Bank of America Overdraft Fee Refund

boansfUpdated 2014. Although I originally wrote this post in 2009, it (unfortunately) still gets regular traffic. Bank reforms instituted in 2010 made overdraft “protection” only applicable on an opt-in basis on ATM/debit card usage. Despite this fact, U.S. banks still collected over $30 billion dollars in overdraft fees in 2012.

The advice below on how to get a BofA overdraft fee refunded still works, as many positive e-mails and comments will attest. But you should also ask to turn OFF your overdraft protection as many people are confused on the actual meaning of the service. If you opt-out of overdraft protection and try to use your debit card with an insufficient balance, you will simply get denied with no fee. If you opt-in to overdraft protection and try to use your debit card with an insufficient balance, your purchase will go through but you will get charged a fee of roughly $35 on each instance. Now you know why I put quotation marks around “protection”.

Just Ask!

I was hit with an overdraft fee from Bank of America when I was trying to close out an account. Luckily, I was able to get it refunded to me. The answer is always no if you don’t ask, so don’t give up the opportunity to save hundreds of dollars with a 10-minute phone call! A few tips:

  • Be nice but firm. Customer service reps are people. This is not the time to outline all the reasons why their overdraft system is unfair. The employee is never going to be able to admit “Yes, they are unfair!”, and you’re only going to put them on the defensive.
  • Admit you made a mistake, and include your personal story. Perhaps you and your spouse had a miscommunication and lost track of the bank balance. Your contractor finally cashed a check from 8 months ago that you forgot about. A spokesperson from Bank of America said they “may waive unemployed consumers’ fees on a case-by-case basis.”
  • Help them find a reason to help you. Are you a first-time offender? Are you a long-time customer? Do you have other accounts with Bank of America? Credit card, loans, or business accounts? Show them you are a profitable customer worth keeping.
  • Try different communication avenues. I used to visit my local branch a lot, and have had some good success with going directly there. Your mileage my vary, but also try any combination of Live Chat, E-mail, and Telephone.

“Hi, I was recently charged an overdraft fee when an old check got cashed. I totally forgot about it and it was my fault. However, I’ve been with BofA for X years, and this is my first overdraft fee. I am calling to see if I am able to get this waived.”

Denied? Escalate!

If you’re not satisfied with your response, it has paid off for many customers to escalate your request to the “Executive Customer Relations” division of Bank of America. Read the many relieved comments below.

Call Executive Customer Relations:
Executive Customer Relations general line: 704-386-5687

E-mail a Bank of America Customer Advocate:
Melissa Russell
Customer Advocate
Office of the Chairman
800-669-2443 Ext 2809
melissa.d.russell@bankofamerica.com

Crystal R. Peterson
Customer Advocate
Office of the CEO and President
336-805-3126
crystal.peterson@bankofamerica.com

A sample success story:

Emailed the office of the chairman 2 weeks ago and received a call today from that office. They credited back $440 in overdraft fees. Issue was my fault since i made the purchases but the merchant submitted all transactions for 3 months on one day. Pretty happy with the result.

Write a snail-mail letter to the CEO:
Brian Thomas Moynihan
100 N. Tryon Street
Mail Code NC-1-007-18-01
Charlotte, NC 28255

Another success story:

Thank you, thank you, thank you. After reading the post about the BoA customer who got $280 in NSF fees refunded, I wrote BoA myself. They had charged me 7 NSF fees in succession (which sucked ass) and was my fault. [...] So I wrote a formal letter of complaint to Kenneth Lewis. This past Saturday, they refunded all of the fees – even though it was my fault. I can’t believe it. That rocks. People do have the power.

Free TurboTax Deluxe Online with State Farm Bank Account

Works again for Tax Year 2013. State Farm is again offering their bank and credit card customers TurboTax tax-prep software at a significant discount. TurboTax Federal Deluxe Online is free, Premier is $20, Home & Business is $30, and State is also included free with e-File for all versions. Software downloads are also available (Deluxe $20, Premier $30, Home & Business $40). I ran an experiment last year and found it only took a one-time $25 deposit and a week’s time to obtain this valuable perk. Details below.

(Side note: TurboTax Deluxe 2013 no longer supports stock and mutual fund sales reported on Schedule D. You must now pay for the $20 Premier version in order to get this feature. Rather disappointing feature reduction, Intuit!)

According to my blog archives, from 2006-2009 State Farm offered TurboTax Deluxe for free to all customers including insurance policyholders. Starting in 2010 or 2011, they started offering it only to bank and credit card customers. I recommend opening a “Free Checking” bank account instead of a new credit card account, as many other credit cards are offering $500+ value in sign-up bonuses while the State Farm one does not. I’d much rather get $500 for a credit check and just put $25 in a State Farm bank account indefinitely while earning the same perks. Think of it as earning 50% APY interest every year on that $25! I did not get hit with a credit check for opening the State Farm bank account.

New Bank Account Application Process Details

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Pentagon Federal 5-Year, 7-Years CD Rates at 3.04% APY

Pentagon Federal Credit Union officially announced some competitive new rates for their money market certificates (basically CDs, or certificates of deposit) starting December 1st, 2013. The minimum opening deposit is $1,000.

Term APY Early Withdrawal Penalty*
(days of interest)
2-Year CD 1.41% Last 180 days
3-Year CD 2.02% Last 180 days
4-Year CD 2.22% Last 180 days
5-Year CD 3.04% Last 365 days
7-Year CD 3.04% Last 365 days

Here is an interesting chart comparing the effective APY depending on holding period (taking into account the early withdrawal penalty) for the 4-year and 5-year CDs. We see that the 5-year CD (and 7-year CD) actually matches the 3-year CD held to maturity at the 3-year mark (both 2.02%) and is slightly better than the 4-year CD held to maturity at the 4-year mark (2.28% vs 2.22%). However, for some interim time periods (7 to 28 months) the shorter penalty will make the effective yield of the 4-year CD higher.

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Pentagon Federal Offering 3-Year CDs at 2.02% APY

Pentagon Federal Credit Union is now offering 2.02% APY rate on it’s 3, 4, 5, and 7-year CDs (they call it a Money Market Certificate). The minimum opening deposit is $1,000. Early withdrawal penalties are as follows:

  • For terms from 6 months to 4 years, you will lose the last 180 days of interest. If you haven’t earned 180 days of interest yet, you lose all the interest and get back only your opening amount.
  • For terms of 5 years or longer, you will lose the last 365 days of interest. If you haven’t earned 365 days of interest yet, you lose all the interest and get back only your opening amount.

As a credit union, you must meet their eligibility requirements to join. Basically all members of the military and their immediate families are welcome, as well as many other military-related groups. Otherwise, simply become a member of the organization Voices for America’s Troops. Membership costs $15/yr, and you don’t need to renew to remain a PenFed member. “Voices for America’s Troops advocates for a strong national defense, including sustaining and improving quality of life programs for America’s troops, their families and survivors.”

(I ran a search through the blog archives and found a post about PenFed offering 6.25% APY 3-year CDs back in late 2006. I wonder how long until we see rates like that again?)

Santander Bank extra20 Checking: Effective 16% APY?

Santander Bank (formerly Sovereign Bank) has a new banking package called the extra20 checking and savings account that pays you up to $20 each month:

  • You must open both an extra20 checking and extra20 savings account.
  • Get a $10 bonus each month that you have direct deposits totaling $1,500.
  • If you qualify for the first $10, get another $10 bonus each month that you pay two bills from your extra20 checking account through Online BillPay.

$20 a month = $240 a year. If you choose to simply use this account to pay your bills, it shouldn’t be hard to keep a $1,500 average balance. Earning $240 on a $1,500 balance works out to a 16% APY. If you aggressively emptied your account after each direct deposit, you could increase this effective APY even more.

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Ally Bank CD Early Withdrawal Penalty Change: Details & Analysis

Ally Bank LogoAlly Bank just announced that they will be changing the early withdrawal policy on their CDs starting on December 7, 2013. Found via Ken Tumin’s DepositAccounts post, the details are now officially outlined in the fees tab of their certificates of deposit page. A screenshot:

I have several 5-year Ally CDs earning between 1.8% APY and 3.1% APY, bought largely due to their uniquely short 60-day interest penalty as it meant that I could effectively have access to my funds if required and still earn an interest rate that was higher than anything any other bank CD.

For example, let’s look at their 5-year CD currently paying a 1.60% APY (as of 10/27/13) with no penalty, a penalty of the last 60 days of interest, and a penalty of the last 150 days of interest. Here’s how your actual annualized interest rates would look like based on time of withdrawal:

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Citibank Checking Account Promotion: 20,000 ThankYou Points

Update: Citibank has a new checking account promotion for new customers. You can get up 40,000 ThankYou points if you can maintain a $50,000 balance, but the more accessible option can still get you a nice 20,000 ThankYou points. I’ll only focus on how to get the 20k offer below. This would combine well with the 30,000 ThankYou point bonus from the Citi ThankYou Preferred card. Don’t forget to maximize the value of your Thank You points.

First, you must open a Basic Banking package either through the link above or by calling 1-866-583-6706 and using promo code CZC2. As long as you make 1 direct deposit and 1 bill payment each monthly statement period, you’ll pay no monthly service fee. Alternatively, keeping $1,500 in the account by itself will waive the $10 monthly service fee.

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Capital One 360 Financial Independence Day Promo 2013

Update - This promotion is now EXPIRED

Capital One 360 has their annual Financial Independence Day promotion which boosts the usual bonus for their 360 Savings and 360 Checking accounts. (Artist formerly known as ING Direct.) Offers good until Wednesday, July 3rd 11:59PM ET.

360 Savings $76 Bonus

  • Open a no-fee 360 Savings account between July 1st and 3rd ($500 minimum deposit) and snag $76.
  • This has to be your first 360 Savings account (includes Orange Savings Account).
  • The bonus starts earning interest on day 1, but you can’t take it out for at least 30 days.
  • 0.75% variable Annual Percentage Yield (APY) effective 6/30/2013.
  • For more, check out my Capital One 360 Savings Account Review.

360 Checking $100 Bonus

  • Open a fee-free 360 Checking account between July 1st and 3rd (with a deposit of $500 or more) and grab $100.
  • This has to be your first 360 Checking account.
  • Make a total of 5 purchases (either signature of PIN-based) using your 360 Checking Debit Card, make 5 CheckMate deposits or any combination of the two within 45 days. Your $100 bonus will be automatically deposited into your account on day 50.
  • Variable APYs effective 6/30/2013: 0.20% Balances under $50,000 / 0.80% Balances between $50,000 and $99,999 / 0.85% $100,000+.

Fixed Annuities: Maximize State Guaranty Coverage Limits

A recent article by Scott Burns talked about investing in deferred fixed annuities with CD-like qualities, an example offered a 3% yield guaranteed for 5 years plus no surrender charges (similar to early withdrawal penalty) after 5 years. This is a better rate than current bank CDs offer, and annuities can grow tax-deferred for those saving for retirement (withdraw as early as age 59.5)*. After the 5 years, you roll the annuity over to another company if the new rate is no longer good enough. The catch? The annuities that have the best rates often don’t have the highest credit ratings.

A possible solution? Make sure you stay under the coverage limits of your state’s Life & Health Guaranty Association. From NOHLGA.com:

State life and health insurance guaranty associations are state entities (in all 50 states as well as Puerto Rico and the District of Columbia) created to protect policyholders of an insolvent insurance company. All insurance companies (with limited exceptions) licensed to sell life or health insurance in a state must be members of that state’s guaranty association.

These are not federally-backed like FDIC insurance. Instead, all the member insurance companies agree to cover each other in cases of insolvency up to the policy limits. In order to be a licensed insurer, you need to maintain a certain level of financial stability. But just like banks, some insurers are stronger than others. So if you’re going to go over the limits, the standard advice is to go with a top credit rating from AM Best, Moody’s, or S&P. However, credit ratings can go down over time, and you may be holding these annuities for many years. Therefore, it’s still safest to stay under the limits.

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Savings I-Bonds May 2013 Upcoming Rate: 1.18%

New inflation numbers for March 2013 were just announced, so it’s time for the usual semi-annual update and rate predictions.

New Inflation Rate
September 2012 CPI-U was 231.407. March 2013 CPI-U was 232.773, for a semi-annual increase of 0.590%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be approximately 1.18%. The new fixed rate is nearly guaranteed to be zero, so the total rate will be 1.18% as well. If you have an older savings bond, your fixed rate may be different.

Purchase and Redemption Timing Reminder
You can’t redeem until 12 months have gone by, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A known “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time though, since if you wait too long your effective purchase date may be bumped into the next month.

Buying in April

If you buy before the end of April, the fixed rate portion of I-Bonds will be 0.0%. You will be guaranteed the current variable interest rate of 1.76% for the next 6 months, for a total rate of 0 + 1.76 = 1.76%. For the 6 months after that, the total rate will be 0.0 + 1.18 = 1.18%. Let’s say we hold for the minimum of one year and pay the 3-month interest penalty. If you buy on April 30th and sell on April 1, 2013, you’ll earn a 1.28% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. This is better than any 1-year bank CD that I can find right now, keeping in mind the liquidity concerns and the purchase limits. If you hold for longer, you’ll be getting the full 1.47% over the first year.

Given the combination of current low rates and the fact that you lose the last 3 months of interest (again, for holding less than 5 years), it might be better to wait long enough to grab 12 full months of interest by holding for 15 months (14 buying late). If you buy on April 30th and hold until July 1st, 2014, you’d achieve a annualized return of ~1.26% over 14 months. After that, you can see what the new rates are and decide whether to keep holding them.

Buying in May

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Cash Reserves Update: Best Available Interest Rates – March 2013

Our family keeps a full year of expenses put aside in cash reserves; it provides us with financial stability with the additional side benefits of lower stress and less concern about stock market gyrations. Emergency funds can actually have a better return on investment than what you see on your bank statement.

I’ve been slacking in terms of updates on this topic. While I still like to maximize my interest, there just hasn’t been many new developments that make me want to jump from one bank from another. However, if you haven’t optimized your cash recently, you may be stuck in a money market fund or megabank saving account paying 0.05% or less. You can definitely still do better than that! Here are what I consider the highlights of the best currently available interest rates.

Certificates of Deposit

If you have a large cushion, it’s quite likely to just sit there for years or more. Therefore, you may wish to put some of it in longer-term investments where you can take the money out in a true emergency and paid an early withdrawal penalty.

  • Everbank’s Yield Pledge Money Market and Interest Checking account both offer 1.10% APY guaranteed for the first 6 months for new accounts. Since it is fixed, this is essentially a 6-month CD with a higher rate than any other 6-month CD rate out there and with no early withdrawal penalty to worry about.
  • Ally Bank Raise Your Rate CDs have a rate bump feature; the 2-year term pays 1.05% APY and the 4-year term pays 1.30% APY (as of 11/1/13). You can change your rate after your account is opened — if their rate on this CD goes up, yours can bump up to match it (one interest rate increase with the 2 year term, two interest rate increases with the 4 year term).They also offer traditional Ally Bank High-Yield CDs with 3-year CDs at 1.20% APY and 5-year CDs at 1.60% APY (as of 11/1/13) currently. Early withdrawal penalty is only 60 days.
  • Discover Bank CDs are currently offering 3-year CDs at 1.25% APY, 5-year CDs at 1.65% APY, 7-year CDs at 1.80% APY, and a 10-year CD at 1.90% APY. Early withdrawal penalty varies from 6 months for the 3-year to 15 months on the 7 and 10-year CD.
  • PenFed Credit Union CDs are currently offering 3-year CDs at 1.60% APY, 5-Year CDs at 1.65% APY, and a 7-Year CD at 1.75% APY. Early withdrawal penalty varies from 6 months for the 3-year CD to 12 months on the 5 and 7-year CD.

Ally Bank’s Flexible Certificates of Deposit

Ally Bank LogoLet’s focus on the Ally Bank certificates of deposit, where you can still access your money as long as you pay a early withdrawal penalty of 60 days interest – significantly less than at other banks. Why is this good?

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Best Value for Citi ThankYou Points Redemptions

If you have a Citi credit card or a Citibank account with the ThankYou points rewards system, you have a wide array of options to redeem your points at ThankYou.com. But while that fancy coffeemaker may look nice, chances are the cash equivalent value for your points is quite poor. I’ve covered this in bits and pieces before, but here’s a complete guide to getting the most value out of your points.

Eligible ThankYou accounts (* are the ones I have linked to my account):

  • Citibank Checking Accounts – Varies, historically 10,000 to 40,000 bonus ThankYou points for opening an account.
  • Citi ThankYou® Preferred Card– Low Intro APR’s – 0% APR fo 15 months on balance transfer and purchases. No annual fee.
  • Citi ThankYou® Preferred Card – Earn up to 20,000 Bonus Points – Earn 20,000 bonus points after $1,500 in purchases in the first 3 months of account opening. No annual fee.
  • Citi ThankYou® Premier Card – 50,000 bonus ThankYou® Points, Travel redemption bonus, see application for details.
  • Citi ThankYou® Preferred Card for College Students – Earn 2,500 Bonus Points - 2,500 bonus ThankYou Points After you spend $500 in purchases within 3 months of account opening.
  • CitiBusiness ThankYou® Card* – 15,000 bonus ThankYou® Points after $3,000 in purchases within 3 months of account opening. 3X points in rotating categories. No annual fee.

Best Value Option #1: Limited Time Offers

If you have either patience or luck, Citi does offer “sales” on gift card redemptions which can reduce the cost of a reward by up to 25%. For example, right now until 3/31 you can get a $50 Home Depot gift card for 4,500 points. Normally, you’d need 5,000-6,000 points. That equates 1.11 cents in gift card value per point. If you wanted cash, you could sell a Home Depot gift card at PlasticJungle.com for 87% of face value in cash, 91.35% in Amazon.com gift certificates. That equates to 0.967 cents per point in cash.

Previously ThankYou point sales have involved gift card to other popular retailers like Wal-mart, Lowe’s, Kohl’s, Best Buy, Gap, and Macy’s. The regular price is usually 1 cent in gift card value per point.

Best Value Option #2: Student Loan & Mortgage Rebate Checks

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