I know there is a personal responsibility part of this but banks end up prying on the financial illiterate. Somehow my wife has a student loan with 12% interest. I'm not even sure how that happens. I also don't understand how interest rates are so low but CC interest is so high. They are basically borrowing free money and then charging people 29% on it.

CC interest is high because: 1. Most people pay off the balance each month; the people who don't _really_ need the credit. 2. The default rate of those people is probably (very) high. Given a default means a bank loses their capital, they need to make it back somehow.

Also, a student loan with 12% interest? If the loan still carries a significant balance, she should refinance at a much lower interest rate (pledge some collateral if you have to, like a car/house/existing share portfolio).

I'm not saying it justifies the whole 29%, but CCs have a much higher rate of default, which leads to higher interest rates.

I agree. They make the rules, they write the fine print, they hide the fees, etc...

Are there any consumer advocacy groups that represent the interests of consumers of financial services? Seems like that should be a thing.

From my limited knowledge of such things, I think it would be possible to set up a credit union where the "common bond" among members is the ability to spot banking practices hostile to banking customers.

If all the members know how to spot a scam, it is unlikely that anyone would vote that everyone should try to run one on themselves.

Excerpt from the membership application exam:

      ...
      B) Take the lower rate with the higher monthly payment.
      C) Buy a used car that is about 2 years old instead.

  22. Your bank offers to upgrade your debit card such that, for a fee,
      a transaction that would ordinarily be declined--or a check that
      would have bounced--is instead approved.  How do you react?

      A) Wow, that sounds convenient.  I'm in.
      B) If I wanted credit, I would have used a credit card.
      C) If I can't opt out, I'm closing my account.

  23. You need $40 in cash.  Your bank does not have any no-fee ATMs
      in the area.

      A) A fee is no big deal.  Withdraw $40 and pay $3.
      B) Withdraw the maximum, to minimize the percentage lost.
      C) Buy a pack of gum with debit and get $40 cashback.
      D) As in C, but also return the gum for a refund.

  24. Your bank offers...

The Credit Union would end up with so few members and so few persistent deposits (since all your smart members would immediately transfer assets into investment accounts, muni bonds, and ETFs), that the Credit Union would operate in the red... costing all the founding members dearly, both in time and money, when the Credit Union goes into bankruptcy. It turns out that the smartest folks, who saw through the charade, were thrown out with the bath water by not joining to begin with. ;-)

Obama's Consumer Financial Protection Bureau [0] and related initiatives provide an advocate in disputes with banks, limits and disclosure requirements on fees, etc. The CARD Act of 2009 also standardized credit card rate and fee disclosures.

On the non-regulatory side, there's not much meaningful pushback against the big banks, but you can choose to opt out of them by banking with a local credit union (university, employer, city, etc.) or potentially an internet bank like Ally or Simple.

It's not just fine print and fees. That's the least of our worries. It's more about the misuse of debt (line of credit for a vacation), taking on too much debt (furniture and appliances on layaway, and other such things), and inappropriate investment vehicles.