Automatic Overdraft Protection Crackdown

I was wondering if all banks automatically enrolled their customers into some sort of overdraft protection program, because I recently signed up for a new checking account with a very large bank, and they automatically enrolled me in one, and even gave me an automatic credit card that would act as the covering agent for the overdraft should I happen to overdraft what I had in my account with checks I wrote or with debit card charge I made that exceeded the actual amount of money I had in my account.

While most people would consider that a good thing, some consumer groups think it’s unfair to automatically enroll customers in these programs without giving them the option or making them do the decision, because most of them charge fees when this “protection” is used. I honestly am sort of glad that I’m enrolled in one now though, because for me, it makes more sense to pay the fee to the bank if I overdraft, instead of paying the fees to the bank AND the fees to the institutions I wrote checks to that may have bounced, which could definitely add up to more than what I paid in fees to the bank to temporarily cover the funds discrepancy.

However, do I think that all customers should automatically be signed up without having the choice being presented? No. Because some people may genuinely not want or need this type of protection, and they should have the option to say no to it if they don’t want the burden of being enrolled in a program.

For me, for instance, I had to make sure the credit card was activated, and it’s just one more credit card for me to keep track of, so it is kind of a pain if you look at it that way. I’m not sure if all banks work this way with overdraft protection, but they should give an option when you don’t have to actually have a credit card to cover the funds that you should happen to overdraft, it’s too confusing for the customer sometimes.

I’m Now a Chase Checking Customer

Well, it’s official. I’m now a Chase Bank (JP Morgan Chase) checking account customer. Yep, I’ve migrated from my current bank (although I still also may keep that checking account open as well, for various convenience reasons) to Chase, because it is looking like they will now be my new official single mortgage loan holder.

That’s if everything goes well, and they are able to refinance our home and combine the two loans we currently have, one through them and one through another mortgage lender where we happen to be getting the you know what beat out of us with a high interest rate (it’s a secondary loan, to cover the down payment so we didn’t have to pay the PMI, so they always charge you out the wazoo for that privelege, knowing what I know now, I sometimes wonder if the extra percentage points on our mortgage loan were even worth that knowing what I know now).

Hey, sometimes I guess you wish you would have done a little more homework before buying your first home, but when it’s all literally greek to you, it’s a bit hard to wade through the options and actually know what the right option is for you and your family in the end. It’s a leap of faith at some point, and most certainly a learning experience.

At any rate, because the loan is looking good, they talked me into signing up for a checking account through them since (this is a no brainer), they actually will give your 1% of your mortgage balanced per year back in cash, as long as you pay your mortgage bill to them every month on an automated system, through the checking account you have set up with them of course.

I tried to figure out how they benefit from this, and figured it out. They pretty much have control of getting that money from your every month this way, and in this economic climate, that can definitely be worth it’s weight in gold to have more control over your mortgage lendee’s money and when it comes to you, and that it actually comes from an account with you, if your’e the lender.

All in all, Chase offers the best checking account out there. You get a free overdraft purpose credit card, you get so many free nonChase ATM transactions per month, you get free unlimited checks and registers. They have a very sophisticated ATM machine that just scans your checks instead of using sloppy deposit slips, and they also have the best online banking system I’ve seen in a while. I’m very happy I switched, now let’s just hope they can combine our mortgages, right!?

IRS Cracking Down on Oversease Hidden Assets

In these unprecedented times, it’s pretty clear that the government is looking for each and every penny they can scrape out of people for Federal taxes, especially the wealthy, who actually pay the majority of the taxes here in the US because of the disproportionate percentage of their income they pay in taxes when compared to the average earner.

The problem is that a lot of wealthy people, for ions, have been stashing their money, and a lot of it, in Swiss and other overseas bank accounts. I think the Cayman Islands used to be one of the desirable places to have money too, but that I believe has fallen out of favor.

They stash this money in these overseas accounts because they are doing something pretty simple and clear cut, they are evading taxes by not declaring this income. I always wonder though, how do they think they won’t get caught. I mean, how do they get the money out – don’t they have to have it wired to a US account, and wouldn’t that then tip off the Feds that there was something fishy? I thought that banks were required to report suspicious activity like that, not only for tax evasion purposes to nail tax evaders, but also not because of how terrorism is funded.

Finally, an settlement has been made between the IRS and a large Swiss bank to declare the names of more than 50,000 Americans who are putting their money in the bank, presumably to evade taxes, although all may not be guilty of that, but why else would one have a Swiss bank account, I’m really not sure. This has a lot of the most wealthy, richest people in a frenzy seeking tax and legal advise on what they should do to avoid getting prosecuted for tax evasion.

Apparently there is a stipulation that if you have earned money legally and avoided taxes, you can get away without jail time as long as you come forward voluntarily and declare the money, pay any applicable back taxes, and also pay the incredibly hefty penalties and fines that are involved with not paying your taxes when you should.

The Obama administration has really made it an incentive to make back some money that they feel is missing and contributing to the deficit (uh, how about wasteful government spending, nah that can’t be it!), and they have proposed and had approved a suggestion to hire 800 new IRS agents to go after people who have evaded their taxes via overseas accounts. Times are a changing, and some may think it’s not for the better.

I’m not really sure how this benefits people, but I’ll take their word for it that somehow down the line this helps average American citizens. I do think that everyone should pay their taxes though, and I’m not really sure why the richest of the rich try so hard to avoid paying their share when they usually have so much to begin with. Heck, who am I kidding, no one likes to pay taxes. It’s just a fact of life!

How Do Credit Unions Rate for Savings/Checking?

I remember when I first started my foray into managing my own money, I started my first checking account (which by the way, I still have my checking account through them) at Key Bank, which is a bank that is headquartered just one hour from me, in Cleveland Ohio. It’s recently had some financial problems, as most banks these hard days have, but all in all, I’ve not felt any of it since I am an FDIC insured customer. Overall, I’m happy with the service but do feel that some of their transaction and maintenance fees are a bit absurd.

I also almost left the bank when I bounced the account unknowingly because of a check that did not go through as it should have, and they charged me several fees, however they later reversed them when I expressed my discontent, so I was happy with that outcome. I started to hear about credit unions when I was in my early twenties, and I really didn’t understand first of all what they were, and why so many people seemed to want to go to their credit union to sevure loans instead of to a bank that was pushed on them at car dealerships, etc. to buy large items.

After doing a bit of research, I discovered that credit unions often allowed people to have checking accounts with very little maintenance and service charges, but it also offered loans sometimes at better interest rates than customers could find at commercial banks. Because of this, I thought it was interesting how credit unions offered to people in various professions seemed to be the better way for people to secure credit as well as checking and savings accounts that were generally a better deal than what they could get at chains.

Of course, the downside to credit unions is that you’re not going to find them too much when you travel. Major metropolitan areas generally only have the major banks, and sometimes you’re even SOL if you try to find your bank if it’s a major name (I’ve found this with Key once in a while when we’re traveling across state). Not only that, credit unions are usually local, so you can’t really do deposits or withdrawals unless you are at home, and that could be a definite drawback in this day and age of convenience.

Saving Habits Help with Anxiety

Anxiety and stress are probably the biggest issues that effect our state of mind daily. A large portion of our anxiety and stress comes from worries and uncertainties about our financial matters for the present and our futures.

One way to reduce anxieties about money matters is to get in the habit of saving on a regular basis. It doesn’t have to be a huge amount that you are saving and investing as long as you are doing so consistently.

If you set a goal monthly for savings, keep it realistic so it’s doable. Studies show that those who save regularly feel more financially secure and optimistic about their future. Just knowing that you have set a goal for savings and met it each month gives you the confidence to tackle bigger challenges financially.

One way to meet your savings goal monthly is to change your spending habits. For example, if you go out to eat daily for lunch, try brown bagging your lunch and put the difference into a savings account. Coming up with a budget plan, no matter what your income and staying with it helps you set boundaries and actually boosts your self esteem.

One major priority to set is to pay off your high interest debt. If you have balances on your credit cards, make it a priority to pay them off as quickly as possible. If you own a home, try to pay off your mortgage before retiring. This will free up more money for saving without a mortgage payment and also gives you leverage for borrowing against this asset in the event of a cash emergency down the line.

If your company offers a 401k plan, sign up for this work related retirement benefit. Often, companies match your contribution up to a certain percentage. The money is automatically deducted from your paycheck for your input so you don’t really miss it and it forces you to save.

You can request your bank to monthly allot money from your checking account into your savings account for a specified amount to build an emergency fund. Getting in the habit of living beneath your means regularly will help to give you financial security for the future and help to alleviate stress and anxiety about how you will monetarily cope with your future.

Can You Avoid ATM Fees?

We all hate to pay them, some more than others, myself included admittedly. What am I talking about? Those darn ATM fees that eat up a couple bucks, and sometims up to three to four dollars at some ATM’s, for the privelege of accessing and withdrawing money that belongs to you anyways. It’s kind of the way that a lot of banks are making money when you withdraw your money, but they would never own up to that. Instead they say that is covers administrative and maintenance costs for your account, the machines that dispense the money, and keeping tabs on your account balances properly.

But we all know that’s something that needs to happen anyways, so I personally take those excuses with a grain of proverbial salt. I’ve seen the recent ATM fees go up as high as five bucks, which if it were me, unless I were in dire need of that money, I probably would not pay based on the sheer principal alone that it’s a rip off to pay five bucks, which equates to a perfectly good meal at a fast food restaurant, just to withdraw my money.

Then there are the fees that you have to pay to use an ATM that isn’t actually owned by your bank. For example, my sister is in town from California right now, and just for her to withdraw money from an ATM that was within her network, but owned by my bank and not hers, which is a small town bank from where she lives, she was charged a 3.50 fee for withdrawing her money.

This one is particularly baffling because I’m not really sure why they put that extra fee on when it’s “outside your network” or from another bank. Sometimes your bank may actually charge two separate fees, one from them for using the ATM, and another one if that particular ATM is out of their “network”.

It’s really highway robbery if you think about it, considering banking fees are also going up just for your monthly maintenance fees as well. Heck, I pay six dollars on one account every month, and ten on another, just for them to keep my account going. I think these fees are really getting out of hand, but they can get away with it because you “need” them, and you need checking accounts and savings accounts often times to establish credit. Bummer.

Is Your Money Safe?

Fears about the safety of individual savings and nest eggs rose with the faltering of Bear Stearns Cos., an investment bank. The Bear Stearns Co. had to sell, at a drastically reduced rate from just several days prior, to J. P. Morgan Chase and Co. for just $2.00 a share.

In a ripple effect, concerns have grown that the problems on Wall Street could effect commercial banks and their individual depositors. The response to this concern is that bank accounts for individuals are backed by the FDIC. The Federal Deposit Insurance Corp. covers up to $100,000.

The coverage by the FDIC includes trusts, IRAs, certificates of deposit and savings and checking accounts. For accounts, such as retirement accounts, the coverage can be as high as $250,000. Customers of brokerages are similarly protected by a different agency.

The Federal Security Investment Protection Corp. protects the assets of investors at the brokerage firms. So, if your brokerage failed, you would still be covered. Some wonder what the limits of coverage would be by the FDIC if banks failed collectively. In 1991,502 banks failed in three years and the FDIC’s reserve ratio slid as low as negative 0.25%. The FDIC still covered all depositors at failed banks.

Last year, the FDIC was following 76 problem institutions compared with 1991 when that number was 1,430. So 76 banks are relatively easier for the FDIC to cover.

Checking Account Mishap?

Well, my inspiration for writing this particular post here is that this just happened to me days ago, literally. I have a checking account with a prominent bank, whose name I won’t mention here. I’ve had the checking account since I was in college and it was the only show in town, so I was basically forced to sign up for a checking account there so I could pay my rent with checks, among other necessities that only checks could buy back then (yes, there was no such thing as a debit card back then).

So, I’ve had this account for a good 15 years, and I’ve never had an incident that resulted in overdrafting as far as I can remember. So, about one year ago, I opened a separate business account. I pay all of my business expenses with the business checking account, and still pay for all of my personal effects with my personal checking account with said bank.

Well, things got a little confusing for me last week due to a flurry of activity in my life, and I accidentally paid for a credit card balance with my personal checking account instead of my business checking account, which is with a totally different bank. I didn’t have enough funds in my personal account to cover the charge, so therefore I was hit with massive overdraft fees.

I wouldn’t have minded so much, except I have questioned whether I could get overdraft protection before and was told “no” and wasn’t really offered the best customer service as to how to get it on the account. So, I was agitated, and I wrote to the bank asking them to remove the charges. Actually I threatened to leave and find another bank, which is what I full well meant to do.

However, I was very pleasantly surprised that they removed all but one of the overdraft fees. I guess my patronage does mean something, and to me, that meant a lot, so I stuck with the bank and will still stick with the bank. Oh, and I’ll be careful what accounts I’m paying business vs. personal expenses with too. Lesson is, I learned a very valuable lesson from all of this!

Health Savings Accounts

Health care costs and health insurance rates are spiraling upward and out of control. Even with insurance, a series of the usual screening tests can end up costing a lot of money out of your own pocket after deductibles and the percentage uncovered by your insurance provider. One of the ways to get a handle on this situation is to investigate some of the alternatives to the traditional payments made for the usual health care policy.

One of the newer choices that is becoming more popular is the health savings account. Probably, the biggest advantage to the health savings account is the tax benefits. Contributions made by the employee are tax exempt from federal income tax and, in most states, from state income tax. Whatever amount your employer contributes is also tax exempt.

You may contribute as much as 100% of your annual deductible, provided you do not exceed the annual contribution limits set by the IRS. When you need to use the health savings account funds for health care costs, distributions are tax-free as long as the amount is used for “qualified medical expenses.

People who are qualified for a health savings account are individuals covered by a high deductible health plan, not enrolled in Medicare, not covered by any other insurance and not claimed by another as a dependent on their tax return. A health savings account is an individually owned account and is intended for use together with a high deductible health plan.

The money in a health savings account is your own and balances roll over from year to year. If you leave your job, the money in your health savings account stays and if you opt for a high deductible health plan with your new employer, you can continue contributing to your account. Even if you don’t use that option, you can still use these funds for qualified medical expenses, but can no longer contribute.

A health savings account can be opened as a checking account, a money market or as certificates of deposit. Interest is accumulated on all of these types of accounts and minimum opening deposits vary with the type you choose to open and which bank you choose. Be certain of any fees that may apply and what your balance needs to be to avoid them.

This is an option that is worth researching for the tax benefits and because the funds stay with you and remain your own even with a shift in employment.

Choosing the Right Bank

In the event that you are a young adult looking for your first bank or if you are already established with a bank, but are disillusioned with your present bank for some reason, what do you look for when selecting a bank? Probably, the first item to look at is the location. Is there a branch near your home and near to where you work? Make sure it is geographically convenient for you. Also consider what hours and days they are open and how that will fit your schedule.

While shopping for convenience, find out their availability of technological advances. Consider the ease of their online banking services and their security of these services. Does the bank have online bill paying available?

Find out the loan services and interest rates that would apply. Compare these services for different types of loans that you might need in the near future. When looking for a bank, find out if they have customer service representatives you can talk to about different financial situations. Make sure you can talk to and ask questions from a live person, not just an automated tape recording.

Look at the savings options offered to you. You want to see a variety of plans such as certificates of deposit, traditional savings, IRA’s in both the traditional and Roth. Find out the interest rates and time frames involved for each type of plan. Again, you want to see and talk to customer service representatives for an explanation of these services.

Another important area to look at is the different types of checking accounts they have to offer. See if there is any kind of overdraft protection available and what types of fees apply. Research and determine if there is an interest bearing checking account if you have a sum of funds you want to keep liquid yet need to earn interest on.

Ask about debit cards, prepaid credit cards to avoid hefty balances and finance charges if you’ve had credit card problems in the past, and ATM cards and find out if there are any service fees that apply on using these. Call around and stop in and visit your potential bank in advance to selecting which bank is the right one for you.