Archive for March, 2011

Rising ATM fees –

Last summer the new banking regulation caused a great concern among American financial institutions.  Banks will have to change how they conduct their day to day operations with regards to middle to low income customers.  The new regulations will cause banks to lose Billions of dollars in fee income and hopefully Americans will be able to spend that same Billion dollars to boost the economy.  However, there may be some unintended consequences to bank customers as well, I will discuss later.

Some of the highlights of the regulation are banks cannot charge Overdraft (OD) fees to customers unless they opt-in;  the number of OD charges will be limited and credit card fees will have to be more transparent.  Here is an example; a $5 cup of Starbucks could cost you $40 before the new regulation.  Now, if you do not opt-in your debit card will be declined at the counter if there is not enough money to pay for the item.  Good or bad for the consumer it is not my place to say, but I will say this; bank customers will have to pay attention to their balances and transactions to avoid being declined.   With that being said, banks must recover the fee income so their CEO’s can continue to earn those $10 – $20 million dollar salaries (Wells Fargo CEO received $19 million in 2010).  Here are a few ways the banks will plan to recover fee income:

    • Eliminate free checking – The days of free checking accounts are going to disappear, banks are slowly phasing these types of accounts out of their portfolio by 2014 no “free accounts” will exist.  The new customers will not have the option of a free checking account and the existing customers will be grandfathered and then eventually phased out.  For example, Wells Fargo will convert ALL grandfathered free checking accounts by May 2011.  On the flip side, most good bankers will tell you that all their accounts are free.
    • Raise ATM fees – Currently, a person can expect to pay somewhere from $2 to $6 per foreign ATM withdrawal.  This fee includes fees from both financial institutions.  Typically, your bank will charge you $1 to 3 dollars for using a foreign ATM and the foreign ATM will charge you an additional $1 to $3 dollars for the withdrawal.  As banks continue to recover loss revenues you will see these charges double; as a bank customer you will be charged a minimum of $5 per foreign ATM withdrawal and probably somewhere around $8 – $10 per transaction.  WOW!
    • Debit card use fee – Congress is in the process of placing a limit to what banks can charge retailers, currently retailers pay banks an average of 44 cents per debit card swipe.  98 million swipes per day at 44 cents equals $16 billion dollars banks stand to lose. Where are they going to recoup those funds, the debit card user who else!  I have heard that if this legislation passes banks will consider charging you a fee every time you use your debit card ($.10 to $.25) and add a monthly or annual service charge for just carrying a debit card.

        The take away from this information, know the bank rules and play within them.  Cash may become king again, but not without a cost!

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        Getting Money Back?

        Are you getting money back this year?

        There are approximately 4 weeks until the tax deadline.  Have you filed yet?  If you have what are you going to do with the money?  Are you going to pay bills?  Go on vacation, buy a new car?  These are the typical things that people do every year when they receive a tax refund.  This year try something new and creative to do with your tax refund.  Here are a few ideas:

        Make a bet with yourself

        Set a major goal with a 6 month deadline (like losing 10 pounds).  If you don’t meet the goal put your refund into an IRA.  But if you do hit the mark, spend the money on anything you want guilt-free!

        Give it away

        There are tons of people and places that can use a donation.  Remember to be creative and have fun with it.   For example, start a general scholarship fund to your alma mater, buy toys for the Toys for Tots drive, or even donate to the zoo.  All of these places rely on donations and gifts to continue operations.

        Start a side business

        If you have always wanted to turn that hobby of yours into a side business but lacked the capital, your tax refund may be the funding you need.  The old adage of it takes money to make money is still very true!

        tips are from USAA insurance

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        Debit Cards vs Credit Cards…Do you know the difference?

        Debit Cards vs Credit Cards…Do you know the difference?

        Debit cards are directly linked to your checking account. When your card is swiped the money is taken directly out of your account. Now the tricky think about debit cards is that your money does not leave your account right away. Many times the withdrawal can take up to 3 days to occur. Also what people do not know is that when you enter a pin number into the terminal, the transaction will be considered as a foreign ATM withdrawal and an additional fee usually occurs. With that being said, most people love their debit cards and prefer to use over a check. Debit cards are convenient and unlike credit cards are interest-free. In fact, Visa reports that there are over 400 million debit cards in use today across America.

        There are times, however, when you should use your credit card:

        Major purchase and online transactions

        A consumer should use a credit card because it will offer greater protection if something negative should happen; such as the product not being delivered. Most credit cards have an automatic insurance protection plan.


        When your server takes your card is leaves your sight, a major security breach in itself. There have been reports that servers have added additional tips without disclosing to the diner. It is better to have a wrong purchase on a credit card where transactions can be reversed, whereas a bad debit card transaction will affect your actual cash in hand.

        Car and Hotel Reservations

        Rental car companies and hotels usually place a hold on funds that are greater than the actual cost of the rental period. After the final bill has been produced these organizations can take up to a week to release the remaining balance, again affecting you cash in hand.

        Automatic Payments

        Using a debit card for monthly bills that vary month to month can be dangerous. If a mistake occurs, it is up to you to get your money back. As a former banker, I have seen mistakes on phone bills that were $500 greater than the actual bill. The customer had $500 deducted from their checking account, causing a negative snowball. Because of the $500 deduction, she had 3 other checks returned; the entire mistake cost my customer an additional $150. Now the mistake was corrected money refunded but the entire ordeal took 2 weeks to be cleared up.

        I know you may not be able to use a credit card in all of these examples. But if you can, you will be able to minimize your exposure to lost money and ID theft!

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        Co-Founder Frank Robinson

        Frank Robinson graduated from Boise State University with a degree in Business Administration, emphasis in Human Resources. He also has a Master of Arts in Organization Management from the University of Phoenix. Frank played professional football for the Denver Broncos and Jacksonville Jaguars for 3 years. Learn More...

        Co-Founder Stewart Gallagher

        Stewart Gallagher graduated from Colorado State University with a Major in Political Science and minors in both Economics and Philosophy.  Over the past 12 years Stewart has worked for 3 major financial intuitions holding various positions from teller to Assistant Vice President-Branch Manager. Learn More...