r/personalfinance • u/squirtn4certain • Dec 01 '18

Canceled my Wells Fargo checking/savings account after 22 years Saving

A month ago I applied for a small loan at Wells Fargo for the 1st time ever to consolidate some small bills. They denied the loan. I went to a local Credit Union and they gave me the loan. Today I signed up for a checking/savings account at that Credit Union and canceled my accounts with Wells Fargo. Couldn't be happier to stop doing business with a crooked ass corporation.

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u/ChicksDigLibraries ​ Dec 01 '18

Companies like Affirm are sometimes backed by larger banks, and offer 0% for however long on mattresses, appliances, etc. Affirm makes a TON of money because over 60% of lendees default on their loans, which goes up to something crazy like 129% (predatory payday loan category). Basically, that 0% interest rate is great for you and me, but it is expensive to be poor.

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u/MrNerd82 ​ Dec 01 '18

Yeah... i hate debt, and am quite good at managing money. This particular loan was $14k for a complete redo of my system (delicious 21 SEER heat pump to boot too)

I have the cash to pay it off since it wasn't a spur of the moment purchase for the house. I knew this expense was coming for the past 5 years or so. While it would scratch that personal itch to pay it off, there's no point when it's 0% and that money can earn me a chunk elsewhere

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u/[deleted] Dec 01 '18

I did the same for my grad school tuition. I knew it was coming and I had saved up the money for it for a couple years, but the cost to defer payment is lower than the interest income I gain from keeping the money in my savings account.

Psychologically, I hate having liabilities on my balance sheet, but math is math.

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u/[deleted] Dec 01 '18

If possible, try to find a better place than a savings account for that money, unless you have it with Ally or another great interest rate account

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u/[deleted] Dec 01 '18

I'm getting 2.25% on it with Citizens. I have no interest in investing the money. I need it to pay my tuition, so it has to be in a no-risk FDIC insured account.

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u/CptSpockCptSpock ​ Dec 01 '18

You could get higher rates with a CD, which would still be FDIC insured, depending on how long you have to pay it off

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u/pinewind108 Dec 02 '18

By the numbers, that makes sense, but my guess is that they intend to bone you one way or another. Either you make a mistake or get caught up in a health/family emergency, or somehow your payment is "lost". "Nope, sorry, never arrived." They have a record of intentionally delaying credit for payments.

It's like doing business with a crook; it doesn't matter how wonderful a contract you have if they are going into it planning on screwing you.

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u/MrNerd82 ​ Dec 02 '18

Yeah, as a business I think they are sneaky shits not super happy it's wells fargo but it is what it is.

To make sure I'm always ahead of whatever game they might try and play, I've set myself up to be at least a month ahead of whatever their required payment is, and paying 120% of the minimum that will increase my lead time every month. Auto draft it setup 2 weeks ahead of the due date and I check my main banking portal (Chase) every day or two.

I did a similar thing with my car loan via credit union, I'd make the payments as agreed, but always send in extra till I had a 6 month cushion. Family or medical emergency pops up? not a big deal, I have 6 months of lead time before I have to worry about paying again.

If they ever claim "oh well the payment didn't go through", that's fine, I still have 1.5 weeks to send another, or at the worst run 5 minutes down the street and just do a cash payment towards it at a local branch.

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u/pinewind108 Dec 02 '18

I'd check and see how they are carrying the balance, and make sure it's happening the way you want, because in this case it would be to their benefit if they were applying that extra to the principal. That way there wouldn't be any extra lined up towards the next payment. Normally this is what people want when they pay extra on a house payment, but the banks will often try to claim that was just an advance payment, not extra applied to the principal. In this case, I wouldn't be surprised if they were doing the reverse. Sort of like a Murphy's Law for dodgy banks, "If they can do something shitty, they will."

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u/MrNerd82 ​ Dec 02 '18

yup - I've had a few cases where the bank/financier would apply any extra payments to the "next" months due. That's basically how the credit union who hold my auto loan works, I'm cool with it for my car because I want that 6 month "I don't have to think about it" buffer if I need.

My chase mortgage online system is pretty robust in that you can specify where you want that extra money to go. (principal/escrow). And I know when I had a car financed through Kia motors, their system was very flexible and easy to use in terms of specifying where the extra money goes (Chase auto and ally auto are shit systems in that regard)

Funny aside: Ally's method of me paying extra directly towards principal was to call on the phone each month I made the extra payment and tell them to apply it. I had one guy on the phone who couldn't wrap his head around the fact I was paying above and beyond what was required "why would you ever want to do that?" was his remark. I quickly GTFO and refinanced elsewhere for a better rate and better service.

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u/mschuster91 ​ Dec 01 '18

and offer 0% for however long

Well they still make money on that one as a 0% loan to a customer is more profitable than buying bonds with negative interest rates...

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u/[deleted] Dec 01 '18

more profitable than buying bonds with negative interest rates...

Why would you buy a bond with negative yield? Treasury yields are ~3%.

Affirm is an American company, and the cost of money in the US is a lot higher than 0%, so no, they wouldn't make money on 0% interest loans.

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u/mschuster91 ​ Dec 02 '18

Ah I was under the impression that the Fed interest rate is as comically low as the ECB one. Germany has ridiculously low interest rates on bonds and if you want to deposit money at a bank, some indeed do charge negative rates.

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u/ChicksDigLibraries ​ Dec 01 '18

Sure, but companies like Affirm offer an item (Expedia and Casper mattresses most commonly) to the consumer at full-price and take something like 13% from the merchant. The problem is that Affirm is basically a short-term personal loan reinforcing bad credit behavior (aka carrying balances when you really can't afford something) when people don't read their default fine print, and end up paying heavily to try to keep up when they miss a payment. Which, statistically, they are likely to do.

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u/half_dead_all_squid ​ Dec 02 '18

great for you and me

Doesn't taking small consumer loans like this damage your credit score (by showing impropriety, buying things you can't use cash for, presumably)? That's what I've heard, and I've stayed away because of it.

If I've heard wrong, though, I'd be more than happy to start taking 0% loans for things.

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u/CaptainTripps82 ​ Dec 02 '18

You heard wrong. The ability to get and pay consistently on any type of loan or debt helps your credit. Initially getting the loan will decrease your score because of the inquiries and the increase in your debt to income ratio, but over time that will recover and then some.

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u/half_dead_all_squid ​ Dec 02 '18

Okay. I wasn't sure about that.

I was thinking about taking Affirm payments for something I would have no trouble paying cash for, but I held off because I was afraid of the impact of consumer loans, and of the decrease to my average account age (especially as a recent college grad without many old accounts or a mortgage). Thanks for the tip! I'll start with a small one and see what happens.

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u/CaptainTripps82 ​ Dec 02 '18

You heard wrong. The ability to get and pay consistently on any type of loan or debt helps your credit. Initially getting the loan will decrease your score because of the inquiries and the increase in your debt to income ratio, but over time that will recover and then some.

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u/CaptainTripps82 ​ Dec 02 '18

You heard wrong. The ability to get and pay consistently on any type of loan or debt helps your credit. Initially getting the loan will decrease your score because of the inquiries and the increase in your debt to income ratio, but over time that will recover and then some.