Christian Finance Blog

Just got an email from FNBO Direct saying that their rate for their online savings account went down to 3.25% from 3.50%. WaMu (JPMorgan Chase) also quietly lowered the online savings rate to 3.00% from 4.00%. ING Direct is at 2.75% (instant $25 bonus for new accounts with at least $250). HSBC Direct is currently at 3.00%.

By now, most of us have heard about the news of the $700 billion bailout signed into law by President Bush on October 3rd, 2008. The bill is designed to bailout the numerous banks throughout the country that were making bad mortgage loans. The government (read: we, the taxpayers) are now going to own $700 billion worth of homes and hopefully sell them later for a profit. How much later is in question.

Do I support the bailout? It doesn’t matter. It has already passed. What I can do is try to analyze the effects of the bailout to you and I. Joe Doughnut. The average American. I definitely don’t like the idea of using taxpayer money to bailout any huge corporation that made bad decisions. They should be allowed to fail. This is a free market capitalist country. I’m afraid America is moving more and more toward socialism and that’s scaring me. But enough of that.

The real question is why does it matter to me personally? After all, this is a personal finance blog. Along with the huge amount of “bad” in the bailout, there some “good” thrown in there as well. For example, the bill increases the FDIC insured limit from $100,000 to $250,000 deposits at all banks and credit unions (that are FDIC insured). That means more protection for you! Hopefully it will get you to save more and spend less, too! This expires December 31, 2009.

Also included in the bill is about the alternative minimum tax. It was expected to hit 20 million taxpayers with an unexpected tax increase this year but it was originally supposed to affect 155 high-income households who owed little or no taxes at the time when it was introduced.

So what does the bailout mean for me? What does it mean for you? It means that I’m doing everything I can to get out of debt and avoid my own “credit crisis”. If I don’t have any debt and a have whole bunch of cash, I won’t have a credit crisis! If I don’t need to borrow, I don’t need credit! What a concept!

With all this consolidation and shrinking of competition in the banking industry comes huge corporations that are too big to provide any kind of customer service at all.

You would think that a bank as big as Bank of America would make it easy to open an account online. After all, I am trying to give them my money. I went online to open an account because there was a coupon code that I found that supposedly gives $100 for opening an account with no direct deposit requirements and $25 minimum deposit (WGSUOISI808, but YMMV - your mileage may vary). So I decided to open an account online.

First sign of trouble was a warning at the top of the screen saying that due to high volume, accounts were being processed 3-5 business later than usual. That seemed a little strange for one of the largest banks in the country. You would think that they would have the systems in place to be able to handle higher volume. But the opening process online went smoothly. I put in the code for the $100 and went off on my way.

Several days later, however, I receive an email from Bank of America stating that my online passcode was reset. That’s funny. I never even set up my online passcode. So I called the customer service number and after navigating the horrible phone tree which I could not get out of (it kept asking for my account number that I didn’t have), I finally spoke to a customer service rep. Well, guess what? He was a part of the east coast call center which apparently cannot handle west coast accounts. So after I was on hold for twenty minutes (for nothing), I was transferred to the west coast call center back in the same phone tree and on hold for another fifteen minutes before I spoke with someone else.

The CSR then asks for my account number again (which I don’t have). She verified my account with some other information. The nice lady on the other line listens to my problem and looks into it. She says that apparently when it says that the passcode was reset that it doesn’t mean it was reset. It means that my passcode was set up. Well, why didn’t it just say that my passcode was set up then? If you can’t tell, I’m a little annoyed at this point.

So she gives me my online ID and passcode over the phone (I’m not sure if they’re supposed to do this or not) and I’m able to login to my account. My advice to you: skip the hassle and the lack of customer service and stay away from Bank of America!

BofA, you can keep your $100. I don’t want it. It’s not worth it to open an account with you. Where has all the customer service gone? That’s why I opened a WaMu account way back when. Because at least they had a little hint of customer service. I hope it stays that way with the acquisition by JPMorgan Chase. The other “big” bank that had a little customer service was Wachovia, I mean, Citi Bank, err… Wells Fargo? I don’t know. Now I’m annoyed and confused.

I wrote about the purchase and acquisition of ShareBuilder by ING Direct last year in December. I wondered back then how they would integrate together. Well, ING finally took a step in the right direction.

You can now access your ShareBuilder account from your ING account. All you have to do is login your ING Direct account and click on “Access your ShareBuilder account(s)”. Then you will login with your ShareBuilder account and you can now see your account value in your ING Direct account.

And on a side note, yes it does say “Kill Student Loan” on there as a nickname for one of my savings accounts. I know it sounds a little violent but it’s only because I’m passionate, intense, and vehement about getting out of debt! The only debt I have left is credit card debt (all at 0%) and my student loans at 6.8%. A month ago I transferred a large portion of my student loan debt to a 0% balance transfer on a credit card.

So what I’m doing is paying the minimum on the 0% credit card and then transferring every month the amount it would take to pay off the card in 12 months into ING Direct to maximize the interest I can get. I’m also making extra payments to my student loan every month. I plan on being completely debt free by September 2009! I can’t wait!

If you’re interested in getting $25 for opening an ING Direct savings account or Electric Orange checking account, shoot me an email and I’ll send you a referral. Help a brother out!

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As many of you know, I bank at Washington Mutual (WaMu). As many of you also know, WaMu actually failed and the government sold it to JPMorgan Chase for $1.9 billion on Friday. This was the largest bank failure ever in the United States. So what caused the downfall of the nation’s largest bank?

The major reason is the huge amount of subprime (bad) mortgages that WaMu made over a period of time. Subprime mortgages are mortgages made to people with less than stellar credit. These people are most likely not able to afford the mortgages that they were put into. However, the bank could charge a higher interest rate and make more money on them. The problem started when house prices took a dive nationwide. The same people were now underwater with their homes and many walked away because they couldn’t make the payments.

But the bigger problem and the catalyst that caused the failure was the many people who took out all of their money based on fear and false rumors. In the ten day period following the collapse of Lehman Brothers, WaMu customers took out $16.7 billion in deposits. This caused WaMu to not be able to conduct day to day business because of the lack of cash.

I keep repeating this over and over. It is not a time to panic. Fear and worry doesn’t solve any problems. Only action solves problems. No one lost any money when WaMu went down. No one, including everyone with more than $100,000 at the bank, did not lose any money at all. Let me say that again; nobody lost any money, period.

So what does this mean to you?

If you bank at WaMu, you now bank at JPMorgan Chase (technically). In the short term, this means business as usual. You continue to use the same account numbers, branches, checks, debit cards, online banking, ATMs, etc. All JPMorgan Chase ATMs are now available to you fee free. JPMorgan has a nice page explaining everything about your banking after the buyout.

The merger is going to take some time. I would say that within the next 6-9 months, JPMorgan will begin to consolidate and get rid of the Washington Mutual name. I’m going to continue to bank there. I’m not taking out my money. I’ll continue to use the online bill pay and have my paycheck direct deposited there as I always have.

If you don’t bank at WaMu, it just means one less bank to choose from. It means less competition. It probably means higher prices. Higher interest rates on loans and less attractive rates on savings devices. Less competition is never good. But the lesson here is, don’t panic. Your money is safe and sound. Just remember to keep less than $100,000 in any account at any one bank. Unfortunately, I do not have that particular “problem”. God bless!

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Looks like WaMu has extended their online 5.00% CD for both 12 and 13 month terms. They had briefly lowered rates to 4.50% but now they are back up to 5.00%. This is a great rate and the highest I know of for any FDIC insured CD.

You can only open it online with a minimum of $1,000. Make sure to have less than the $100,000 FDIC insurance limit.

Now through this Friday, August 29th, WaMu is offering a 13-month 5.00% APY CD available in the branches, online, or by phone. They are really pushing this hard and is a great rate. Penalty for early withdrawal is 90 days interest.

They are also offering a 12-month 5.00% CD online which might be better for you if you don’t want to lock in your money for 13 months. I’m not sure when this deal expires, though. This is only available online. Minimum is $1000 to open for both.

I’m thinking about opening one up myself. This may be a desperation move for the large bank to get some cash but I wouldn’t be worried unless you have more than $100,000 with them. The FDIC will cover everything under $100,000.

The FDIC (Federal Deposit Insurance Corp.) shut down the Columbian Bank of Topeka in Kansas yesterday which had about $752 million in assets and $622 million in deposits.

This is already the ninth bank failure this year. There were $46 million in uninsured deposits by 610 accounts at the bank that exceeded the $100,000 insurance limit.

Now, I don’t write this stuff to scare you. I write this to let you know that you will be covered under the FDIC insurance for any deposits under $100,000 at a FDIC-insured bank. You don’t have to worry.

For more on this subject, check out this and this.

Source: CNN Money, FDIC

Since I blogged about the IndyMac Bank failure a little while ago, there have been several banks to go under with First Priority Bank in Bradenton, Florida being the latest casualty. It was closed last Friday, August 1, 2008 and is being taken over by SunTrust Bank. Two banks were also closed on July 25 bringing the total number of bank failures this year to eight.

This is just another reason to make sure you are covered under the FDIC insurance protection of up to $100,000. You can find more information on the article I wrote earlier on FDIC insurance. This is no time to panic. Your money is safe and there’s nothing to worry about.

Any bank can fail if there is a run on the bank because of the way banks operate to begin with. Banks don’t hold all of their deposits on hand and are only required to hold a certain percentage so if there is a run on the bank, there won’t be enough assets to cover the withdrawals. But there is no reason to take out your money because of FDIC insurance.

Washington Mutual (WaMu) recently upped their online savings interest rate to 3.75% from 3.50%. It’s one of the highest rates going right now and a great place to park that emergency fund. I use WaMu as my main bank because of the numerous branches and ATMs in my area. Here’s my full review of the checking and savings accounts. Just so you know, you have to apply online and open with a checking account to take advantage of this deal. This is not available in the branches.

FNBO Direct is putting on a Pay Yourself First online video contest with some nice cash prizes! I had heard about the contest a while back since I’m a customer of FNBO Direct and I wanted to put together a video. I kept putting it off until fellow blogger Jonathan at My Money Blog wrote about it and put up a video for the contest. This kind of sparked a fire inside me (I always love a little competition!) and I whipped up a quick video for the contest. Go ahead and watch and rate it!

[youtube=http://www.youtube.com/watch?v=wn6YhPPK0v4&hl=en]

http://www.youtube.com/watch?v=wn6YhPPK0v4

The odds of winning are really good since currently there are only 33 submitted videos and four of them are from FNBO so there are really only 29 submissions (including mine). That means almost everyone by default is winning $500! First 500 submissions get a $10 Amazon.com gift card. Top 20 videos win $500. Top five get up to $5000 in matched savings. Deadline is July 31st and unless everyone is just waiting to post their videos up before the deadline, I think you have a good chance of winning something. Let’s just hope they don’t cancel the contest for lack of participation.

FNBO Direct is currently paying 3.50% on their online savings account which is a very competitive rate right now. I currently have some money parked there. Here’s my full FNBO Direct review.

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The latest bank to “bite the dust” is IndyMac Bank in Pasadena, California. Earlier today, the FDIC took over the failed IndyMac Bank. This is already the fifth bank to fail this year alone compared to “only” three in 2007 and none in 2006 or 2005. This is also the second largest bank failure in U.S. history.

So what happens if your bank fails? Well, not a whole lot. The bank usually is taken over by the FDIC (Federal Deposit Insurance Corporation) or the NCUA (National Credit Union Administration) and an announcement is made (notices posted on doors, news information sent out). Usually, another bank will buy the assets (and liabilities) of the failed bank and the branch will be reopened as a branch of the new buyer. When there’s a buyer of the bank, checks will continue to clear, debit and ATM cards will continue to work. This is only applicable to the insured amount ($100,000 per depositor or $200,000 per joint account).

However, if there is no buyer, the checks, debit cards, and ATM cards will not work. Checks will be returned and stamped “bank closed.” Typically, the bank is closed on a Friday and by Monday, checks are mailed out for the insured deposits. You will have almost immediate access to your insured funds. However, any amount that exceeds the FDIC insured deposits becomes a creditor of the failed bank and you may or may not see the money after the assets are sold off by the FDIC. You may not see all of your money.

You likely won’t know that a bank’s about to fail until it has happened. That’s why it’s so important not to exceed the insurance limits at any one bank. So don’t keep more than $100,000 at any one bank. If you stay within the insured limits, you’ll have relatively quick access to your money.

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Source: MarketWatch, Bankrate

HSBC Direct recently bumped up their online savings rate to 3.50% until August 15, 2008.

FNBO Direct also announced today via email that they were bumping their online savings rate to 3.50%. They also increased some of their CD rates. These are great places to park that emergency fund.

You can also earn 3.90% at SmartyPig which is a little different than an online savings account. I just opened an account and should have a full review soon.

Does this signal the end of rate decreases by the Fed? Have we hit the bottom as far as interest rates go? I think so especially since inflation is now on the rise. The Fed will have to increase rates in order to help combat inflation as seen in soaring energy costs and food costs.

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Here’s a brand new $75 Bank of America checking account bonus! You must open a checking account with minimum $100 by July 31, 2008 to receive your bonus. Use code AOU260508 and apply online or go to your nearest banking center. $75 will be deposited within 90 days. Amount will be reported to the IRS as a 1099 so you will be taxed on it.

Just open an MyAccess Checking account (free with no direct deposit requirement and no minimum balance required if opened online). A savings account is not required for the bonus, but if you want to use the Keep the Change program, you’ll need to open one.

Offer only good for new customers and one per household. Not available in Washington or Idaho. Expires 7/31/08 so hurry.

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I just saw a post on FatWallet that talks about the Provident Direct online high yield savings account that’s currently paying 4.50% (edit: now only 3.75%)! It seems like a good deal especially given today’s market conditions. However, the Fed is expected to drop rates again tomorrow so who knows how long this rate is going to stay competitive. Currently, it’s the highest that I know of. It’s also FDIC insured at Provident Bank which has been around since 1886. The online portion has been around since November 2007.

It says that there are no minimum balance requirements and no monthly fees. You only need a dollar to open. The major downside is that withdrawals are limited to $5000 per transaction but you can do multiple transactions per day. However, savings accounts are government regulated and cannot exceed more than 6 transfers out in a month. Any withdrawals after that will be charged a $5 fee. You can bypass the $5000 limit by “pulling” from another account rather than “pushing” from the Provident account. Apparently there’s also a $25 fee for closing the account within 180 days and a$5 monthly fee if the balance dips below $300.

I’ll have a full review when I open an account in a little bit. I’m going to wait and see what happens to the rate first. It would be a great place to park my emergency fund which is currently only earning 3.85% at FNBO Direct.

In other news, there’s a new concept in the online savings space that I stumbled onto today. It’s called SmartyPig and it basically combines an online savings account with social networking. The basic premise is that you need to set goals that are funded by monthly deposits into SmartyPig. The goal is active until it is reached. The social aspect comes in when you make your goal public. People can help fund your goal by using a credit or debit card (with a $4.95 processing fee). Once goals are met, you can “withdraw” the money via MasterCard debit card or a gift card from participating retailers. At this time, there is no way to receive that money via ACH transfer in cash. This is apparently done so that it’s harder to use the money since the purpose is to save it.

Deposits are FDIC insured and held at West Bank, which has $1.3 billion in assets. Deposits also earn a very competitive 4.30%, albeit with some limitations. I think it’s a good idea, but I definitely wouldn’t use it to hold my emergency fund because it’s not liquid enough. However, I don’t think it was intended for that purpose either. I think there’s a market for this and if it helps people to set savings goals and encourages them through the social aspect, it could be a winner. I’m holding off on it for now, but maybe I’ll revisit it later. Maybe I can set up a public goal to get out of debt and you guys can contribute!

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