fivecentnickel.com &#187; Banking

Buying Non-Laddered CDs With Your Emergency Fund

Ally Bank Ten Day CD Rate Guarantee

Nickel — Thu, 22 Oct 2009 20:21:27 +0000

Not quite a year ago, we started building a CD ladder. We’re building a five year ladder, and that first rung is nearly up for renewal. I’ve thus been looking around for the best CD rates.

In doing so, I ran across the ten day CD rate guarantee at Ally Bank. In short, if you open a CD with Ally and the rates go up within the first ten days, they’ll automatically increase your rate to the higher level.

When you fund your CD within ten days of opening or renewing your Ally account, you automatically get the best rate we offer during that time period.

This isn’t a huge deal, but it’s nice to know that you won’t have any regrets about locking in your rate a few days before they raise them. Since our CDs are already at Ally (formerly GMAC Bank), and since their rates are still near the top, we’ll be leaving the money in place and just changing the term.

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ING Direct “Added Value” CDs

Nickel — Fri, 09 Oct 2009 18:12:00 +0000

Earlier this week, ING Direct announced a new promotion aimed at generating more deposits. Dubbed the “Added Value” CD, they are offering a 12 month CD that pays a 0.15% premium over and above their standard rate. As of right now, that means you’ll get 2.25% APY vs. the standard 2.10% APY.

The catch here is that you have to fund the CD with “new money” that is transferred in from elsewhere. And before you try to get clever and circumvent the rules, keep in mind that they are defining “new money” as deposits over and above your balance as of October 7th, 2009.

In other words… You can’t qualify by simply transferring your money out and then back in. Nonetheless, if you’re looking for a safe place to park you cash for the next year or so, you could do a lot worse than 2.25% APY at a bank like ING Direct. In fact, this ranks amongst the highest 12 month CD rates that are currently available.

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Historical FDIC Insurance Limits

Nickel — Fri, 02 Oct 2009 10:00:10 +0000

With all the recent talk of the FDIC wanting to raise more funds to meet its obligations, I thought it would be interesting to take a look at FDIC insurance limits over the years.

A brief history of the FDIC

For those that aren’t aware, the FDIC was formed following the signing of the Banking Act of 1933 (also known as the Glass-Steagall Act). Prior to that time, bank customers were at risk of losing all of their money if their bank failed, and bank runs were a common occurrence.

In the beginning, the FDIC was funded with “just” $289M in loans from the U.S. Treasury and Federal Reserve. While this has grown to tens of billions of dollars (currently $10B, but headed to $40B with the accelerated premium payments), they’re currently insuring $4.8 trillion in deposits.

Unfortunately, I couldn’t find any data on how much money the FDIC was insuring back in the 1930s. It would be very interesting (at least to me) to see how much the ratio of money on hand vs. funds insured has changed over the years. Anyway…

A brief history of FDIC limits

What follows is a list of historical FDIC insurance limits, accompanied by the 2009 inflation adjusted values (in parentheses; courtesy of the CPI Inflation Calculator).

1934 – $2,500 ($40,268)
1935 – $5,000 ($78,772)
1950 – $10,000 ($89,558)
1966 – $15,000 ($99,923)
1969 – $20,000 ($117,621)
1974 – $40,000 ($175,119)
1980 – $100,000 ($261,934)
2008 – $250,000 (current, expires at end of 2013)

As you can see, the limits have grown fairly steadily in both nominal and “real” terms over the years. That being said, the gap from 1980-2008 was by far the longest on record, and the adjustment to $250k was long overdue.

Indeed, that $100k back in 1980 was worth the equivalent of roughly $260k in current dollars. Conversely, by the time the 2008 adjustment rolled around, that $100k limit had effectively shrunk to only $38k in 1980 dollars. Gotta love inflation, huh?

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FDIC to Seek Premium Prepayments

Nickel — Tue, 29 Sep 2009 15:55:24 +0000

As a quick followup to last week’s article on FDIC solvency, I just wanted to point out that the FDIC has opted to accelerate bank premiums to help build up their cash on hand from the current $10B level.

Under the just-announced plan, the FDIC will require banks to prepay their 2010-2012 assessments when they pay their Q4 2009 premiums. There will also be a three basis point (0.03%) increase in premiums starting in 2011.

From what I’ve heard, the increased cushion will amount to roughly $10B per year of accelerated premiums, or $30B total. Of course, this also means that the FDIC won’t be collecting any money from 2010-2012 unless they change the rules.

Thoughts?

Source: WSJ.com

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Banks Reducing Overdraft Fees

Nickel — Mon, 28 Sep 2009 17:00:17 +0000

According to MarketWatch, Chase and Bank of America are relaxing their overdraft rules. More specifically, both banks will now require you to opt in to their overdraft protection plans, and they are also limiting the transaction amounts that will trigger an overdraft fee.

At Chase, you’ll no longer be charged a fee if you overdraw your account by $5 or less. Similarly, Bank of America will forgo the fee if you overdraft by less than $10 on any given day.

According to Chase, these changes are being made:

“to make [their overdraft policy] clearer and simpler and to give customers more control over their debit cards and the fees they pay.”

For their part, Bank of America is hoping the changes:

“will help customers avoid excessive overdraft fees and better manage their finances.”

In reality, it looks like both banks are trying to get out in front of impending legislation that will mandate such changes. By doing it ahead of time, they get to claim the high ground vs. other banks that wait until their forced to make the change. Either way, change is good when it comes to overdraft fees.

Source: MarketWatch

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FDIC Insurance Coverage: Is Your Money Safe?

Nickel — Wed, 23 Sep 2009 17:45:04 +0000

I’ve written in the past about the importance of banking only with FDIC-insured institutions (or NCUA-insured credit unions), and also of respecting the FDIC insurance limits. That’s all well and good, but…

Is the FDIC running out of money?

If you’ve been following the financial news over the past day or so, you’re likely aware that the FDIC insurance fund is running low. In fact, the FDIC has seized 94 failing banks during 2009, driving the insurance fund to its lowest level since the peak of the Savings & Loan scandal in 1992.

Here’s the scary thing… The FDIC currently insures roughly $4.8 trillion in deposits, but they only have about $10 billion on hand (down from roughly $30 billion at the beginning of the year). In other words, the fund could easily be wiped out by the failure of just one major bank.

Covering the shortfall

The FDIC is funded by premiums from member banks, but these premiums haven’t been able to keep up with the FDIC’s recent “burn rate.” The FDIC is thus considering at least four different options for shoring up the insurance fund.

Borrowing from healthy banks.
Levying a special fee on banks.
Borrowing from the Treasury.
Collecting regular premiums early.

Unfortunately, none of these options are particularly attractive.

Borrowing from healthy banks reduces the amount of money available in the private sector to fund the recovery, whereas borrowing from the Treasury is politically objectionable. At the same time, levying additional fees could be push weak banks toward the edge of failure.

According to an article in the Wall Street Journal, the FDIC is currently leaning toward the final option. Unfortunately, that is a temporary solution, as they’re essentially cannibalizing future premiums.

Are you concerned?

So… Are concerned about the solvency of the FDIC? Personally, I’m not happy about the current situation, but I’m also not losing any sleep over it. I figure that whatever is going to happen will happen, and the Feds will simply bail out the FDIC if they get in over their heads.

Yes, that means the possibility of printing more money to cover the shortfall, but the outcome will be the same whether our money is in the bank or stuffed in our mattress.

Source: AP News Wire and WSJ.com

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Banks Reducing Overdraft Fees

Avoid Overdraft Fees With a “Balance Buffer”

Nickel — Fri, 18 Sep 2009 10:00:48 +0000

As a followup to my recent post on the dark side of debit cards, I wanted to highlight a simple strategy for avoiding those nasty $30+ overdraft fees…

Instead of letting your account balance run down near zero, create a “virtual zero” by depositing what might be referred to as a “balance buffer” of (say) an extra $100 or $500 in your account. The trick here is to treat that number as your new zero balance point.

If you think it might help, you can go so far as to ignore this amount in your checkbook register, Quicken, etc. That way, it will look you’re really approaching zero as you get close to your “virtual zero.”

Now… If you slip up and accidentally dip below “virtual zero,” respond as if you’ve truly overdrafted, and immediately bring your balance back into positive territory.

Admittedly, this is a bit like setting your clock ahead by a few minutes to avoid being late. Such tricks don’t work for everyone, but if they work for you, then run with it.

Hat tip to BG for the suggestion.

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American Express Introduces Online Banking Products

Nickel — Wed, 16 Sep 2009 01:07:30 +0000

If you’re in the market for a new bank, you might want to keep your eye on American Express. According to a company press release, they’re introducing a new online savings account as well as a variety of CDs. Here’s the scoop:

Personal Savings from American Express is a new line of FDIC-insured certificates of deposit and high-yield savings accounts, which offers consumers a convenient way to save with a company they know and trust… The Personal Savings deposit accounts feature competitive rates, no monthly fees, no minimum balances and 24/7 account access via web or phone, making it easy for consumers to manage their accounts whenever they want, wherever they are.

Looking more closely, their rates seem to be on par with the majority of other online banks. For example, their online savings acccount currently pays 1.85% APY, and a 24 month CD pays 2.35% APY.

Note that you do not have to have an Amex card in order to open an account. Here’s the link if you’re interested.

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The Dark Side of Debit Cards

Nickel — Fri, 11 Sep 2009 10:00:16 +0000

If you’ve followed this site for any length of time, you’re likely aware that I’m not a huge fan of debit cards. While I recognize that they can be quite convenient at times, debit cards simply have too many disadvantages for me to use one instead of a credit card.

In the past, my biggest concern has been fraud. While debit card issuers typically offer fraud protection on par with credit cards, fraudulent activity typically results in an investigation before the questionable charges are eventually reversed. I’m not sure about you, but I don’t want a portion of my bank balance tied up with things get sorted out.

Fees, fees, and more fees

Well, after reading this article, I now have one more reason to dislike debit cards: overdraft fees. I know what you’re thinking — any responsible debit card user won’t overdraw their accounts, but…

We’re all human, and it might happen. In fact, it did happen to Peter Means, who’s been using a debit card to reign in his spending, but wound up getting hit with seven different $34 overdraft fees in a single day.

“[Means] was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account, notifying him only afterward. He paid $4.14 for a coffee at Starbucks — and a $34 fee. He got the $6.50 student discount at the movie theater — but no discount on the $34 fee. He paid $6.76 at Lowe’s for screws — and yet another $34 fee. All told, he owed $238 in extra charges for just a day’s worth of activity.”

To make matters worse, he had actually deposited sufficient funds a few days earlier, but it took too long for these transactions to clear.

Doing us a favor?

The problem here is that banks allow customers to overdraw their accounts without warning. Sure, they call it “overdraft protection,” as if they’re doing you a favor but they don’t actually ask if you want it. And why would they? Banks are expected to collect tens of billions of dollars this year on overdraft fees alone.

Compare that to the situation with credit cards. Under the terms of the CARD Act of 2009, cardholders will have to opt in for approval of over-limit charges. In other words, you can protect yourself from inadvertent credit card fees.

The solution?

Rep. Carolyn Maloney (D-NY) has actually introduced legislation to level the playing field between credit cards and debit cards by requiring consumer consent before banks can permit (and charge for) overdrafts. The legislation would also regulate overdraft fees and prohibit banks from maximizing overdraft fees by manipulating the order in which transactions are posted.

Of course, such restrictions will come at a cost. If banks lose overdrafts as a major profit center, some industry experts are predicting that they’ll start charging monthly service fees on formerly “free” checking accounts. That way we can all share the joy.

Source: NY Times

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Ally Bank Raises Savings Account Interest Rate

Nickel — Sun, 30 Aug 2009 15:24:54 +0000

Late last week, Ally Bank did something that’s been almost unheard of over the past year or so… They raised the interest rate on their online savings account. No, it wasn’t a large increase, but at least it wasn’t a decrease. It remains to be seen if anyone else will follow suit, but I doubt it. After all, the underlying Federal Reserve rates haven’t changed a bit.

Click through for current online bank interest rates.

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Bank Fees Increasing

Nickel — Fri, 21 Aug 2009 17:00:29 +0000

Has your bank increased fees related to your checking or savings accounts? According to a recent blurb in Money Magazine, banks have turned to account maintenance fees, overdraft fees, etc. in an attempt to make up for recent losses in other areas.

“Recently, Bank of America boosted maintenance fees on certain checking accounts, Wachovia doubled its overdraft transfer fee, and Citibank raised foreign-transaction fees on debit cards.”

According to Bankrate’s Greg McBride, banks with the largest market share in your area are the most likely to increase fees. Thus, you can (hopefully) avoid trouble by using small, local banks or credit unions. Of course, you give up some convenience with a local outfit, as they have fewer ATMs, etc.

In our case, switching just isn’t worth the trouble — at least not yet. We use Bank of America for all of our local banking needs, and have yet to pay a fee. Despite all the negativity toward banks like BofA, we’ve found them to be both competent and convenient.

Sure, we don’t earn any interest on our checking account — this is effectively a fee — but we keep our balances there relatively low. In fact, we keep the bulk of our savings in an online savings account, though our BofA Money Market Account actually pays a decent rate.

What about you? Do you bank with one of the “big boys”? Have you seen a recent uptick in fees? Have you ever thought about switching to a different bank?

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Bank Overdraft Fees at All-Time High

Nickel — Tue, 11 Aug 2009 16:36:39 +0000

Did anyone else see today’s headline about bank overdraft fees? According to a recent report, U.S. banks are on pace to collect $38.5 billion worth of overdraft fees this year.

Can that number be right? Assuming that it is, then every man, woman, and child* in the United States will have paid an average of a little more than $125 apiece in overdraft fees by the end of they year..

On a per household basis (and assuming an average of 2.59 individuals/household*) this works out to roughly $325. Even more astonishing is the fact that just 10% of bank customers account for nearly 90% of these fees.

All I can say is: Wow. No wonder Matt hates big banks.

I can’t even remember the last time we had an overdraft. How much do you expect to pay this year in overdraft fees?

*Note: Population numbers and household sizes are based on census estimates.

Source: CNN/Money

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What are “No Penalty” CDs?

Nickel — Fri, 07 Aug 2009 10:00:54 +0000

Have you ever wished you could lock in a competitive, guaranteed rate on your savings while still retainign the flexibility to access your cash in a pinch? If so, then you might be interested in a so-called “No Penalty” certificate of deposit (CD).

What is a “No Penalty” CD?

“No Penalty” CDs are exactly what they sound like — CDs that have no penalty for early withdrawal. In the case of traditional CDs, you typically forfeit a portion of the interest that you’ve earned (often 3-6 months worth, but sometimes more) if you break your CD prior to maturity.

Given the above, “No Penalty” CDs can be a great option in a falling interest rate environment because you can lock in a decent rate but still have access to your cash. Alternatively, in a rising interest rate environment, they give you the freedom to switch to a higher rate.

What’s the downside?

As great as “No Penalty” CDs sound, there are some downsides and limitations. For starters, the rates on “No Penalty” CDs are somewhat lower than traditional CD rates. In some cases, they might be no higher than online savings account rates.

In terms of minimums, some banks require high minimum deposits for their “No Penalty” CDs, in some cases ranging as high as $5k-$25k. Fortunately, others don’t. Thus, it’s important to look closely at the terms when considering your options.

In addition, despite their “No Penalty” moniker, there might still be some limitations on how/when you can access your money. For example, while some banks allow you to pull your money back out within a week or less, others require up to 30-90 days.

Finally, “No Penalty” CDs are typically short-term CDs. In the vast majority of cases, we’re talking 9-12 months, or even less. This means that the rates won’t be all that high, as shorter-term CDs have lower rates.

Where can you get “No Penalty” CDs?

“No Penalty” CDs are offered by a variety of banking institutions. As noted above, rates and terms vary, so it pays to shop around. One bank with particularly good terms is Ally Bank, who offers “No Penalty” CDs with no minimum deposit requirement, a relatively narrow spread between their traditional and no-penalty CD rates, and you can access your money within six days of opening the CD.

Alternatives to “No Penalty” CDs

While “No Penalty” CDs can be a great deal for some, they’re not necessarily for everyone. For example, if you don’t have a lot of money, it might not be worth going to the trouble of opening CDs vs. simply using a high-yield online savings account, especially given the relatively flat interest rate landscape right now.

In our case, we’ve opted to stick with the tried-and-true CD ladder approach. We’ve built a five year CD ladder with one CD corresponding to 20% of our holdings maturing each year. This gives us a bit of flexibility while smoothing out the inevitable ups and down of interest rates. Our longer time horizon has also allowed us to lock in higher rates than would otherwise be available.

If you’re a bit more risk tolerant, another possibility would be to invest with Lending Club, which offers three year notes paying an average of 9.5% annually (my review). Because Lending Club has a note-trading platform, you can actually sell your notes to other investors mid-stream, providing a bit of liquidity.

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Why Banking With ING Direct Rocks

Matt — Thu, 06 Aug 2009 10:00:34 +0000

I NEVER thought that I’d be writing about how much I love banking! As a matter of fact, I’m laughing and shaking my head in disbelief as I write this…

This article is a bit of a followup to my previous article about borrowing from big banks, which sparked quite a lively and interesting debate. Today, I’d like to spend time addressing banking as it relates to personal checking and savings accounts. More specifically, I’m going to share a bit about how I finally found a bank that works for me, and what a blessing that is!

Why so sour on banking?

Good question! After re-reading my article about big banks from two weeks ago you’d think that I was Anti-Bank Man — brought into this world to highlight and condemn all the failures and atrocities of the entire banking world. Perhaps I could even have a super hero outfit… But I digress.

In truth, my disdain for the banking industry has come through good, old fashioned conditioning. Sooner or later, every bank I’ve dealt with has disappointed me in one way or another. While I recognize that some of the fault lies squarely on my shoulders, my contempt for banks is largely driven by something as widespread and rampant as any infectious disease the world has ever known: FEES.

It’s amazing the way banks ALWAYS seem to nickel and dime me to death (no offense Nickel!). Fees upon fees upon fees upon fees… That’s been my biggest complaint over the years. I haven’t been wrongfully charged, but bank policies are typically designed to maximize the fees they collect their customers. And why wouldn’t they? After all, they’re “for profit” businesses with shareholders to answer to?

I felt so inspired so I whipped up a little poem about it, I hope you enjoy…

Bank Fees by Matt Jabs
Fees for this and fees for that
Fees for skinny and fee’s for fat
Fees for breakfast to start the day
Fees for business and fees for play
Fees for moms and fees for dads
Even for lasses and even for lads
What can you do to keep fees at bay?
Open an account with ING Direct today!

So what’s the answer?

I can happily and honestly say that, up until I started banking with ING Direct, I was never a satisfied customer. For me, it was always about deciding who sucked the least and then banking with them.

Regarding credit unions, I’ve never had the right relationships, or known the right people to get in. Thus, I was always left picking amongst banks I knew I wasn’t going to like. It’s kind of like having to pick between the two non-athletic kids for your basketball team in high school. Ugh.

I was motivated to open my ING Direct accounts after reading about them on scores of other personal finances blogs. After five months of working with ING Direct, I’m happy to report that I’ve never been happier with a bank. In fact, if it was possible, I’d walk up and give them a big kiss.

And so today I’d like to share with you the top five things I enjoy about being an ING Direct customer for both personal checking and high yield savings. In the end, I’m hoping to convince you to join ING Direct just as I did. It really has been a blessing.

Why ING Direct Rocks

Clear, honest, and upfront about fees. Does ING Direct charge fees for some things? Yes, but they are 100% clear and upfront about their fees. Not only that, but they don’t charge exorbitant amounts like other banks. In addition, their fees are all for things I’d expect to pay for. What I’m most impressed with is how they almost always offer you a free alternative before having to charge you the fee. Fees are only charged for:

Overdraft Line of Credit – This is a “line of credit” on which you pay an interest rate… Not a $29+ fee like every other bank I have ever dealt with.
Overnight Delivery of a Check – The fee for this is $20, but they also offer free check delivery through standard first-class mail if you can wait a couple of days.
Overnight Delivery of a Replacement Card – The fee here is $25, but there is no charge for standard delivery of a replacement card
Stop Payment – There is a $25 fee to cover administrative costs, and presumably to discourage unnecessary check stoppages.
Foreign Transactions – If you use your debit card for a foreign transaction, they add a fee 2% of the transaction amount to your charge.

Easy creation of as many sub-accounts as you want. My wife and I absolutely love this feature! We use it to set and stick to our savings goals.
Automatic savings plan. This is ING’s nifty feature that allows you to — as the title states — set things up such that your savings contributions automatically get divvied up into different accounts.
Overdraft line of credit – While I don’t really need this thanks to my $1,000 checking account buffer, it’s comforting to know that it’s there. Instead of getting nailed with a $29+ fee if they make a mistake, customers are given a line of credit and charged a minimal interest rate based on their credit score.
Electric Orange bill pay. I know a lot of banks have a bill pay service, many charge a fee while ING offers it to their customers for free. Beyond that, ING’s bill pay interface is by far the best of all that I’ve tried.

Just like every other article I write, I’m sure there will be those that disagree with some of my points, and that’s fine with me. The important thing is that I’ve developed a system that works GREAT for my wife and I. For the first time in my life, I can honestly say that I’m happy with my bank! Yay!

What about you?

Does your bank rock? If not, are you looking to move? Are you an ING Direct fan like me? I highly recommend it, but if you bank elsewhere and love it, please let us know.

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Borrowing From Big Banks – A Moral Issue?

Matt — Thu, 23 Jul 2009 12:15:54 +0000

*Me to group*

“Hello everyone. My name is Matt and I’m a recovering big bank customer.”

*Group replies in unison*

“Hi Matt!”

*Me to group*

“I’m 33 years old, and have been borrowing from big banks ever since they courted me with offers of credit cards and free t-shirts on my University campus back in the 1990s. Ever since the glorious free t-shirt days, I’ve been indebted to these banks at varying levels off and on.”

*Group offers up sounds of compassion*

*I continue…*

“Although I’m no longer actively entering into these bad relationships, my ties to the banks remain, and will for quite awhile as I climb out of servitude and work to free myself from bondage. Thank you for listening.”

*Group replies*

“Thanks Matt.”

Good reasons to be angry with big banks

Since deciding to put an end to the cycle of abuse, I’ve been studying the business practices of big banks. During that time, I’ve discovered that they’re not the sort of businesses that I want to associate with on a daily basis. I suppose I entered into all of my relations with them (e.g., mortgage, credit cards, auto loans, etc.) because I was just sheepishly following along with what everyone else was doing. Going forward, I’m just happy to say that I’ll no longer be so ignorant and complacent.

Here are just a few of the recent ways big banks have disappointed and utterly surprised me:

Bailed out financial institutions post huge Q2 profits. While the American consumer is struggling to pay down debt and build an emergency fund, big banks who just received billions of dollars from US taxpayers are posting $3 billion quarterly profits! Sad but true.
Banks profit while US home repossessions rise. No, you didn’t read that wrong… While we’re losing our homes and essentially funding the bail out of these bloated and corrupt financial institutions, again… they profit. Our loss is their gain.
Banks profit but are no longer lending money. One of the main purposes of the bailout was to stimulate the economy. Instead of turning around and lending the taxpayers their money back, however, the banks are sitting on the loot. Banks profit while loans drop.
Despite record profits, big banks are raising fees. As if they were not already nickel and diming us to death, and despite massive earnings and many of their customers facing financial troubles, big banks are raising fees almost across the board.

As you can clearly see, banks are profiting enormously while the American consumers that have funded their entire existence scrimp, save, and suffer.

The NY Times recently worded it this way:

“The headlines over the last week have reinforced the perception that the country’s financial institutions, or at least some of them, are beginning to rebuild and profit. But resentment and the risk of public backlash against these banks remain, as shown by the recent opinions and editorials complaining about how ungrateful these banks are and suggesting they are once again trying to take advantage of the government and game the system.

As Goldman Sachs earns $3.4 billion in a single quarter, many Americans continue to suffer from the recession, which was triggered by a financial crisis in which the banks played a part. News reports about banks taking a more assertive approach reinforce this perception. So Iíve decided to look at whether the criticism rings true: Are banks getting too cheeky?”

For their part, CNN/Money said “Big banks have some nerve!” and that:

“…you have some big banks putting out press releases that essentially are saying, ‘Hey. Look at us! We’re still lending! Honestly!’ But the data from the Fed paints another picture entirely. I am not suggesting that banks go back to the days of approving anything with a pulse for a no-money-down option ARM that’s destined for default. But until banks start to lend more freely to responsible individuals and businesses that deserve credit, we will remain in this recession.”

Finally, Pro Publica, a site dedicated to delivering journalism in the public interest, shows us exactly where all of that $1.1 trillion in taxpayer money is going on their Eye On The Bailout page.

So what’s the answer?

I am working tirelessly to get out of debt, and rid myself of all relationships with any of these big banks. I currently have the following relationships that I am working to terminate for good:

1st Mortgage – Wells Fargo
2nd Mortgage – JP Morgan Chase
Auto Loan – Capital One
Credit Card 1 – JP Morgan Chase
Credit Card 2 – Capital One
Credit Card 3 – Citigroup

Looks like a heavy burden to bare, and a seemingly insurmountable task, but let me remind you dear reader… “a journey of a thousand miles begins with a single step” –Lao Tzu.

I plan to rid myself of these “toxic money relationships” one dollar at a time! And I will not stop until I am free!

Moving forward, I intend to continue and increase my banking relationship with ING Direct, where I currently have an online savings account, as well as with my local credit union.

And so I ask you…

Is the decision to do business with big banks a moral issue? For me, the answer is a most certain and resounding “YES”! Of course, this won’t be the case for everyone, but I sure would like to hear your point-of-view. Please let us know how you feel by leaving a comment below.

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Best CD Rates (Updated!)

Nickel — Wed, 15 Jul 2009 10:00:52 +0000

Using the rate comparison tool above will allow you to compare many more accounts side by side, but I’ll also occasionally update the list below. Since interest rates at historical lows, I’ve focused my efforts here on shorter-term CDs — no sense in locking up your principal for too long when rates have nowhere to go but up!

What follows is a list of the best CD rates at ten well-known, nationally-available banks. Rates are for 12 months CDs unless otherwise indicated. I’ve sorted the list based on APY, and have also indicated the minimum deposit to open a CD.

Best CD Rates (12 Month Term)

(All CD rates current as of 10/30/09)

Bank	CD Rate	Minimum
Everbank	1.81%	$1,500
ING Direct	2.10%	$1
Ally Bank 11/19/09	1.90%	$1
DollarSavingsDirect	2.25%*	$1,000
Bank of Internet	2.02%	$1,000
Discover Bank	2.00%	$2,500
HSBC Direct	1.85%	$1
Citibank	1.50%	$500
E*Trade Bank	0.45%	$1,000

*Rate applies to sixteen month CDs.

For the sake of comparison, check out my list of the best online savings account interest rates. Right now, there’s not a whole lot of difference. However, the CD rates listed here can be locked in such that they won’t drop over the next year. With savings accounts, things may well get worse before they get better.

Finally, if you’re looking for a higher yield and don’t mind taking on some additional risk, you might want to check out Lending Club. It’s not FDIC-insured, but annual returns have been averaging 9.61% — far better than the best CD rates on the market. It’s free to open an account, and you can get started with as little as $25.

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WT Direct Account Opening Bonus – Up to $150 Cash

Nickel — Wed, 08 Jul 2009 15:39:47 +0000

If you’re in the market for an online savings account, you might want to check out the latest offer from WT Direct. While their current rate (1.76% APY for accounts with a balance of at least $10k) isn’t all that great, they’re offering a bonus for new account holders. The amount of your bonus will be based on your balance from 7/31/09 through 10/31/09, as follows:

$10,000 = $25 bonus
$20,000 = $50 bonus
$30,000 = $75 bonus
$40,000 = $100 bonus
$50,000 = $150 bonus

Here’s how it works…

1. Open an account with WT Direct*
2. Fund your account no later than 7/31/09
3. Maintain the required balance through 10/31/09
4. Your bonus will be deposited in your account in November

*Note: Use one of the links in this post, or use promo code WFIT if asked for one.

Given the relatively high balance requirements and middle-of-the-pack APY, this offer won’t appeal to everyone. Nonetheless, I thought I’d throw it out there for your consideration. Note that there are no fees associated with this account, and there is no minimum balance requirement, though you have to keep at least $10k in place to get the advertised APY as well as the associated bonus.

If this isn’t your cup of tea, be sure to check out my list of online savings account interest rates. Otherwise go ahead and click the button to get started…

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Everbank Raises Rates

Nickel — Mon, 06 Jul 2009 12:00:25 +0000

It’s been a long time since we’ve seen an online bank increase their interest rates, but… I recently received an e-mail from Everbank saying that they’ve bumped up the rate on their “Yield Pledge” Money Market Account (link).

The calculation is a bit convoluted, but they’re offering an introductory rate of 3.01% APR (3.06% APY) on up to $50k in deposits for the first three months. After that, the rate falls back to 1.83% APR (1.85% APY; this is up from a rate of 1.63% APR). The end result is an average APY of 2.15% over the first year on up to $50k in deposits.

Like I said, sorta convoluted. Nonetheless, if you’re looking to open an online savings account, Everbank is definitely worth checking out. Just be aware that they require a $1500 minimum deposit to open, and that accounts with a balance below $5000 are subject to a monthly fee.

For a more complete rundown, check out my list of interest rates at online banks.

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Ally Bank Review: New Name, Same Great Bank

Nickel — Mon, 08 Jun 2009 13:24:44 +0000

A few weeks ago, we received a letter saying that GMAC Bank had been re-branded as Ally Bank. We actually opened a GMAC account last fall (more on this below), so I was quite interested when I heard this news.

If you’re in a rush, and just want the executive summary, here it is:

Ally Bank is a great online savings option. They’re FDIC insured, they offer a wide variety of products, they don’t have any minimum deposits or balance requirements, and they don’t have any account maintenance fees.

If you’d like more info, read on…

A short history of GMAC/Ally Bank

The GMAC brand actually goes back to 1919 when GMAC Financial Services was established as a wholly-owned subsidiary of General Motors to provide financing for automotive purchases following WWI. GMAC eventually branched out into retail banking, offering savings account, certificates of deposit, money market accounts, etc. under the GMAC Bank brand.

In 2006, GM sold a majority stake in GMAC to private investors, thereby providing a bit of distance between the now-bankrupt automaker and the financial services company. Nonetheless, the name stayed, and consumers no doubt wondered about the stability of the bank given its apparent connection to GM. Hence, the name change — Ally Bank.

Having logged in and poked around, it appears that little else has actually changed — and that’s a good thing. Their rates are still highly competitive, and the web interface is as convenient and functional as ever.

Ally Bank products and rates

We were first attracted to Ally Bank last fall by their high CD rates. At the time, we were looking to set up a five year CD ladder, and we also wanted to keep things fairly simple. We were thus pleased to see that Ally offered the highest rates across all maturities.

One particularly interesting product is what they refer to as their “no penalty CD.” This CD allows you to lock in a great rate (though not quite as high as with a traditional CD) while still retaining the flexibility to break the CD without penalties. Thus, if an emergency arises, or if rates simply raise, you’re covered.

Note that they also have a highly competitive online savings rate, as well as a slightly lower (but still high) money market account rate just in case you want a check card and check-writing ability.

Customer service

When it comes to online savings accounts, I look at one thing above all others — the interest rate. Nonetheless, it’s still nice to be able to reach out and touch an actual human being if/when trouble arises.

The good news here is that Ally not only publishes a customer service phone number in the top right corner of the page, but they also disclose the expected wait time right next to the number (see below).

I just tested the system at 9:10 AM Eastern on a Monday morning and, sure enough, they picked up less than 10 seconds after I indicated that I wanted to speak to a CSR.

Closing thoughts

If you’re looking for an excellent online bank with highly competitive rates, you should seriously consider Ally Bank. We’ve been very happy with them over the past eight months or so, and have actually been thinking about opening another account with them to hold cash for a trust that my wife and I manage.

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FDIC Extends $250k Insurance Limit Through 2013

Nickel — Wed, 27 May 2009 21:55:10 +0000

Remember when the FDIC raised their insurance limits from $100k/depositor to $250k/depositor? That extended coverage was set to expire at the end of this year. This left some savers wondering what would happen if the increased limits were allowed to expire.

Well… Just a few days ago, the FDIC announced that the expanded limits would be in place for an additional four years, saying:

Deposits at FDIC-insured institutions are now insured up to at least $250,000 per depositor through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except for IRAs and other certain retirement accounts which will remain at $250,000 per depositor.

In case you’re curious, the increased NCUA coverage limits have likewise been extended. It’ll be interesting to see if anything changes between now and the end of 2013, or if the coverage limits will be allowed to fall back to $100k.

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Bank of America ATM Deposit Images Available Online

Nickel — Mon, 02 Mar 2009 21:40:08 +0000

About a year and a half ago, I wrote about my first experiences with Bank of America’s new ATMs. At the time, I felt that the ability to scan cash and checks was great in theory, but not so great in practice. The main problem was that the process was S-L-O-W and didn’t really offer much for the customer in return for the inconvenience.

Sure, they print an image of the checks that you deposited on your receipt, but that’s only marginally useful. What happens if I don’t want a huge paper receipt containing all those images? Or if I misplace it? If they want me to do their job and process my deposits manually, then they should offer me something in return — like online access to those check images.

About a month ago, I brought this up on Twitter and was surprised to receive a reply from @BofA_Help. After going back and forth a few times about what seems to be an obvious (and useful) feature, he promised to pass along my feedback.

Well, guess what? This past week I discovered that you can now access your check images online. I’m not sure if this was already in the works or if they actually implemented this in response to my feedback — more than likely, they were already working on it — but I’m happy either way. In fact, this new feature has already saved me a good bit of trouble…

Over the weekend, I was able to login and check the issue date on a business-related check that I received right around New Year’s. The company in question didn’t issue me a 1099-MISC, so I needed to verify the date so I’d know whether to claim it in 2008 or 2009.

I am now officially a fan of the new ATMs. Next, I’m hoping that they figure out how to let us scan in checks ourselves and deposit them from afar, a la USAA’s Deposit@Home feature.

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Alternatives to High Yield Online Savings Accounts

Nickel — Fri, 27 Feb 2009 11:15:14 +0000

If you’ve got money in the bank, then you’re likely aware that savings account interest rates have been plummeting. For example, in the month since we opened our DollarSavingsDirect account, they’ve slashed their interest rate by nearly 35%, and WT Direct has actually cut rates twice within the past week.

Unfortunately, things aren’t likely to get better anytime soon. This all begs the question of what you should do when your high yield savings account no longer qualifies for the “high yield” moniker. Assuming that you don’t want to tie your money up indefinitely, your options are somewhat limited.

Consider a Local Bank or Credit Union

While online banks typically offer significantly better rates than the average brick and mortar bank, you can find some great deals by looking locally. Consider both local banks and credit unions, and also look into high yield checking accounts. You might have to jump through some hoops, such as signing up for direct deposit and/or using your debit card a minimum number of times per month, but there are still deals to be had.

Consider Certificates of Deposit (CDs)

Another possibility would be to put your money in CDs. If you won’t need access to the full amount at the drop of a hat, you can build a CD ladder such that your a portion of your savings will be available to you on a monthly, quarterly, or yearly basis. Unfortunately, CD rates have fallen along with savings rates, so there’s not currently a lot room for improvement here.

Consider Savings Bonds

While rates on Treasury securities have fallen, there are still some decent deals to be had. For example, Series I Savings Bonds are currently paying a composite rate of 5.64%. Drawbacks of I-bonds are that you can only buy $10,000 worth of them per year ($5k via Treasury Direct and $5k in paper bonds), you can’t redeem them for 12 months, and you forfeit 3 months interest if you redeem them in less than five years. Moreover, the rate is subject to change on a semi-annual basis.

Consider Paying Off Debt

While you always need to maintain a cash cushion, there’s no point in earning a pittance on excess savings if you’re carrying debt. Instead of settling for 1-2% interest, why not throw some extra cash at your outstanding debts? Note that this breaks the liquidity rule, but it’s still worthwhile if you can swing it.

Consider peer-to-peer lending

If you’re looking for a better return and don’t mind taking on a bit of risk, check out Lending Club. It’s not FDIC insured, but returns have average 9.05% over the past 18 months. It’s free to open an account, and you can get started with as little as $25.

Just Deal With It

Last but not least, you could always just choose to suck it up and deal with the low rates. While low rates are frustrating, you have to consider how much you’re actually losing by sitting on your hands. If you don’t currently have a lot of money in savings, then you’re not missing out on much in terms of real dollars. Your time might be better spend figuring out other ways to earn extra money or otherwise improve your financial situation.

If you have any other suggestions, please share them in the comments.

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CD Ladders in a Low Interest Rate Environment

Nickel — Fri, 20 Feb 2009 13:30:14 +0000

A reader named Joyce recently wrote in to ask about managing a CD ladder in a low interest rate environment. She noted that interest rates have been falling, and that she’s not crazy about locking her money up for minimal return. She’s thus wondering if she should continue to plow her money back into her ladder when CDs mature, or if she should pull the money out of CDs entirely.

What is a CD Ladder?

For starters, let’s define what we’re talking about. A CD ladder is simply a set of long(er) term CDs with staggered maturity dates. For example, you might have a set of twelve 1 year CDs, each maturing during a different month throughout the year. Alternatively, you might have five different 5 year CDs, each maturing a year apart.

Regardless of how you set it up, the attraction of a CD ladder is that it allows you to retain some degree of liquidity (due to the staggered maturity dates) while earning a higher interest rate than you could otherwise get with a high yield savings account. In addition, the staggered maturity dates help smooth out interest rate fluctuations.

Managing Your CD Ladder

Returning to Joyce’s question, I agree that the current interest rate environment is frustrating — a quick glance at my list of online savings account interest rates will show you just how bad things have gotten. But should she abandon her ladder?

The answer to this question depends on a number of variables, such as the term of the CDs, how soon this money might reasonably be needed, etc. From the sound of her e-mail, Joyce is holding fairly short-term CDs (6-12 months), so she’s not facing a lot of risk by renewing now. If interest rates suddenly move upward (seems unlikely, but I’m no economist) she wouldn’t be stuck holding the bag for very long.

Another thing to keep in mind is that, as I noted above, one of the main points of maintaining a CD ladder is to smooth out the ups and down in interest rates. Yes, interest rates are down right now, but the ladder means that: (1) only a fraction of your holdings are being renewed at any one time, and (2) the other, higher rate CDs will soften the impact of these low rates.

There are, of course, some alternatives. One would be to shop around for better rates elsewhere. Joyce’s money is currently at ING Direct, which is bringing up the rear right now in terms of interest rates at online banks. Of course, this adds complexity, so it might not be worth the trouble.

Another possibility would be to just let this rung on the ladder sit on the sidelines in a savings account until rates improve — maybe create a subaccount to make sure it doesn’t get spent. The problem here is that savings account interest rates are typically even lower than CD rates (that’s certainly the case right now at ING Direct), so there’s not much to be gained unless she switches to a bank whose savings rate is higher than ING’s CD rates.

So, dear readers, what did I miss? Do you have any advice for Joyce?

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How to Choose an Online Savings Account

Nickel — Wed, 11 Feb 2009 11:00:11 +0000

I’m a huge fan on online banking. In fact, we opened our first online savings account with ING Direct over five years ago, and we haven’t looked back since.

Sure, we still have a local brick and mortar bank for convenience, but we keep the vast majority of our savings online. Why? Because online banks offer significantly higher interest rates than do their local competitors.

I’ve opened more than my fair share of accounts over the years, in part because I enjoy rate-chasing, and in part because I like reviewing them here on FCN. With that in mind, I wanted to talk a bit about what I look for when evaluating an online bank.

Interest Rates

One of the biggest factors that I consider when evaluating an online bank is their interest rate. While online savings rates can fluctuate dramatically over time (just look at the downward spiral we’ve experienced over the last few months), certain banks are consistently amongst the best (or worst) of breed.

For example, ING Direct is typically amongst the first to lower their rates and the last to raise them when the interest rate landscape changes. Thus, while they’re quite popular, they’re not at the bleeding edge rate-wise.

In contrast, banks like FNBO Direct, DollarSavingsDirect, and Everbank have consistently ranked near the top in terms of interest rates.

Recommended:
» Everbank
» DollarSavingsDirect
» FNBO Direct

Note: If you’re looking for a higher yield than a regular bank can offer, and you don’t mind taking on some additional risk, you might want to check out Lending Club. It’s not FDIC-insured, but annual returns have averaged 9.05% APY over the past 18 months. It’s free to open an account, and you can get started with as little as $25.

Bank Safety

Whenever I evaluate a new bank, I always check out their safety ratings. To be completely honest, I’m not sure why I bother because, as long as they have FDIC insurance, I’m perfectly happy putting my money there.

Case in point… I recently opened an account with DollarSavingsDirect. They have a 1-star Bankrate rating, but I’m still perfectly comfortable having money with them as long as we stay below the FDIC insurance limits.

Aside from bank stability, you also want to find one that is secure. The good news here is that most of the major online banks have fairly similar (and secure) login procedures, etc. Honestly, the biggest thing you can do to ensure the security of your money is to choose a strong password and then avoid falling for a phishing scheme.

Recommended:
» FNBO Direct
» Everbank
» ING Direct

Minimum Balance Requirements

Many online banks don’t have a minimum balance requirement, but some do. Fall below it, and your interest rate will likely tumble, and you might also find yourself subject to monthly fees. If you’re not in a position to keep a large amount of cash in your account on an ongoing basis, then be careful to choose one without a high minimum. WT Direct is an example of a bank with a relatively high balance requirement ($10,000 minimum).

Recommended:
» FNBO Direct
» ING Direct
» HSBC Direct
» E*Trade Bank

Online Interface

I’m not terribly picky when it comes to bank interfaces. As long as the site is secure and functional, I’m pretty happy. That being said, some sites are certainly slicker than others. One of my favorites in this regard is our old standby, ING Direct. They not only have a very clean interface, but they make it dead easy to create subaccounts for different savings goals.

Recommended: (Largely subjective)
» ING Direct
» Everbank
» FNBO Direct

Other Account Types

If you want more than just a savings account, be sure to check what other account types your bank of choice offers, as well as your options for linking them together. For example, ING Direct now offers an online checking account that can be linked directly to your savings account. Taking this a step further, Everbank offers checking, savings, and money market accounts, as well as a wide range of CDs that can be purchased in a variety of currencies.

Another possible consideration is access to a brokerage account. Here again, ING Direct doesn’t disappoint, as you can link your account directly to a Sharebuilder account. Likewise, E*Trade offers both high yield savings accounts and access to their brokerage accounts.

Recommended:
» ING Direct
» Everbank
» E*Trade Bank

Customer Service

Customer service is sort of a funny thing when it comes to online banking. If all goes well, you’ll never need to interact with a real, live person. But if something goes wrong, you’ll likely want to get someone on the line. While many banks have 24 hour customer service lines, some don’t. If this is important to you, then be sure to check it out (and maybe call to test their hold times) before selecting a bank.

Another factor that I’ll lump in here with customer service is the time it takes to transfer money in and out of the bank. Some banks are quite good at this (e.g., ING Direct), consistently completing your transactions in two days, whereas others (e.g., HSBC Direct) drag their feet a bit and take a full three days. Not a huge deal, but something to consider if you’ll be shuffling money around on a regular basis.

Recommended: (Based on personal experience)
» ING Direct
» FNBO Direct
» DollarSavingsDirect

ATM Access

This one has never really been an issue for us, as we keep enough money in our local bank to avoid needing regular ATM access to our savings. Nonetheless, it’s an important consideration for some customers. Beyond asking whether or not your bank of choice offers an ATM card, you also need to consider fees. Some, such as ING Direct (via a linked Electric Orange account), offer free ATM access via specific networks (Allpoint in the case of ING) whereas others do not. FNBO Direct likewise offers free access to a specific ATM network (Circle One), and both E-Trade and Everbank reimburses you for up to $6 in ATM fees each month (that’s roughly three transactions)

Recommended:
» ING Direct
» FNBO Direct
» E*Trade
» Everbank

Closing Thoughts

As with most consumer decisions, selecting the best online savings account is all about tradeoffs and finding a happy medium. What’s more important to you, interest rates or safety ratings? Online interface or minimum balance requirements? For us, the top two options are FNBO Direct and DollarSavingsDirect. The former excels in nearly every aspect, whereas the latter outperforms in terms of interest rate, but lags a bit in other areas.

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The Safest Banks (Updated!)

Nickel — Tue, 03 Feb 2009 12:58:13 +0000

While much of the hysteria surrounding bank failures has died down, it’s still worth doing your homework when selecting a bank. With that in mind, I thought I’d update my list of the safest banks. The following list is based on Bankrate’s “Safe & Sound” ratings* of the financial condition of their parents companies:

FNBO Direct – 4 stars
Everbank – 4 stars
ING Direct – 4 stars
WT Direct – 3 stars
HSBC Direct – 2 stars
E*Trade Bank – 2 stars
Dollar Savings Direct – 1 star
Emigrant Direct – 1 star

If you’re curious about how these banks stack up in terms of yields, check out my updated list of online bank interest rates. There have been a lot of recent changes.

Or… If you’re looking for a higher yield than a regular bank can offer, and you don’t mind taking on some additional risk, you might want to check out Lending Club. It’s not FDIC-insured, but annual returns have averaged 9.05% APY over the past 18 months. It’s free to open an account, and you can get started with as little as $25.

*Definition of ratings:
5 stars – Superior
4 stars – Sound
3 stars – Performing
2 stars – Below peer group
1 star – Lowest rated

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More Online Bank Interest Rate Decreases

Nickel — Fri, 30 Jan 2009 19:44:28 +0000

And the hits just keep on coming… Earlier this week HSBC Direct announced that they’re reducing their interest rate form 2.60% APY to 2.45% APY, and I just received notification from E-Trade that they’re reducing their rate form 3.01% APY to 2.50% APY. These sorts of changes make the term “high yield online savings account” almost laughable, as the yields are far from high. If you’re curious as to where things stand at other institutions, be sure to check out my updated list of online savings account interest rates.

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How Large is Your Emergency Fund?

An Emergency Fund Victory

Nickel — Fri, 30 Jan 2009 13:39:42 +0000

Are you getting tired of all the economic doom and gloom? Me too. So today, I thought I’d change gears and spend a little time talking about a recent financial success that we’ve experienced…

The Backstory

Back in January of 2004 we had been homeowners for about 2 years, we had three kids with another on the way, and we had just gotten to the point where we had a nice, fully funded emergency fund. Never content to rest on our laurels, my wife and I decided that we wanted to try to wring a bit more out of our safety net.

At the time, our e-fund would’ve covered close to six months of living expenses, and we weren’t crazy about the idea of leaving a bunch of potential interest earnings on the table. At the same time, interest rates for online savings accounts were at low tide.

Around that same time, I ran across a screaming hot deal on five year CDs at Pentagon Federal Credit Union — 5.25% APY, which was way, way, way above the going rate at the time. The problem was, this was our emergency fund, and we weren’t crazy about the idea of locking it away for five years.

The concern here is that,if you break a CD early, you face penalties in the form of recapture interest. Penalties are typically in the range of 3-6 months interest, and if it happens early on, you might even lose a portion of your principal.

The Non-Laddered CD Solution

Our solution? We bought five equal, non-laddered CDs. The thinking here was that we’d be able to maximize our interest earnings by getting the 5 year rate on the full amount, but the non-laddered CDs would make the make money somewhat “modular” (i.e., we could break into just a portion of it if a smallish emergency cropped up).

In reality, the interest rate difference meant that we’d likely come out ahead as long as we didn’t need to tap into that money within the first six months or so. By breaking the money into multiple CDs, we just further reduced our risks.

In the end, our goal was to sock this money away, maximize our earnings on it, and do everything within our power to avoid touching it. All the while, we were working on building up other savings and investments in parallel to these CDs. The goal was to make it through that five year term without needing that money, such that we’d have roughly a nice chunk of change coming due in January 2009.

Success

As of two days ago, we’ve officially survived the entire five year period without touching that money. To be honest, it was a bit anti-climatic, as it became clear two years ago that we’d succeed. Regardless, we now have a nice little chunk of change coming due, and we have other resources to depend on in a pinch.

Given the above, we now have some thinking to do. Should we plow this money into our mortgage? Use it to further build up our long term investments? We still haven’t decided. But it’s a good position to be in.

What About You?

Now it’s your turn. Do you have any recent(ish) financial successes that you’d like to share with the world? If so, please don’t hesitate to leave a comment. Or, if you’ve recently set any major financial goals, feel free to share those. With any luck, these goals will grow into future successes.

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DollarSavingsDirect Savings Account Approved

Nickel — Mon, 26 Jan 2009 03:52:52 +0000

Saturday afternoon I received an e-mail saying that our new DollarSavingsDirect savings account has been approved. The link to our local checking account still hasn’t been established, but once that’s done we’ll be ready to roll. According to the e-mail, here’s what’s next:

Important Next Steps to Activate Your Account

Look for validation deposits

In the next few days, we will process two small deposits and matching withdrawals against your external checking account. We will also withdraw the initial funding amount so please make sure there are sufficient funds in your account.

Login to your DollarSavingsDirect account

Just go to www.dollarsavingsdirect.com and log on using the Online ID and password you created during the application process. Then select additional personal security credentials, one of which will be presented each time you log on.

Verify your small deposits

Once you have seen the small deposits processed against your linked checking account, you can log on to verify the amounts. Just click on the Verify Now! link that appears at the top of your account summary page. Once you verify the amounts, you will be able to set up additional transfers between your linked accounts.

So… By mid-week (hopefully earlier) our account should be completely open and funded, and thus ready to receive even more funds.

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DollarSavingsDirect Review and Account Opening Process

Nickel — Fri, 23 Jan 2009 11:00:57 +0000

Last night I finally found the time to open an account with DollarSavingsDirect. For those that are familiar with it, DollarSavingsDirect is a new(ish) high yield savings bank. Amazingly, despite month of falling rates, they managed to stay atop my list of online savings account interest rates with a juicy 4.00% APY.

While DollarSavingsDirect is a relative newcomer to the online banking game, it has an older sister named Emigrant Direct. In fact, both banks are owned by the same company (Emigrant Bank), and even share an FDIC certificate (and thus they have a common FDIC insurance limit). In fact, aside from the name, it’s hard to tell them apart — they have the exact same online interface.

Oh, and then there’s the small matter of their rates… As noted above, DollarSavingsDirect pays 4.00% APY, whereas Emigrant Direct is languishing back at 2.50% APY. While I’m not sure of their motivations, it appears that Emigrant Bank wanted to attract new money without paying their existing customers a premium.

Opening an Account

Whatever their motivation, the current rate at DollarSavingsDirect is high enough to get my attention. While I doubt it’s sustainable, I’ll take it while I can get it.

Step 1: Select your login credentials.

The application process starts by asking you to choose a username and password.

Step 2: Enter your personal information.

The next step is to enter your personal information, including your social security number and driver’s license info (this is standard fare for banks).

Step 3: Enter your address and choose an account type.

Next up… Your address. They actually need both your current address (along with your time at the current residence) as well as your previous address. I’m guessing that this is part of their identity verification process, as they can check both addresses against your credit record.

If you choose a joint account, you’ll be asked to enter all of the same information for your joint account holder.

Step 4: Fund your account.

The final step is to fund your account. As usual, I chose to link the new account to our local checking account. Note that DollarSavingsDirect requires a minimum deposit, so it’s not quite as forgiving as some of it’s online banking brethren. We went with the minimum for now, and will move more money once everything is up and running.

And that, my friends, is it. As things stand, we’re awaiting final approval — apparently it’s not fully automated, and I applied in the middle of the night. I will update with more details and screenshots once they provide us with full access.

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Credit Unions Can Seize Funds to Cover Credit Card Defaults

Nickel — Thu, 22 Jan 2009 17:07:45 +0000

Here’s an interesting little tidbit from Consumer Reports Money Advisor… Almost all credit unions require you to put up your other accounts as collateral when applying for one of their credit cards. Thus, if you default on the card, they can take your savings and apply it toward what you owe them. In contrast, very few banks require this sort of collateral when opening a credit card account.

Hopefully this won’t directly impact you, but it’s certainly worth knowing about.

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Watch for Falling Rates: HSBC, ING Reduce APY

Nickel — Mon, 05 Jan 2009 20:46:59 +0000

I just got an e-mail from HSBC Direct stating that they’ve reduced the APY of their online savings account to 3.00% to 2.60%. This prompted me to check the rates at other banks, and I discovered that ING Direct has dropped to 2.50% APY. I’ve updated my list of online savings account interest rates accordingly.

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$250 WT Direct Signup Bonus – Expiring Soon

Nickel — Mon, 29 Dec 2008 11:31:28 +0000

In case you missed it, WT Direct is currently offering a bonus of up to $250 as part of their Winter Bonus Blast promo. But you had better act fast — the offer expires on 12/31/08.

Here’s the scoop… They’re currently paying 3.06% APY for accounts with a balance of at least $10k as well as the aforementioned bonus for new account holders. The amount of your bonus will be based on your average daily balance from 1/1/09 through 2/28/09, as follows:

$10,000 = $50 bonus
$20,000 = $100 bonus
$30,000 = $150 bonus
$40,000 = $200 bonus
$50,000 = $250 bonus

Getting the bonus

1. Open an account with WT Direct using the promo code WTG3DNC
2. Fund it by initiating an online transfer before 12/31/08
3. Maintain an eligible average daily balance through Jan/Feb
4. Your bonus will be deposited in your account in mid-March

There are no fees associated with this account, and there is no minimum balance requirement, though you have to keep at least $10k in place to get a decent APY. You also have to keep an average of at least $10k in the account through Jan/Feb in order to qualify for the bonus. If you’re looking for a high yield savings account and can meet the requisite thresholds, you should definitely check it out.

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Fed Cuts Interest Rates to Record Low

Nickel — Tue, 16 Dec 2008 21:56:09 +0000

In case you missed the news, the Federal Reserve has cut rates to what it calls a “target range” of 0-0.25% and further indicated that they won’t be increasing anytime soon. This is the ninth rate cut in the past 14 months, and leaves the Fed with virtually no room for additional cuts. In other news, the dollar fell and gold prices increased.

It’ll be interesting to see what this does to interest rates for online savings accounts. Once again, now might be a good time to consider buying CDs before banks drop their rates.

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What Happens When the Increased FDIC Insurance Limits Expire?

Nickel — Tue, 09 Dec 2008 10:49:09 +0000

Earlier this fall, FDIC insurance limits increased from $100k to $250k. But guess what? That increased FDIC coverage is set to expire on 12/31/2009. Thus, assuming that these changes aren’t extended or made permanent, the coverage limits will fall back to their original values in just over a year. With that in mind, a reader named Dale recently asked the following question:

If I get a five year certificate of deposit (CD) for more than $100k (but less than $250k), will this CD be covered in full for the full five years by the FDIC? Or will the extended coverage expire in Dec 2009?

That’s a great question. Unfortunately for Dale, his CDs will only be protected by the higher limits until the end of December 2009. At the point, the coverage will fall back to $100k. According to an FDIC press release:

“…all the deposits a consumer has at a bank in his or her name alone will be fully insured up to $250,000 through December 31, 2009. After that date, the depositor will only be insured up to $100,000, with any balance over that limit becoming uninsured.”

Expanding your FDIC limits

The good news is that you can actually stretch your limits beyond the basic coverage amounts by employing additional ownership categories. Because coverage is determined on a “per depositor” basis, jointly held accounts qualify for twice the coverage. On top of that, accounts held in different ownership categories are separately insured.

In light of the above, it’s actually possible for a married couple to protect up to $1M at a single bank — i.e., they can individually hold $250k apiece plus a join account of $500k. Even after the coverage limits revert to their previous levels, they’ll be left with $400k in protection ($100k apiece plus $200k in a joint account).

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WT Direct Signup Bonuses – Up to $250 Cash

Nickel — Fri, 05 Dec 2008 12:34:26 +0000

If you’re in the market for a high yield savings account, check out the Winter Bonus Blast promo from WT Direct. They’re currently offering a 3.06% APY for accounts with a balance of at least $10k as well as a bonus for new account holders. The amount of your bonus will be based on your average daily balance from 1/1/09 through 2/28/09, as follows:

$10,000 = $50 bonus
$20,000 = $100 bonus
$30,000 = $150 bonus
$40,000 = $200 bonus
$50,000 = $250 bonus

Here’s how it works…

1. Open an account with WT Direct with the promo code WTG3DNC
2. Fund it by initiating an online transfer before 12/31/08
3. Maintain an eligible average daily balance through Jan/Feb
4. Your bonus will be deposited in your account in mid-March

There are no fees associated with this account, and there is no minimum balance, though you have to keep at least $10k in place to get a decent APY, and you also have to keep an average of at least $10k in the account through Jan/Feb in order to qualify for the bonus.

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Limit of Six Withdrawals from Savings Accounts

Nickel — Wed, 03 Dec 2008 14:57:54 +0000

Did you know that the Federal Reserve limits certain transactions on your savings account(s)? Well, they do. And guess what? This morning, I received the following e-mail from ING Direct:

Based on recent activity in your Orange Savings Account, we want to remind you that you cannot make more than six withdrawals from your account each month. This is a federal regulation that all banks are required to follow for savings accounts like this one, so if this type of activity occurs more than three times in any 12-month period, we will have to close your account.

We don’t want that to happen, so here’s what you can do to prevent your account from being closed:

Take a look at your statements or go to ingdirect.com and review your account activity.

Keep track of how many times you transfer money out of your Orange Savings Account, including transfers to other ING DIRECT Accounts, and make sure you’re not making more than six withdrawals each month.

Make one or two larger transactions rather than moving money numerous times. This will reduce the number of withdrawals you make each month.

Give us a call at 1-888-464-0727 if you have any questions.

Save Your Money.

Apparently we approached (or surpassed, I haven’t checked) the six transaction limit last month, which triggered this message. If you’re interested in exactly what types of transactions count against the limit, check out this passage from Section 204.2(d)(2) of Regulation D of the Federal Reserve Board:

…the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle… to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order, or instruction, and no more than three of the six such transfers may be made by check, draft, debit card, or similar order made by the depositor and payable to third parties.

In plain English, courtesy of GenXFinance…

Transactions that are limited:

Pre-authorized transfer to a third party
Pre-authorized payment to a third party (ACH)
Pre-authorized transfer to an individual’s own non-loan account
Transfer for overdraft protection
Transfers or payments done via telephone system
Transfers or payments authorized via fax
In addition no more than three transactions may be made by check, draft, debit card, or similar order and payable to a third party

Transactions that are not limited:

In person request
Transactions initiated via mail
To make a payment on an in-house loan account
Transactions via ATM

So… If you’re like us and you rely on a high yield online savings account to maximize your interest, keep an eye on those transactions. As the e-mail from ING suggested, try to group them together and make oine big transaction instead of many small transactions. Another option would be to transition to a high-yield checking account, such as an Electric Orange account, which doesn’t have such limitations.

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What’s Your Favorite Checking Account?

Nickel — Mon, 24 Nov 2008 17:47:35 +0000

Over the weekend, a reader name Patrick e-mailed to ask for my opinion as to the best free checking account. I sent him my thoughts on the issue (below), but thought that it would be good to throw this one out to you guys, as I’ve done in the past when searching for the best online savings account or the best online broker.

So… What your favorite free checking account?

There are a number of online options, including ING Electric Orange (nice APY for higher balances, but there’s no physical checkbook — all check writing is done online) as well as E-Trade’s online checking account (again, nice APY for higher balances). As for us, we have a local checking account with Bank of America, which is where we also have our business checking account. It’s “free,” but it pays zero interest, so we’re paying for it indirectly.

We mainly have this account because: (1) we have kids and write a lot of random checks for school lunches, fundraisers, etc. (Electric Orange wouldn’t work very well for this), and (2) we frequently have to deposit checks, and Bank of America has ATMs everywhere (at least around here). We have this account hooked up to several online savings accounts, including our current favorite, Everbank. That way we can easily shift money in or out depending on our needs while still earning as much interest as possible.

Do we like Bank of America? Not really. But it’s convenient, and fills a need.

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E-Trade Account Activation and Review

Nickel — Fri, 21 Nov 2008 15:22:02 +0000

Just a day after opening our new E-Trade account, we received an e-mail saying that our account was open and ready for business. Sure enough, when I logged in, I was greeted with this:

As you can see, we have a balance of $1.00 (the initial transfer), although that’s not available yet since the transfer hasn’t completed. Overall, the interface is very clean and easy to use, and it’s very straightforward to add things like a checking account or a linked brokerage account — just click the “Open Another Account” link on the right side, and you’ll be presented with a full list of options.

Oh, and remember when I mentioned that they didn’t require verification of our bank account? Well… As a commenter on my original post correctly pointed out, that was just for the initial transfer, which was limited to $100 max.

Before you can make additional transfers, you have to click the “Verify External Accounts” link in the bottom right. You’ll then be presented with two options: (1) verify online, or (2) use trial deposits. I opted for online verification, and I had everything up and running in just a few seconds.

While we’re looking at the bottom of the graphic, notice the nice “Quick Transfer” interface that they have. This is a huge improvement over what most banks offer. No more click, click, clicking to transfer money. Simply scroll down, enter the details, and click the “Transfer” button. Easy peesy, lemon squeezy.

Since I don’t have available funds in the account, I haven’t executed any online trades. I am, however, looking forward to trying this out, as E-Trade was recently rated the best online broker by Smart Money. I should also note that they offer 100 free trades during your first thirty days, which is a nice little bonus.

All in all, I’m quite impressed so far, and I have to admit that having a high yield online savings account and discount brokerage all rolled into one is quite an attractive combination.

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E-Trade Online Savings Account Opening Process

Nickel — Thu, 20 Nov 2008 11:31:57 +0000

As part of my continuing quest to find the best online savings account, I opened an account with E*Trade last night. In case you’re not familiar with E*Trade, they’re not only one of the best online discount brokers, but they also offer a full complement of banking services. This includes a high yield savings account with no minimum balance requirement, and no fees.

The signup process was very simple and straightforward. In the first couple of screens, they ask for all of the standard info: name, social security number, address, phone number, and driver’s license number. If you’re setting up a joint account, you’ll also need to enter this information for the joint account holder. After that, you need to choose your account type.

As you can see, we opted for the “Complete Savings” account, which is currently paying 3.30% APY. They also offer the opportunity to buy CDs of varying lengths, but the rates weren’t particularly compelling.

Next up, funding the account… I opted to fund it online, so I had to enter a bit of banking information. Note that you can do it via wire transfer or by sending in a check if you prefer.

Interestingly, they don’t make trial deposits for account verification. Rather, they just pull the funds directly out of your account. That being said, they limit your initial transfer from an unknown account to a maximum of $100, which is presumably designed to minimize their liability. As you can see below, they should initiate the transfer within one business day.

And finally, shortly after completing the process, we received the following e-mail:

We’ve received your application and will begin processing it immediately. As soon as all of your information is verified, we will open your account. You will then receive an email when your account is opened and visible online.

In the next business day, we will be also be initiating an electronic transfer totaling $1.00 to fund your account(s). In some instances, you may see funds going out of your existing account prior to depositing in your new account.

Until then, if you have any questions or need more information please call us at 1-800-ETRADE-1 (1-800-387-2331) from 7 a.m. to midnight ET, send a secure email to service@etrade.com, or visit an E*TRADE branch near you. Visit etrade.com/centers for a listing of locations near you.

We appreciate your business and look forward to serving your financial needs for many years to come.

And now, we wait… Our account should be up and running within a few days, and I’ll be sure to update when as things develop.

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FNBO Direct has the Best Online Savings Account

Nickel — Mon, 17 Nov 2008 19:46:27 +0000

According to a recent article in Kiplinger’s Personal Finance, the online arm of the First National Bank of Omaha, known as FNBO Direct, offers the best high yield online savings account. Here’s their synopsis:

Earn 3.50% on your FDIC-insured savings at FNBO Direct. You pay just $1 to open an account with no maintenance fees and no minimum-balance requirements. You can link the account to as many as three others, including FNBO’s bill-payment account. Use electronic transfers to move your funds and your ATM card to withdraw cash.

A couple of notes on this… First off, you don’t technically pay a dollar to open your account. Rather, you have to deposit a minimum of one dollar, though there’s no minimum once the account has been established. Second, that interest rate is a bit out of date. While they’re always near the top of the heap, you should click through to see what they’re currently offering.

Anyway, as you might recall, we opened an FNBO Direct account a few months ago, and we’ve been very happy with it. The signup process is a snap, the online interface is very clean and streamlined, and you even get an ATM card for accessing your cash in a pinch. What’s not to love?

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Two More Bank Failures… And Counting…

Nickel — Mon, 10 Nov 2008 15:24:28 +0000

Remember back in July when the projected number of bank failures for 2008 was sitting at nine? Well… Here we are in November, and banks #18 and #19 just closed their doors. According to an AP report this weekend:

Regulators shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday, bringing the number of failures of federally insured banks this year to 19… The FDIC said all of Franklin Bank’s deposits will be assumed by Prosperity Bank of El Campo, Texas… Meanwhile, all of Security Pacific’s deposits will be assumed by Pacific Western Bank of Los Angeles… The FDIC will retain the remaining assets of the two banks for eventual sale.

Before you start getting nervous, just keep in mind that FDIC insurance limits were recently increased to $250k per depositor per insured bank.

Source: AP News

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Buying Non-Laddered CDs With Your Emergency Fund

Nickel — Mon, 03 Nov 2008 11:16:49 +0000

A few years ago, we did something with our emergency fund that most financial experts will warn you against… We tied it up in long-term CDs. No, we didn’t build a CD ladder such that we’d have periodic access to a portion of our funds. Instead, we socked it all into five year CDs.

What were we thinking?

When it comes to CDs, the longer the term, the more you (usually) earn. Of course, the tradeoff here is that your money is tied up for a longer period of time. The good news is that you can typically break your CDs early, subject to an early withdrawal penalty. So… We rolled the dice.

We locked in our money at a higher yield knowing that we might have to forfeit a portion of the interest if we had to tap into it early. The primary reason that we did this is that we ran across a screaming hot deal on five year CDs back in early 2004.

At the time, interest rates even for the best online savings accounts were near an all-time low due to repeated rate cuts by the Fed. While we could’ve laddered our CDs, shorter term yields were paltry compared to what we were able to get by committing to a longer term. In fact, even after factoring in the early withdrawal penalty, we’d come out well ahead by locking our money away and forfeiting a portion of our interest on the off chance that we’d need to access the money.

In other words, it was a no-brainer.

Minimizing our downside risk

The only real risk that we faced in structuring things this way was that we might have to break into the money and pay that early withdrawal penalty. In our case, however, the penalty was just three months interest and, as noted above, we’d still come out ahead as long as we didn’t need to tap into that money within the first six months or so.

In order to further minimize our risk, we decided to split our money up and buy five identical CDs in parallel. By doing this, we minimized the penalty that we’d face if we only needed to access a portion of our emergency fund. In other words, if we only needed to access 20/40/60/80% of the money, we could just break 1/2/3/4 CDs and let the balance keep chugging along.

In the end, we were fortunate in that we never needed to touch that money. It comes up for renewal in January 2009, at which point we’ll consider our options. However, we’re in a much more stable position now, and have other resources on which we can draw.

Things to watch out for

If you’re considering this approach, here are a few things to keep in mind:

Make sure you can get your hands on the money. An emergency fund is only useful if it’s accessible for use in case of an emergency. If you can’t get same-day access to the money, then you’d be well advised to keep some portion of your emergency cash on hand in a local bank.
Double check the early withdrawal penalty. The lower the better. Forfeiting three months of interest is probably the best you can hope for. Many banks charge substantially more.
Consider your situation. The more stable your situation, the less likely it is that you’ll have to break into those CDs. Also, the larger your emergency fund, the more (in terms of absolute dollars) you will benefit from seeking out a higher rate of return.
Consider your alternatives. If the spread between prevailing interest rates and what you can get with a longer-term CD isn’t sufficiently large, this might not be worth the trouble.

The bottom line

While this approach might not be for everyone, you can squeeze a good bit more performance out of your money if you’re willing to think outside the box. Sure, it takes a bit of additional work, but there’s no real risk as long as you know what you’re getting into. If you’d prefer a more traditional approach, you might consider building a monthly ladder for your emergency fund instead.

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Another Fed Rate Cut – Time to Load up on CDs?

Nickel — Wed, 29 Oct 2008 20:51:18 +0000

Consider yourself warned… The Federal Reserve just cut interest rates by another 0.50%, meaning that it’s just a matter of time until the interest rate on your online savings account drops. Again. If you have extra money sitting around, now might be a good time to think about locking in a decent rate of return by purchasing CDs.

As I write this, ING Direct is offering 4.25% APY on 12 months CDs. This is actually quite competitive, and you can’t beat the convenience if you already have money deposited with them. You might also want to look at Jim’s updated list of certificate of deposit rates, which lists the top rates for CDs in the 6-18 month range.

And while we’re on the subject of CDs, be sure to check out my previous article on building a CD ladder. It takes a bit of time, but it’s definitely worth the effort if you want to maximize your returns.

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$50 Signup Bonus from ING Direct Electric Orange

Nickel — Wed, 29 Oct 2008 01:55:31 +0000

The $50 offer expired, but you can still get a $25 signup bonus.

Time is running short on this one, but apparently ING Direct is offering a $50 signup bonus for their Electric Orange checking account. There are two catches… First, it looks like you have to have an ING Direct savings account (not a big deal, as you can just open one now). Second, this deal apparently expires on October 31st.

Here’s how it works:

If you don’t already have one, open an ING Direct savings account
Click through to open an Electric Orange account
Enter EM227 when prompted for a reference code
Activate your debit and make 3 signature-based transactions within 45 days
Receive a $50 credit in your account within 50 days

Note: When I tried to signup through the Electric Orange url, everything worked fine until I got to the identify verification step. Unfortunately, it errored out at that point, so… I ended up calling them at 1-888-ING-0727 and they completed the activation process in just 2-3 minutes. Just be sure to tell them about the promo code if you have to call.

Click the button below to get started opening your online savings account…

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Online Savings Account Rate Changes

Nickel — Fri, 24 Oct 2008 19:48:35 +0000

Not long after the Federal Reserve’s recent interest rate cut, ING Direct dropped their interest rate from 3.00% to 2.75%* APY. This is par for the course for ING Direct, as they’re always among the first to drop rates and the last to increase them. Not long thereafter, HSBC Direct dropped their rate from ~~3.25%~~ to ~~3.00% APY~~*. And now, FNBO Direct has dropped their rate from 3.50% to 3.25%* APY.

While I’m a bit disappointed, I can’t say that I’m very surprised. Actually, the most surprising thing to me right now is that banks such as WT Direct (3.31%* APY) and E*Trade (3.30%* APY) haven’t followed suit (yet). It’s likely only a matter of time.

As for us, we’re sticking with FNBO Direct which is, in my opinion, one of the very best online savings accounts out there (read my review). Not only have they consistently offered high rates, but they’re also amongst the safest online banks.

*For updated rates, check out my list of online savings account interest rates.

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Don’t Be Stupid – Leave Your Money in the Bank

Nickel — Fri, 10 Oct 2008 13:53:59 +0000

Check this out… Despite the recent increase in FDIC insurance limits, Richard Cruz of New York no longer trusts banks. In order to protect his money, he has decided to withdraw his money, place it in a shoebox, and then allow a newspaper to publish his photo such that everyone will know what the guy with the box full of money looks like.

Curious to know how he settled on a shoebox? Well…

“No one hides their money under a mattress any more. That’s the first place people would look.”

I guess it’s hard to argue with that sort of logic…

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WaMu Drops Interest Rate, Alternatives Abound

Nickel — Wed, 08 Oct 2008 15:46:51 +0000

A reader named William wrote in recently to point out that, as expected, Washington Mutual (WaMu) has cut the interest rate on their online savings account to 3.00% APY, dropping them from being a rate leader to being middle of the pack. Apparently they no longer need to pay a premium to attract (or retain) deposits now that they’ve been taken over by Chase.

As for us, we’re sitting tight with Everbank, which pays a high interest rate, and is rated as one of the safest online banks. In all likelihood, I’ll close our WaMu account. We opened it shortly before the collapse, and never got around to transferring any money over there, so what’s the point?

I’m also considering opening an E*Trade account, as they offer a competitive interest rate along with a linked brokerage account with relatively low commissions ($9.95/trade). Yes, you can do better with outfits like TradeKing ($4.95/trade) and Zecco (free trades), but it’s hard to beat the convenience of a linked savings account at the same institution.

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FDIC Insurance Limits Increased to $250k

Nickel — Wed, 08 Oct 2008 10:05:32 +0000

In case you haven’t heard, the recent economic bailout bill included a provision for increasing FDIC insurance limits to $250,000 per depositor per insured bank. This move is intended to shore up confidence in struggling banks and improve liquidity in banks across the country.

What increased FDIC coverage means for you

The new limits mean that a married couple such as my wife and I could conceivably keep up to $1M at a single bank — individual accounts for each of us ($250k/each) plus a joint account ($500k). Not that it matters too much for us, but the increased coverage is currently slated to end in December 2009, though it’s conceivable that additional legislation could extend this deadline, or make the change permanent.

Who’s paying for the increased FDIC coverage?

Interestingly, FDIC premiums (paid by banks) are increasing, with the average premium going up to roughly double the current rate (from 6.3 to 13.5 cents per $100). This change has actually been in the works since July, and will apply only to the first $100k of deposits per depositor, as the FDIC isn’t being allowed to increase their rates to offset the additional coverage. Rather, they’ll have to borrow from the Treasury to cover losses due to the higher limits.

The future of FDIC insurance

On a related note, Congress actually approved new limits that would peg FDIC coverage to inflation back in 2005. However, that measure wasn’t scheduled to go into effect until 2011. Stay tuned — I’m sure this isn’t the last we’ll be hearing more about FDIC coverage in the coming months…

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