Posts Tagged ‘financial institutions’
Banks are realizing that raising fees are a clear mistake for customer loyalty and morale. Since Bank of America made announcements this fall declaring a rising of debit card fees, there has been an outrage amongst debit card users everywhere. Consumers sensing a trend developing noted their dissatisfaction in great numbers.
The proposed BofA Debit Card usage fee of $5 dollars a month changes are supposed to begin at the turn of the new year. A powerful outcry by consumers has thwarted these general plans. Some customers have even made videos that may be viewed on YouTube. This is a serious move by consumers.
“Consumer power has worked, at least in this case,” according to MSNBC.
As a direct result, BofA has made adjustment that include no debit card fees for: having direct deposit payments from employment payroll, maintaining a minimum balance, or using BofA credit cards.
However, some “experts” have noted that consumers should look out for what they are calling “stealth fees.” These would be fees that may be attached to your account for not maintaining a minimum balance, not making enough use of your debit card, or some other similar type of lower utilization penalty. This could all sum up to being a low blow for consumers that are not rich enough to avoid these fees, if these stealth fees should be applied. No announcements have been clearly made by BofA as to what the bank minimums will truly be. However, it has been in the thousands of dollar mark in the past, according to reports. Today’s average American, cannot afford to keep up with such high minimums on their banking accounts.
Among the Big Banks that have made announcements that they will not charge fees or stop charging debit card fees of this type are JP Morgan Chase, TD Bank, Citigroup, Inc., Ally Bank, USAA Bank, and Wells Fargo. Some banks, like Chase, had tested out an increase earlier in the year are now reluctant to begin the increase. So far, none of these banks have admitted that their change of heart has to do with the backlash of the BofA proposal. Some experts have noted that these banks are doing their best to avoid a “Netflix moment.” There have already been reports of customers actually going into their local BofA branch and literally cutting up their BofA debit cards for all to see.
There is a strong resentment present as customers feel more than slighted by having to pay to use a card for accessing their money.
Alternative banking does exist for those that want to avoid some of the high fees. Municipal Unions, and community banks may offer a lesser financial burden for banking consumers. You may also have an opportunity to make money—interest—from an interest bearing checking account. Online banking, with exclusive online banks, may also be a way to avoid high banking fees. With a bit of research, you may be able to come out ahead of all of this.
Associated Press: http://www.ap.org
The Bottom Line: http://bottomline.msnbc.msn.com
A New Personal Finance Solution
This is truly an interesting endeavor. Online banking has been with us for quite some time now. Most people refer to this as being able to have full access to the brick and mortar bank they have already joined. The ability to check up on account activity, new payments, and making money transfers with the touch of a button, is very convenient. However, some banks are now exclusively online. This type of banking completely eliminates the need for standing in line, and other related bank lobby issues. Because there is a lowered need for human capital, most online banks offer double and sometimes even triple the interest rate earnings as compared to other banks. This option makes for a profitable move. However, changing rates over the years has become more comparable to brink and mortar banks. Even so, some still believe that online or Internet banks are the new age way to go. And online banks do still have a slightly higher earning rate and lower to no fees. But how are people really getting along with an all-electronic banking system? Let us weigh the pros and cons of this matter.
First of all, higher interest earned with low to zero minimums, is probably the biggest draw to exclusive online banking. Typical brick and mortar banks offer an interest rate earning of less than 1% for most accounts, and some with high minimums to even begin earning interest. At the most you may get 1.3% interest earnings on a savings account. This has led to some consumers finding that online or Internet banks may be able to offer more for less. Even comparable rates may bring out more consumers if there are other existing accommodations being made to them that brick and mortar banks will not offer.
ATM and minimum fees are virtually nonexistent in online banks. And if by chance an ATM charges you, most online banks will reimburse you. To top it all off, most online banks do not charge a debit usage fee either. Now that is really good customer service.
One drawback from online banking is opening up an account to begin with. The typical way of opening up a bank account with a brick and mortar bank is to bring your identification information to the location of your choosing. However, with an online bank this exchange is more rigorous and takes longer in order to avoid fraud concerns. Most importantly, opening up an online bank account will need for you to send in your signature. You can probably send all of this information in electronic format. However, it is best to check with the bank for more enrolling details.
A very important feature that you want to make sure of before signing up for an online banking account is making sure that the online bank is FDIC insured. Some of the online banks are not.
Another issue can be the transferring of your money from your brick and mortar bank to an online bank. This may take a much longer time because you will have to mail in your deposits on a regular basis. Some online banks do take payment via MoneyGram or UPS though. Future paycheck payments may be easier with the use of direct deposit. However, some bank consumers like face-to-face interactions with people that know he or she by name.
All of this becomes a matter of personal preference compared with functionality and pricing that one can live with. The explosive rise of banking fees lately, have consumers begging for a better banking deal. For some, online banking may be the best way for an alternative banking experience, with higher earning potential, and low to no fees attached.
Main Street: http://www.finance.yahoo.com
My Bank Tracker: http://www.mybanktracker.com
Have to Provide Plans to Regulators
There are quite a few banks that are now under scrutiny by US “regulators,” due to the recent financial crisis they may have been involved in. This includes the purchase or selling of mortgage-backed securities. Coupled with the housing failure that began, roughly around 2008, a lot of financial institutions have been determined to have crossed the line, and are being dealt with quite seriously. This is by official monitoring institutions and investors. There is a lot of money to pay back and those that may consider themselves as an interested party, want to be sure that these banks will be able to pay.
The Federal Deposit Insurance Corp. (FDIC) has created a unanimously approved rulebook to oversee the proper installation of pay back plans, from these banks. Some of these regulations include “rules [that] require banks with $50 billion or more in assets to submit so-called living wills to the FDIC, the Federal Reserve and the Financial Stability Oversight Council and send revised plans annually,” according to an Associate Press report. These banks would have to include how, and possibly to whom, they may sell off assets: if they are not able to produce enough income to pay back debt owed. The plans have to start pouring in by July 2012. However, smaller banks are being allowed to wait to file their paperwork until 2013, according to the same report.
The report further reveals an intent being made by these regulators. These plans have been designed to hopefully prevent targeted, or other banks, from receiving a government bailout in the future. Instead, regulators have seen it fitting that they be wholly responsible, for any debt they may incur.
The Plans Construct
The plans to be submitted have to be extremely detailed. They must contain every aspect of the banks operation, all revenue producing items or products, and “liabilities.” They must provide details on who and how much they owe. There must also be a “risk” forecast for all of these details. If the regulators choose to make modifications, they will be able to. This includes the immediate selling of assets, or completely scrapping the plan – making the bank start all over again. And if banks should want to modify already approved plans, they must send in a detailed report on these changes, or plans to change, within six weeks.
Out of the 124 financial institutions being targeted, approximately 21% are American. The remaining are foreign subsidiaries.
Regulators will possess the power “to seize and dismantle banks that threaten the broader financial system,” according to the same report (AP). And if they come to believe that a financial institution may possibly head down that same road – they will be able to make them submit financial plans too.
It would be very interesting to see how well this will go and how this will affect economic recovery – in the long run. It seems as though this is what should have been going on all along: at least to a certain extent. The financial reporting makes enough logical sense to have always been a necessary factor in place. However, it is the element of forcing a “living will” situation on these financial institutions that will give this operation more teeth.
Associate Press: http://www.ap.org
Yahoo! News: http://www.finance.yahoo.com
What You Should Know
There has been a lot of talk lately regarding the ratings of financial institutions. Standard & Poor’s financial recent rating statement regarding the U.S. has really put the world in a spin about the American debt crisis. The thing is what does all of this really mean for the average American?
Standard & Poor’s, Moody’s, Fitch, A.M. Best
These are the four main U.S. entities that specialize in rating financial institutions. What they do is to figure out how well a financial institution or other such entity’s credit rating is by using similar standards as done for individuals seeking credit. This includes calculating how much debt has accumulated, the time frame of this accumulation, the ability to meet the payment schedule, and the frequency of requests for credit, just to name a few bits of the criteria. This helps to determine if these institutions are worthy enough for investment. These ratings can make or break an institution’s capability to borrow: which is an extremely important aspect in big business. This will determine how far an entity may be able to expand or grow. Without the ability for growth and expansion a potential borrower will surely be stifled and soon shrivel to competitors. And recovery from such a perilous fall may take a very long time.
These four rating powers inspect and report on the credit ratings of institutions such as banks, not for profit organizations, federal and state financial institutions including governmental entities.
S&P created an international ripple effect reaction to their announcement, downgrading the American financial status from AAA to AA, in August. This is the first time in the history of S&P that they have given the U.S. such a rating. This has had an upsetting impact on the way people are conducing their business ar0und the world as well as giving way to very public criticism against the U.S. Countries such as China have immediately brought up questions about the stability of the U.S. dollar continuing to be used as an international “reserve” dollar. However, S&P is the only one of the American agencies that has marked the U.S. with a downgrade, so far. Fitch and Moody’s still have the U.S. under the highest rating for their standards.
Meanwhile other regions like Australia have been showing their strength in having a stronger credit rating. They are currently being seen as having one of the strongest economies right now, with stable credit activity.
What this means for the average American
The average American will feel the effect of the downgraded American credit rating if any part of their income is supplemented with foreign funding. A lowered credit rating could mean that the U.S. will have less financial resources to borrow from to use as a reserve to support particular American programs such as government retirement benefit programs, as well as other social specific programs. The U.S. has also been using foreign money to supplement military functions including war efforts in recent history.
Only time will really be able to tell what is going to happen next. For right now a primary task at hand will be to improve job growth and reducing the U.S. debt crisis. This combination will be a sure road to economic recovery and the rebuilding of the American financial status.
EHow Money: http://www.ehow.com
Maps of World – Finance: http://www.finance.mapofworld.com