Archive for the 'Banking' Category
Friday, September 2nd, 2011
As part keeping the interest rate on my emergency fund as high as possible, I’ve shared my like of rewards checking, savings bonds, and the Ally Bank 5-Year CD. Ally CDs have a small 60-day interest withdrawal penalty, so the liquidity is still quite good. As long as you hold it for 6 months, you’ll be earning more interest than the highest rate from an online savings account even after the penalty is factored in. After that, the effective rate just keeps getting better until you reach maturity at the full rate.
With no minimum balance requirements, you can also buy them in whatever size chunks you want. And I have. But I checked the rates again today, and was sad to see they’ve been dropping quite fast recently. The current Ally Bank 5-year CD rate is APY. I decided to compile the rate history from as far back as I’ve been tracking them.
There have been a few small rate hikes, but for the most part the rate has been gradually dropping due to market conditions. If you’ve been thinking about buying, I would buy now before rates drop even farther. When opening a CD, remember they have a “10 Day Best Rate Guarantee” in which you get the best rate they offer within 10 days of opening. You can now also find slightly better rates elsewhere, for example Alliant Credit Union has their 5-year certificate at 2.35% APY (2.45% for $25k+), but with a larger 6-month interest penalty. I’ll probably still buy a little more at 2.17%, but if the rate drops below 2% then I’m looking elsewhere.
Posted in Banking | 10 Comments »
Friday, September 2nd, 2011
Banks aren’t as wildly profitable anymore, and thus are looking for ways to bring back the bucks. They’ve added new “features” like debit card fees, and are dropping unprofitable customers. For example, people with zero balances and little activity still cost money in the form of generating statements, 1099s, and such. Well, MMB reader Mike experienced firsthand how much Capital One Bank doesn’t like inactive checking accounts.
Even though he has biweekly direct deposits into his account, his account suddenly disappeared one day from online banking. It’s the primary fear of online-only accounts; what happens if they simply say my money doesn’t exist? After contacting them, what was the reason given for closing without notice? A $0 balance for just five consecutive days. Here are some excerpts of his exchange with customer service:
We understand you are inquiring about the status of your checking account. Your checking account ending in XXXX was closed on 08/19/2011 after an extended period with a zero balance. We apologize for any inconvenience this may cause. To have your account reactivated, please confirm you mailing address and phone number by secure message.
In regards to your question of $2,000 deposit once a month, our records indicate this last deposit made into the account was on 08/12/2011 for $2,278.44. Following this deposit on 08/12/2011 there was a withdrawal of $2,278.44, followed by a $20.00 ATM withdrawal on 08/15/2011 leaving the balance of this account at $0.00. Once the account has a zero balance for five consecutive days, it will close automatically and no longer appear in your online banking profile.
In the past, banks like ING Direct and EmigrantDirect also closed zero balance accounts without warning, but only after at least a month of inactivity. I suppose Capital One did just buy ING Direct. Watch out, banks are becoming even less friendly than before.
Posted in Banking, Funny | 10 Comments »
Thursday, August 18th, 2011
The fees are coming! Since February, Chase Bank has been testing out a monthly fee for anyone who uses their ATM debit card for purchases in areas of Northern Wisconsin. Regions Bank and Suntrust have added fees as well. Per this CNN Money article, Wells Fargo Bank just announced that it will start charging a $3 monthly fee for debit card usage next month in Georgia, New Mexico, Nevada and Oregon. (I guess they’re afraid of messing around in California just yet.) According to this WSJ article, Wells Fargo is only announcing this fee with one of those small inserts in your monthly statements, so heads up.
I know there has been drama over debit card interchange fees, but that was just a result of two big lobbying groups – small businesses vs. big banks. It was really not about consumer rights. The result was a new law that caps debit card interchange fees at 21 cents + 0.05% of the sale amount for banks with $10 billion or more in assets. Smaller banks with debit rewards like PerkStreet (review) say that this will not affect them.
I never use my debit card for purchases, so I would not be affected by any of this. Credit cards offer more consumer protection against fraud and things like extended warranties and free insurance, on top of the ability to delay payment for 15-30 days of float. More importantly, credit card rewards are better which means more money in my pocket. However, many people do like the simplicity of debit cards for purchases. If they don’t want to pay the fees, I hope they will vote with their money and move it immediately to bank that doesn’t charge such fees. Don’t expect banks to care about your angry internet comments; affect their bottom line and they’ll listen.
Posted in Banking | 12 Comments »
Tuesday, August 16th, 2011
A couple of readers have informed me that Ally Bank recently changed their policy on fee rebates on international ATMs for their Interest Checking account. I finally verified that this policy was indeed changed over the summer. I suppose it was too expensive a perk to give out (which is why you rarely see it) but it was a rather nice feature to have since ATMs provide rather good currency exchange rates. (Ally won’t charge an additional foreign transaction fee, but Visa will charge their standard 1%.)
I usually try to take all the cash I’ll need for an entire trip in one ATM visit and just take the ~$3-$5 hit once. You can still get foreign ATM fee rebates from a the brokerage checking accounts at Schwab and Fidelity (ATM with Visa/Plus/Star logo), although the interest rates they pay are pretty low (.10-.25%).
I have updated my Ally Checking review and 3-month Follow-up posts.
Posted in Banking | 11 Comments »
Thursday, August 11th, 2011
In their most recent attempt to try and control the economy (notice I said try), Ben Bernanke and the US Federal Reserve made another carefully-worded psuedo-commitment earlier this week:
The committee currently anticipates that economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
Usually they don’t talk about firm dates, so many analysts that spend their lives parsing these FOMC statements take this to mean that interest rates are very likely to stay low for a while. Low interest rates are usually bad for savers and good for debtors. Since I am both due to my mortgage, here are my action plans in response:
1. Buy more flexible, longer-term CDs. If interest rates on savings accounts will be low for a couple of years, any kind of “bump-up” CD like the Ally 2-Year Raise Your Rate CD is unlikely ever to be triggered. Instead, I still like the Ally Bank 5-year CD that currently yieldsAPY with a 60-day interest penalty. The rate on this CD has been dropping regularly since I bought some initially at 3% APY and more at around 2.40% APY. But this way, I keep earning the higher rate as long as rates are low. More details here. 2. Refinance my mortgage.Every time I think rates won’t go any lower, they do. Even though I am currently at a 30-year mortgage at a 4.75% interest rate, I am seriously considering a 15-year mortgage at 3.75% that will actually leave me with a nice cash-out. This will be a commitment to continue my extra principal payments, but saving thousands of dollars a year in interest is a good incentive. Check out the major loan match/FHA/VA comparison sites likeand Quicken Loans
, but also compare with credit unions like PenFed and NavyFed if you are eligible. It’s a good time to explore your options.
Posted in Banking, Real Estate | 31 Comments »
Thursday, August 11th, 2011
Reader Alison shares a unique savings account program for residents of Ohio. The SaveNOW program is a higher interest savings account supported by the state in order to encourage savings. The maximum balance on this account is $5,000 and pays 3.25% APY. The fine print regarding deposit limits is a bit confusing. It says:
Limits single deposits to $500 at a time with the exception of lump sum payments such as; a tax return, insurance settlement or inheritance payment
If I read this to mean that each resident to deposit a maximum of $500, every other year, then it would take nearly 20 years to reach the maximum? Otherwise, you might overpay taxes to max out the benefit. In any case, this is not going to make anyone rich, but can be a nice incentive given the program’s goals. A couple could deposit $1,000 every other year up to $10,000 combined.
Does anyone know of similar programs for other states?
Posted in Banking, Deals & Offers | 5 Comments »
Monday, August 1st, 2011
Will the rate on your high-yield savings account stay high? It’s always hard to tell. Some do, and some banks seem to just give up. The NY Times Bucks blog shared a list of the top 10 banks offering high savings accounts rates over time for the 2nd quarter of 2011 as compiled by MoneyRates, of which nine banks that have made the list for three quarters in a row. I’ve looked up their current APYs as well.
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Bank Name
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Historical Rate
(for ranking purposes)
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Current Savings Account Rate (APY)
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1.16%
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1.00% APY
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1.13%
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1.00% APY
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1.10%
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1.10% APY
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1.01%
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Posted in Banking | 12 Comments »
Friday, July 1st, 2011
ING Direct, soon to be owned by Capital One, is running their usual “Financial” Independence Day promotion. Valid only July 1st & 2nd, 2011 (why not until the 4th? who knows).
- New Electric Orange checking account customers will receive an opening bonus of $50 when they make three purchases within 45 days of account opening. Those that then set up and make at least two direct deposits of $250 by August 31st will receive an additional $76 bonus for a total savings of $126.
- Investors who open a new ShareBuilder account will receive a $76 account bonus after their first investment.
Posted in Banking, Deals & Offers | 4 Comments »
Thursday, June 23rd, 2011
Per many reports from Reuters and WSJ and more, Capital One is buying online bank ING Direct. After being bailed out by the Dutch government in 2008, parent company ING Groep NV was required to sell the US bank by 2013 as part of their restructuring plan. Other major suitors included Ally Bank and General Electric.
So while a takeover was expected, many people were unhappy with the announcement that the were soon to be customers of Capital One. They were rightly afraid the stubbornly simple and straightforward bank culture would change. I personally didn’t really care, banks change all the time and I just go with whomever has the best rate and feature combo available right now. ING Direct has been content with “just good enough” rates for a while. Here’s where I keep my cash these days, I’m earning much more than 1%.
However, the NYT Times Bucks blog ran an interview with Capital One about the sale yesterday, and it was just too horrible not to make fun of. Read the original, real interview first, with more vague, lawyer-approved, corporate double-talk you could imagine. In my *parody* version below, let’s imagine what they’d say if allowed to be brutally honest.
—
Q: Why are customers of ING so upset about the sale of their bank to Capital One?
ING Direct was known for simplicity, directness, and good customer service. Capital One is known mostly for credit cards that don’t properly report credit limits to bureaus so it hurts your credit scores, a surprisingly good foreign transaction fee model, and TV ads with Vikings and Alec Baldwin.
Q: What changes are you planning to make to ING Direct’s account offerings? Will subaccounts for specific savings goals remain?
Well, many good features including that one are already in place and it would be really, really stupid to mess it up. But the lawyers won’t let me commit to anything in writing or they will eat a kitten.
Q. Are you planning any new fees or minimum balance requirements?
If we think it will make us more money in the end, then hell yeah.
Q: Does the reaction suggest Capital One might need to enhance customer service? How might this be done?
Yes. No idea.
Q. Will ING Direct be operated separately or integrated into Capital One’s operations?
Look, we just saw over $80 billion in bank deposits paying out just 1% interest. Do you have any idea how much interest we’d get paid by lending that out to people with our credit cards??? Cha-ching!
—
To repeat: These are a parody. I am actually a satisfied customer that has used a CapOne credit card for international purchases for several years. But hopefully they’ll realize that bland PR talk does not make more engaged, passionate customers.
Posted in Banking | 17 Comments »
Thursday, May 26th, 2011
Fidelity Investments has just added some handy new features to their Apple iOS and Android OS apps. You can now use their BillPay service, transfer funds between accounts, and deposit checks remotely via camera. Before, you were limited to viewing account holdings and making trades. Competition is good, and I expect all major banks and brokerages to offer these features soon.
Mobile Check Deposit
Basically the same as other apps, you take a picture of the front and back with your smartphone camera. You can deposit only into non-retirement accounts, and the back must be endorsed with the text “For deposit only to Fidelity account #XXXXXX”. The deposit limits vary.
BillPay & Funds Transfer
You can pay bills with your mobile app, either through a regular brokerage account or their mySmart Cash Account (basically their checking account replacement product). Fidelity also allows you to link outside banks to your accounts, so now you can initiate money transfers both within Fidelity and externally on your phone.
Posted in Banking, Investing | 3 Comments »
Thursday, May 19th, 2011
PayPal announced today that you can now deposit checks in your PayPal account via photo upload from both Apple iOS [iTunes] and Android OS devices. Just sign the back of the check, take a picture of the front and back, type in the amount, and submit. (If you have a iPod Touch, iPad, or Android tablet with camera, that works too.) You are free to withdraw the funds into your linked bank account. Via MobileCrunch.
This is pretty cool, as it basically allows remote deposit of checks into any bank, not just Chase or USAA. Reading through the Terms & Conditions, you are limited to total deposits of $1,000 per day, and $3000 per month. You’re supposed to keep the check for 15 days to verify that it went through, and then destroy the check.
The only thing to consider is do you trust PayPal? Long-time readers may know that I have an uneasy relationship with PayPal. They’ve frozen my seller accounts before with no evidence and required all my personal information (SSN, credit report, driver’s license, utility bills) to release the money, and they’ve never been known for their stellar customer service. But I still use them when the alternatives are too inconvenient and the dollar amounts are small, because honestly I’m too lazy (and like I said, they already have my info). I simply operate on the principle that they can freeze my account again at any time, so I never leave more than $20 in my account. I’ll definitely try this app out the next time I get a small check to deposit, but only for small deposits that I’d be too lazy to deposit at a branch and it will be withdrawn immediately.
Posted in Banking | 22 Comments »
Sunday, May 15th, 2011
ING Direct, with their popular Orange Savings Account, has just launched a Kids Savings Account specifically to help children learn to save and manage money. Here are the ways that the Kids account is similar to the Adult version:
- FDIC-insured savings account.
- No fees, no minimum balance requirements.
- Pay interest, currently 1.00% APY.
- Kids can log in and check their balance at any time with their own personal customer number and PIN.
Here are the main ways that the Kids account is different to the Adult version:
- Kids cannot move money, only check balances.
- Adult must sign in with their own separate customer number and PIN to transfer money in and out.
- When the kid turns 18, the account will automatically convert to an adult Orange Savings Account.
I’m not sure how I feel about this account. I think I’d rather have kids using paper money that they can touch, and let them visit a human teller to deposit and withdraw money. Seeing the interest accumulate online would be nice, but the small 1% rate of growth right now might be discouraging. That said, everything is so digital now. I’ve met 8th graders that know more about Facebook and editing digital videos on YouTube than I do.
Posted in Banking, Family | 9 Comments »
