker of preventing you from replicating it is obscene.

By: ckbryant

ckbryant — Fri, 06 Jan 2012 14:40:04 +0000

I’ve been laughing myself silly over these arrangements for ages. I understand why people enroll in these things, though.

First, some people are bad at math.

Second, some people understand the math, but still find it a valuable committment mechanism.

But look, the “enormous amount of hassle” it takes to replicate this thing on your own?

It’s called a BUDGET. There’s really nothing more to it than that. Write your budget around two bi-weekly paychecks, and you get a “bonus” paycheck twice a year. We generally use one for summer vacation and one for Christmas, but if you want to be virtuous and use them to accelerate your mortgage, go right ahead. Who’s stopping you?

For anyone on Earth who isn’t living with a budget, keeping track of expenses, and balancing the books at the end of the month, the very best financial advice you can get is to start doing that right now. No gimmicky program will ever do as much good as that; and once you’re doing it, you find you don’t need the gimmicky programs anyway.

By: dhunger

dhunger — Fri, 06 Jan 2012 13:44:58 +0000

Why in the world ANYONE does business with Citibank, is a complete and total mystery to me.
When did the business world evolve from “The customer is always right” to the new business model: “Suck every last drop of blood out of their veins”?

By: amr2002

amr2002 — Fri, 06 Jan 2012 13:20:39 +0000

FWIW, GMAC doesn’t charge for this. Indeed, you can make payments every day if you want to…though i think they only apply the payments to the mortgages 2x per month. (From what i can tell.)

By: BboBob

BboBob — Fri, 06 Jan 2012 12:50:20 +0000

This is nothing new. I’ve been shredding those offers for years.

By: Sechel

Sechel — Fri, 06 Jan 2012 10:56:56 +0000

This is absurd and assumes a person has zero cushion in their bank account and has no concept of opportunity cost. Given the math there is no sane reason to pay bi-monthly. The borrower would be better off paying once per month and electing to prepay a few dollars extra which would get one back to a 25 year plan. So you pay a big bill at the beginning of the month, in the middle of the month you don’t pay and your monthly finances are back in line. This plan makes no sense…

By: trnc

trnc — Fri, 06 Jan 2012 03:30:29 +0000

TFF, moving savings, checking, money market, etc to a small institution is definitely a great thing to do, but there isn’t much point in going out of your way to move your mortgage to a small bank because they will likely sell it to one of the big banks in a heartbeat. That’s what happened when we refinanced with a small bank a couple of years ago.

By: spectre855

spectre855 — Fri, 06 Jan 2012 03:25:47 +0000

I think I’d also like to hear more information about only being able to pay once per month. What exactly does that mean?

By: TFF

TFF — Fri, 06 Jan 2012 03:04:26 +0000

If you don’t like it, then don’t bank there. It is really and truly that simple. Don’t do business with Citibank. Don’t do business with BoA. Find a local bank, a credit union, some place where they treat you honestly.

Anybody who still patronizes a big bank surely knows the game by now and has no excuses if they don’t like the rules.

VOTE WITH YOUR FEET!!!

By: leoklein

leoklein — Fri, 06 Jan 2012 02:45:41 +0000

Once I noticed that Chase Manhattan Bank was charging me a monthly “Inactivity Fee” on my checking acct (think how Orwellian that is), I figured anything is possible with these Banks.

I say, break ‘em up — before they ruin us.

By: DCWright

DCWright — Fri, 06 Jan 2012 02:35:38 +0000

I’m not surprised that they charge you to set up a regular biweekly payment, but I am surprised that “CitiMortgage has a rule that it will only accept a full payment once per month”. I believe that means this is a nonconformant mortgage, i.e. Fannie and Freddie should be unwilling to underwrite it, because conformant mortgages allow unlimited prepayment. Perhaps it is okay for them to only accept a payment against interest once a month, but you should be able to make principal payments as often as you want.

By: tqft

tqft — Fri, 06 Jan 2012 01:36:50 +0000

Try that in Australia.

After being stoned by your customers and pillioried by the government, the regulators and news organisations would be after you.

Weekly, fortnightly, whatever payments – is always free to give the bank cash. Note, most banks here is Australia hold the mortgages themselves.

By: Curmudgeonly

Curmudgeonly — Fri, 06 Jan 2012 00:58:25 +0000

But remember, we don’t need to get a Consumer Financial Protection Bureau up and running in some kind of unprecedented power grab, with unchecked, almost dictatorial powers to regulate business in America with little or no oversight from the peoples’ representatives in Congress.

By: SaulTann

SaulTann — Fri, 06 Jan 2012 00:53:22 +0000

What I don’t understand from the story is whether the mortgage holder is actually getting the benefit of biweekly payments since Citi is remitting the monthly.