PayPal

PayPal Dividend Issues

Several months ago there was a significant delay in PayPal sending out dividend payments, and its happened again. This time however, several people are reporting that they have received a dividend payment, but its been incredibly small.

To follow-up on the threads, check out the original post here:

PayPal Dividend Issues

UPDATE: PayPal recently emailed me with this notice:

We’re contacting you in regards to your January Money Market dividend payment. Due to a technical problem we experienced, you may not have received your January dividend payment, or you may have only received a partial payment.

We’ve processed a credit to your PayPal account which includes the balance of your dividend payment.

We apologize for any confusion this issue may have caused, and we appreciate your business.

Thank you,

PayPal Operations

Bank of America SafePass Wednesday, November 21st, 2007

I just logged into Bank of America’s website and in the process I noticed that they are promoting a new feature: SafePass. If this is anything like Chase’s authentication code which is emailed or sent via SMS, it would be very unfortunate.

Email and SMS are insecure, and only add a layer of inconvenience to the login process, in my opinion. The only thing similar that actually adds some security is the service offered by PayPal, which is really a service offered by RSA, a company which in my opinion actually understands how security works.

I hope Bank of America offers this “feature” as an option, not as a common element to their web services. If I recall correctly, the service for PayPal is optional, and you have to pay $5 for the unit, which is more than a fair price for what you get.

New PayPal Logo

PayPal has launched a new logo, and are working on a new look for their website. The new logo isn’t so different from the old one, but I think I like it better. It’s simpler.

What do you think?

Obviously, PayPal is a registered trademark of PayPal / eBay.

ING Direct Savings Account for Small Business

ING Direct sent me some direct promotional mail this week announcing their newest product: an online high-yield savings account for small businesses. They are offering approximately 5% APY, but to me this product is second rate compared to the products offered by Advanta Bank Corp., unless you need an online service (Advanta doesn’t offer online banking for small businesses).

I use PayPal for transferring money to my different online accounts, and I bet the new ING Direct small business accounts can do the same thing. The nice thing about PayPal is that they do offer competitive interest and they also offer online payment services.

PayPal Problems Friday,

I’m having trouble accessing my PayPal account. Anyone else having this problem? Afraid my network might have been hack and someone was redirecting the PayPal domain name server, I logged into a remote site to ping paypal.com and received the same IP address. Hmmm. Wonder what the problem is.

UPDATE: Now at 4PM, their site is accessible again. Whoops, I spoke too soon:

Line of Credit

No More AMEX Line of Credit?

I received a letter from American Express recently that stated that they are phasing out their line of credit product. I was disappointed to learn this, but after thinking about it, it doesn’t really affect me that much.

I’ve had an American Express business line-of-credit for a few years and only used it a handful of times. Within the past year, they drastically reduced the size of the line, so after that I used it even less.

Nevertheless, it doesn’t make much sense to me why they are phasing it out. It seemed like a smart product to me, especially for a company like American Express.

Mastercard

Home Depot Business Credit Card

Citibank sent me a letter today with an update to the Home Depot Business Credit Card Rewards Program. The program used to feature 1 point for regular purchases, and 2 points for Home Depot purchases. Now it features 1 point for regular purchases, 2 points for gas, pharmacy, and grocery store purchases, and 3 points for Home Depot purchases.

This is a good improvement to a great card. Thanks Home Depot and Citibank!

Bank of America Payment to FIA Card Services Test

As a test to make sure payment arrives and is credited to the right account, I made a small payment of $10 from my Bank of America account to my FIA Card Services account using the online bill payment system to my FIA Business card, using the zip code mentioned in my last post:

FIA Business Card Services Contact Information

I just logged into the FIA Website and it hasn’t show up yet, though Bank of America shows it as been processed. I’ll check again tomorrow and update this post. Bank of America is in a bizarre position with the FIA Card Service; they are offering a credit card branded for other banks - i.e. their competitors! My FIA Card Services MasterCard is branded as a TD Banknorth Business Card. It almost makes sense that they are providing poor customer service because of this tenuous relationship with the customers of their competitors. If a customer of a TD Banknorth Business Card, supplied by FIA Card Services, is dissatisfied, will they be disappointed by TD Banknorth, FIA Card Services, or Bank of America? What do you think?

UPDATE June 1, 2007: The test worked. My deposit from Bank of America’s online banking system worked fine. Now I’ll setup two payments per month.

FIA Card Services MasterCard Platinum Plus for Business

This product name is a mouthful! My new “FIA Card Services MasterCard Platinum Plus for Business card” (yes that is the full name of the card) arrived today. It is a TD Banknorth branded card that really has nothing to do with TD Banknorth. MBNA used to allow retail banks the ability to offer these types of cards to their business customers, and that relationship made sense because MBNA was only a credit card company. Since Bank of America bought MBNA awhile back, I’m not sure how well that scenario works anymore.

That could be the reason that FIA does not make their relationship with Bank of America that obvious, but there is no denying it: FIA Card Services is owned by Bank of America. So think about it, what are banks like TD Banknorth doing offering credit cards issued by their competitor Bank of America? I have no idea!

For more information, check out the FIA Card Services Archive here at Informed Banking. Of note, Brian writes in that he’s disappointed with some of the changes he’s experienced since the change from MBNA to FIA. What about you? Are you finding the changes to be negative as well, or are you getting good results from FIA? Let us know! Feel free to submit a comment or send us an email at staff [ at ] informedbanking [ dot ] com. Thanks!

Personal Banking

Fed Rate @ 1%

The Federal Reserve Bank lowered their primary interest rate another half percent to one percent. This makes it generally less expensive for banks, businesses, and people to borrow money. There is a lot of existing debt, including credit card debt, out there which is directly tied to this number, so over the past month, interest rate payments on those debts have lowered by one percent as well.

I have two loans from the Small Business Administration which are tied to this rate, so I will see a tiny bit of relief, thankfully. The danger here is that the low rate will cause inflation, and given how much money is currently being injected into the economy at the moment, I’d say that’s an important risk. I’ve heard on the radio that the treasury isn’t actually releasing any more “dollars” out into the economy, which should help offset any risks of inflation.

Yay! Fed Cuts Rate

Finally, the Federal Reserve Bank dropped their primary lending rate from 2% to 1.5%. Its a significant drop, and has been described as an “emergency” measure.

Around the time the $700 billion bailout was introduced, I suggested that the Fed held off on lowering rates to that they could later have more options if they needed them. Whether or not I was right, I’m sure the Fed is thankful that they still have some room to drop the rate.

The danger here is inflation, and while that is a serious problem to watch, a recession is a serious problem too. And worse, market stagnation can cause some serious loss of value in a short period of time, as we’re seeing the stock market plummet day after day.

The party is over folks, time to get back to real work.

Sovereign Bank, Rockville, MD

I took a picture of this Sovereign Bank building in Rockville, MD:

How much is 700 billion?

As just a regular Jane I find it very difficult to understand what is going on with the banking industry at the moment. The headlines talk about banks being insured up to $100,000, and the government is going to give 700 billion dollars to the failing companies to keep them from going under.

As I understand it if the banks go bankrupt that’s big trouble for the economy. Little businesses will be in financial trouble because the banks hold all their money, and then they can’t pay their bills or buy supplies to continue to operate. Individuals are impacted because they stand to loose all their life savings. The implications of all the money in my checking account disappearing is not lost on me.

The insurance of up to $100,000 is a guarantee, from a separate Insurance company, I can only presume. Should the bank ever go under individual customers would receive any amount of money they had in the bank up to $100,000. No problem for people like me. I have nothing to lose anyway. But lots of people have a lot to lose.

How does it work, if the insurance company has to come swooping in? Is it like when the bank takes you house? My guess is the insurance company seizes all the banks assets including mom and dad’s retirement fund and uses, it to pay everyone their insurance up to $100,000. And then sits like a fat cat on all the excess money they took?

Now if the government comes with their “bail out” plan. What an inspiring title for the everyday person, usually you bail out a sinking ship. Way to instill consumer confidence. Anyway this plan of a whole lotta moola, is it good or bad? Where’s that money coming from? Will it stop the swarm of foreclosures sweeping across the country? Will it allow people to keep their homes? Maybe it’s selfish, but $700 billion in tax payer money better be spent to help the tax payers, it sounds like it would be going to help the banks, which in turn would help the tax payers.

But what about the insurance companies? I assume the banks pay them a hefty monthly premium to insure all that money in the event of an economic crisis. If the government just steps in to take care of things, what have the banks been paying them for?

I don’t get it. Can anyone explain it to me, in simple terms?

Huge Spike in WaMu Interest

As part of my efforts to provide quality and up-to-date information about banks and the banking industry for everyday people, I keep track with Google Analytics. It provides information about our visitors, including what search phrases were used to find this site.

Upon reviewing the statistics this morning, I was surprised to notice a huge spike in the number of search phrases including “Washington Mutual bank branch locations”. When I mean huge, I mean going from practically zero to almost 200 in the last few weeks.

How come? A quick scan of the news reports doesn’t provide much. I wonder what is going on in consumers’ minds?

Another possible explanation is that the spike might not represent a shift in consumer sentiment, but instead a shift in how various search engines position Informed Banking in their database indexes. Hard to say what the ultimate reason is, but its interesting to think about.

Retail Banks

The Transfer Has Begun!

We started an update to the Informed Banking website several, actually many, months ago. The main target was the wiki, and finally the transfer process has begun. I’ve been very careful to make sure the URLs get mapped to the new site. The old wiki engine was not really designed for dynamic publishing, so we’re switching to MediaWiki.

Many pages have already been transferred, but I’ve only redirected one so far. I’m excited for this transition, though it will take a few more weeks to complete.

The first migrated page: Marketable Securities.

More Banking Rumors Some new rumors abounding this morning in the banking world: New York Times is reporting that Washington Mutual is in talks for sale by Goldman SachsNew York Times also reporting that Wachovia might buy Morgan Stanley What the blazes is going on here?

Informed Banking Status Report

Informed Banking has taken a hiatus lately (my wife and I had our first baby recently), and so the launch of the new design had to be postponed. Now I’ve got a moment to revisit the process, and I’m wondering how to proceed.

Within the past few weeks, I was able to migrate IB to the new hosting platform we’re using, but in the process, broke a few existing feature, like the forums and the bank directory. These will be fixed eventually, using more sustainable software applications and databases.

I’m trying to decide the order in which to do all this. I’ll probably update the blog first as that should be a fairly easy switch - just have to make sure all the old URLs are redirected to the new path. Then I’ll follow up with the wiki update, as most of the articles have already been migrated, and again fix the URL’s. After that, I’ll replace the forums and the bank directory. I’m not as concerned about the URLs for the bank directory or the forums, both are designed more for browsing and interacting than as a reference.

Request for Feedback

Hello Informed Banking readers! I’m posting today to ask for your feedback about our new design. As you’ll likely notice, the content isn’t fully up-to-date, but the point is to only to preview the new design. Here is the address:

New Informed Banking Design Beta

I’ve still got a lot of work to do on it, but I figured you might enjoy a sneak preview. Thanks for your comments!

FIA Card Services

Business Banking Updates

My company is going through many banking changes at the moment - mostly having to do with debt and credit cards. My business’s Simply Cash American Express credit card is almost one year old, so my 12 month promotional 0% rate is almost up. I had planned to shift some of the balance to my American Express line of credit, but last month they reduced my available credit, much to my dismay.

Therefore, I applied for a few new credit cards on behalf of my company:
* Bank of America Business Power Rewards Card
* Citibank Points Card
* Chase / Amazon.com credit card

None of the cards gave me an instant approval, but I’m happy to report that I was eventually approved for the Citi and Chase cards. I haven’t heard from Bank of America yet about my Power Rewards application. Speaking of Bank of America credit cards, I recently took them up on an offer for a 7.9% fixed rate on a cash advance on my FIA Platium Card. Not a bad deal since its for the life of the balance. Speaking of which, I should setup auto-payments for that!

The Chase card looks great, it comes with a 6 month promotional rate of 0% on purchases, balance transfers, and balance transfer checks.

The Citi looks good too. The credit line is lower, and the promotional rate is only good for balance transfers, but it is 0% for 12 months.

Auto Loans

My wife is looking to buy a new car, and so we’re shopping around for auto loans.

When I bought my 2006 Toyota Corolla, Toyota was having a promotion and I landed 2.9% financing. The same dealership is now offering 7%, no thanks.

USAA

We called USAA, and they said they could offer 5.99%, a little better.

FIA Card Services / Bank of America

FIA Card Services is really Bank of America, and they are offering 6.04% according to their website.

Capital One

Capital One also has 5.99% car loan rates on new cars.

Credit Cards

While there are no doubt better deals on credit cards, the available credit won’t be as high, and it will also have a negative impact on our credit score, so no thanks.

Promotional Car Loan Rates

We’re hoping to find a promotional auto loan rate within the next few weeks. If I find anything good, I’ll post it here!

UPDATE:

We ended up going through Toyota Motor Credit Company (TMCC) as they were able to provide a slightly better rate and a faster turnaround. My wife got her new Toyota RAV4 in less than two days!

FIA Card Services Honoring Offer

I got my FIA Card Services business credit card statement today, and I’m glad to say that they are indeed honoring the offer they sent me months ago for 2.9% interest on cash advances.

The first statement I received had an interest rate of 19.9%, so I called and asked them what that was all about. Although the CSR was helpful and agreed that it was a mistake, I wasn’t sure if they were going to come through with a fix.

I know FIA Card Services isn’t doing as good a job as MBNA did in managing their private bank branded cards, but I’m so glad that in this case they fixed their error.

Also, here’s a link just in case you are looking for FIA Card Services contact information.

FIA Card Services Contact Information

I just got an inquiry from a Citi credit card representative about debits on a customers account from FIA Card Services. Unfortunately, contacting FIA Card Services is difficult for many, so I will link back to the original post with their contact information:

FIA Card Services Contact Information

Here’s what I wrote back to the Citi representative:

FIA Card Services is the new name for MBNA since Bank of America bought them. Please see our post about FIA Card Services for their contact information:

FIA Card Services Contact Information

Informed Banking Staff

Fia Card Services Balance Transfer Interest Rate

I just opened my FIA Card Services monthly statement (first one since MBNA was bought by Bank of America / FIA) and was greeted with an unpleasant surprise. While I was offered 2.9%, they tried to charge me 19.9%. I called up their customer service department and dug out a copy of the offer.

Surprisingly, someone picked up the phone fairly quickly. I explained the situation, and after verifying my identity (which I appreciated) found that my complaint was justified. The customer service representative was also surprised by the error, and said he would fix the rate. He said the correct rate of 2.9% would be applied to my account retroactively and moving forward.

Can you believe it? That only took about 5 minutes. Its nice when people admit their mistakes.

e-bills

Bank of America E-Bills

Bank of America just sent me an email about some changes they have planned for e-bills from American Express. Because of the problems that were caused when Chase’s e-bills were failed to be delivered to Bank of America, I’m going to post the contents of the email for everyone to read. If I understand the email correctly, the changes will be an improvement, and existing, non-recurring payments will be executed, but recurring payments will need to be reconfigured using their new system.

Here’s the contents of the email I received:

As a reminder, Bank of America will offer an enhanced e-Bill service for your American Express Card beginning in November. As a result of this change:

In November, your current e-Bill Service for your American Express Card will be discontinued so that our systems can be upgraded.

When the upgrade is completed, you will be able to enroll for the new e-Bill service for your American Express Card. (Please note that this upgrade is expected to take no longer than 3 days.)

This new enhanced e-Bill service will allow you to view a PDF replica of your American Express paper statement through your Bank of America Online Banking service.

You can continue to pay your American Express bill through Online Banking, even if you elect not to re-enroll for the upgraded e-Bill service.

Any payments you schedule to your American Express Card will be processed as directed, even if your selected payment date is after the upgrade. However, if you use the automatic payment feature to pay your American Express e-Bill, no additional payments will be automatically scheduled after the upgrade. To continue using automatic payments, you must re-enroll for this feature after the upgrade is complete.

We sincerely apologize for any inconvenience this may cause. If you have any questions regarding this message or the effect this upgrade will have on your Online Banking service, please contact Customer Care at 1-800-933-6262 and our representatives will assist you.

UPDATE November 6 2007: I just checked my Bank of America account and the automatic payments I’ve setup there, and nothing has changed. What’s the deal?

Discover Card

Citicards Robocalling

Grrrr… this really annoys me - when a company calls, you pick up the phone, and an automated attendant (aka robo-caller) says, “Please hold, an agent will be right with you…”.

I just got one of those calls from Citicards, and I’m very disappointed. I’ve always had fairly high respect for their brand, but this is rediculous. Doesn’t their management understand the damage that this type of annoying will inflict upon their brand?

I’ve had issues with Discover Card calling too much as well, and thankfully those calls have, for the most part, subsided.

Discover Buying Diner’s Club Monday,

Discover Card, a spin-off from JP Morgan, is buying Citigroup’s Diner’s Club International, for $165 million. I have applied for a Diner’s Club card in the past (they have pretty good rewards), but was denied.

Apparently you have to do a significant amount of dining domestically and overseas to be approved for the card.

American Express and Discover Promo APRs Over

The 12 months of 0% APR on my business American Express Simply Cash card are up this month, so its time to start paying it off. All in all, the card has been fantastic. My favorite things about it are the high cash back percentages (up to 5% for gas and wireless phone bills), and more importantly that the cash back is rebated the next month - no waiting an entire year!

Over the past year, I’ve worked myself up a decent amount of debt with American Express on this card, so much that they reduced my available credit on a line of credit I have with them! Even without the line of credit, I should be fine, I have some “rainy day” funds, as well as a cash-secured line with Bank of America.

If you’d like to try out the American Express Simply Cash card, you can apply through this link:

While I’m on the subject, my wife’s Discover Card promotional APR is also up as of last month, and I was pleasantly surprised to “discover” that the normal interest rate was only 9.99%. Not bad! Most of the available credit on the Discover Card was used to buy plane tickets and pay for travel expenses as my wife interviewed for infertility fellowships. It was worth it, she was chosen by the NIH! (If you want to learn more about her specialty, check out Informed Infertility.) My experience with the Discover Card has been less extensive, but if you’d like to apply for one of them, you can do so by clicking on this link:

My business also has a Discover Business Card, and again my experience with that card has also been limited. I bought a Apple MacBook with it when I first was approved as it came with 12 months of a promotional 0% interest rate on purchases. Unfortunately, my Macbook has been acting up lately.

And finally just one more link. This one is for a Discover Business Card. If you and your business have good credit you might get a sweet balance transfer, cash advance, or purchase APR! My card also came with great cash back deals, too. See their site for full details:

Discover® Business Card – 5% back on your office supplies! Apply Now!

Discover Card Affiliate

I’m glad to announce that we’re now affiliated with Discover Card! If you would like to apply for a Discover Card, you can do so right now:

Discover Courtesy Calls Are Obnoxious

I’ve ranted about obnoxious Discover Card “courtesy calls” before. There was awhile there when they called my office about 5 times over two days, didn’t leave a message, but kept calling. That type of behavior encourages me to blacklist the called identification number.

Today my home phone received 3 phone calls, and only on the third call did they leave a message. The message requested a call back, but didn’t say what it was for, or even identify the caller - I only knew it was Discover due to the caller identification. So I called back the number, and was greeted by an automated system, asking me for my account number. Great, yeah right.

I say “representative”, with no luck, then finally am transferred to an operator, who again asks for my account number, yet I still have no idea who I’m talking to or what about! Grrr. Finally I provide the phone number they called, and it turns out it was a courtesy call. In my humble opinion, courtesy is not the word I would use to describe these calls. I would choose harassment, but that’s just me.

Come to think of it, there was nothing in this call that verified Discover as the authentic caller or respondent to my return call. For all I know it could have been a more sophisticated phishing scam trying to elicit information from me. Ugh. If scammers haven’t tried this yet, I bet they will soon.

UPDATE: I can’t believe it but Discover called again today. Do I need to take out a restraining order on them??

OK, this is getting ridiculous. They just called AGAIN! Just in case you think I’m going crazy, here is the call log from the past few days:

This of course does not include their calls to my office as well.

UPDATE October 26, 2007: Just got another Discover call to the office, and requested an end to the calls. I’ve requested this before, and obviously it was ineffective.

Posted in Credit Cards, Discover Card, Se

Credit Unions

Evergreen Credit Union

Here’s a picture of the sign for Evergreen Credit Union in South Casco, Maine:

As you can see, they are promoting free checking and free bill payer.

Some Local (New England) Banking News

Salem Five has launched a new wireless banking service, so that you can access your account information from cell phones and handheld devices. While this sounds convenient, I believe they could offer more convenience by doing away with the added security on their online banking login screens, and simply using a username and password field.

As a former member of the South Shore Chamber of Commerce, the Telephone Worker’s Credit Union sent a letter to me stating that they have opened up membership to a wider group of people. While I find credit unions to be an important community builder, I don’t belong to any myself.

More Information:

Credit Cards

Whoa Home Depot

I can’t believe it! My Home Depot credit card interest rate jumped from around 11 last month to around 19 percent this month. What gives? I’ve sent them this message:

The interest rate on this account changed from approximately 11% to approximately 19%. Please change it back.

Their response:

Thank you for your request.

Since the terms on all of our accounts have changed, this is your new APR and can’t be changed back.

Sincerely,

Home Depot Credit Services.

That’s bad.

More Credit Reductions

Chase sent my business the dreaded credit line reduction letters this past week. Does anyone else find it bothersome that American taxpayers are lending these big banks money, only to have them hoard it, and refrain from lending it back to us? Why don’t we just keep the money ourselves?

I find it especially bothersome that these letters (including the one from American Express) are coming after $350 billion of the TARP funds have been released. And what adds insult to injury is that the banks are “rationalizing” their decision based upon credit reports saying that the amount of outstanding debt to available credit ratio is too high. Strange, that ratio for my business has only gotten better (much better, I might add) over the past year. I hate to second guess the rationale there, but I’d venture to guess that the real reason is that the banks themselves are still in terrible financial shape due to their own mismanagement.

Shouldn’t this type of action on the banks’ part have happened before they found themselves in dire straights? If so, does it mean that last year when they went begging to Congress they were only crying wolf, and are now seriously in rough shape? I hope not, I really hope not.

In the end, its these types of credit restrictions which cause more damage than good. It encourages people and banks to borrow more than they need, hoard cash, and not repay their debts when they can with excess capital. It further exacerbates the lack of cash flow and available credit. Dare I say there will be a prolonged financial ice age before there is any hope of a financial rebirth?

Is this nonsense happening to anyone else? Please share your stories, thanks!

Credit Card Regulations

As you may have heard, federal regulators have passed several new regulations concerning how credit cards are marketed and managed by credit card companies. To me, some of the changes seems pretty unimportant or not very different to existing practices, but one of them stuck out when I heard about this on the radio.

The one change that stuck out to me was how credit cards apply excess funds from payments to outstanding debt. Many credit card customers are surprised when they learn that payments made to their accounts are applied only to the lower balance debt first, regardless of when the various rate debts were acquired. There is no “first in, first out” rule when it comes to paying down credit card debt.

From what I understand, the new law will require credit card companies to apply payments to the highest interest rate first. While this is obviously a good thing for consumers, it seems a little heavy handed on the part of regulators. One alternative I heard about that seemed fair was to apply the payment proportionally to all outstanding debt.

No matter what the case, none of these changes will appear in our lives until mid 2010, which is still a ways away. The commentator on the radio I listened to said that Congress may step in before then to enact similar measures or to simply enforce these new rules sooner.

American Express in Trouble?

So after recently informing me that American Express is phasing out their line of credit, I learned today that American Express has also called my Simply Cash credit card in for “review”. This is very upsetting to me, and just another negative experience to add to the list of my relationship with American Express.

They also reduced the line of credit I have on a personal credit card with them, but that doesn’t bother me, as the balance I have on it carries a 3.9% APR for the life of the balance. I don’t plan on using it any time soon, since they would apply my payments to the lower APR first, while new charges rack up higher interest fees.

With the government pumping in well over one trillion dollars into the financial markets, and dropping rates to 0.25 percent, I’d figure that banks and credit card companies would be extending lines of credit, not closing and curtailing them. All this makes me wonder, is American Express in financial trouble? Maybe they weren’t able to tap into the TARP funds. I’m fairly certain they already owned a bank, and come to think of it, American Express recently applied and were approved to become a bank expressly for the purpose of gaining access to TARP funds. Go figure.

Its good to know I’m not the only one getting their credit lines cut:
Changing credit card terms squeeze consumers @ USA Today

Capital One Buying Chevy Chase Bank

Wow - this is news! Capital One is reportedly buying Chevy Chase Bank. Since I’ve moved to Bethesda, I see tons of Chevy Chase bank branches all the time these days.

But even before I moved here, I was familiar with the bank and the brand, and frankly I’m surprised that their board and shareholders are approving the sale. I have to imagine that the capital marketplace is really bad for this transaction to be beneficial to Chevy Chase Bank.

Capital One will likely get some great customers, lots of deposits, and access to a wealthy marketplace with this purchase. They’ve been buying up several retail banks over the past few years, and I expect that their acquisitions will continue, especially if they can get quality banks like Chevy Chase.

Bank Marketing

Wachovia’s Savings Program: Way2Save

I just saw a television commercial for Wachovia’s new savings program called “Way2Save”. Its similar to Bank of America’s “Keep the Change” program, but instead of the amount of of change required to “round-up”, Wachovia transfers a single dollar from the customer’s checking account into a high interest money market account.

I believe Bank of America filed a patent application for their program. I’m curious to learn if the licensed the concept to Wachovia, or if they will sue for infringement of intellectual property.

These concepts are a great use of technology in my humble opinion, and I expect to see more of this in the near and long term future.

Wainwright Bank

Wainwright Bank has been airing some radio commercials in our marketplace, promoting itself as an environmentally conscious bank. However, they stop short of explaining how they are more environmentally friendly than any other banks out there. Compared to other industries, I don’t think banks are very damaging to the environment in general, so I’m not sure how effective this campaign is going to be, but they did capture my attention.

Valley Green Bank

This is an interesting looking bank I found in Philadelphia, PA. It has a very modern look to it, don’t you think? Their website has a much better picture of it. Check it out so you can see the full effect:

ING Direct Launches “Electric Orange”

Thursday, May 17th, 2007

I just got an email from ING Direct - they are launching a new product called “Electric Orange” which offers higher interest for bigger deposits, and even a MasterCard debit card for making purchases.

Electric Orange delivers all the features of conventional checking plus the speed and convenience of electronic checking:

Apply for your Electric Orange
today and start earning 1% Cash Back.

• It pays high interest
• 4.00% APY on balances up to $50,000
• 5.25% APY on balances between $50,000 and $100,000
• 5.30% APY on balances of $100,000 or more
• A MasterCard® Debit Card for purchases
• Free ATM access at more than 32,000 locations nationwide
• Free Bill Pay
• Automatic overdraft protection

(Annual percentage yields apply to your entire balance=2E All listed rates are variable and effective as of 5/4/07)

That’s right, from June 1, 2007 to July 31, 2007, when you open Electric Orange and use your MasterCard® Debit Card to make signture-based purchases, you’ll get 1% Cash Back, up to $250 per month, on what you spend, anywhere.

I used to deposit my money into ING Direct for many years, but now I use PayPal. For more information, check out our page on ING versus PayPal.

Bank Fees

Whoa Home Depot

Wednesday, March 25th, 2009

I can’t believe it! My Home Depot credit card interest rate jumped from around 11 last month to around 19 percent this month. What gives? I’ve sent them this message:

The interest rate on this account changed from approximately 11% to approximately 19%. Please change it back.

Their response:

Thank you for your request.

Since the terms on all of our accounts have changed, this is your new APR and can’t be changed back.

Sincerely,

Home Depot Credit Services.

That’s bad.

Bank of America Overdraft Fees

Tuesday, December 11th, 2007

I just hit with two overdraft fees on my Bank of America checking account. How much? $35 each. That really hurts. I mean that really, really hurts.

Does anyone else feel that those fees are a little bit excessive?

UPDATE December 18, 2007: Bank of America sent out a notice informing me of the overdraft. Citizens Bank did the same thing in the past when I overdrew my account with them, but Bank of America has a return feedback form, as well as some “helpful hints” to try and avoid the overdraft occurring again.

My issue with the overdraft fee is that I feel it is excessive. $35 is a lot of money, and I believe they should only charge once per day. I used to have overdraft protection with a saving account, but if I recall correctly, they charge $10 for the transfer!

Bank of America Economy Business Checking Fee

I just logged into my Bank of America small business account to check my balances, and to my surprise I noticed a $25 monthly maintenance fee. I’ve never seen that before so I emailed customer service about it.

While I’m waiting to get a message back from customer service, I did a little reading of the fine print for the small business economy checking, and I found that there can be a fee for the business economy checking. It can be waived in a variety of ways:

$2,500 minimum daily balance

$7,500 average monthly balance

of if you have a Personal Advantage account with Bank of America. If you have any personal account with Bank of America, the fee is waived for two years. So maybe that’s why I’m now getting the fee, but still I’m confused - their website says the fee is only $13 if it isn’t waived.

UPDATE December 2, 2007: They sent this back to me:

Dear Valued Customer,

Thank you for your inquiry dated 12/1/07 regarding your Monthly Maintenance fee. We will be happy to assist you.

The Advantage relationship requires an average daily balance of $15000.00 or higher in one checking account, Regular Savings account, or Custom Savings account in order to waive the $25.00 monthly service charge. This monthly service charge may also be waived by maintaining a $20000.00 average daily balance in a checking account that is linked with a savings account, Money Market Savings account, or a CD or IRA
account.

We apologize for any inconvenience this may have caused. We value you as a customer and appreciate your business. If we may be of further assistance, please contact us again by e-mail. Thank you for choosing
Bank of America.

Sincerely,

Craig Gentry
Bank of America

But I don’t have an “Advantage relationship” - I only have the economy checking. What gives, this response makes very little sense to me.

UPDATE December 4, 2007: After several back and forth emails with Bank of America representatives, I never was able to figure out what a “Business Advantage Relationship” was. Every time I told them I had an economy account, they concurred, and said I had an advantage relationship. When I asked what that was, they told me what an advantage checking account was, resulting in a vicious cycle. I even searched online for what it was, but only found one site which referenced it, and it wasn’t a Bank of America page.

In the end, I canceled the advantage relationship, and had the fee refunded. Then the question was whether or not the CD I have with Bank of America would count towards my minimum daily balance to waive the fee for my economy checking account. I chatted with a Bank of America CSR through their website and was informed that the minimum balance is calculated by only the amounts in the checking account. Too bad. Its probably a good idea to have a minimum of $2500 in my checking account anyway, or $3000 for that matter. Then if it goes below that amount, I can transfer funds into it.

Bank Failures

Wamu Suing the FDIC

Now this is interesting! Who would have thought that a bank would sue the Federal Depository Insurance Company? It comes as a surprise to me, but apparently they are indeed.

Any they aren’t looking for small change, they are suing for billions of dollars.

I found out about this via a Portland Business Journal article, and I’m sure a story of this complexity will produce many more articles.

More Credit Reductions

Chase sent my business the dreaded credit line reduction letters this past week. Does anyone else find it bothersome that American taxpayers are lending these big banks money, only to have them hoard it, and refrain from lending it back to us? Why don’t we just keep the money ourselves?

I find it especially bothersome that these letters (including the one from American Express) are coming after $350 billion of the TARP funds have been released. And what adds insult to injury is that the banks are “rationalizing” their decision based upon credit reports saying that the amount of outstanding debt to available credit ratio is too high. Strange, that ratio for my business has only gotten better (much better, I might add) over the past year. I hate to second guess the rationale there, but I’d venture to guess that the real reason is that the banks themselves are still in terrible financial shape due to their own mismanagement.

Shouldn’t this type of action on the banks’ part have happened before they found themselves in dire straights? If so, does it mean that last year when they went begging to Congress they were only crying wolf, and are now seriously in rough shape? I hope not, I really hope not.

In the end, its these types of credit restrictions which cause more damage than good. It encourages people and banks to borrow more than they need, hoard cash, and not repay their debts when they can with excess capital. It further exacerbates the lack of cash flow and available credit. Dare I say there will be a prolonged financial ice age before there is any hope of a financial rebirth?

Is this nonsense happening to anyone else? Please share your stories, thanks!

First Georgia Community Bank Closed

First Georgia Community Bank was seized by the FDIC yesterday. Its a small bank, so not too many people will be affected. I believe that the bank’s assets will be quickly purchased, thus I doubt that any depositors will have any issue, or even delay in being able to access their funds. Their website says that all deposits have been transferred to United Bank in Zebulon, GA. Side note: Zebulon is a great name for a town, don’t you think?

According to the bank’s website, which is still active, the bank only has four locations, and originally opened in 1996. It is reportedly the twenty third bank failure this year.

Credit Rating Agencies

I’ve been listening to the Senate hearings about the financial market meltdown, and recently there has been a lot of talk about the credit rating agencies: Moody’s, Standard & Poors, among others. From what I’ve gathered, they were rating bonds which were secured by sub-prime mortgages as AAA, or investment grade. Since these bonds were rated so highly, those who sold them were able to pay lower interest rates to their purchasers.

As it turned out, the sub-prime mortgages were not very good quality assets, and they could indeed lose value - a lot of value. When they did lose value, not only did the bonds which were secured by the mortgages lose value, but as the credit rating went down, the interest rate upon which the bond issuer must pay went up.

Even without this knowledge, I had a feeling that the problems in the sub-prime mortgage marketplace would have far reaching implications. In learning about how these credit rating agencies essentially portrayed speculation as reliable investments, it makes sense that the housing bubble not only inflated house values, but also the value of the stock market in general.

I’m still learning a lot about this fiasco, how wide spread it is, what caused it, and what some potential solutions might be, and as I learn more, I’ll be posting my thoughts here on Informed Banking.

Bailout Busted

The $700 billion bailout was voted down. From what I’ve heard, there were some lame reasons for voting against it, like partisan bickering, as well as some good reasons, like outrage by the public and glaring oddities in the bill.

For example, I saw one report on the news that said a congressional office received over 100 calls in a short period of time, all of the calls expressing a strong opposition to the bill, and only one “I’ll think about it” expression. Another example, one congresswoman explained that the bill asked for $700 billion in capital to buy distressed mortgage assets, but also raised the Federal debt limit from $9 trillion to $11 trillion.

It certainly sounds like most average American citizens accept that the letting the economy fail will be bad for everyone, but they continue to accept responsibility for it. If the system is broken, filling it up with more money won’t fix it, they say.

I’m still not sure what to make of the situation. What do you think?

Automobile Loans

Auto Loans

My wife is looking to buy a new car, and so we’re shopping around for auto loans.

When I bought my 2006 Toyota Corolla, Toyota was having a promotion and I landed 2.9% financing. The same dealership is now offering 7%, no thanks.

USAA

We called USAA, and they said they could offer 5.99%, a little better.

FIA Card Services / Bank of America

FIA Card Services is really Bank of America, and they are offering 6.04% according to their website.

Capital One

Capital One also has 5.99% car loan rates on new cars.

Credit Cards

While there are no doubt better deals on credit cards, the available credit won’t be as high, and it will also have a negative impact on our credit score, so no thanks.

Promotional Car Loan Rates

We’re hoping to find a promotional auto loan rate within the next few weeks. If I find anything good, I’ll post it here!

UPDATE:

We ended up going through Toyota Motor Credit Company (TMCC) as they were able to provide a slightly better rate and a faster turnaround. My wife got her new Toyota RAV4 in less than two days!

ATMs

Getting the Best Exchange Rates

An impending trip the the UK has me re-investigating exchange rates. With the dollar falling all the time and being especially weak against the euro and pound, it is even more important to do research.

So, how do you get the best exchange rates? Well it seems in the past few years weighing your options has gotten more complicated.

Credit Cards- The credit card has been the way to go but the banks have decided to cash in on the popularity of that choice. Many credit cards now have a surcharge of 1-3% on your purchases and the fee is not separated from the purchase price, so it is difficult to spot after the fact. “it’s a good idea to contact your bank and credit card issuers a couple of weeks before an overseas trip.” recommends bankrate.com. “For example, American Express and Juniper Bank charge just 2 percent, and Capital One is especially traveler-friendly, with no additional surcharge, not even the 1 percent charged by MasterCard and Visa.” says David Kelly of the NY Times.

Also, many European and British retailers offer dynamic currency conversion, charging you in dollars rather than their currency. This waives the conversion surcharge on the US side but they often charge a percentage of your purchase for this service- if they offer it, ask what the added charge is, it might be more that what the US banks charge.

ATMs- When using your ATM bank card you might be subject to the conversion surcharge, a charge from your bank for using an ATM outside their brand as well as that bank’s ATM charge.

Cash- If you must exchange cash, stay away from the money exchange bureaus and hotels, as they have the worst rates and highest fees. Instead go for banks, post offices and American Express branches.

The bottom-line: do your homework. It seems that using your credit card is still the best bet, with the most competitive rates from inter-bank exchange. So call all your credit cards and figure out which one has the lowest surcharge and use that one for all your big purchases (hotel, car rentals, etc). Use your ATM infrequently and plan your withdrawals accordingly. For cash exchanges- go to banks and government post office. Bon voyage!

CRM in ATMs and MACs

Customer Relationship Management (CRM) is a blanket term for better coordinating the interactions between “systems” and customers and prospects. Still a little vague? I don’t blame you! Let’s consider the ATM (automated teller machine) and compare that to visiting a traditional bank teller at an actual bank branch.

Bank Branch Teller Transaction

You walk into a bank branch, and there is a person who says hello. You wait in line, and then your usual teller greets you by name. He or she is familiar with the type of transactions you do, so the process is efficient, pleasant and friendly. You leave with a better feeling about the bank and its brand in your subconscious.

ATM Transaction

You walk up to an ATM, insert your ATM card, and enter your PIN to identify and authorize yourself. Even though the “system” now knows who you are, the ATM asks you if you speak English or another foreign language. This step alone takes 5 seconds, and is uneccessary. The next menu presents you with options that you are unfamiliar with, and have no need for because, for example, you don’t have a line of credit or mortgage to make a payment on. This makes choosing the desired option a little more difficult. The system then asks you if you would like a receipt for the transaction. You press no, because you don’t want to waste the paper, and you always say no. You walk away feeling a little annoyed when being asked such obvious questions, the answer to which should already be known.

Those are just a generalized scenarios, there are many better and worse examples of both situations. Customer service representatives can be rude or make mistakes, and ATMs can be very convenient in a pinch. However, it continues to surprise me that an ATM can’t remember what language I speak. Its great that ATMs can support multiple languages, but wouldn’t it be better to be able to save your preferences?

Supposedly Wincor-Nixdorf is coming out with ATMs that have CRM software built-in. I’ll believe it when I see it, and have to ask: “What took you so long?”

Alabama National Bank

Royal Bank of Canada is buying Alabama National

Thursday, September 6th, 2007

The Canadian Invasion continues! The Royal Bank of Canada is buying Alabama National, which over 100 branches throughout several states in the United States, including Florida, Georgia, and Alabama.

Toronto Dominion is another large Canadian financial company that has purchased banks in the United States. They bought Banknorth, and changed its name to “TD Banknorth”, and even bought naming rights to the “Fleet Center” when Fleet Bank was purchased by Bank of America, returning the “Garden” back into its name - TD Banknorth Garden, as it used to be name “Boston Garden”.

Many banks which operate in the United States are owned by large banks in other countries. For example, Citizens Bank in the northeast is owned by the Royal Bank of Scotland, and Bank of the West is owned by BNP Paribas, headquartered in France.

AIG

$700 Billion Bailout?

This weekend has been chock full of news reports discussing the government’s new plan to provide $700 billion to buy the bad debt of banks.

I’m not sure about you, but I am having a hard time understanding how United States taxpayers will be available to pay for this bailout. I mean, what type of revenue is generated by taxpayers?

Add that to the expenses of the war in Iraq, and its obvious how broke the government is. At least the $85 billion bridge loan to AIG is backed by 80% of the company, as well as has an approximately 11% interest rate. Beyond that, I’m annoyed that AIG can get that type of rate from Uncle Sam, but I cannot.

It must be going to get worse. Maybe the Fed decided not to lower rates at their recent meeting so that they can lower them later when everyone is hurting even more.

Advanta

Advanta Bank Corp. Corporate Money Market Account

I’ve written about the few options corporations have for decent interest rates in savings accounts and money market accounts. The two main choices are PayPal and Advanta Bank Corp.. I finally signed up for an Advanta Bank Corp. account!

To comply with the USA Patriot Act, they require a bit of paperwork (much more than PayPal). Once I was done with that, they sent me some checks as well as my first account statement and some deposit slips. I tried to sign up for online banking, but to my surprise and disappointment, they don’t offer online banking to corporations! I did speak with Richard who informed me that online banking for corporations is something they are working on.

In the meantime, I’ll be able to mail deposits, write checks, and initiate transfers via PayPal. That isn’t a bad setup but I definitely would have preferred access to online banking.

ABN Amro

Bank of America Buys LaSalle Bank

Bank of America snapped up LaSalle Bank last weekend, April 23rd, 2007, in a surprise bid of $21B. I felt that the Royal Bank of Scotland would be targeting ABN Amro’s US branches for acquisition, competing with Barclay’s in their pursuit, and I believed that the Royal Bank of Scotland would end up the victor and new owner of LaSalle Bank.

I based my belief on the premise that the European banking regulators would view the experience that the Royal Bank of Scotland has had owning a bank based in the United States, namely Citizens Bank of Rhode Island, as a positive factor. Not only has Citizens Bank been a successful operation, it has also grown quite effectively through numerous acquisitions throughout New England and the mid-Atlantic states.

The acquisition gives Bank of America a strong presence in Chicago, Illinois, competing with Harris Bank (owned by the Bank of Montreal) and Chase Bank.

UPDATE: But wait - the deal isn’t done yet. A European court apparently blocked the sale today to let shareholders of Barclay’s and ABN AMRO approve the sale. Bank of America is reportedly saying they have a legally binding agreement, and the Royal Bank of Scotland’s approximate $98 Billion offer is likely still on the table.

Citigroup Buying ABN AMRO’s Mortgage Unit

Seems like Monday’s always have a lot of news about bank mergers and acquisitions. Today’s reports indicate that Citigroup is buying ABN AMRO’s mortgage unit, which doesn’t seem out of the ordinary, considering the recent changes in the housing marketplace in the US. On top of those changes are the lingering effects of the hurricanes in the gulf region, where ABN AMRO’s La Salle Bank does business. One might think that the rebuilding process will benefit banks in the area, unlike insurance companies who have to fit the bill.

Also reporting for Citigroup, Bloomberg has stated that Sallie Krawcheck will be switching roles from CFO to the wealth management department. They also mention that Krawcheck is a potential candidate for CEO in the future.

Hopefully Citigroup will be able to carry on successfully after Sandy Weill.

Foreign Banks in China

China has approved plans for 9 foreign banks to incorporate on the mainland, including:

• Citigroup
• HSBC
• Standard Chartered Bank
• Bank of East Asia
• Hang Seng Bank
• Mizuho Corporate Bank
• DBS Bank
• Bank of Tokyo
• ABN Amro Bank

Good stuff! My guess is that this will have a positive impact on the Chinese economy, and the rest of the world, too. This change was brought about thanks to the World Trade Organization (WTO).

Yay! Fed Cuts Rate

Finally, the Federal Reserve Bank dropped their primary lending rate from 2% to 1.5%. Its a significant drop, and has been described as an “emergency” measure.

Around the time the $700 billion bailout was introduced, I suggested that the Fed held off on lowering rates to that they could later have more options if they needed them. Whether or not I was right, I’m sure the Fed is thankful that they still have some room to drop the rate.

The danger here is inflation, and while that is a serious problem to watch, a recession is a serious problem too. And worse, market stagnation can cause some serious loss of value in a short period of time, as we’re seeing the stock market plummet day after day.

The party is over folks, time to get back to real work.

Banco Santander Buying Sovereign

Another acquisition, but this time its by a foreign bank. Banco Santander of Spain already owns a significant potion of Sovereign Bank, and they will now own it all.

Sovereign went on a large expansion track several years ago, and in my humble opinion weathered the storm quite well considering that they almost overextended themselves. The investment by Santander a few years ago was helpful, and I’m sure many an employee and customer of Sovereign are glad to learn the news. Its hard to say though, some employees may fear getting laid off.

What’s a Derivative?

Many people are blaming the explosive, unregulated derivatives market as one of the main causes to the current credit freeze. So I’m sure many Americans, including me, are wondering: “What’s a derivative?”

When I think of the term derivative, I think of mathematics. I believe that security derivatives do have something to do with math, but in reality, according to Wikipedia’s page on derivatives, a financial derivative is an agreement - a right to buy or sell a security (i.e. stock, asset, or debt) at a certain price. Even though derivatives aren’t “real” investments themselves, they are definitely traded.

That still doesn’t make much sense to me, but from what I understand the purpose of a derivative is to lower risk for one of the parties involved in the agreement and / or potential transaction. But the risk is still there, right? And if I understand correctly, the risk of the actual security holder is compounded through the use of derivatives. Maybe not, but I’m fairly certain that the original risk of the security is not diluted.

Anyone more familiar with derivatives care to chime in here and shed some light on the matter?

Credit Rating Agencies

I’ve been listening to the Senate hearings about the financial market meltdown, and recently there has been a lot of talk about the credit rating agencies: Moody’s, Standard & Poors, among others. From what I’ve gathered, they were rating bonds which were secured by sub-prime mortgages as AAA, or investment grade. Since these bonds were rated so highly, those who sold them were able to pay lower interest rates to their purchasers.

As it turned out, the sub-prime mortgages were not very good quality assets, and they could indeed lose value - a lot of value. When they did lose value, not only did the bonds which were secured by the mortgages lose value, but as the credit rating went down, the interest rate upon which the bond issuer must pay went up.

Even without this knowledge, I had a feeling that the problems in the sub-prime mortgage marketplace would have far reaching implications. In learning about how these credit rating agencies essentially portrayed speculation as reliable investments, it makes sense that the housing bubble not only inflated house values, but also the value of the stock market in general.

I’m still learning a lot about this fiasco, how wide spread it is, what caused it, and what some potential solutions might be, and as I learn more, I’ll be posting my thoughts here on Informed Banking.

Fed Rate @ 1%

The Federal Reserve Bank lowered their primary interest rate another half percent to one percent. This makes it generally less expensive for banks, businesses, and people to borrow money. There is a lot of existing debt, including credit card debt, out there which is directly tied to this number, so over the past month, interest rate payments on those debts have lowered by one percent as well.

I have two loans from the Small Business Administration which are tied to this rate, so I will see a tiny bit of relief, thankfully. The danger here is that the low rate will cause inflation, and given how much money is currently being injected into the economy at the moment, I’d say that’s an important risk. I’ve heard on the radio that the treasury isn’t actually releasing any more “dollars” out into the economy, which should help offset any risks of inflation.

Ridiculous Whining at Citigroup, Bank of America

It's going to be interesting to see how quickly Congress and the administration caves in to banks and Wall Street after expressing so much indignation about bonuses over the last week.

Here is the backdrop.

Senator Chuck Grassley said AIG "Sucking The Tit Of The Taxpayer". President Obama said "It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165m in extra pay" Obama pressed Treasury Secretary Timothy Geithner to "pursue every single legal avenue" to block the bonuses.
House Passes 90% Tax On Bonuses

The indignation was round one. For additional discussion of round one, please see Bonus Bonanza Bingo, a Blessing In Disguise.

In round two Bonus Tax Heads to Senate After House Passes 90% Levy.

Twitter and the Customer Experience at Bank of America

What’s the typical career choice for a Poly Sci/French major-the U.N.? The U.S. State Department? Well, for me it was banking. Not the typical choice, but one that has proven to be extremely rewarding for me over the last 14 years. I’ve had the opportunity to learn everything from operations, marketing, project management, and now creating the customer experience.

During my time in banking, I’ve learned that most importantly customers want to trust us. Customers have given us the responsibility to help manage their finances, and they expect us to get it right, every time. So whether it’s getting an address updated, a check card issued or understanding why a fee was posted to the account, we have a team of service professionals that want to get it right for our customers. However, in those instances where we don’t meet their expectations, we want to understand what went wrong and more importantly, fix it.

With the advent of social networking sites and blogs, companies have the opportunity to listen and learn from their consumers in ways that were not possible before. Companies can gain powerful knowledge on everything from product enhancements, customer service interactions and unresolved problems–but only if they listen. Social networking sites like Twitter enable that listening in real time. According to Matt Dickman, VP of Digital Marketing at Fleishman-Hillard, “Twitter is the ultimate customer service tool. It’s live, instantaneous, community driven, open, two-way and multi-way, unfiltered and predictive. “

As of last week, we are now listening AND responding to customers on Twitter. You can find us at BofA_help.

So we are entering a new territory. A place that is not familiar to many in financial services-but a place with tremendous opportunity. I look forward to the journey ahead knowing that for each and every tweet we engage in, we are looking to maintain and grow the trust you have in Bank of America.