DailyFinance.comhttp://www.dailyfinance.comDailyFinance.com%http://www.blogsmithmedia.com/BlogURL%/media/feedlogo.gifDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/Bank Fee Backlash Cost Big Financial Institutions More Than 2 Million Customershttp://www.dailyfinance.com/2012/02/07/bank-fee-backlash-cost-big-financial-institutions-more-than-2-mi/http://www.dailyfinance.com/2012/02/07/bank-fee-backlash-cost-big-financial-institutions-more-than-2-mi/http://www.dailyfinance.com/2012/02/07/bank-fee-backlash-cost-big-financial-institutions-more-than-2-mi/#commentsFiled under: , , ,

Bank feesNobody likes to leave their bank. Apart from the hassle of setting up a new account, switching your direct deposit, re-entering all of your automatic bill payment information, and getting used to a new network of ATMs, there's the fact that banks are supposed to be our partners.

That's how they advertise themselves, after all -- as the steady friends who hold our money, gently push us towards our dreams, and even pay us a little bit of interest for hanging around. Looked at from this perspective, leaving a bank isn't a spur-of-the-moment decision like switching from Pepsi to Coke or McDonald's to Wendy's: It's more like breaking up with your friendly-but-slightly-abusive girlfriend.

The emotional roller coaster aside, thousands of people switch banks every day, for a host of reasons: better interest rates, easier access to their money, or because they're leaving one town and moving to another. Last fall, however, an estimated 610,000 people dumped their significant bankers for a very specific reason -- to protest steep bank fees.



According to a recent study by Javelin Strategy and Research, 11% of the 5.6 million people who switched banks over the last three months did so as part of "Bank Transfer Day," an event inspired by Bank of America's (BAC) decision to begin charging its customers $5 per month to use their debit cards for purchases. BofA ended up scrapping the plan, but it, and many other banks, added a variety of other fees. In fact, as a 2011 Pew study showed, the average bank account has 49 fees, many of which -- like the confusing "'Staff Assisted Requests for Any Item or Statement Copy' fee, the 'Foreign Check Clearing Services for up to US $5,000 Drawn from Canadian Banks' fee, the 'Online External Transfer to Your Accounts at Other Financial Institutions' fee and the 'Large Amount of Coins Deposited' fee" -- charge for services that used to be free.

(Full disclosure: The author recently discovered a new $25 monthly fee that his bank is now charging him because his balance is below $15,000. This fee was added late in 2011, and was not part of the original banking agreement. The author is currently trying to get his money back, is exploring other banking options, and is attempting to remain unbiased in his discussion of the greedy, soul-sucking clever, fee-adding folk who run many of America's largest financial institutions.)

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On the one hand, Bank Transfer Day was hardly the overwhelming consumer uprising that big banks might have feared and activists had hoped for. More than 218 million Americans have some form of bank account, so in the grand scheme of things, the transfer tidal wave of 610,000 was more like a trickle. Even so, many banks -- including Citigroup (C) and Bank of America -- managed to give themselves PR black eyes as they called in security guards and police officers to keep protesters from withdrawing their money. Predictably, videos of these skirmishes found their way online, vignettes that are eerily reminiscent of the bank run scene from Mary Poppins.

But while the number of customers who were able to move their money on Bank Transfer Day itself was relatively small, many others have joined them over the following months. As Javelin reports, a further 26% of people who switched banks during the last 90 days -- about 1,456,000 customers -- also cited new bank fees as the reason for their moves.

This pattern of a slow diaspora from big banks dovetails with the demographic data that Javelin collected. Judging by the videos of Bank Transfer Day skirmishes, one might assume that the bank exodus of 2011 was largely composed of wild-eyed radicals -- or, as one Javelin researcher reported, "young, low-income hipsters." Not so: According to Javelin, people who switched banks "trended toward higher incomes." As these higher-wealth, generally older consumers continue to consider their banking options, it seems likely that America's largest banks are going to continue hemorrhaging customers.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>bankbank feesBank of America Corpbank transfer daybank+feebank+of+americabankfeeBankFeesbankofamericaBankTransferDayBruce Watsoncanadian+bank+feescanadianbankfeesCitigroupcredit unionsCreditUnionsDebit CardsDebitCardsFinanceprotestorsTwitterBruce WatsonTue, 07 Feb 2012 13:20:00 ESTWhen 6 Percent Interest Is Too Good to Be Truehttp://www.dailyfinance.com/2012/02/02/when-6-percent-interest-is-too-good-to-be-true/http://www.dailyfinance.com/2012/02/02/when-6-percent-interest-is-too-good-to-be-true/http://www.dailyfinance.com/2012/02/02/when-6-percent-interest-is-too-good-to-be-true/#commentsFiled under: ,

MangoSavers have taken it on the chin for years, with banks paying almost nothing on checking and savings accounts while happily charging big fees. So when one new financial website offered a 6% interest rate on an insured savings account, you can bet it got a lot of attention.

If you've never heard of Mango Financial, you'll probably see a lot about it soon. The company signed actor George Lopez to a five-year marketing agreement, and Wednesday, it started its national "Save With Mango" campaign to promote its high-interest savings account -- as well as some other products.

Where's the Catch?

If the last several years haven't trained you to be suspicious of bank offers, you haven't been paying attention. Various big banks have tried to charge fees on everything from talking to a teller to not talking to a teller by using an ATM, from making too many transactions on your account to not making enough.

Mango tries to tap into that resentment of Wall Street, calling itself "the fresh way to manage money." Its FDIC-insured savings account promises no monthly maintenance fee and pays 6% interest on deposits up to $5,000.

But if you think that Mango's paying you a sky-high rate out of the goodness of its heart, think again.

Sign Here. And Here, Too.

You see, Mango doesn't let you open a savings account to get that 6% rate unless you also sign up for its Mango Card prepaid program. And that's where the fees start.

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Mango charges a $5 monthly fee, but that's waived if you load at least $500 onto your card every month. Want money from an ATM? That'll cost you $2, plus whatever the ATM owner tacks on top of that. And although there's no charge to load the card from another bank account or by direct deposit, its Green Dot (GDOT) cash load feature comes with a $4.95 charge.

Granted, if you actually want a prepaid card, Mango's fees are actually lower than many of its competitors. And the extra interest from the savings account can certainly offset fees from the card.

For an intended audience that has gotten almost no attention from traditional banks, Mango should have broad appeal. But if all you want is a high-yield savings account without all the complications of a prepaid card, Mango's not the answer.
More on credit and debit cards:

Motley Fool contributor Dan Caplinger wishes banks would do the right thing. You can follow him on Twitter here. He doesn't own shares of the companies mentioned.




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]]>bank feesBankFeeschecking accountCheckingAccountFinancegeorge lopezGeorgeLopezhigh interest rate savings accountHighInterestRateSavingsAccountMango FinancialMangoFinancialPrepaidCardsSave With MangoSaversSaveWithMangoSuze OrmanTwitterDan CaplingerThu, 02 Feb 2012 13:02:00 ESTWhat Would You Do With a Billion Dollar Bank Error?http://www.dailyfinance.com/2012/01/19/what-would-you-do-with-a-billion-dollar-bank-error/http://www.dailyfinance.com/2012/01/19/what-would-you-do-with-a-billion-dollar-bank-error/http://www.dailyfinance.com/2012/01/19/what-would-you-do-with-a-billion-dollar-bank-error/#commentsFiled under: ,

Parijat SahaIt's a cliche that dates back to Monopoly: A bank error in your favor leaves you with an unexpected windfall. But for Parijat Saha, an Indian schoolteacher, the Community Chest card came to life in a big way when he discovered that his bank account suddenly held $9.8 billion.

"I was expecting an amount of a little more than 10,000 rupees ($200)," Saha told the BBC. The teacher, whose monthly salary is roughly $700, was stunned to find his account filled with a Buffett-level balance. He quickly notified bank officials, who subsequently announced that the huge sum was listed as "uncleared," which means that Saha couldn't have withdrawn it.

Saha's honesty is commendable, but it raises an interesting question: What should bank customers do when they find themselves the beneficiary of a bank error?

The other route, grabbing the money and hitting the road, can be alluring -- for awhile. In 2009, a New Zealand couple, Leo Gao and Kara Hurring, were surprised to discover that a bank error had left them with a $6.2 million overdraft account. The two quickly withdrew about $2.3 million and went on the lam. In 2011, Hurring voluntarily returned to New Zealand, and Gao was arrested a few months later. She's scheduled to go on trial in February and he is being held pending a bail hearing.

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While among the most impressive accidental millionaires, Gao and Hurring are hardly the only people who have found themselves on the wrong side of the law after falling victim to the temptation to take advantage of a bank's blunder. In 2008, Pennsylvania couple Randy and Melissa Marie Pratt used a bank mistake to make off with $177,250. They were later apprehended in Florida, and ended up behind bars. Similarly, when Susan R. Madakor, a Brooklyn, N.Y., woman, spent part of a $701,998 windfall that mysteriously appeared in her Chase Manhattan account, she ended up doing two years in prison for bank larceny and bank fraud.

But bank error stories don't always end up quite so badly. In 2007, Harriet and Herbert Starbird, another Pennsylvania couple, spent about half of $280,276 that their bank erroneously deposited in Mr. Starbird's account. When the case came to court, they were forced to repay the money, but didn't end up doing time. While there are several reasons that Herbert Starbird got off relatively easily, the fact that he didn't try to flee and repeatedly tried to return the money likely factoring in heavily.

The moral is clear: if you see a mistake in your balance, contact your bank immediately. The statute of limitations on bank errors that benefit customers can vary from state-to-state, but most jurisdictions give banks several years to discover their mistakes and seek restitution. And, needless to say, customers who spend their ill-gotten gains will likely find themselves facing the wrath of hordes of well-paid bank lawyers.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>bank error in your favorBankErrorInYourFavorBBCbillion dollar errorBillionDollarErrorBruce WatsonChaseCommunity ChestmonopolyNew ZealandParijat SahaParijatSahaTwitterBruce WatsonThu, 19 Jan 2012 14:55:00 ESTFed to Regularly Forecast Interest-Rate Changeshttp://www.dailyfinance.com/2012/01/03/fed-to-regularly-forecast-interest-rate-changes/http://www.dailyfinance.com/2012/01/03/fed-to-regularly-forecast-interest-rate-changes/http://www.dailyfinance.com/2012/01/03/fed-to-regularly-forecast-interest-rate-changes/#commentsFiled under:

Fed to regularly forecast interest-rate changesWASHINGTON (AP) - In a major shift, the Federal Reserve will start updating the public four times a year on how long it plans to keep short-term interest rates at record lows, according to minutes from its December policy meeting.

The first forecast will be included in the central bank's economic projections after its Jan. 24-25 meeting, the minutes said.

The change is the Fed's latest move to make its communication more open and explicit. It could help assure investors, companies and consumers that rates won't rise before a specific time. This might help lower long-term yields further - in effect providing a kind of stimulus.

The Fed has left its key short-term rate near zero for the past three years. In August, it that it plans to leave it there until at least mid-2013, unless the economy improves.

After its Dec. 13 meeting, the Fed issued a policy statement that portrayed the U.S. economy as improving slightly. The central bank declined to take any additional steps to boost growth.

In January, the Fed will release an interest rate forecast for the fourth quarter of 2012 and for the next few calendar years, the minutes show. It will update that forecast four times a year.

The minutes also suggest the Fed could be poised to launch a new step to invigorate the economy. Some members favored bolder action but said they wanted to wait until the more explicit communication policy was in place.

The plan to forecast interest rates follows a historic decision last year to have Fed Chairman Ben Bernanke hold news conferences four times a year. Bernanke has also done a number of interviews and sought other changes to make the Fed's decision-making process more transparent.

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]]>Ben BernankeBenBernankeFederal ReserveFederalReserveinterest ratesInterestRatesThe Associated PressTue, 03 Jan 2012 15:00:00 ESTCitibank Turns Rewards Into 'Social Currency'http://www.dailyfinance.com/2012/01/03/citibank-turns-rewards-into-social-currency/http://www.dailyfinance.com/2012/01/03/citibank-turns-rewards-into-social-currency/http://www.dailyfinance.com/2012/01/03/citibank-turns-rewards-into-social-currency/#commentsFiled under: , ,

Citibank turns rewards into 'social currency'NEW YORK (AP) - Credit card rewards are the new social currency.

Citibank (C) customers can now use Facebook to pool their rewards points online.

The bank on Tuesday launched a Facebook application that lets users team up to use their points, whether it's for charity, a group gift or a personal goal. Citi says it's the first bank to offer such a feature.

The app builds on a service Citi introduced last year that lets customers transfer points to one another on the bank's homepage. After getting feedback, executives decided to expand the rewards sharing capability and offer it through social media.

"Now we're delivering it to where customers are every day," said Ralph Andretta, who heads Citi's loyalty programs and co-branded cards.

Andretta noted that customers will have far more flexibility with their points, whether it's to help a friend fly home from college or team up for a big-ticket reward. The company is giving away 2,500 free rewards points to each of the first 4,000 customers to sign up.

To get started, customers download the ThankYou Point Sharing App, which is linked on Citi's Facebook page at www.facebook.com/citibank.

Customers can then start a rewards pool by naming a recipient and explaining its purpose. The recipient of the points maintains control of any contributions, so it's best if you know and trust that person.

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Pool recipients must be individuals and cannot be an organization, even if the intended goal is a charitable donation.

Users can promote their goals by sharing links on their Facebook pages or privately inviting other Citi customers to contribute. Donors can see the total number of points a cause has amassed.

The app can collect personal information from Facebook profiles. But Citi says it does not share any customer account information with Facebook.

The program isn't only for credit card holders either. Citi checking account customers can also earn ThankYou points. Citi introduced its lineup of ThankYou credit cards last year.


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]]>banking rewardsBankingRewardscitibankfacebookreward pointsRewardPointsrewardsrewards pointsrewards programrewards programsRewardsPointsRewardsProgramRewardsProgramssocial currencysocial networkingsocial networksSocialCurrencySocialNetworkingSocialNetworksThe Associated PressTue, 03 Jan 2012 10:45:00 ESTThe Bigger the Bank, the Worse the Customer Servicehttp://www.dailyfinance.com/2011/12/28/the-bigger-the-bank-the-worse-the-customer-service/http://www.dailyfinance.com/2011/12/28/the-bigger-the-bank-the-worse-the-customer-service/http://www.dailyfinance.com/2011/12/28/the-bigger-the-bank-the-worse-the-customer-service/#commentsFiled under: , , , ,

The Bigger the Bank, the Worse the Customer ServiceThe biggest bank in America isn't the one you might think.

Industry monitor SNL Financial recently revealed that JPMorgan Chase (JPM) knocked out longtime rival Bank of America (BAC) for the top spot, measured by both total assets and the amount of those assets that take the form of customer deposits. (Major financial powerhouses like Morgan Stanley (MS) and Goldman Sachs (GS) didn't make the cut because they're not your run-of-the-mill depository banks.)

But is bigger better? Not when it comes to customer service.

A second survey released this month by the American Customer Satisfaction Index revealed which of these banks score highest with the customers who make those deposits.

Bank
SNL Survey Rank
Total Assets
Total Deposits
ACSI Score (out of 100)
JPMorgan Chase
1
$2.27 trillion
$1.09 trillion
70
Bank of America
2
$2.22 trillion
$1.04 trillion
68
Citigroup (C)
3
$1.94 trillion
$851 billion
73
Wells Fargo (WFC)
4
$1.30 trillion
$895 billion
73
US Bancorp (USB)
5
$330 billion
$223 billion
Not rated
Source: American Customer Satisfaction Index and SNL.

Right off the bat, you can see that the "biggest bank in America" isn't necessarily the "best bank in America."

JPMorgan Chase may boast the most assets in the land, and the most customer deposits -- but these deposits aren't landing in Chase accounts because of the service. More likely, people are banking at Chase by default -- because it's the bank they see on the corner, rather than the bank they necessarily would like to see.

Scoring just a 70 on the ACSI survey, Chase offers lower-quality service to its customers than either Citigroup or Wells Fargo (73), despite the fact that, judging from their total deposits, these banks lag Chase in popularity.

Credit Unions Rule

The deeper you dig into the survey, the bleaker the situation looks. According to ACSI, all of the top four biggest banks offer lower-quality service than the "average" bank in America, which customers give a score of 75.

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Moreover, banks in general score lower on customer satisfaction than other financial institutions. On ACSI's survey, the category of "all other" financial institutions received an average ranking of 79, while credit unions in particular scored 87 -- a record high for the category.

There is one comparison by which banks are held in a positive light: Another survey found that Americans like their banks a whole lot more than they like politicians.

(For a look at a financial institution that is truly beloved, check out this recent profile of the Bank of Cattaraugus, an old-fashioned community bank that is the smallest in New York State.)


Motley Fool contributor Rich Smith does not own shares of, nor is he short, any companies named above, but The Motley Fool owns shares of Citigroup, JPMorgan Chase, Wells Fargo and Bank of America. The Motley Fool owns shares of and has created a covered strangle position on Wells Fargo.


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]]>Bank of America Corpbest bankBestBankChaseCitigroup Inccredit unionsCreditUnionscustomer serviceCustomerServiceFinanceGoldman SachsJPMorgan ChaseMorgan StanleySNL FinancialU.S. BancorpWells Fargo & CoRich Smith, The Motley FoolWed, 28 Dec 2011 09:30:00 ESTMore People Like Their Banks Than the Governmenthttp://www.dailyfinance.com/2011/12/21/more-people-like-their-banks-than-the-government/http://www.dailyfinance.com/2011/12/21/more-people-like-their-banks-than-the-government/http://www.dailyfinance.com/2011/12/21/more-people-like-their-banks-than-the-government/#commentsFiled under: ,

Government vs. BanksGuess who's more hated than banks? The folks in Washington.

Yes, despite the din from the Occupy Wall Street crowd, not everybody dislikes financial institutions -- at least, not their own. A new poll from the staunchly libertarian and conservative Reason Foundation and the similarly aligned Arthur N. Rupe Foundation found that 76% of Americans surveyed have a favorable opinion of their own bank, while just 15% gave it a thumbs down.

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Uncle Sam, by contrast, gets a big thumbs down. A mere 32% said they have a favorable opinion of the federal government as a whole, and 62% rate it unfavorably.

Congress fares even worse: Some 80% of those surveyed said they disapprove of the job it's doing. And, when asked which outcome they feared more, 54% said they're more worried that the government will do something to make the economy worse, while 40% said they're more worried that the government will fail to take action on the economy.

The president, though, fared somewhat better: 49% of respondents approved of the job Barack Obama is doing in the White House, with 47% disapproving.

So, does this means banks have bragging rights?



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]]>Arthur N. Rupe FoundationArthurN.RupeFoundationbanksbanks vs. governmentBanksVs.Governmentcongressconservativeseconomygovernmentlibertariansobamapollreason foundationReasonFoundationsurveySheryl Nance-NashWed, 21 Dec 2011 10:25:00 ESTSick of Fees? Here Are Some Other Banking Optionshttp://www.dailyfinance.com/2011/12/15/sick-of-fees-here-are-some-other-banking-options/http://www.dailyfinance.com/2011/12/15/sick-of-fees-here-are-some-other-banking-options/http://www.dailyfinance.com/2011/12/15/sick-of-fees-here-are-some-other-banking-options/#commentsFiled under:

banking alternatives for those who are sick of feesWhen people talk about the American dream, banks are usually somewhere in the background. Whether the goal is buying a house or going to college, starting a business or taking a vacation, the bank is where people save their pennies and get the loans that make everything happen. But what if -- instead of making your dream come true -- your bank relationship actually costs you money?



Ideally, banks are supposed to provide a secure place to store money and a steady stream of compounded interest to make the pile bigger. But, between falling interest rates and rising fees, many bank customers have found that, instead of getting richer, they're actually losing money. Part of the problem is the government: Traditionally, banks invest their deposits and pay interest to their customers. But with the Federal Reserve lending money at 0% interest, there's no reason for banks to pay interest to their customers. At the same time, 2009's CARD Act cut many of the hidden fees that banks were using to boost revenue from credit cards; in response, many banks created new fees to help them ensure a steady stream of income. Many banks have added or increased fees for online bill pay, online account transfers, coin deposits, and dozens of other services that used to be relatively cheap, or even free.

Put It on the Card

One increasingly popular alternative for stashing cash is refillable debit cards, which resemble credit cards but are not attached to bank accounts. Customers can buy the cards, deposit their cash onto them, and use them in much the same way that they would use a credit card. Most cost a few dollars to buy and carry a small monthly fee. For households that spend most of their monthly income, these cards offer a convenient way to handle their money.

Unfortunately, many of these cards, which are offered by banks, come packed with the same brutal fees that plague traditional bank accounts. In fact, thanks to a loophole that banks lobbied to have placed in the CARD act, banks are able to hit refillable debit card users with fees that are illegal for more traditional credit card accounts.

Walmart offers a promising solution to the debit card problem: its money card costs $3 per month to use, but doesn't have any automatic fees. Customers can directly deposit their paychecks onto the cards, can use them like credit cards, and can even get their cards -- and their money -- replaced if the cards are stolen. For many users, the cards are a lot cheaper than traditional bank accounts.


Credit Unions

For people who want a full-service bank, but don't want to pay huge fees, credit unions are a great choice. Basically not-for-profit, member-owned banks, they follow fairly close to the traditional banking model: Most of their money comes from loans, not investments, and much of their profit goes back to members in the form of compounding interest and lower-rate loans. Because their profit model doesn't rely on fees, credit unions don't have many of the charges that banks commonly tack on. In fact, some credit unions even reimburse the fees that their customers pay for using other banks' ATMs!

Admittedly, there are some drawbacks to credit unions. To begin with, most only have a few branch offices, and they don't have as many ATMs as major banks. Then again, with many banks tacking on or increasing fees for ATM usage, the benefit of large numbers of ATMs may be fairly limited. For that matter, many credit unions belong to co-op, cashpoint, or other ATM networks that vastly increase the number of places where customers can access their money.

Given the choice between high-cost banks and lower-cost credit unions, it's not surprising that many customers are moving their money. According to the World Council of Credit Unions, more than 91 million people -- almost 44% of the economically-active population -- had accounts at credit unions in 2010. Since then, the numbers have risen even higher: On "Bank Transfer Day," a widespread protest in November against high-fee banks, an estimated 40,000 bank customers moved their accounts to credit unions. According to the Credit Union National Association, approximately 650,000 customers did the same over the course of the preceding month.

For some bank customers, refillable debit cards are a simple, safe way to handle money; for others, credit unions offer the best option for cash management. Regardless, one thing is pretty consistent: for many customers, traditional banking is a waste of money.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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]]>bank accountbank accountsbank feesBankAccountBankAccountsBankFeesCARD ActCardActcredit unioncredit unionsCreditUnionCreditUnionspersonal bankingPersonal financePersonalBankingPersonalFinancerefillable debit cardsRefillableDebitCardsretail bankingRetailBankingWalmart MoneyCardWalmartMoneycardBruce WatsonThu, 15 Dec 2011 14:20:00 ESTHow Durbin's Debit Card Fee Cut Backfired on Small Merchantshttp://www.dailyfinance.com/2011/12/08/how-durbins-debit-card-fee-cut-backfired-on-small-merchants/http://www.dailyfinance.com/2011/12/08/how-durbins-debit-card-fee-cut-backfired-on-small-merchants/http://www.dailyfinance.com/2011/12/08/how-durbins-debit-card-fee-cut-backfired-on-small-merchants/#commentsFiled under: , , ,

How Durbin's Debit Card Fee Cut Backfired on Small Merchants Washington's efforts at Wall Street reform and consumer protection keep having strange and unintended consequences for Main Street businesses and customers.

The Durbin Amendment, part of the Dodd-Frank Act, set a cap on the amount financial institutions can charge merchants to process debit card transactions. Previously, the average "interchange" fee was 44 to 45 cents per transaction. As of Oct. 1, the maximum swipe fee was cut to 21 cents. The intent was to keep the cost of doing business down, but that goal is reportedly being thwarted by the credit card companies' response.

According to The Wall Street Journal, Visa (V) and Mastercard (MA) have eliminated the discounts they previously offered on interchange for small transactions -- those under roughly $10. Instead, the credit card companies now charge many small businesses the maximum 21-cent fee allowed by the law. As a result, small merchants face a conundrum: How to convince their customers to pay in cash, after several years of marketing designed to encourage debit card use?

The problem is especially acute for those businesses that deal for the most part in sales under $10 dollars, like coffee shops. Alisa Morkides, owner of Brew Ha Ha!, a nine-store coffee chain in northern Delaware, recently had to raise prices in order to offset what she said was a 35% increase in interchange fees paid to big financial institutions.

"We've been in business for 18 years and we just started taking credit cards in 2007 -- and I'm sorry I did," Morkides says. "When McDonald's started, I was told I had to do it. It did not increase our sales but now it's a weird bind."

In her first year of taking credit cards, Morkides says interchange fees ran to $30,000; this year, she expects to pay $85,000. Roughly one-third of her customers pay with credit, an amount that has grown over time. "I pay half in health care what I pay in swipe fees," Morkides explains. "I don't pay this much in business insurance."

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Morkides experienced the impact of the card companies' response to the Durbin amendment right away: "In September, I was paying in interchange rates $2,914; in October, $4,677." The new rules on swipe fees took effect Oct. 1.

"Our overall sales have been constant," she says of the rising costs. "It's all interchange."

The Wall Street Journal reports that the amendment's namesake and champion, Sen. Richard Durbin (D-Ill.), "declined through a spokesman to comment on the consequences of the law." But higher costs due to swipe fees are not direct consequences of the law itself; rather, they result from the card companies' response to the law. This is not the financial industry's first attempt to avoid any loss to their own profit margins by raising costs for others: Big banks previously floated plans to charge consumers a monthly fee for debit cards, before a public backlash caused them to back down.

The president of U.S. markets for MasterCard told The Wall Street Journal, "There will be some unhappy parties, as there always is when the government gets in the way of the free-market system." But this particular market is not quite as free as it might be: Visa and MasterCard each have a clause in their standard contract that prevents merchants from charging higher prices on credit and debit card transactions. As a result, merchants are unable to pass along swipe fees to their customers (or to decide not to, depending on their inclination). Since Visa and MasterCard have a near duopoly on the market, many merchants are trapped in unhappy arrangements like the one described by Morkides, with no choice but to raise prices across the board.


- Additional reporting by Catherine New.

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]]>Brew Ha HaBrewHaHacoffee shopCoffeeShopconsumer protectionConsumerProtectiondebit card feesDebitCardFeesDodd–Frank Wall Street Reform and Consumer Protection ActDurbin AmendmentDurbinAmendmentFinancefinancial reformFinancialReforminterchange feesInterchangeFeesMain StreetMasterCardsmall businessSmallBusinessswipe feesSwipeFeesThe Wall Street JournalWall Street reformEamon MurphyThu, 08 Dec 2011 16:15:00 ESTWould You Watch an Ad Instead of Paying an ATM Fee?http://www.dailyfinance.com/2011/12/02/would-you-watch-an-ad-instead-of-paying-an-atm-fee/http://www.dailyfinance.com/2011/12/02/would-you-watch-an-ad-instead-of-paying-an-atm-fee/http://www.dailyfinance.com/2011/12/02/would-you-watch-an-ad-instead-of-paying-an-atm-fee/#commentsFiled under:

Would you watch an ad instead of paying an ATM fee?What if there was a simpler solution to avoiding an ATM fee than running all over town looking for an in-network machine? One Brooklyn, New York-based entrepreneur says he found it.

Instead of paying a fee to use an out-of-network ATM fee, Clinton Townsend, the founder of Free ATMs NYC, proposes consumers watch an ad, the New York Daily News reports. Townsend has already installed one of the free ATMs at a New York City music venue.

Townsend's business plan may be coming at just the right time. Americans spent $7.1 billion in ATM fees in 2010, according to Oliver Wyman, a consulting firm. JPMorgan Chase abandoned a test program where the bank charged non-Chase customers in a few states $4 or $5 to use the banks ATMs after just two months, according to CNNMoney.

The bank went back to charging its usual $3 fee for out of network customers after determining that the higher fees weren't generating enough revenue to justify expanding the program nationwide. Still, the $3 fee is higher than the average charge in the cities with the highest ATM fees, according to bankrate.com.

But Chase's decision to just lower its ATM fee likely won't satisfy consumers. Seventy-Seven percent of respondents to a November Ally Bank survey said that they don't think it's okay for a bank to charge an ATM fee.

Consumers aren't the only ones complaining about high ATM fees. ATM operators filed a lawsuit against Visa and Mastercard in October, alleging that the credit card companies' rules prevent the operators from offering their services at a lower price.

Banks have been quietly boosting fees in recent months in an effort to recoup revenue lost due to new limits on swipe fees, overdraft fees and other charges that took effect as part of the Dodd-Frank financial regulations.

Bank of America announced in September that it would charge customers $5 to use their their debit card for purchases starting in 2012. But the bank and others ultimately abandoned plans to charge for debit card use after criticism came pouring in.

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]]>ATM feeatm feesAtmFeeAtmFeesHuffington PostFri, 02 Dec 2011 17:12:00 ESTBank at Walmart? Cheap Prepaid Debit Cards Lure the Fee-Frustrated and Unbankedhttp://www.dailyfinance.com/2011/11/22/bank-at-walmart-cheap-prepaid-debit-cards-lure-the-fee-frustrat/http://www.dailyfinance.com/2011/11/22/bank-at-walmart-cheap-prepaid-debit-cards-lure-the-fee-frustrat/http://www.dailyfinance.com/2011/11/22/bank-at-walmart-cheap-prepaid-debit-cards-lure-the-fee-frustrat/#commentsFiled under: , ,

Bank at Walmart? Cheap Prepaid Debit Cards Americans feeling disenchanted (or worse) with their banks after years of ever-increasing fees are increasingly turning to an alternative financial tool provided by the world's largest retailer: the Walmart (WMT) MoneyCard.

For a flat $3-a-month fee, consumers get a prepaid debit card that they can reload at their convenience. Free direct deposit is also available, and comes with a $10 bonus. The card requires no credit check or bank account, and there's no possibility of overdraft fees, since -- as one enthusiastic user told NPR -- "You can't spend what you don't have, so you can't go over. You don't get in trouble with it."

The MoneyCard is part of Walmart's push into the financial services sector, an area where the company evidently sees a massive opening -- understandably so, given the recent outpouring of scorn for the country's big banks. Customer anger found a convenient target this fall when Bank of America (BAC) announced plans to charge depositors a monthly fee to use their debit cards for purchases, on top of overdraft and other charges frequently incurred. The backlash was intense enough to compel the giant institution to backtrack.

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But if anger at large financial institutions has only recently reached a flashpoint, galvanized by the Occupy Wall Street movement, the use of prepaid debit cards has been on the rise for years: In 2009, research firm IBISWorld estimated the value of the market to be between $50 billion and $160 billion. In September 2010, Consumers Union issued a report titled Prepaid Cards: Second Tier Bank Account Substitutes, in which researchers connected consumers' decisions to switch to such cards with recession-related uncertainty. But the report also noted that prepaid debit cards were still high cost, often carried confusing fees and offered little or no protection for customers' funds.

Walmart has addressed the fee issue, at least, and is attracting significant numbers of the unbanked with its MoneyCard. The Federal Reserve estimates that 60 million Americans -- one-fifth of the country -- deal primarily in cash. An expert on the debit card market told NPR he thought there were 2 million active MoneyCards. And while Walmart did not succeed in obtaining a federal bank charter, its MoneyCenters offer a range of financial services, including affordable check cashing, options for bill payments, and overseas wire transfers, in addition to prepaid debit cards.

The market for these cards may have begun among low-income workers and the unemployed in the midst of a recession, but they could well prove popular enough to stay in widespread use even if the economy improves.



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]]>bank feesBank of America CorpBankFeesConsumers Uniondebit card feesDebitCardFeesFederal Reserve SystemFinanceOccupy Wall Streetoverdraftprepaid debit cardsPrepaidDebitCardsunbankedWal-MartWalmart MoneyCardWalmartMoneycardEamon MurphyTue, 22 Nov 2011 16:30:00 ESTFacebook Friends Get a New Benefit: Now You Can Send Each Other Moneyhttp://www.dailyfinance.com/2011/11/18/facebook-friends-get-a-new-benefit-now-you-can-send-each-other/http://www.dailyfinance.com/2011/11/18/facebook-friends-get-a-new-benefit-now-you-can-send-each-other/http://www.dailyfinance.com/2011/11/18/facebook-friends-get-a-new-benefit-now-you-can-send-each-other/#commentsFiled under: , ,

Facebook Friends Get a New Benefit: Now You Can Send Each Other Money The most precious of holiday cards -- the one shaped like a $20 bill, with a peekaboo cutout for the president's face -- may be a thing of the past. Now you can just post a virtual $20 bill on a friend's Facebook wall to say Happy Holidays this year. Or send money to your kids in college -- instantly.

In a joint effort with PayPal, the social media giant launched a new app this week called Send Money that could remake the money-transfer business. While a number of so-called peer-to-peer payment systems already exist, the new app offers a seamless money transfer system between Facebook friends -- and captures Facebook's more than 800 million users.

I took the new app for a test drive. On Thursday, I sent my sister $5 to say "Thanks for being a great sibling!" While I have a PayPal login, I don't keep actual funds in a PayPal account, so I used PayPal to make a payment via my credit card.

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That's when I saw a little catch to Facebook's new app: My $5 gift had turned into $5.45 expenditure. PayPal charges a premium of 2.9% of the transfer amount, plus 30 cents, which is the same fee that PayPal also charges on its website. But for $5 gift sent from New York to Philadelphia, it's only a penny more than sending a fiver through the mail in a stamped envelope. And a whole lot cheaper than Fedexing a check or using Western Union, where an instant money transfer of $5 comes with a $5 fee -- and higher sums as the amount being sent rises.

But if you fund the transfer directly from your bank account, or with money that is kept in a PayPal account it can be sent for free. And PayPal cash can be used for currencies in 65 countries.

The turnaround time beat snail mail by a long shot: After I made the payment, my sister reported getting a link for the gift in less than two minutes. She logged into PayPal, where the prompts directed her to withdraw the money from PayPal and transfer it to her bank account. Recipients can also request a paper check.

One disconcerting part of the payment transfer: The email receipt for my payment showed $5, not the actual $5.45 that was debited from my credit card.

Catherine New can be reached at catherine.new@huffingtonpost.com.

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]]>FacebookfedexFinancemoney transferMoneyTransferpaypalpeer-to-peer paymentPeer-to-peerPaymentremittancessend moneySendMoneywestern unionWesternUnionCatherine NewFri, 18 Nov 2011 06:00:00 ESTFor Top Bankers, the Era of Easy Job Hopping Is Endinghttp://www.dailyfinance.com/2011/11/11/for-top-bankers-the-era-of-easy-job-hopping-is-ending/http://www.dailyfinance.com/2011/11/11/for-top-bankers-the-era-of-easy-job-hopping-is-ending/http://www.dailyfinance.com/2011/11/11/for-top-bankers-the-era-of-easy-job-hopping-is-ending/#commentsFiled under:

By Dan Fastenberg

One of the secrets of finance is that the banking world has a history of working in a lot of ways like a basketball league. You may be a star, but your killer jump shot barely matters if your team is in last place. Or to put in actual terms, what bank you work at is as important as your analyst skills. So if you're lucky enough to be one of the premiere bankers, you can just change teams, or banks, when fortunes fade.

That fluidity in the finance world may however be coming to an end, or so says a new report from Reuters. "There are plenty of resumes going around in the market right now, just not too many takers," Joe Neitham, a recruiter at TRC Group in Singapore, told the news agency. Just four years ago, when the volatility arrived on Wall Street in the wake of the financial crisis, its course was unpredictable. And its contours have already changed, Reuters says. When Lehman and other giants came crashing down, there were as many finance houses, like Barclays, that were then seeing golden days, going on "hiring sprees" in the first few years of the financial crisis.

The dynamic of 2011 is quite different, the report says. If banks aren't trimming their rolls, they certainly aren't hiring anymore either, Reuters says. In other words, no bank can speak of flush times. One could look to Asia to get a sense of the new stop sign that has taken over on Wall Street. Indeed, Asian finance was a bastion of prosperity during the worst of America's finance woes, and the securities sector there grew from 42,000 employees in 2007 to 55,000 at the end of this September. Among the Asian banks that were once outlets for hiring that are now going forward with a no new hands on deck policy is the Japanese financial holding company, Nomura.

Observers of Wall Street have tried to come up with explanations as to how some banks were up until this point able to see sky high returns even as global finance confronted its worst crisis since the Great Depression. And many have highlighted the popular Wall Street policy of maintaining skeleton crews, keeping staff overhead as low as possible to boost profits. It may be that all banks are now catching on, creating the new dynamic described above. Regardless, finance chieftains have defended the no hiring policies by highlighting the so-called "uncertainty" they are operating under, thereby disincentivizing hiring. And among the issues raised by Wall Street executives in defending the lack of hiring are the new regulations introduced by the 2010 Dodd-Frank Wall Street Reform Act.

Among the regulations introduced by Dodd-Frank is the mandate that banks keep more money in reserve so they need not look to Washington for a bailout in the event of massive crisis. This policy was also intended to halt the riskiest of trading. The new framework has drawn the ire of bankers, who say our capitalism must allow for such trading. For his part, former Sen. Chris Dodd, who sponsored the bill, is wearing the oft-sounded rebuke of his bill as a badge of courage.

"I should be flattered, I suppose," he told NBC's Meet the Press online program "Press Pass" on Friday. "I don't know of anyone who wants to go back to the fall of 2008."



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]]>bankersbankingBarclays PLCChris DoddCredit Suisse Group AGFinancefluidityGreat DepressionGreat Recessionjob hoppingJobHoppingpremiere bankerPremiereBankerReuterstop performersTopPerformersWall StreetAOL JobsFri, 11 Nov 2011 12:30:00 ESTFormer Google Exec Jumps Into Payday Lending with ZestCashhttp://www.dailyfinance.com/2011/11/09/former-google-exec-jumps-into-payday-lending-with-zestcash/http://www.dailyfinance.com/2011/11/09/former-google-exec-jumps-into-payday-lending-with-zestcash/http://www.dailyfinance.com/2011/11/09/former-google-exec-jumps-into-payday-lending-with-zestcash/#commentsFiled under: , ,

Former Google Exec Jumps Into Payday Lending with ZestCash A former Google executive has moved from the world of Internet searches to the world of high-interest, short-term lending. He says his operation, ZestCash.com, offers an innovative way to help the poorest borrowers avoid financial emergencies. But is this just a slick veneer putting a shine on the classic payday lending business?

One-time Google Chief Information Officer Douglas Merrill founded online-only lender ZestCash, which uses some fairly high-level Google-esque algorithms to assess its borrowers' creditworthiness. And the site certainly looks better than your typical payday lender. Those sketchy outfits usually operate out of rundown storefronts in lower-income neighborhoods, offering quick cash infusions at jacked-up interest rates to people with nowhere else to turn.

But friendly looking ZestCash does essentially the same thing: Its loans ring up at triple-digit interest rates. For example, a three-month $800 loan will cost nearly $550 in interest and fees at the 412% interest rate that ZestCash charges.

The site is one of a number of new businesses popping up to cater to a growing segment of Americans: The poor and credit-challenged who don't -- or can't -- use a bank. As high unemployment and falling wages continue to push more Americans into poverty, financial innovators like Merrill are on the lookout for new ways to milk profits out of this demographic.

Firmly on the 'Loan Shark' End of the Spectrum

Merrill says that his new model for assessing a borrower's creditworthiness and setting installment payments means he can offer lower rates than standard payday operators. But when one is talking in either case about interest rates of more than 400%, the degree of difference is arguably meaningless. The Center for Responsible Lending, a national policy advisory nonprofit for lending issues, defines any operation charging more than 36% interest -- a rate cap that 17 states have put in place -- as a loan shark, regardless of the secret formula it uses to underwrite its high-risk loans.

ZestCash says its rates are up to 50% lower than other payday lenders -- but some of that nuance is hard to calculate, and depends the ability of the borrower to repay the loan on its due date. If you can't make the weekly $101 payment, add a $35 ZestCast late fee to your balance. If the payment bounces, that's $35 plus a possible overdraft fee of up to $35 from your bank. And if you can't pay $101 this week, what are the chances you'll be able to afford $237 next week?

This is hardly better than online quick-cash lender, Checkngo.com, which offers a 14-day payday loan for $800 in the state of Utah, with a $200 fee, for a total of $1,000 due after two weeks. But if you can't repay the money then and have to roll over the loan, an annual interest rate of more than 650% kicks in. Multiply that by six payday periods -- or the equivalent of three months (and there is no maximum term length in Utah) -- and that $800 could cost at least $1,789.63 on the principal alone, not including interest on the $200 fee or other rollover fees. Checkngo.com did not respond to a call for comment.

Currently ZestCash is available to residents in Missouri, Utah, Idaho and South Dakota, which do not have maximum interest rates for payday loans. Four more states will be added to the roster soon, the company said.

Your Profile Includes Everything They Can Glean (and That's Plenty)

Using a formula similar to the one Google uses to rate the quality of a website, ZestCash determines a borrower's credit worthiness based on thousands of factors from cell phone behavior to an in-person interview to your Internet trail. ("Almost everyone has one," Merrill says.) They don't use a more traditional credit scoring mechanism, like a FICO score, because it is too narrow -- and if you're getting a quick loan, chances are your credit score doesn't really mean much.

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But, for example, a phone number coupled with third-party data can say more about a borrower than bankruptcy, says Merrill. Using related data points -- such as how often a borrower switched phone providers, the frequency of switching, the type of provider -- and in addition to other variables plus some fancy math, ZestCash says it can determine more accurately whether a borrower is a good loan risk.

"Many of the [people without bank accounts] have prepaid cell phones," Merrill says, explaining that continuity of month-to-month plans are a good signifier of baseline financial stability. "Not having a cell phone is a negative signal because it signals that you don't even care enough to have connectivity."

Mathematically Strong, Ethically Shaky

Care enough? Or can't afford it? It's the use of factors like that one that has some critics say saying these kind of underwriting formulas are akin to economic profiling.

"What if there was a correlation between eating at McDonald's and not paying back debt?" asks Deborah Thorne, a professor at Ohio University who specializes in debt and bankruptcy issues. One of the problems with tying cell phone patterns, for example, to credit worthiness is that it unfairly targets the poorest as a justification to charge exorbitant rates, she says. In other words, super-strength math can quickly turn into fuzzy ethics.

Merrill argues the industry charges sky-high interest rates to compensate for its average 44% default rate, and that his company's default rate is already lower than that, though he didn't specify a percentage.

Using a borrower's data trail to gauge creditworthiness breaks new ground in the evolving realm of privacy. Increasingly, transaction data is being used by third-party clients to direct targeted ads. Harvesting transactional information -- like cell phone behavior -- to predict repayment odds could be the next frontier for evaluating borrowers with otherwise spotty financial pasts.

Dartmouth economist Jonathan Zinman suggests it's often not APR or how their credit risk is evaluated that is as important for consumers, but rather the economic outcome of the loan. "Is it an investment? Are borrowers taking this loan to prevent job loss or income loss?"

Catherine New can be reached at catherine.new@huffingtonpost.com.

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]]>borrowingcredit worthinessCreditWorthinessDouglas MerrillDouglasMerrillFinancegoogleinterest ratesInterestRatesloan sharksLoanSharksonline lendingOnlineLendingPayday Lendingpayday loansPaydayLendingPaydayLoanspersonal financePersonalFinancepoor credit historyPoorCreditHistoryusuryzestcashCatherine NewWed, 09 Nov 2011 06:00:00 ESTBank of America Settles Excessive Overdraft Fee Lawsuit for $410 Millionhttp://www.dailyfinance.com/2011/11/08/bank-of-america-settles-excessive-overdraft-fee-lawsuit-for-410/http://www.dailyfinance.com/2011/11/08/bank-of-america-settles-excessive-overdraft-fee-lawsuit-for-410/http://www.dailyfinance.com/2011/11/08/bank-of-america-settles-excessive-overdraft-fee-lawsuit-for-410/#commentsFiled under: ,

Bank of America Settles Excessive Overdraft Fee Lawsuit for $410 Million More than 13 million Bank of America (BAC) debit-card customers could see some repayment for excessive overdraft fees the bank charged between January 2001 and May 2011.

On Monday, a federal judge gave final approval to a $410 million settlement in a class-action lawsuit to compensate customers who were charged fees one or more times as a result of the bank's practice of posting debit card transactions from highest to lowest dollar amount, rather than in the order they occurred. The bank stopped doing that in May 2009.

Bank of America is far from the only one to have made that practice a policy. Suits have also been filed against J.P. Morgan Chase & Co. (JPM), Citigroup (C) and Wells Fargo (WFC), among others. The majority of banks have since changed their policies and no longer process debit-card charges that way.

The banking industry has defended the system as a way to help customers clear their largest bills first. But in reality, it was a golden goose for overdraft fees, which ranged from $25 to $35 per overdraft.

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The practice was so entrenched that one consulting company developed specialized software aimed at helping banks facilitate the high-to-low ordering and to maximize consumer fees, American Banker reported in September. One financial institution -- Union Bank of California -- signed up and agreed to pay the consulting company a 20% cut of the fees. That bank reversed its policy last year and settled for $35 million last week.

For consumers, it can be hard to figure out the details of a bank's overdraft policy and its transaction processing system. Details may be available, but they're buried in the lengthy disclosure statements attached to the accounts, which run to an average of 111 pages. That's one reason there is a new push on Capitol Hill to streamline checking account disclosures to one page. Meanwhile, if you want to know how your charges are being processed, just call your bank and ask, consumer advocates advise.

Monday's settlement with Bank of America came with a steep price tag. The $123 million attorney bill means less than $300 million will be paid out to its customers. Those who are included in the settlement will see automatic credits to their account. Former customers will have checks mailed to them.

Affected customers can check www.bofaoverdraftsettlement.com for more information.




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]]>American BankerBank of AmericaDebit CardsDebitCardsFinancelawsuitoverdraft feesOverdraftFeessettlementtransactionsWells FargoCatherine NewTue, 08 Nov 2011 17:45:00 ESTLean Bonus Season Ahead for Wall Street Bankershttp://www.dailyfinance.com/2011/11/08/lean-bonus-season-ahead-for-wall-street-bankers/http://www.dailyfinance.com/2011/11/08/lean-bonus-season-ahead-for-wall-street-bankers/http://www.dailyfinance.com/2011/11/08/lean-bonus-season-ahead-for-wall-street-bankers/#commentsFiled under: , ,

Lean Bonus Season Ahead for Wall Street BankersWith unemployment hovering stubbornly at 9%, late mortgage payments rising for the first time since 2009, and the number of Americans living in poverty rising to a record 49.1 million, it seems that Main Street is headed for a hard, cold holiday season. But, somewhat surprisingly, so too are the fat cats of Wall Street -- relatively speaking.

According to a report released by the compensation consulting firm Johnson Associates, corporate bonuses -- which are often the crown jewels of compensation packages, making up the bulk of bankers' pay -- are set to fall an average of 20% to 30% this year.

It attributes the cuts to a "challenging market environment," in particular the "sluggish and uncertain" recovery.

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The forecast, if accurate, would make this "the weakest bonus season since the financial crisis," The New York Times observes, "and a reflection of the leaner times confronting the industry."

Alan Johnson, managing director of Johnson Associates, announced the news with sadness: "This year started with great promise for a banner year on Wall Street, but hopes for larger bonuses faded over the summer and continue to dim as we approach year end."

"It is disappointing," Mr. Johnson told The New York Times' Dealbook. "I think we were all hoping we were out of this morass."

Traders, investment bankers and senior management look set to suffer the steepest declines in compensation, but those who manage wealthy clients' money might actually see a small increase in their bonuses.

Although The Washington Post's Zachary Goldfarb recently reported that Wall Street firms made more money in the first two and half year of the Obama administration than they did during the entire presidency of George W. Bush, some banks have shown signs of faltering. Goldman Sachs (GS) reported its second-ever quarterly loss in October, and Bank of America (BAC) has said it will lay off 30,000 workers.




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]]>Alan JohnsonBank of America Corpbanker bonusesBankerBonusesbonusescompensationFinanceGeorge W. BushGoldman SachsMain StreetPresidency of Barack ObamarecessionThe New York TimesWall Streetwall street bonusesWallStreetBonusesEamon MurphyTue, 08 Nov 2011 15:15:00 ESTSenators Take Aim at Bank Accounts' Fine Printhttp://www.dailyfinance.com/2011/11/08/senators-take-aim-at-bank-account-fine-print/http://www.dailyfinance.com/2011/11/08/senators-take-aim-at-bank-account-fine-print/http://www.dailyfinance.com/2011/11/08/senators-take-aim-at-bank-account-fine-print/#commentsFiled under: ,

Senators Take On Bank Account Fine PrintHave you ever really read all the disclosures that came with your bank account? Nope -- we haven't either. And that should come as no surprise: The average length of banks' fee disclosures and checking account policy paperwork is 111 pages, according to a survey by Pew Charitable Trusts.

That's way too much fine print, say Sens. Dick Durbin (D-Ill.) and Jack Reed (D-R.I.). Last week, the two called on all banks to make those disclosures just one page long.

They offered as an example a one-page disclosure that Pew designed. On Monday, Durbin pressed banks in Illinois to adopt the new disclosure box.

"Consumers have demonstrated that they will no longer stay with banks and credit unions that disrespect them by failing to charge fees in an upfront and fair manner," Durbin wrote in a letter to the financial institutions, reported The Hill.

The cost of not reading and understanding those disclosures adds up to big costs for bank customers. A 2009 study of 917 consumers found that households paid a median of $43 a month in credit card and checking account fees, including credit card interest, ATM and overdraft fees.

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"People are unhappy with fees, but where are they going to go?" says Susan Weinstock, director of Pew's Safe Checking in the Electronic Age Project. "They [could] end up worse off because they won't read 111 pages of disclosure [for a checking account]."

The new proposed disclosure format outlines all the basic checking account terms and conditions -- including interest rates, ATM fees, overdraft penalties and account closing fees -- in clear terms, using a uniform reporting style across all financial institutions.

The senators also asked the new Consumer Financial Protection Bureau to lend a hand on enforcement, and require banks and credit unions to post this disclosure on their websites, the Los Angeles Times reported.

Two large credit unions are already on board -- the Pentagon Federal Credit Union and North Carolina State Employees Credit Union -- the Washington Times reported. The Consumer Bankers Association is also supporting fee disclosure simplification.

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]]>ATM feesATM usage feesAtmFeeschecking account feesCheckingAccountFeescredit cardsCreditCardsDick DurbindisclosureFinanceJack ReedLos AngelesoverdraftPentagon Federal Credit Unionpew research centerPewResearchCenterThe Pew Charitable TrustsCatherine NewTue, 08 Nov 2011 09:45:00 ESTBank Errors Make Lowest Interest Rates Harder to Landhttp://www.dailyfinance.com/2011/11/07/bank-errors-make-lowest-interest-rates-harder-to-land/http://www.dailyfinance.com/2011/11/07/bank-errors-make-lowest-interest-rates-harder-to-land/http://www.dailyfinance.com/2011/11/07/bank-errors-make-lowest-interest-rates-harder-to-land/#commentsFiled under: ,

Bank Errors Make Lowest Interest Rates Harder to Land Many people who are looking to buy a new home or refinance lately are experiencing sticker shock when they see how much higher the interest rate they're getting is than they expected.

Interest rates on 30-year mortgages are still cheap by historical standards, averaging 4%, up slightly from a record low last month. The time it takes to process mortgage applications also is increasing as applications surged. A delay doesn't necessarily mean that consumers are getting a higher rate, but according to one expert, it may mean that your loan is more likely to be rejected.

Consumers are being urged to get their paperwork in order before submitting an application in order to minimize the potential for processing hiccups. Even then, there is no guarantee that the application will be approved, as creditworthiness standards have been ratcheted up in the wake of the housing market's collapse.

"There are no rules about this to my knowledge," Jack Guttentag, a Wharton professor who edits the Mortgage Professor blog, wrote in an email. "If the lock expires, unless the lender acknowledges responsibility for not getting it done, the lock will be extended at the higher of the lock price and the current price.

"This represents a change for consumers, who before the financial crisis were able to lock in interest rates on the spot. The bursting of the real estate bubble put an end to that practice. Now, the lock rate can differ from the final rate if market conditions change or there is a change in a borrower's credit score, Guttentag points out.

But lenders are also partly to blame. "The problem is that underwriting requirements have become tough and rigid, appraisals have deteriorated in quality and have a pronounced downward bias," Guttentag wrote. "Loans are being rejected as a result, and many loans that do go through are priced higher than the best prices available, which are the ones quoted."

Banks Were Unprepared, Understaffed

According to a Sept. 2 Bloomberg article, the surge in applications caught the industry flat-footed. It came after thousands of mortgage workers were laid off as demand for refinancing cooled. For instance, Wells Fargo (WFC) announced plans in April to cut 4,500 jobs from its mortgage business. Meanwhile, Bank of America (BAC) said it would slash 1,500 employees from its mortgage unit, along with 2,000 contractors.

There's no quick fix for this staffing problem: "Banks are experiencing capacity issues, as they are having to hire compliance staff and as a result, oftentimes are unable to hire production staff," according to a statement the Mortgage Bankers Association provided for this story.

The mortgage services industry is in the sights of the Consumer Financial Protection Bureau. Raj Date, special advisor to the secretary of the Treasury on the CFPB, said on Oct. 13 that the agency would examine reports of pervasive and profound consumer protection problems. A CFPB official could not be reached for comment on this story.

The surge in mortgage applications shows few signs of easing. Data from the Mortgage Bankers Association showed that for the week ending Nov. 2, applications increased 0.2% from the previous week. Most of that volume (77%) came from refinancings. Banks are struggling to keep up with demand, which is forcing some to "adjust rates to slow their pipelines and widen their margins," said LendingTree Chairman and CEO Doug Lebda in a press release.

Fool contributor Jonathan Berr has no position in any stock listed in this story. The Motley Fool owns shares of Wells Fargo and Bank of America.



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]]>Bank of AmericaFinanceinterest ratesInterestRatesMortgage Bankers Associationmortgagespersonal financePersonalFinancerefinancingThe Motley FoolWells FargoJonathan Berr, The Motley FoolMon, 07 Nov 2011 15:01:00 ESTLehman Brothers' First Share Sells for $33,000http://www.dailyfinance.com/2011/11/07/lehman-brothers-first-share-sells-for-24-000-euros/http://www.dailyfinance.com/2011/11/07/lehman-brothers-first-share-sells-for-24-000-euros/http://www.dailyfinance.com/2011/11/07/lehman-brothers-first-share-sells-for-24-000-euros/#commentsFiled under: ,

Lehman Brothers' First Share Sells for 24,000 EurosWhile creditors continue to fight over the crumbs of Lehman Brothers, one tiny piece of the formerly giant investment bank just demonstrated close to a 66,000% return on investment -- as a collectors item: A 50-cent share in the bank was sold at auction in Germany on Saturday for 24,000 euros, the equivalent of a bit more than $33,000.

The stock certificate, numbered LB0001, was issued on May 31, 1994, when the bank went public. Measuring twelve inches by nine, the certificate hung in the office of CEO Richard Fuld as a souvenir of the firm's initial public offering.

After Lehman's collapse, the share wound up in a lot of mixed financial papers sold earlier this year, before landing at the HWPH Historisches Wertpapierhaus, an antique auctioneer specializing in historic investment memorabilia.

"In the run-up to the auction," The Local reports, HWPH chairman Matthias Schmitt "called the item 'the ultimate (stock) certificate of the financial crisis.'" The share's eventual selling price was nearly five times the minimum bid. "What happened here was just crazy," Schmitt said of the bidding.

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The successful bidder -- much like the share's previous owner, these days -- prefers to remain anonymous. (In 2009, Portfolio magazine named Fuld the worst American CEO of all time. Other dubious honors for Fuld include ranking No. 9 on CNN's Ten Most Wanted: Culprits of the Collapse.)

Lehman Brothers was founded in 1850 in Montgomery, Ala., by three German emigrants -- brothers Henry, Emanuel and Mayer Lehman -- born near the auction house in Würzberg. From humble cotton-trading origins, the firm rose to become the fourth largest investment bank in the United States. Lehman imploded in September 2008, collapsing under the weight of shady accounting practices and bad bets on subprime mortgages. Its fall led to the the largest bankruptcy in U.S. history, and is credited with triggering the global financial crisis.

Agence France Presse notes that, more than three years later, creditors owed $370 billion will have to divvy up just $65 billion in recovered assets.

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]]>Agence France PresseauctionbankruptcyFinancefinancial crisisFinancialCrisisGermanyLehman BrothersrecessionRichard S. Fuld, Jr.stock certificatesStockCertificateswall streetWallStreetEamon MurphyMon, 07 Nov 2011 14:05:00 ESTBank Transfer Day: Small Protests, Big Changeshttp://www.dailyfinance.com/2011/11/07/bank-transfer-day-small-protests-big-changes/http://www.dailyfinance.com/2011/11/07/bank-transfer-day-small-protests-big-changes/http://www.dailyfinance.com/2011/11/07/bank-transfer-day-small-protests-big-changes/#commentsFiled under: , , ,

Bank Transfer Day: Small Protests, Big Changes Did Bank Transfer Day work? Over the weekend, many Americans came out to protest big banks, and while there's no hard data yet to gauge the day's impact, credit unions around the country are reporting a continuing upsurge in interest.

At Redwood Credit Union in Rohnert Park, Calif., on Saturday, the branch parking lot was packed and inside, extra staff were on hand to welcome new customers, according to a Patch report.

"This is definitely not normal for us," branch manager Amy Anahatou told Patch. "With the Occupy Wall Street movement and Bank Transfer Day, we have seen a lot of growth."

In other cities around the country, protesters gathered in front of big banks and in parks to express their frustration with corporate banking, bailouts and foreclosures.

In San Antonio, Texas, around 100 people connected to march downtown to Chase (JPM) and Bank of America (BAC) branches, according to the San Antonio Express. The Chicago Tribune reported that the Windy City suburb of Oak Park saw about 60 people gathered in a march organized by the local MoveOn.org chapter. Outside a Bank of America in Newtown, Penn., dozens of retirees and middle-aged residents gathered in general support of the "99%" the local news outlet reported. Patch also reported that homeowners joined dissatisfied banking customers in downtown Walnut Creek, Calif., to protest bank bailouts and foreclosures.

Big commercial banks remain unfazed. On Friday, many of the big banks said they planned to conduct business as usual. And last week, Wells Fargo (WFC) announced its attention to focus on nabbing wealthier customers, opening its first branch of Abbot Downing, a new service aimed at customers with net worths of above $50 million.

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On the original Bank Transfer Day Facebook page, some satisfied bank transferees have been calling for a new movement: Cut Up Your Credit Card Day.

Last week, the Credit Union National Association reported that at least 650,000 new people had joined credit unions across the country since Sept. 29 for a total of $4.5 billion in new deposits. Nearly 50,000 of those new customers were in Texas, the Texas Credit Union League reported, where at least $326 million had moved to Lone Star credit union accounts by November 2.

The national association said Monday it was still compiling updated national numbers in the wake of the weekend's event.

Historically, credit unions have held about 7% of the consumer banking market share in the United States. Mark Wolff, senior vice president of communications for CUNA, said that percentage is likely to rise given the surge in new members over the last six weeks.

In response to an online poll that was posted on Friday, more than 4,850 DailyFinance readers also said they are planning to move or have already moved their money to a community bank or credit union.

"The amount of attention we have had in a short, condensed period of time is unprecedented," CUNA's Wolff said.

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]]>Bank of Americabank transfer dayBankTransferDayCaliforniaChicagoChicago TribuneCredit Union National AssociationFinanceOccupy Wall StreetOccupyWallStreetRohnert Park, CaliforniaSan Antonio Express-NewsWells FargoCatherine NewMon, 07 Nov 2011 13:35:00 EST