My bank randomly charges me $1, then charges me $2 for asking about it

So today on my online bank statement (for a secondary checking account) appears "FEE" with a series of numbers followed by "$1.00".

Hmm.

So I call them up and, a quick 20 minutes later, ask a customer service rep why I have a $1 fee on my account. Long story short, it would appear they have decided to start charging me an account fee because of a direct deposit that was cut off several months ago. I ask why the fee has suddenly appeared many months later. He can't explain why, but he tells me I am lucky that I avoided paying all those fees in the meantime.

I feel so lucky.

So I ask if he can waive the fee. He can't. So then I ask him if he's going to charge me a $2 fee for calling him on the phone. He is, and he can't waive that either. Why? Because I'm so lucky that I haven't been paying this other fee for so long.

The conversation is simply comical, and keep in mind we're both lighthearted and chuckling through his ordeal. I am laughing because I think the situation is ridiculous, he is probably laughing because he knows I'm a powerless consumer to be toyed with.

I ask to speak to a supervisor, and 5 minutes later I have my $1 fee waived, my $2 fee waived, and my account converted to a different account type to avoid the fee. I guess the supervisor figured $3 was worth keeping a customer.

Banks report losses

Many of the major banks are reporting losses.

Chase reports 70% loss in its investment banking division.

Bank of America profit is down 32%.

Countrywide has a whole host of problems, including plummeting stock values and a 20% layoff of their workforce.

Wells Fargo is also reporting big increases in credit losses, particularly from consumer real estate.

Citibank plunges 57%.

Washington Mutual reports 72% profit loss.

Wachovia falls 10%.

Why did you take the ARM?

Countrywide is getting criticism for not permanently fixing the rates of several hundred thousand homeowners in risk of foreclosure. Part of this is being fueled by a protest group, NACA (or the Neighborhood Assistance Corporation of America).

If you take a look at their site, you will see all kinds of emotional statements designed to make you sympathetic to their cause, things that have nothing to do with subprime borrowers in foreclosure. Information such as "Chairman of Countrywide, one of the leading companies, is reported to have earned $22 million per year" seems to encourage the thought that because the CEO of a multi-billion dollar corporation is rich, he should forgive people who haven't been paying their mortgage.

These “geniuses” and their companies actually compensated their brokers and agents more if they marketed and closed loans containing abusive yield-spread premiums, low teaser and high re-set rates, and other costly loan terms and conditions

In other words, it worked like just about every commission based sale out there. Shocking that the company would give higher commission for a loan that makes the company more money.

Why on earth would the rates for these loans be so high? Why is lending to people with bad credit and lots of debt result in high rates? They answer it themselves: "almost one in every five subprime loan goes into default", yet they don't seem to make the connection. To be profitable, a bank has to get paid for the money it lends out. If a group of people tend to default at higher rates, their interest rate will be higher to ensure the bank doesn't lose money on those loans.

Modify every loan back to the rate at which these borrowers were or should have been qualified, and everyone wins. People can keep their homes and avoid financial ruin, and lenders can still receive payments on mortgages that borrowers can actually afford.

Here's the problem, NACA, they weren't qualified for payments they could afford. They were qualified for high interest adjustable rates, and that's exactly what they got. It is not the banks duty to set payments that someone can afford, it is the borrowers responsibility. What you are suggesting essentially shafts every single American paying a regular rate on a 30 year fixed.

These “genius” profit barons have pretended to create unparalleled homeownership opportunities for working people and families. Instead, they have preyed upon the most vulnerable, often based on a low credit score -- people with marginal credit and limited resources who could and should have obtained homes through fair lending practices. They charged people interest rates above 10% and often enticed them with teaser rates of 6% and less for the first two years.

The banks took a huge risk by putting these people into homes with teaser rates, when all the statistics showed that there was a high probability of default. To make such a venture profitable, they needed to charge higher interest rates later in the loan. These people could have used that time to rebuild their credit, save up to afford the new payments...anything. Instead, they rode along and when the teaser rate expired, cried foul. They can't refinance because, surprise, their credit still isn't any better.

Bottom line, it is not the banks responsibility to create a loan that is affordable to the borrower. Their only interest is in creating a loan that is profitable. It is the borrower's responsibility to determine whether that loan is affordable to them or not.

Banks don't want to foreclose. It costs money to foreclose. They end up with a house, which in all likelihood has been trashed by the deadbeat homeowner, that they have to sell for cheap at auction. They want you in your house, paying your mortgage, paying that interest. But because the group you fell into, that bad credit group, is a high risk and will default in higher numbers, your rate is higher in order to make up for the other deadbeats who do foreclose. Why is this so difficult to understand?

At the same time, some acknowledge that regardless of whether their loan is modified, some borrowers could lose their homes anyway because their financial situation is otherwise precarious.

"It all comes back to affordability," said Richard Pittman, housing services coordinator for ByDesign Financial Solutions, the Los Angeles branch of the Consumer Credit Counseling Service (CCCS). "As recently as 12 months ago, some were refinancing themselves out of their problems. A lot of them were just kidding themselves. They were fine through their second refi, but the third refi caused them problems."

Yes, I have read that a good number of these people in subprime loans in foreclosure, perhaps even the majority, are refinances. They refinanced equity to pay off their debts. This is the consequence of such a debtors lifestyle.

What is missing here? Case studies. No one appears to be asking these homeowners one very important question: "Why did you take the ARM?"...I would be very interested in hearing their answers.

FNBO advertises a rate that does not exist

FNBO Direct is still advertising its 6.0% online savings account interest rate. I had an issue with this last week, but I really have an issue with it this week.

First of all, all transfers into the FNBO account have a 3-4 day waiting period (in which I assume the company used to complete the transfer gets their cut by taking the interest in the meantime) between the time the money transfers out of your other bank and into theirs. So even if you already have an FNBO savings account, it has been literally impossible to earn the 6.0% advertised rate. At all! Starting about the middle of this week they have been advertising a rate that no longer exists for new customers.

The rate changes on Sept, 28. Friday. Tomorrow. The real stinger is that FNBO has already announced their new rate of 5.05%. This really isn't bad, considering other banks are reducing their rates almost across the board. ING is down to 4.3% (a .2% difference) and HSBC just lowered theirs to 4.5%, down a whopping .55%. Still, they are advertising a rate that not even their existing customers can take advantage of.

FNBO announces new rate

FNBO has announced the new rate on their savings accounts. 5.05%. Lower than their previous rate, higher than some (like ING). No doubt this is to recoup their losses from their brief 6% promotion.

FNBO's new rate is under lock and key

FNBO Direct, an online bank that the bulk of my savings is in, currently offers 6.0% APY on its savings accounts. That is a limited offer, and the offer is set to expire on September 28. Next week!

No one seems to know what the new rate will be after that. I called customer service and inquired with one of the reps and they couldn't tell me. She implied that she didn't even know herself, so it is possible that FNBO is keeping a tight lid on the news.

The logical rate for them to return to is 5.25%, the same as the rate before the promotion. But there are two problems with that. First is the Federal rate cut, which could trickle down to lower the rate on savings accounts. Second is that they may undercut their previous rate in order to make up for a little on their promotion. Then again, cutting it below 5% would put it below average and may encourage too many customers to transfer their money elsewhere.

What I found interesting was that they are still advertising the rate with less than 5 business days remaining in the promotion. With the time that it takes to sign up for an account, get it verified, transfer funds, and wait for the funds to clear, no one signing up today or anytime next week is going to see that rate! If you are considering FNBO, you need to wait until after the 28th.

If I were to hazard a guess, I would say that FNBO's new rate will fall between 5.00-5.25%.

I think my bank stole 54 cents from me

There has finally been a resolution to my auto financing problem. To sum up, the bank decided I didn't have insurance charged me for some of their own, a total of $83.87 that they helped themselves to out of my last payment without telling me (thankfully I always check my payments online).

After faxing over the appropriate paperwork showing no lapse in insurance coverage, it took 33 days to get it corrected - oddly, a day before my next payment was due. $83.87 has been credited to my account and correctly applied to the balance of the loan (the interest was unaffected).

But here's the thing. The insurance payment they took left me with an inflated principle from 8/3 to 9/5. An inflated principle $84 more than it should have. Thus this next payment in which they are going to charge me interest, based on the 33 day billing cycle, is going to be more than I should owe. By my calculation that is a full gain to the bank of 54 cents.

I wonder why it took a whole month to get the problem corrected? I guess they had 54 little incentives to drag their feet.

Charged for bill pay? Let the bank pay you

I was being charged $7/mo for online bill pay by my brick & mortar bank. For a long time it was worth it. Bill pay is just plain convenient. But now online bill pay has come to be expected from any major bank.

Some have started to offer free bill pay to all their normal checking. I thought seriously about switching to one of those until I took a look at my existing account with the online bank ING Direct.

ING Direct has a checking account with free bill pay and 4% interest. That worked out for me! Since I keep a lot of money reserved for annual bills, I have a bit of cash sitting in the account at any time. By transferring the amount of my bills from each pay check and then paying them from ING, I also get to earn a little interest on my bill before it gets sent out. Now that the system is running smoothly, I see that I am earning about the same that my old bank was charging me.

This is how banking should be!

FNBO locks my account

I received a satisfaction email yesterday from FNBO. I filled it out as being very satisfied with their service. So I found it incredibly funny that the day after I fill out this survey, they send me an email telling me they've locked my account.

Apparently, they want my employment information to comply with the "Patriot Act". I find this amusing, since I bank with 3 other banks and none of them have this.

So, I have to call them up. Why? Because I'm locked out of my online account - I can't even sign in. Why? Because even though I have my user name and password, the online website is requiring me to answer 2 security questions. Security questions are more of a hassle than a benefit. Especially when one of the questions they are asking is "What's your favorite sports team". Hey FNBO, not everyone likes sports. And I don't even remember answering that question.

Do you hate the phone trees that companies have now? Do you hate being on hold? At least when you are on hold with most companies, there is some music, with the occasional reminder that you are on hold. Want to piss off your customers? Put them on hold for 30 minutes while you play a recording over and over again repeating the terms and how to visit and navigate your website until your customer gives up.

Um, can I get that survey again? I need to make a few corrections.

Auto Loan Problem Revealed!

Mystery solved! The finance company no longer had my insurance information. My insurance company no longer had my finance company information. The declaration page didn't get sent for the insurance renewal, and the finance company charged me their own insurance.

The interesting part is that this isn't at all reflected on the payment. The numbers simply don't add up. If I had not checked it, found the problem, called to determine why the money was missing, and called both companies to get the paperwork back in order, I would have continued to be charged this extra insurance while already being covered. I do not know how long the finance company would have done this before bothering to notify me that there was a problem, but I am guessing that they never would have.

In fact, this happened before at the beginning of the loan, but was apparently corrected after 2 months. However instead of taking it from the monthly payment, as they did this time, they just tacked the insurance (I did not ask why their insurance was $2,200 a year) onto the balance of the loan. Supposedly I had not been charged interest during those two months, but I have asked for a full history report so I can check the math myself.

Hopefully this will be taken care of by the end of the week. I have updated the information with my insurance carrier, and with the financier, and had them fax the declaration. It should take 24-48 hours for the fax to go through, plus another 2 days for the financier to update their system and make the correction. I also requested a hard copy be mailed to me so I can fax it to the finance office myself.

Then, I will be having fun all next week checking the account to make sure the remainder of the payment has been properly applied.

So the lesson here is always check your payments, review your statements, and don't finance stuff!

Mismanaged Auto Loan

As if I needed another reason not to want to do business with loan companies, my wife's auto loan has been misapplied this month. I have vowed never to take another loan or finance a car again. When you pay in cash, you aren't dependent on some guy in an office somewhere entering your information into their computer. The more businesses you work with, the more problems you will inevitably have. You will always have human error.

Since I hate my debt and I distrust companies, I always double check my payments and make sure the companies are doing their jobs. Since I started to handle my wife's auto loan, I began checking the deposits made each month. The payment I just made has a problem, a big problem. Out of a $300 payment, only $175 was applied to principle with a $30 interest payment. $95 vanished.

So I went back and looked at all the payments all the way back to the origination of the loan. No other problems. However, I noticed another huge issue.

2 months after she signed her loan, the finance company increased her balance by over $2,200, then credited the $2,200 back 2 months later. For 2 solid months (59 calendar days to be precise) she was being charged interest for an artificially inflated balance. I ran the numbers and determined that during that time, they overcharged her around $25 in interest!

We are calling them this afternoon to try to get this straightened out. Certainly people make mistakes, but knowingly collecting interest that isn't owed without informing the customer of the mistake? That sounds negligent to me. And disappearing money? The numbers don't look like they could be a simple typo, and its quite possible an employee somewhere pocketed it.

Always scrutinize your payments to be sure they've been properly applied. You can't trust other people with your money.

ING checking

Having used a brick & mortar bank and their online bill pay for so long, here's what I like (and don't like) about ING's direct online checking (primarily their bill pay service).

:) - 4% interest. I haven't found a local brick & mortar checking account that earns you interest (thanks to Wendy in the comments for this link!).
:) - Verifies its bill pay addresses with large companies. This isn't obvious at first, but if you go back to edit them they will say "we have verified..." and does allow direct electronic payments.
:) - Seamless with individual checks. I don't like physically writing a check, but I'll mail one to you, and ING's bill pay works seamlessly with its ability to send individuals checks.
:( - No memo lines on the checks
:) - Simple transaction layout. Unlike my other banking site, ING puts all my transactions, pending bill pays and deposits right there on one page.
:( - The "spending power" balance. ING lets you have a line of credit as an overdraft protection feature. This is good since there are no fees, but you do pay 12% interest on the balance overdrafted. I selected the minimum amount of overdraft; why have a 4% checking account and then overdraft a thousand bucks at a 12% loss (APY)? Be sure to eye your "available balance" and ignore the "spending power" column.
:) - Check cashing verification! Click on a paper check you sent and it tells you whether it's been cashed (but you aren't waiting around for it to be cashed to come out of your account).
:) - The bill pay is free. I was paying $7 before this.
:) - Simple pin sign-on. Once I registered my computer with the site, all I need to do is enter my pin. Easy access.

Account Flowchart

Above is an example of a flowchart of my various accounts, not including retirement and investments. Basically, this shows where our paychecks go. Since we have stopped our Roth IRAs until we are out of debt, do not fund any other investments, and our 401ks are taken out pre-tax, this is a distribution chart of our net take-home pay.

We have a brick and mortar bank that we use for our everyday spending, for cash withdrawals and debit purchases. A percentage of our income goes into our long term savings (the whole 6 months of income thing), or it goes into short term savings (but that account is already sufficiently funded so it gets nothing at the moment). Why have 2 savings accounts? The FNBO has a great high interest rate, but transferring money can take a few days. With the Wells Fargo savings, which earns barely any interest, I can transfer the money instantly. A credit card is fine for emergencies only assuming the emergency will take plastic! I like having cash available, and the Wells Fargo account beats keeping it under my mattress.

Our bills, weekly readjusted costs (readjustment pool money) and debt repayments goes to ING. From there it sits until needed and a bill is paid and earns 4% interest in the meantime. A savings account wouldn't do for this obviously because it restricts the number of withdrawals per month. Why even have an ING savings? Good question. I opened it with them intending to move my money there until I discovered FNBO, and I just left it open. Maybe ING will come out with a promotional rate, so there's no harm in keeping it.

Seeing it as a chart, it's not as complicated as it sounds when I try to explain it!

Want a receipt? Too bad!

Do you use a debit card? I sure do, it's a lot easier than carrying cash and frankly I don't buy that much. But when I do buy something, I stick my receipt in my pocket and keep it for a couple of days, just in case there is a dispute between myself and the merchant. Now if you make purchases with your debit card under $15, you may not get any receipt at all. That's right, for a product purchase the retailer will not be legally required to give you any proof of that purchase at all.

Lovely.

You can thank the Federal Reserve for effectively discouraging the use of debit cards. Why does VISA support this? Don't they want me to use my debit/credit cards on a regular basis?

The Federal Reserve press release:

For immediate release

The Federal Reserve Board on Thursday announced its approval of a final rule to create an exception for transactions of $15 or less from Regulation E's requirement that receipts be made available to consumers for transactions initiated at an electronic terminal.

Regulation E implements the Electronic Fund Transfer Act. The rule is intended to facilitate the ability of consumers to use debit cards in retail environments where making receipts available may not be practical or cost effective.

The effective date of the final rule is thirty days from the date of publication in the Federal Register, which is expected shortly.

The Federal Register notice is attached.

Frankly, I'd be a bit concerned with running any electronic transaction with a machine that refused to give me a receipt. If it is "impractical" to use debit, why is it not impractical to use credit cards? Does this mean any such machine, like vending machines and laundry machines that take electronic transactions will also not be giving out receipts for credit cards (by the wording in the press release, I assume it applies to all electronic transactions under $15)?

Is it in consumers best interests to force them to use credit cards or cash with purchases under $15 by denying them the right to a receipt or proof of the transaction? Or is this just an example of a law designed to line the pockets of the banking industry?

Banks love automatic drafts

Banks and companies are in love with automatic drafts. Some even go so far as to require them. I firmly stay away. Why do banks love them so much?

• It guarantees them payment. They control when you pay your bills, not you. Usually when you get your bill you have at least a week to pay it; with automatic payments they have the control.
  
• It increases the odds of an overdraft. Your bank wants you to overdraft $20. It costs them very little but they get to hit you with a $10-30 fee.
  
• If the charge is denied for insufficient funds, the company gets to hit you with a fee.
  
• They have access to your bank account. Do you have a dispute over a bill? A changing bill, like a cellphone can always have errors or mistakes. Whether or not you really owe what they claim, they'll snag it from your account and you'll have to fight to get it back (either with a credit or refund check, which can take months).
  

Firing your bank

Who knew firing your bank would be so hard? I have been mulling over taking my primary bill paying checking account out of Wells Fargo and over to ING, to take advantage of their interest bearing checking accounts. For my tiny deposits, I can get a 3.8% interest rate. That's a lot better than 0%. The question is, how can I set all of it up with the system I use?

Maybe my system is too complex!

I have a savings account with FNBO (bulk of my emergency fund), that will stay the same. I have a checking account with Wells Fargo with direct paycheck deposits. This is where I currently pay my bills from. It's also my spending account, since we have debit cards with it. I have a savings account with Wells Fargo as an "immediate" emergency fund. It's $1k that I can transfer if I absolutely need money that day. I have a second checking account with Wells Fargo that is my readjustment account, ie all the bills that don't occur every month I transfer weekly into. It's a "pool" of money to pay irregular bills with.

Its the readjustment account that I want to switch to ING. My regular checking usually has very little money in it (I be broke), so I'm not concerned with earning interest on $23.51. But I regularly have up to a thousand in the secondary checking, just sitting there waiting to be zipped away to some company's bank account and on to an executive's Ferrari payment.

The thing is, ING offers free bill pay. I am paying $6/mo with Fargo. So obviously I want to combine my bill pay checking and my secondary readjustment account into a single "Billing Account". I'll just need to transfer money from my regular checking into ING.

Here is another problem. I'm going to have a large pool of cash in the ING account to pay bills, and I am going to need to keep track of what that money is earmarked for. So, I'll need to add another spreadsheet. At some point I am going to have to review my financial management plan and look for ways to simplify it. I really think combining the bill paying account and the readjustment account (irregular bill cash pool) is a good idea.

This is as far as I want to go. Could I dump WF entirely? Probably...but I just can't seem to get away from that brick and mortar bank. Their buildings are so pretty.

Walmart's prepaid VISA fees revealed

A little while ago I wrote about Walmart announcing its prepaid VISA card. One question I was left with from the original article was; what kind of fees would there be? There was a vague reference to fees, but nothing concrete.

Finally, here it is: the Walmart Prepaid Card official website. The card has a Walmart logo, but like many card services it is actually operated by a company called Greendot. The cardholder agreement gives you a rundown of their fees. Here they are in plain english.

Monthly fee: $4.95 (just for having the card)
Load fee: $4.95 (to put money on the card - ie, activation)
Reload fee: $4.95 (for putting more money on the card)
ATM withdrawal fee: $1.95 (for getting my money back - my first transaction and I've already paid $11.85 in fees)
Cash advance fee: $4.00 (I'm sure what this is, since its a prepaid card but it involves a teller or non-ATM cash withdrawal, maybe it just means any cash withdrawal from the card that is not done at the ATM?)
ATM Balance inquiry: $0.50
ATM Declined withdrawal fee: $0.50 (in other words, you pay $.50 if you check your balance or you pay $.50 if you try to get $20 when your balance is less than $20)
Stolen card replacement fee: $10.00 (thats right, if your card is stolen, you get to pay a fee)
Customer service fee: $3.50
Statement fee (by request): $2.00
Minimum deposit amount: $20
Maximum daily purchase limit: $2,500 (of course this is the balance limit anyway)
Automated phone system charge: $0.75 (a flat fee for calling the number and pressing buttons)
Phone operator charge: $.41 per minute, up to $1.00 (I suspect the operators rarely take less than 3 minutes for each call)

So you pay a fee to get the card, a fee to put money on the card, a fee to get your cash from the card, a fee to figure out how much money is on your card, a fee to interact with any employees or automated systems that issued the card, and a monthly service fee if you have the card longer than a month. Sign me up!

Statements are done electronically, and access is available online (because so many people without checking accounts have regular Internet access). They also readily admit to selling your information to other financial institutions and marketers.

I wonder how upfront Walmart will be about all these fees? I feel like I'm going to get charged a fee just for walking by the card kiosk. Admittedly, Walmarts fees are a little better priced than Greendots direct fees, but not by much. I still have no idea what the bill pay fees will be, as I didn't see them in the fee schedule. But the customer service fee is $3.50, and unless I have internet access I am going to have to interact with someone to initiate a bill pay. Walmarts card site has now become a mess of runtime errors, so please post these fees if you can find them.

They do have online access, but most of their pages were broken with errors when I was just trying to read the cardholder agreement. How many of those who have no checking account - usually because they are "undocumented" - have Internet access to avoid some of these fees?

My original suspicion was correct: paying $3.00 to cash a check is a great deal compared to this prepaid VISA.

Walmart to offer prepaid VISA card

Walmart is going to start offering a prepaid VISA card, which in principle basically works like a debit card. Customers go to Walmart with a paycheck, load up their card, and can spend their card anywhere that accepts VISA. Basically, anywhere except 2 convenience stores in southern Alabama.

But Walmart already offers check cashing. In fact, they do it for $3, a flat fee. Their average check cashed is $300. I imagine many Walmart employees themselves take them up on this offer.

This isn't new. Check cashing places are already doing this. Here is one such card with some detailed information. Scroll all the way to the bottom. The card charges the cardholder $1.00 for every signature based transaction, and $2.00 for every ATM transaction (not including originating bank fees). Wow! That could really eat into your balance. Walmart has not released any information about its fees.

Another question I have, and someone who actually uses this service may be able to elaborate, is whether the card comes with the same penalties as a prepaid VISA "gift card". Ie, it expires, and/or they make it next to impossible to finish off a small remaining balance. On some cards you need to know the exact remaining balance to zero out the card, which means a phone call to the issuing company, or it won't run it. Most people don't bother with the hassle and throw out cards with pennies or dollars remaining, what I consider essentially a hidden fee.

Of course, this works out for VISA. They charge 1-3% of the transaction total to the merchant depending on the type of transaction (debit pin/credit sig). And keep in mind that as more people switch from cash to VISA, merchants are going to have to increase prices to make up for the fees. Any fee charged to the merchant is passed down on to the customer in one way or another.

VISA claims customers spend $300 a year on check cashing. Considering check cashing places charge $3-$5 for their services, that doesn't add up. A regular bimonthly paycheck would cost $72-$120 a year. VISA is claiming to reduce their check cashing costs to $130 a year. Where's the savings? VISA certainly wants Walmart to help them peddle their cards. With an average balance of $300 per check, assuming they 'cash' it for free, they still earn about $6 in merchant fees not including any cardholder fees. And there will be fees, particularly bill pay and ATM withdrawals.

Here's what I don't understand. Checking accounts are free. Most of them include free checks that cost only the stamp to send in your bills. They come with free debit cards. There are no minimum balances on zero interest accounts, and taking cash from their own ATMs is free. So I just have to ask, if Walmart really cared about its customers, why isn't it encouraging them to save a whopping $300/yr by opening a checking account rather than just promising to cut their fees in half. There are banks in Walmart, right there at the front. Just put up a big sign "Hey, open a free checking account, get free checks, and eliminate all your cashing fees!"

The VISA is great for VISA. For consumers? You get loaded with fees and its impossible to save anything unless you pull out cash from an ATM which, of course, hits you with a $2 fee plus $2-$4 depending on which bank you end up at. This doesn't reduce fees, it just shuffled them around and hides them. How is that good for Walmarts customers?

UPDATE: Walmart's prepaid VISA fees revealed

Review of FNBO Direct

FNBO Direct is an online division of the First National Bank of Omaha. Thanks to a recent post on the Money Blog Network, I learned that this bank was offering a teaser 6.0% APY rate for their online savings account. This is a fully electronic bank, no paperwork or forms. Even their terms and agreements you need to print out (and you should do so).

With my measly 4.5% rate at ING, I was looking for an online savings account that would offer me more. One of the first questions I had was what the FNBO rate would be after the teaser period, which ends in September of this year. Unfortunately, it does not say, and will likely be tied to the market after Sept. Fortunately they do provide their previous rate of 5.25%. This is very competitive with other online savings accounts, so I am confident that it will be okay. As always, check after the period ends to see what rate you are getting.

You have to sign up online through their website. They are fairly new, I learned, so there were some minor glitches. For one, I couldn't seem to return to my application after submitting a secondary user. It kept telling me that my session had timed out. I also learned that the site is not entirely compatible with Firefox. Indeed, I did run into some problems while using Firefox during the application process (however my specific problem was no better in IE7 either) but for regular access and transactions, Firefox has given me no issues. Fortunately I called FNBO and they were able to help me finish my application over the phone. I ended up calling a few times, as I went through the application, and their customer service reps were friendly and very helpful.

Through some of the sign-up process, you will have to wait until you receive confirmation emails (acct #s, etc) before continuing, so don't expect to finish the application in one sitting. In my experience the e-mails were quite prompt, arriving in a day or less.

My first transaction went smoothly and the funds were taken within a couple of days. Setting up direct transfers was easy and there was no 'test deposits' necessary, as there was with ING. It withdrew my initial funding, a dollar, and after that I set up my checking account for direct transfer within minutes. There is a period of 2-3 days when your transfer does not earn interest. Then it appears in your account. This is somewhat of an indirect 'transfer fee' that you need to be aware of. There is a third party that handles their website and transfers.

Outright fees apply to wire and foreign transfers, so if you use those you may want to shop around more.

The site itself is simple and easy to use, with no distracting junk. Read their membership agreement and privacy policy. They do admit to selling your information (and even your transaction behavior) to affiliated parties. If this concerns you, look elsewhere. So far I have not received any solicitations, but certainly if I did they would be lost in the sea of junk mail and credit card offers I get daily anyway.

Overall, I am satisfied with FNBO. It is FDIC insured and the bank has been around for over a hundred years. Hopefully the post-teaser rate will still be good.

The ambiguous ATM balance

I admit it, I failed at owning a checking account when I went into college. I relied on the ATM to tell me what my balance was, and curb my spending accordingly. Naturally, I overdrafted a lot. Fortunately I quickly mended my ways and began keeping my checking account registrar on a digital PDA. It was a smart move, because now I knew what my balance was.

But it wasn't until I investigated that I realized what was happening to my ATM balance. Frankly, it would change almost every day for no apparent reason. For anyone who relies on ATM balances to track their accounts, surely they must be banging their heads against something in frustration.

I discovered that I wasn't the only one with this problem when a relative of mine complained of the same thing (unless of course its a genetic problem). She would overdraft because she would go to the ATM, check her balance or take out some cash, and then spend on her debit card. The ATM would show a balance of $100, she would go spend $70, and the next day her account would be overdrafted.

For me, it got to the point where I just regarded the ATM balance as a completely random number. I found it hilarious and useless that the banks even bothered to print it on there. With electronic transactions taking over it had become a useless feature.

The problem often stems from some merchants who do not run their transactions as soon as you buy the item. Sometimes they will wait until the end of the day, or a couple of days, to actually hit your account with the charge. Gas stations are the worst, as they will hit your account for $1 when you fill up. Then, 3 days later when it is supposed to clear, the dollar transaction vanishes. A day or two later, it reappears for the full amount. So even if you check your account online, you may or may not see all the charges there.

The bottom line is that you must track all your transactions manually. You must also take the time to learn how your various transactions are processed within your banks computer system.