Financial institutions are boosting fees on a wide range of consumer transactions, trying to offset losses on bad consumer loans. Anthony Mason reports.
>> With mortgage defaults and unemployment still on the rise the big banks are taking a beating on bad consumer loans. Bank of America said today its put aside $13 billion to cover mounting losses; Citigroup nearly 4 billion. To offset those loses banks are hiking fees even on good customers.
>> Banks are looking to do much what airlines, state and local governments are doing and that is fill the revenue gap by boosting fee income. Mary Gorman found that out after her 48 year old son died. When she went to close his checking account Bank of America hit her with a $100 fee.
>> I just didn't realize that you know they would charge to close an account. They're taking money from a dead person.
>> Bank of America later refunded the money but in June it raised the fee on its basic monthly checking account from $5.95 to $8.95. Among big banks the average ATM charge is now nearly $2, up from a $1.78 just over a year ago. The median overdraft charge which 6 years ago was $20 has jumped to $26 this year, the first time it's increased during a recession. Heather Denado assumed spelling got hit by those higher fees when a bank loan was late being transferred into her account.
>> So not only was the money for the bills gone I also had $120 in overdraft fees.
>> But as job losses are mounting many borrowers are falling behind on their payments.
>> The issue is those credit losses continue to rise at an alarming rate.
>> And analyst Paul Miller believes unemployment could be headed for 11%.
>> 11% unemployment rate is gonna cause a lot of problems inside these banks.
>> The banks want to raise fees now because new restrictions passed by congress take effect in February. The fed is also working on new rules on over draft protection. Katie.
>> So Anthony we have spent billions of dollars trying to stabilize the nation's banks are we at least getting there?
>> The banks are in better shape but until the unemployment rate stabilizes they're really vulnerable cause remember if unemployment goes up 1% that's 100s of 1000s of job losses, people who can't meet their mortgage payments, can't pay off their credit cards, can't pay their car loans, potentially huge losses for the banks still.
>> Alright Anthony Mason, thank you Anthony.
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