Banking You Can Trust

A recent article by Matt Brownwell on www.dailyfinance.com highlighted Five Ways Consumers Can Protect Themselves in Five Minutes. The article was part of Consumer Protection Week, when a group of nonprofits and government agencies come together to highlight critical issues ranging from identity theft to dodgy debt collector practices.

According to the article, most consumer protection tips are reactive, but there are proactive steps you can take to protect yourself as a consumer.

Here are the five things you can do in five minutes to help protect yourself:

1. Turn on Two-Step Verification on Your Email -- Email is in many ways your most important account. When you forget a password to one of your other accounts, the password reset link will be sent to your email. If someone takes over your email, they can reset all the passwords to your other accounts and take them over. Fortunately, email providers like Gmail now offer what's known as two-step verification. Enabling this feature means that if someone tries to access your email account from a different computer than you usually use, they'll need more than just your password—they'll also need a second one-time password that's sent to your mobile phone. The article recommends putting two-step verification in place for both your email and your financial accounts.
2. Get on the Do-Not-Call List -- You can register up to three phone numbers in less than a minute at DoNotCall.gov or by calling 888-382-1222. These three numbers include your cell phone and do not have to be renewed unless you get a new phone number. If you get an unsolicited phone call offering to add your number to the registry for a fee, it is actually a scammer. The government doesn't allow private companies to register people for the list, and registration is FREE.
3. Get a Free Credit Report -- According to the FTC, 42 million U.S. consumers have errors on their credit reports they don't know about. Those errors can lower your score, reduce your eligibility for loans and credit cards, and cost you a good chunk of change on a home loan. You can't get rid of those errors until you know about them. Everyone is eligible for a free credit report once a year, to access your FREE credit report visit AnnualCreditReport.com. The article recommends that checking your report once a year isn't enough as you will want to dispute errors or erroneous items as quickly as possible. "We think checking your credit report once a year, an oft-recommended interval, is insufficient for most people," says Erik Larson of NextAdvisor, a site that reviews credit cards, Internet providers and other consumer services. "An identity thief can wreak havoc on your credit in a matter of days, much less an entire year." Larson recommends signing up for a credit-monitoring service, many of which provide identity theft protection and monthly updates on your credit score. As an alternative to a monitoring service, you can space out the three free credit reports you receive (one from each bureau), ordering one free report every four months. Not quite as proactive as a monitoring service, but still free.
4. Set Up Alerts on Your Credit Union/Bank Accounts -- If there's a fraudulent charge on your bank account or credit card, you have 60 days to spot it and report it. According to the article, consumers are recommended to set up alerts on their credit union or bank accounts and credit cards to notify them of unexpected charges. Setting up custom alerts allows you to use your knowledge of your own spending habits to provide an extra layer of protection. For instance, if you never put more than $200 on your debit card, you can get a text or email in the event of any debit card charge over that amount. If you're conscientious about keeping account balances over a certain amount, you can set up an alert to trigger any time your balance falls below that level.
5. Set Up a Google Alert for Your Name -- Credit monitoring and bank alerts can help secure you against threats to your finances, but what about threats to your reputation? Rather than Googling yourself every day looking for any incorrect (or incriminating) information about you, just take 30 seconds to set up a Google alert. Then, any time your name pops up on a blog, news site or other search result, you can get an email. If you find information about yourself that you'd rather not have floating around the Web, Google provides a basic primer on how to get it removed.

To read the full article by Brownell, please click here.

Not sure if you should move your money to another (maybe better) financial institution? MSN Money featured a story today from Jennifer Goforth Gregory of SavingsAccounts.com that helps you decide whether it's time to "ditch your bank".

"4 signs you should ditch your bank" asks "Have you had the suspicion lately that your longtime bank no longer suits your needs? Or have you recently opened an account at a new bank, only to feel like it's not a good fit?"

Gregory outlines the four things that might make switching your primary financial institution a good idea. They are:

1. Your savings account interest rate is only average.
2. Your checking account has a monthly maintenance fee.
3. You rarely visit your local branch.
4. The customer service has declined at your bank.

Each topic is discussed by Gregory, and while she makes no nods to credit unions, many credit unions offer higher savings rates, 100% free checking, plenty of online services and mobile banking, and are consistently rated as the top financial institutions for customer service.

The article also mentions SavingAccount.com's Bank Switch Kit as a tool to use when switching to a new financial institution. Often your new financial institution can provide valuable tools as well.

To read the article in it's entirety, click here.

Fox Business recently posted an article explaining why consumers pay bank fees. I encourage you all to read the article here.

Are you done yet?

Now click on "Credit Union Search" at the top of the page and find a better alternative to paying high bank fees.

According to the FDIC, 821,000 households ditched their banks between 2009 and 2011. The financial crisis, the foreclosure robosigning scandal, and the huge amounts of money banks were raking in from fees turned many consumers against big banks. Bank Transfer Day during November 2011 was founded on some of these bad bank practices and had many consumers switching to credit unions.

Even as new regulations have forced banks to change some of their ways, more consumers are expected to close their accounts. A recent survey by Javelin Strategy & Research found that 11% of Americans plan to switch banking institutions in the next year.

While credit unions or community banks may be the best alternative to you—much like a traditional bank, but with none of the big fees or devious practices—others might find some of the “alterna-banks” a better fit.

An article in Time magazine, “The Rise of the Alterna-Banks: 4 Options Beyond Traditional Banking”, lays out four alternatives that might be of interest to consumers fed up with traditional banks.

1. Full-feature prepaid debit cards. Maybe you have been scared off from banks by overdraft fees and other zingers that zap your balance. You don’t mind paying a little bit, but you want to know what fees you’re paying upfront. You don’t really use paper checks, but you’d still like to get the other perks that come with a regular bank account. If these descriptions apply to you, look into prepaid cards.

What’s good: The prepaid landscape has expanded greatly over the past couple of years, prompting providers to lower fees and add features.

What’s not: Prepaid cards are still mostly unregulated. Most providers comply with rules for regular debit cards, so that customers are protected if a card is lost or stolen, but they are not required to comply. The lack of rules also means there is something of a free-for-all when it comes to fees. If choosing a prepaid option, be sure to examine the fine print so you know where all the fees stack up.

Standouts: Chase’s Liquid and Bluebird (offered jointly by American Express and Wal-Mart)

2. Web banking and budgeting accounts. New web-based platforms deliver a combination of banking and budgeting tools. They aren’t banks. But they do partner with financial institutions (like community banks and credit unions) that provide many of the services included in typical bank accounts. These platforms are loaded with money management tools that help users manage their spending.

What’s good: If you’re a fan of personal finance platforms like Mint.com and wish you could keep your money in the same place you manage it, this option gives you one-stop-shopping on your computer or smartphone without the fees that weigh down most regular checking accounts. Heavy-weight analytics tools give in-depth insight into your spending and saving habits.

What’s not: If you want a brick and mortar banking experience like seeing a teller or visiting a branch, this probably isn’t for you. Also, standard account features like paper checks also might not be available.

Standouts: Kasasa (used by many credit unions) and Simple

3. Prepaid debit with high-interest savings. This category combines the functions of a prepaid debit account with the high-APR (relatively speaking) savings feature of online banks like ING Direct and Ally.

What’s good: Interest rates in the 5% ballpark—much, much higher than the average bank account rate, which is barely above 0%—are not unusual. Some providers offer budgeting and personal finance tools as well.

What’s not: In a word, fees. The eye-popping interest rate is the eye-catching figure these providers want you to see, not the fee schedule which will show you really aren’t making any money on your savings. Some cards even charge a fee with every transaction.

Standout: Mango

4. Mobile bank account. Green Dot, one of the granddaddies of prepaid debit, rolled out a mobile bank account last week, following its acquisition of a bank in 2011 and mobile-location service provider Loopt last year.

Called GoBank, it’s designed to appeal to consumers who grew up with smartphones and social networks. The entire experience takes place via the bank’s app for iOS and Android or through a user’s mobile web browser.

What’s good: It doesn’t hit users over the head with fees. The monthly fee is set up on a sort of honor system: there’s a “pay what you want” feature that lets customers choose an amount varying from nothing to $9 per month. There are no overdraft fees and few other fees (like $2.50 to use an out-of-network ATM). Direct deposit and mobile check deposit using the phone’s camera are free. Users don’t get checkbooks, but the bank will mail a paper check to anyone on request, or they can send money to people via text message or through Facebook.

What’s not: To deposit cash, users can buy a Green Dot MoneyPak for around $5, or deposit cash fee-free at Walmart cash registers with a swipe of your debit card. Green Dot plans to make this feature available at more retailers in the future. For people who aren’t used to conducting transactions via their phone—or who don’t have a smartphone—GoBank won’t be a viable option. But GreenDot is betting that younger customers would rather have their bank at their fingertips than down the block.

Credit unions pride themselves on being local, trustworthy financial institutions, unlike some of their counterparts, and employees agreed according to a national survey.

In the survey titled “Sharpening the Focus on Benefits Strategy”, the first in a series of research briefs stemming from Prudential’s “The Seventh Annual Study of Employee Benefits: Today & Beyond”, employees ranked credit unions as the most trusted source to help them grow and protect their money. Eighty-one percent said credit unions were a trustworthy source to help them safeguard their funds. Comparatively, 79% of employees saw their employers as a trustworthy source for growing and protecting their money.

Fourteen percent of both employers and employees cited severe negative economic effects, a decrease from 2010 results of 27% for employers and 22% for employees. Employers who said their financial position will be better or improving in one year dropped to 54% this year from 70% in 2010; employees report a drop to 38% from 44%.

Employers reported a 17% increase over 2010 results in making benefits strategies a main focus. With shifting ownership and cost of benefits to employees, employers’ top strategies included:

• Expanding wellness, preventive, and work/life balance initiatives;
• Improving the effectiveness of benefits communications;
• Cost-sharing with employees;
• Giving more financial responsibility to employees; and
• Increasing employee benefits, education and financial advice.

Dieting and exercising top the list of New Year's resolutions for many, but in 2013, why not add being financially fit to that list as well. Getting your finances into shape won't require major lifestyles changes, according to an article published by Fox Business, the same diet rule of moderation also applies to getting a fit budget.

The article lists a set of steps that will help to get your finances in shape.

1. Evaluate past mistakes. Whether you got hit with finance charges because of overdue bills or held on to a stock longer than you should have, the article, recommends identifying all the 2012 money mishaps and commit to not making the same mistakes in 2013.
2. Review your investments to ensure you have the appropriate risk portfolio. Make sure you are investing appropriately for your age and goals. For instance, if you have 20 years to retirement, it's common to have more of your portfolio invested in stocks compared to being on the cusp of retirement where you might be considering bond investments.
3. Reign in credit card use and overspending. Only use a maximum of two credit unions. To help limit unnecessary spending, the article advises rating everything you consider purchasing on a scale from one to five. If the item rates a one, two or three, don't buy it!
4. Pay down debt. Learn ways to create more income and use those funds to pay down any debt.

Many credit unions have financial advisors on staff they may be able to advise you on ways you can become more financially fit or offer products or services they may help you complete some of you 2013 financial goals.

Good luck creating a new you in 2013!

Since Congress largely deregulated consumer checking and savings accounts in the early 80s, the U.S. Public Interest Research Group (US PIRG) has tracked bank deposit account fee changes and documented the banks’ long-term strategy to raise fees, invent new fees and make it harder to avoid fees. A recent study over the last six months, interviewing 250 banks and 116 credit unions in 17 states and the District of Columbia and reviewing bank fees online in these and seven other states resulted in the report “Big Banks, Bigger Fees: A National Survey of Fees and Disclosure Compliance”.

The report examined the following questions:

• How easy is it for consumers to shop around? Are banks complying with the Truth in Savings Act, which requires disclosure of a schedule of account fees to prospective customers?
• Can consumers still find free or low-cost checking accounts or has free checking ended?
• What can the Consumer Financial Protection Bureau (CFPB) and other regulators do to help improve transparency in the financial marketplace?

Key findings included some of the following:

• Only 48% of bank branches visited provided researchers with fee schedules as required by law on their first request. After two or more requests, eventually a total of 72% complied with the law. More than 1 in 10 (12%) of branches never complied and refused to provide fee information. Another 16% provided only partial information.
• Researchers found a wide variety of free or low-cost checking options, with 63% of small banks and 60% of credit unions providing totally free checking. Although the biggest banks have recently tightened requirements to obtain totally free checking (available at only 24% of big bank branches), it is still available at more than half of big banks with a regular direct deposit (59%).
• While more than half of big banks (62%) posted their full fee schedules on the web, versus less than one-third of small banks (29%), finding the fees was often a scavenger hunt. Many banks, especially big banks, placed fees in massive, clunky PDF files. Some banks even hid fee schedule links in footnotes or, worse, in their “site maps,” with no link available from the “compare checking accounts” page or any other pages.

The study also provides a list of key recommendations for both consumers, as well as regulators. Some of the consumer recommendations included the following:

• Review your bank statements and count your fees. In addition to ATM surcharges, you may be paying your own bank an “off-us” ATM fee that only appears on your statement, whenever you use another owner’s ATM.
• Examine how many fees you pay. Watch for a la carte fees you can avoid, for example, by only using online check images or statements. Use available text alerts to warn you of low balances that could result in overdrafts. Shop around. Look for better accounts. Bank at a credit union, not at a bank. Credit unions are member-owned, lower-cost alternatives to banks and often offer the same variety of services. It is easier to qualify for membership than most consumers think. Certainly, consider banking at a small bank, not a big bank. Consider moving your money by voting with your feet.

To access the full version of the study please click here. The recommendations might prove helpful to you if you are considering changing your financial institution or are looking for information on the type of fees you are being charged at your current financial institution.

Big banks are known for their fees lately and big bank credit cards are no different. Many people have switched to credit unions for their banking needs to avoid big bank fees and many are wondering if they should do the same with their credit cards.

A recent article by Janna Herron published on FoxBusiness.com reviews the good, the bad and the tricky about credit union credit cards, outlining all the things to consider before making the switch.

Like most credit union loan products, the rates are much better than with the big banks. The average APR on a rewards credit card with a credit union was 9.38% as of November 1, 2012 compared with 12.89% for big banks. More interestingly, credit union credit card interest rates are capped at 18%. The National Credit Union Administration (much like the FDIC for banks) mandates the 18% cap for most loans made by federally chartered credit unions, although some short-term small loans have a 28% cap.

Credit union credit cards are also known for lower late payment fees, having a five-day grace period for late payments (compared to one at big banks), and having the same variety of credit card options, such as secured cards, reward cards and platinum cards.

One of the drawbacks to having a credit union credit card are lower limits than with the big banks. Credit unions are risk averse and new accounts will often face lower initial credit limits. Consistent on time payments can often increase the limits more quickly, but it is still a consideration before making the decision to switch.

To read the entire article, click here.

Yahoo recently published a Bankrate.com article regarding ways to keep your checking account free. In an age where fees are on the rise in both amount and frequency, free checking could become a thing of the past.

Credit unions generally offer lower fees and better rates. Many credit unions also offer free checking accounts with no minimum balance required. Those that have fees tied to their checking accounts, usually the fees are minimal and don't put a large dent in already stretched budgets.

To read the full article and to get more tips on how to keep your checking account "free" click here.

A recent New York Times column, "Your Fees, Their Bank", provides some clarifications on the current bank fees, why they are being charged and how many banks get away with them. The column, by Nancy Folbre, also provides some of the many reasons to switch to a credit union. To read the article, click here.