Banking http://www.wisebread.com/taxonomy/term/800/all en-US Online Savings Account Face-Off: Ally Bank vs Capital One 360 http://www.wisebread.com/online-savings-account-face-off-ally-bank-vs-capital-one-360 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/online-savings-account-face-off-ally-bank-vs-capital-one-360" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-133898315.jpg" alt="piggy banks" title="piggy banks" class="imagecache imagecache-250w" width="250" height="206" /></a> </div> </div> </div> <p>Most personal finance experts &mdash; including Dave Ramsey, Ramit Sethi, and Suze Orman &mdash; talk about the importance of saving money. Whether it's for an emergency fund in case you lose your job, or you're saving for a specific purchase so that you don't get into debt &mdash; a savings account will definitely keep you out of trouble.</p> <p>But with the myriad banks that exist today, it can be a daunting task to find one that has a savings account that meets your needs.</p> <p>Luckily, you don't have to compare the features offered from every single bank. Two of the most well-known banks today are <a href="http://www.wisebread.com/redir/10839262" target="_blank" rel="nofollow" onClick="_gaq.push(['_trackEvent', 'afclick', 'contenttext', 'bank_ally']);">Ally Bank</a> and <a href="http://www.wisebread.com/redir/10839261" target="_blank" rel="nofollow" onClick="_gaq.push(['_trackEvent', 'afclick', 'contenttext', 'bank_capone360']);">Capital One 360</a>. So I'm going to weigh the pros and cons of each of their savings accounts.</p> <h2>Interest Rate</h2> <p>Ally Bank's rate is currently 0.86 percent. Capital One 360's rate is currently <script src="https://home.capitalone360.com/js/accounttype.js"></script><script>document.write(type_3000_apy);</script> percent. Since both of these rates are so low right now, it doesn't make a huge difference in making your money grow.</p> <p><strong>Winner:</strong> Ally Bank</p> <h2>Compounding Frequency</h2> <p>This refers to how often your money grows and earns interest. The interest you earn is reinvested in your account, which gives you even more interest in the future. In other words, you earn interest on your interest.</p> <p>So the more often your interest compounds, the more money you'll make.</p> <p>With Ally Bank, your interest is compounded every day. With Capital One 360, your interest is compounded on a monthly basis.</p> <p><strong>Winner:</strong> Ally Bank</p> <h2>Bonus Sign-up Offers</h2> <p>Sometimes, banks will offer you a bonus to entice you to open up for an account. At this time, Capital One 360 is offering a $25 bonus &mdash; if you open an account with at least $250 (through an invitation from a current customer, or via <a href="https://home.capitalone360.com/referafriend">Capital One 360's referral signup page</a>).</p> <p>That works out to an immediate 10% return on your money. Ally Bank doesn't offer a bonus at this time.</p> <p><strong>Winner:</strong> Capital One 360</p> <h2>Sub-Savings Accounts</h2> <p>Saving for the specific things you want &mdash; such as a vacation to Hawaii, Christmas gifts, or a new outfit &mdash; will help you stay focused on your goals. Having sub-savings accounts at the same bank lets you do this easily.</p> <p>Both banks allow you to open sub-savings accounts, and even name them after the things you're saving for.</p> <p><strong>Winner:</strong> Tie</p> <h2>Fees</h2> <p>Nowadays, there's no need to open an account with a bank that charges fees just to hold and use your money. Luckily, both banks come with zero monthly maintenance fees, and no minimum balance requirements.</p> <p><strong>Winner:</strong> Tie</p> <h2>Depositing Checks</h2> <p>Since both bank accounts are online accounts, do you wonder what you'd do if you received a paper check? How would you deposit it?</p> <p>Well, the good news is that both banks allow you to conveniently deposit a check from anywhere, using either a smartphone app, or by scanning it through your computer.</p> <p>What if you prefer mailing your checks instead? Both banks will also let you mail your checks for deposit. But Ally Bank provides postage-paid envelopes, so that you can mail them for free.</p> <p><strong>Winner:</strong> Ally Bank</p> <h2>Accessing Your Money After You're Gone</h2> <p>Lastly, if you're going to open an account, you'll want to be sure that your loved ones are able to get to your money easily if anything happens to you.</p> <p>Payable on Death accounts let you do this without any hassle. Ally Bank offers this benefit with their accounts, but Capital One 360 doesn't.</p> <p><strong>Winner:</strong> Ally Bank</p> <h2>My Thoughts and Recommendation</h2> <p>The thing I like best about <a href="http://www.wisebread.com/redir/10839261" target="_blank" rel="nofollow" onClick="_gaq.push(['_trackEvent', 'afclick', 'contenttext', 'bank_capone360']);">Capital One 360's account</a> is the sign-up bonus. And the thing I really love about <a href="http://www.wisebread.com/redir/10839262" target="_blank" rel="nofollow" onClick="_gaq.push(['_trackEvent', 'afclick', 'contenttext', 'bank_ally']);">Ally Bank's account</a> is the Payable on Death feature.</p> <p>But honestly? You can't go wrong with either.</p> <p><em>Which online savings account do you like best?</em></p> <p><strong><a href="http://www.wisebread.com/redir/10839261" target="_blank" rel="nofollow" onClick="_gaq.push(['_trackEvent', 'afclick', 'applytext', 'bank_capone360']);">Click here to apply at Capital One 360</a></strong></p><a href="http://www.wisebread.com/online-savings-account-face-off-ally-bank-vs-capital-one-360" class="sharethis-link" title="Online Savings Account Face-Off: Ally Bank vs Capital One 360" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/darren-wu">Darren Wu</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking ally bank bank reviews capital one 360 savings accounts Wed, 13 Nov 2013 09:48:04 +0000 Darren Wu 1083926 at http://www.wisebread.com 5 Things Your Teen Needs (or Doesn’t Need) in a Bank Account http://www.wisebread.com/5-things-your-teen-needs-or-doesn-t-need-in-a-bank-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-things-your-teen-needs-or-doesn-t-need-in-a-bank-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/teen-5247562-small.jpg" alt="teen" title="teen" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Teens taught to save from an early age may gain an advantage over kids with no parental direction concerning finances. How you handle your money matters will have a <a href="http://www.kiplinger.com/article/saving/T065-C000-S001-teach-kids-the-value-of-money.html">strong impact on your child's view of money</a> and the values they hold into adulthood. While many people across the county are still struggling to put away cash from each paycheck they receive, teens that learn healthy financial habits will likely struggle less with their money management. (See also: <a href="http://www.wisebread.com/the-first-payday-helping-your-teen-understand-money">Helping Your Teen Understand Money</a>)</p> <p>In addition to prioritizing savings, teens also should start learning the basic fundamentals of personal money management such as being responsible for balancing their checkbook and paying any financial responsibilities on time. As a teen's financial responsibilities increase, they will need to establish a savings account and a checking account. (See also: <a href="http://www.wisebread.com/5-best-prepaid-debit-cards">Top 5 Prepaid Debit Cards</a>)</p> <p>Here are 5 things every teen needs in a bank account.</p> <h2>1. Money, Money, and More Money</h2> <p>Opening a bank account with or for your teen isn't enough to teach a savings lesson. Parents would be wise to sit down with their child and talk about the benefits of savings and the best methods for hanging on to their cash.</p> <p>Ideally, establishing a <em>must-follow</em> rule of savings, such as 10% of all money they earn or receive, will help a teen get into the habit of heading to the bank first rather than the mall. The savings account should never be touched for any purpose so it can be allowed to grow and earn interest for long-term financial stability. Checking accounts will need to have sufficient amounts of cash for checks written. (See also: <a href="http://www.wisebread.com/10-tips-from-a-financially-savvy-teen">Advice From a Financially Savvy Teen</a>)</p> <h2>2. More Benefits Than Fees</h2> <p>Banks have been <a href="http://www.consumersdigest.com/special-reports/license-to-steal">capitalizing on the many fees</a> they are creating to keep making huge profits. When it comes to a new account for teens, it is best to shop around at different banks rather than just head to your preferred branch. Your teen should have a bank account that doesn&rsquo;t charge a ton of excessive fees for administration or transactions. Be sure to review the associated fees with your teenager.</p> <h2>3. Avoid Flashy Incentives</h2> <p>There is still a lot of competition in the banking industry, so it is important for teens to understand what makes an account suitable for them. Banks often offer incentives that seem great on the surface but could leave the customer dissatisfied with the other account terms. Teach your teen to look past the <a href="http://www.cnbc.com/id/100774142">free stuff and focus on the bank's conditions</a>, fees, and limitations. They should find a bank that offers low-cost or free accounts that do not limit transactions including at the ATM and through checking accounts.Take time to read the fine print with your teenager and if you don't understand the terms, visit with the bank's manager for an explanation.</p> <h2>4. Accessible Banking</h2> <p>There is a good mix of brick and mortar banks and online banks offering great deals on bank accounts. However, some online banks or smaller institutions are not as accessible as a teen needs them to be. If they plan to use an ATM card for withdrawals or need to make cash deposits, they will need to be able to access a bank in person. Consider the accessibility of both the bank and its ATM locations when helping teens make a decision. If you anticipate in-person visits to the bank to cash or deposit checks, an online bank may not make as much sense as opting for a bank with a local branch.</p> <h2>5. Seek Out Banks With Educational Resources</h2> <p>Since your teen is just entering the world of personal finance, finding a bank that also offers free resources for financial education is a wise move. Many of the major banks offer online tools and guides for learning the basics of money. As parents can find it difficult to get lessons across to their kids, online tutorials can help close the gap in learning. Phone apps and other technologies offered by banks can be a very effective teaching tool for today's teens. (See also: <a href="http://www.wisebread.com/the-best-money-tools-and-toys-for-every-age-group">Money Tools and Toys for Every Age Group</a>)</p> <ul> <li>Wells Fargo offers <a href="https://www.wellsfargo.com/checking/teen/">Teen Checking (SM)</a> that include parents in alert messages and account management.<br /> &nbsp;</li> <li>Bank of America offers a lot of free information on their <a href="https://www.bankofamerica.com/student-banking/solutions-for-students.go">Student Bank Accounts and Solutions</a> page.<br /> &nbsp;</li> <li>Chase also offers a <a href="https://www.chase.com/checking/student-checking">High School Checking Accounts</a> program for teens to help them manage their money.</li> </ul> <p><em>Have you set up a savings or checking account for your teen (or younger child)? Has it been educational?</em></p> <a href="http://www.wisebread.com/5-things-your-teen-needs-or-doesn-t-need-in-a-bank-account" class="sharethis-link" title="5 Things Your Teen Needs (or Doesn’t Need) in a Bank Account" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/tisha-tolar">Tisha Tolar</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking banks checking accounts savings accounts teen saving Wed, 18 Sep 2013 09:36:07 +0000 Tisha Tolar 986755 at http://www.wisebread.com Why You Should Consider an Adjustable-Rate Mortgage http://www.wisebread.com/why-you-should-consider-an-adjustable-rate-mortgage <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-you-should-consider-an-adjustable-rate-mortgage" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/house-cash-1222803-small.jpg" alt="house" title="house" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Adjustable-rate mortgages, or ARMs, may <a href="http://www.bloomberg.com/news/2013-07-24/americans-gambling-on-rates-with-most-arms-since-2008.html">be coming back into style</a>.</p> <p>If interest rates rise as they are expected to, ARMs, also sometimes called variable-rate or floating-rate mortgages, may become more popular among both <a href="http://www.wisebread.com/fixed-or-adjustable-choosing-the-right-mortgage-loan">homebuyers and homeowners who missed fixed-rates</a> at their record low. ARMs received a bad rap in recent years, since many home loans that defaulted in the housing crash were ARMs. However, many of those loans were subprime mortgages given to borrowers with poor credit, little home equity, and questionable incomes, while today's lending standards are much stricter. (See also: <a href="http://www.wisebread.com/7-financial-must-haves-for-the-first-time-home-buyer">7 Financial Must Haves for the First-Time Home Buyer</a>)</p> <p>Maybe ARMs deserve a second chance.</p> <h2>&quot;Arm&quot; Yourself With Financial Basics</h2> <p>First, some ARM basics. The interest rates of ARMs change periodically usually based on an index, such as the Prime Rate or a Treasury bond rate. That means your monthly payment may go up or down. Is that risky? Yes. But the trade-off is the introductory low rate that can help you qualify for a home loan and move into the home you want.</p> <p>Most ARMs today are technically &quot;hybrid ARMS.&quot; They entail an introductory period with a low fixed rate, typically between two and seven years. After that initial period, the rate adjusts periodically based on its index.</p> <p>Common hybrid ARMs are the 3/1, 5/1, or 7/1. The first number indicates how long, in years, the initial fixed rate lasts. The second shows how often the interest rate changes. When the loan adjusts &mdash; usually upward &mdash; after the initial period, it is said to be fully indexed.</p> <p>ARMs offer lower interest rates and smaller monthly payments over the near term and the risk of higher rates in the future. Generally speaking, the shorter the initial fixed-rate term, the lower its rate.</p> <h2>Important Terms to Know</h2> <p>Before we look at seven reasons to choose an ARM, let's look at a few key terms.</p> <p><strong>Index</strong></p> <p>The index is a benchmark measure for rates in general. Lenders have used the one-year constant-maturity Treasury (CMT) securities, the Cost of Funds Index (COFI), and the London Interbank Offered Rate (LIBOR).</p> <p><strong>Margin</strong></p> <p>The margin is added to the index to determine your mortgage rate. It depends on the lender, but it usually stays the same. For instance, if the index was 3% and your margin 1%, your rate would be 4%.</p> <p><strong>Cap</strong></p> <p>The cap is how much the rate can increase when it adjusts.</p> <p><strong>Lifetime Cap</strong></p> <p>The lifetime cap is how much the rate can increase over the life of the loan. Look at this to consider the worse-case scenario. A common rate cap for a 5/1 ARM is 2/2/6, which means it could increase up to 2% in the first adjustment, up to 2% in following adjustments, and up to 6% over the life the loan.</p> <p><strong>Payment Shock</strong></p> <p>Payment shock is what happens when your mortgage payment jumps when the rate is adjusted. Before signing the loan documents, run through the numbers by talking to a loan officer or using an online calculator at <a href="http://www.bankrate.com/calculators/mortgages/adjustable-rate-mortgage-arm-calculator.aspx">BankRate</a> or <a href="http://www.zillow.com/mortgage/calculator/Adjustable-rate-mortgage-calculator.htm">Zillow</a> to get an idea of how rate increases will impact your monthly payment.</p> <h2>7 Reasons Homeowners Might Choose an ARM</h2> <p>Despite the negative press, an ARM might be the right choice for many homeowners.&nbsp;Consider these seven reasons why.</p> <p><strong>1. You Expect to Earn More</strong></p> <p>If the loan resets into a higher rate, you'll be able to easily afford the larger monthly payment with your increased earnings.</p> <p><strong>2. You Expect to Sell Before the Rate Increases</strong></p> <p>Perhaps you expect a job relocation or plan to renovate the home and sell it for a higher price. While you're living in the home, you can take advantage of the lower ARM rate without worrying about where rates will head in a few years.</p> <p><strong>3. Your Family is Growing</strong></p> <p>Your family will grow within a few years, so you will <a href="http://www.wisebread.com/how-big-of-a-house-do-you-really-need">move into a larger home</a> anyway.</p> <p><strong>4. You have Poor Credit, but You Are Fixing It</strong></p> <p>If you repair your credit in a year or two, you can refinance into a new mortgage and qualify for a lower rate.</p> <p><strong>5. You Expect Home Prices to Rise Out of Reach</strong></p> <p>You want to grab the home of your dreams before the price is out of reach but can't qualify for a fixed-rate loan.</p> <p><strong>6. You Have a Crystal Ball</strong></p> <p>You've peered into the future and you know that interest rates will drop or remain low when your loan adjusts.</p> <p><strong>7. You Expect a Windfall</strong></p> <p>Your intention is to pay off the loan early because you have an inheritance coming or a plan to <a href="http://www.wisebread.com/if-you-won-the-lottery-you-would">win the lotto</a>.</p> <p>Of course, those last two aren't prudent financial decisions. Nevertheless, if rising rates do make your payment unbearable, and it turns out that you don't win the corner office, and your scheme to win the lotto doesn't work out, you can always refinance into another loan as long as home values don't crash. And that's not likely to happen, is it?</p> <p><em>Have you considered an ARM? Would you ever consider an ARM after the housing bust?</em></p> <a href="http://www.wisebread.com/why-you-should-consider-an-adjustable-rate-mortgage" class="sharethis-link" title="Why You Should Consider an Adjustable-Rate Mortgage" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/michael-kling">Michael Kling</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking Real Estate and Housing adjustable-rate mortgages home loans interest rates mortgages Thu, 15 Aug 2013 10:24:30 +0000 Michael Kling 980813 at http://www.wisebread.com Discover Bank Review: You Know the Card, but What About the Bank? http://www.wisebread.com/discover-bank-review-you-know-the-card-but-what-about-the-bank <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/discover-bank-review-you-know-the-card-but-what-about-the-bank" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-4063970-small.jpg" alt="piggy bank" title="piggy bank" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>When many of us think of Discover, we think of credit cards (including the new <a href="http://www.wisebread.com/the-discover-it-card-attractive-cash-back-awards-for-shoppers">Discover it card</a>). However, Discover offers standard banking services as well as credit cards. In fact, Discover Bank features competitive yields on savings products and some loan products.</p> <p>Discover markets is its savings account as &quot;over 5X the National Savings Average,&quot; although the yields aren't the highest available. But they are high enough to justify considering an account with <a onClick="_gaq.push(['_trackEvent', 'afclick', 'contenttext', 'bank_discover']);" rel="nofollow" target="_blank" href="http://www.wisebread.com/redir/9809831">Discover Bank</a>.</p> <h2>A Little History Behind Discover Bank</h2> <p>The Discover card was launched in 1986, but the bank is a more recent invention. The company likes to push that fact that the Brand Keys Customer Loyalty Engagement Index has ranked Discover (the card) #1 in customer loyalty for 17 years in a row.</p> <p>Discover Bank cropped up during the boom in online banking that occurred a few years ago. The online aspect provides Discover with the ability to offer savings products to consumers, in addition to credit cards.</p> <p>For the first quarter of 2013, Bankrate gave Discover Bank its 5-Star Safe &amp; Sound rating. Even though Discover Bank is FDIC-insured, many consumers still like to see that their bank has good health.</p> <h2>Features and Benefits of Discover Bank</h2> <p>As you might expect, Discover offers credit cards, including the Discover it card, a version of the Discover it for students, and business credit card options. All of these credit cards are considered reasonably competitive and offer access to Discover's cash back program. In addition to the well-known credit card offerings, Discover Bank offers a range of savings products, as well as three loan products.</p> <p><strong>Online Savings</strong></p> <p>As of December 2013, Discover Bank offers 0.85% APY on its online savings account. This is high enough to remain competitive and be a top tier offering, but it's not the highest yield you'll find out there. There is no minimum balance requirement and no monthly fee. However, you do need $500 to open an online savings account.</p> <p><strong>Money Market Account</strong></p> <p>Discover Bank also offers a money market account. As of this writing, the APY on a money market account is 0.70% on deposits of between $2,500 and $99,999. Balances of over $100,000 pay a yield of 0.80%. You need $2,500 to open a money market account, and there is a $10 fee for months in which your average daily balance dips below $2,500. You can access funds via check, debit card, or online. However, this is still considered a savings account, so you are limited to six withdrawals a month.</p> <p><strong>CDs</strong></p> <p>Discover Bank offers competitive CD rates, with a one-year CD at 0.95% as of this writing. If you are willing to lock up the money for a longer period of time, the rates are above 1%. You need a minimum of $2,500 to open a CD account. There are also renewal options that make it easy <a href="http://www.wisebread.com/the-basics-of-cd-laddering">to build CD ladders</a> and renew your CD when the term is up.</p> <p><strong>Retirement</strong></p> <p>You can include your retirement planning with Discover Bank. Discover Bank can help you rollover your 401(k) to an IRA, or to transfer your IRA. You can also include CDs in an IRA, and Discover Bank can help you do that, too. Although Discover Bank touts its IRA CD, the reality is that the virtually the same APYs are offered, and you don't get any truly special perks; you just hold the CD account in an IRA.</p> <p><strong>Loan Products</strong></p> <p>You can choose from three different types of loans with Discover Bank:</p> <ol> <li>Mortgages</li> <li>Student Loans</li> <li>Personal Loans</li> </ol> <p>Discover Bank touts its personal loan as one that can be used to consolidate debt as well as to finance larger purchases. There are also a variety of student loans to choose from, including those intended for graduate students as well as undergraduate students. It's even possible to get a bar exam loan designed to help law students pay for prep and the cost of the exam.</p> <p><strong>Mobile Banking</strong></p> <p>Discover Bank offers a mobile banking app that makes it easy to access your account from anywhere. You can manage your account from your mobile app, including taking a look at how much interest each account has earned. The mobile banking app from Discover also includes remote deposit. This is a convenient feature that many banks are adopting. It's also possible for you to schedule your bill payments using this app. There is a handy ATM locator that can help you access your money in the &quot;real world&quot; &mdash; no matter where you are.</p> <p>It's also worth noting that Discover is compatible with Google Wallet, so you can add your credit card information to your digital wallet without too much trouble.</p> <h2>Educational Resources and Customer Service</h2> <p>You will find a number of educational resources on the <a onClick="_gaq.push(['_trackEvent', 'afclick', 'contenttext', 'bank_discover']);" rel="nofollow" target="_blank" href="http://www.wisebread.com/redir/9809831">Discover Bank website</a>. There is a retirement planning center, as well as a number of helpful articles on financial management. You can also find an extensive help center that features FAQs related to various products and services. You can find contact information as well, including online contact, phone contact, and even snail mail contact information. Discover claims that it offers 24/7 assistance, so you can call anytime.</p> <h2>ShopDiscover</h2> <p>Discover offers its own shopping portal, which you can access from the Discover Bank website. If you have a credit card, you can get &quot;super-charged&quot; cash back at more than 200 retailers. For frequent shoppers, this can be a way to build up cash back even faster.</p> <h2>Bottom Line</h2> <p>Discover Bank isn't particularly outstanding when it comes to online banking, but it is a solid choice. On savings products, you receive yields that are considered top tier. You can also get access to a different loan products that provide you with a range of options.</p> <p>Hard-core rate chasers will probably find Discover Bank a bit tame. However, if you are looking for a reliable online bank with easy-to-use features and a mobile app, Discover Bank is a reasonably good choice.</p> <p><strong><a onClick="_gaq.push(['_trackEvent', 'afclick', 'applytext', 'bank_discover']);" rel="nofollow" target="_blank" href="http://www.wisebread.com/redir/9809831">Click here to apply now</a></strong></p> <a href="http://www.wisebread.com/discover-bank-review-you-know-the-card-but-what-about-the-bank" class="sharethis-link" title="Discover Bank Review: You Know the Card, but What About the Bank?" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking banking CD credit cards IRA online bank savings accounts Fri, 02 Aug 2013 10:36:38 +0000 Miranda Marquit 980983 at http://www.wisebread.com Would You Dance to Avoid a Fee? http://www.wisebread.com/would-you-dance-to-avoid-a-fee <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/would-you-dance-to-avoid-a-fee" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/dance-4390690-small.jpg" alt="dance" title="dance" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p><iframe width="604" height="340" frameborder="0" src="//www.youtube.com/embed/OeusaqJYqqM?list=PL33712C953961F6BB" allowfullscreen=""></iframe></p> <p>That's the question Fidelity asked...sort of. More specifically, they asked ATM users &mdash; while they were at the ATM &mdash; if they'd rather pay a fee or dance to get their cash. The video below shows those who danced. I don't know if these are real ATM users or if the video was casted (I always assume these things are casted, but hey, I can be kind of a cynic). Either way, it's fun to watch people bust out some sweet dance moves on the street &mdash; and it's always good to avoid an ATM fee.</p> <p>Video Link: <a href="http://www.youtube.com/watch?v=OeusaqJYqqM&amp;list=PL33712C953961F6BB">Would You Dance Instead of Paying ATM Fees?</a></p> <p><em>So...would you dance to avoid paying ATM fees?</em></p> <a href="http://www.wisebread.com/would-you-dance-to-avoid-a-fee" class="sharethis-link" title="Would You Dance to Avoid a Fee?" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/meg-favreau">Meg Favreau</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking Lifestyle ATM bank fees Fidelity Mon, 29 Jul 2013 09:48:32 +0000 Meg Favreau 980895 at http://www.wisebread.com Buy the Same House Twice for Less Than Buying It Once http://www.wisebread.com/buy-the-same-house-twice-for-less-than-buying-it-once <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/buy-the-same-house-twice-for-less-than-buying-it-once" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/advisor-1702989-small.jpg" alt="refinance" title="refinance" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Earlier this year, my husband and I refinanced our house. The entire process took just a shade more than six weeks. It was our first-ever refinance, on our first-ever mortgage. While nothing totally unexpected happened, the experience was instructive. (See also: <a href="http://www.wisebread.com/will-45-mortgage-rates-jumpstart-the-housing-market">Will 4.5% Mortgage Rates Jumpstart the Housing Market?</a>)</p> <p>If you are preparing to refinance, here are some of the basics you should know.</p> <h2>A Refinance Is Another Loan</h2> <p>The first thing to understand is that a refinance is actually another loan.</p> <p>When you refinance, you are getting a new mortgage to pay off your old mortgage. The new loan, though, has (or should have!) a lower interest rate. And, if you get a 30-year loan, <a href="http://www.wisebread.com/rethinking-the-early-mortgage-payoff">you end up starting over again</a>. Generally, your refinance is only for the amount you still owe on the house, so the loan amount is smaller than your original mortgage amount.</p> <p>So, since the interest rate is lower, you have another 30 years to pay off the loan, and the mortgage is for a smaller amount than your original loan, you usually end up with a lower payment. This can help with your cash flow now, and if the interest rate is low enough, you often pay less over the life of the mortgage, even though it's stretched out to another 30 years.</p> <p>Because a refinance is a new home loan, you need to jump through a lot of the same hoops you cleared to get your mortgage in the first place.</p> <h2>Required Documents and Info</h2> <p>Since you are getting a loan &mdash; and a pretty big one at that &mdash; you need many of the same things required for your original mortgage.</p> <ul> <li>If you want access to the best rates, <a href="http://www.wisebread.com/how-to-improve-your-credit-score">you need to have good credit</a>. The lender will check your credit score and offer you an appropriate rate. You're not in the clear after the initial pull, either. The lender will check your credit again before the loan closes, so don't rack up additional debt on your credit cards or open new lines of credit.<br /> &nbsp;</li> <li>You will also need to provide proof of income (tax returns, pay stubs), as well as copies of your bank statements for the last two months and statements for other asset accounts (such as a retirement or savings) you own. Because most of my family's income comes from my business, I also sent PayPal statements, since the lender wanted to see where the large, periodic deposits on sometimes odd days were coming from.</li> </ul> <p>The lender will have a lot of paperwork for you to sign at the outset, including the Good Faith Estimate, which outlines the terms of your loan and the out-of-pocket expenses you can expect to pay. Make sure you read everything carefully before you sign.</p> <h2>Patience and More Documentation May Be Required</h2> <p>Once you get the ball rolling, you will be presented with the opportunity to &quot;lock in&quot; your interest rate. If you are concerned that mortgage rates will rise before your loan closes, locking your rate is a good idea. Things can change quite a bit in the four to eight weeks that it can take for your refinance to close, and you want to make sure that you still have access to the good rate you were quoted.</p> <p>Throughout the process, you will be presented with updated Good Faith Estimates, and requests for documentation. At one point during my refinance, I was shocked to see that my out of pocket expenses rose dramatically partway through. I was concerned, but my loan team assured me that the final numbers would be closer to what I was originally quoted (and they were).</p> <p>One of the issues is that your final numbers depend, in part, on how quickly your new lender can get a payoff amount from your current lender. Additionally, when the closing happens matters as well. Normally, your lender will give you a target closing date so that you can prepare. If you want to hit that closing date, it's vital that you respond to requests from your lender immediately.</p> <p><a href="http://www.wisebread.com/quicken-loans-review-competitive-rates-and-good-customer-service">My refinance was handled by Quicken Loans</a>, and it took place entirely over the Internet. It was fairly easy to scan and upload all of my documents, and the online interface was easy to manage. If your refinance takes place locally, find out how the lender prefers to receive your paperwork (you might have to take it to the branch). Since the huge stack of papers does need to be signed in person, Quicken sent a notary to our house, and he took care of everything. You might have to go into the bank, or receive the packet in the mail and find your own notary to witness your signature.</p> <p>One of the scariest things about a refinance is that, once you get things moving and the initial steps are taken, it can be two or three weeks before you hear anything from a lender. The underwriting process can take a while, so be prepared. If you are concerned, you can always contact your lender and get an update on your status.</p> <h2>Fees and Rights</h2> <p>As with other loans, you normally have fees to pay with a refinance. Our fees amounted to a little more than $1,700. With our savings of more than $300 a month, we've already almost broken even on the fees. Fees that you might have to pay with a refinance include an appraisal fee, inspection fee, attorney fee, and title search fee. Your old mortgage might also have a prepayment penalty, or you might want to pay points in order to reduce your interest rate.</p> <p>Depending on the refinance you are eligible for, however, you might not have to worry about some of those fees. My refinance was done through <a href="http://harpprogram.org/">HARP</a> (which is scheduled to end December 31, 2013), and I wasn't required to have <a href="http://www.wisebread.com/are-the-new-home-appraisal-rules-good-for-consumers">an appraisal or an inspection</a>. This made the process a little easier.</p> <p>Before you get too far in, make sure that you understand exactly what fees you will pay and when they need to be paid. Also, realize that a &quot;no cost&quot; refinance might actually involve rolling your fees into the mortgage. There's no cost to you up front, but you pay over time. Find out if you are paying the fees that way, or if the lender is truly covering your costs. And, finally, know your rights. You usually have three days to change your mind on a refinance after you close.</p> <p><em>Have you refinanced recently? What was the process like for you?</em></p> <a href="http://www.wisebread.com/buy-the-same-house-twice-for-less-than-buying-it-once" class="sharethis-link" title="Buy the Same House Twice for Less Than Buying It Once" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking Real Estate and Housing home buying mortgage real estate refinance Thu, 25 Jul 2013 10:24:31 +0000 Miranda Marquit 980835 at http://www.wisebread.com SavedPlus Giving Away $3,000 to Wise Bread Readers http://www.wisebread.com/savedplus-giving-away-3000-to-wise-bread-readers <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/savedplus-giving-away-3000-to-wise-bread-readers" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-605.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p><strong>Editor's Note</strong>: The contest is over! Thanks for participating. We're emailing the winners Dan K, Susan H, and Kimberly R right now so be sure to check your mailboxes!</p> <p>SavedPlus, a <b>free</b> savings tool that automatically deposits a small percentage of your purchases into your savings account, is doing a huge giveaway for Wise Bread readers! They are offering two big giveaways:</p> <ol> <li>$1,000 giveaway: &nbsp;A random drawing exclusive to Wise Bread readers.</li> <li>$20 for first 100 Wise Bread readers who try out SavedPlus features.</li> </ol> <p>SavedPlus works a lot like your bank&rsquo;s &ldquo;keep the change&rdquo; programs &mdash; except it is even better! SavedPlus is completely free and even more flexible. On average, SavedPlus users save an extra <b>$205 a month</b>. About.com names it one of the <a href="http://financialsoft.about.com/od/Top-Android-Apps-of-the-Month/ss/Top-Android-Apps-For-Tracking-Savings-Goals-April-2013.htm">Top Three Apps for reaching your savings goals</a>. See how SavedPlus works:</p> <div align="center"> <p><object width="560" height="315"> <param name="movie" value="//www.youtube.com/v/gnlbu12tGWk?version=3&amp;hl=en_US" /> <param name="allowFullScreen" value="true" /> <param name="allowscriptaccess" value="always" /><embed src="//www.youtube.com/v/gnlbu12tGWk?version=3&amp;hl=en_US" type="application/x-shockwave-flash" width="560" height="315" allowscriptaccess="always" allowfullscreen="true"></embed></object></p> </div> <h2>How to Enter the Two Giveaways</h2> <h3>Giveaway 1: $1,000 Giveaway</h3> <p><strong>Follow these three easy steps to enter:</strong></p> <ol> <li>Download the free SavedPlus App for <a href="http://taps.io/OTc4NzI/?__ts=LP_Direct_Link">iPhone</a> or <a href="http://taps.io/OTc4NzY/?__ts=LP_Direct_Link">Android</a>.</li> <li>Go to the SavedPlus website and <a href="https://my.savedplus.com/login/">register your account</a> (click on the &ldquo;register&rdquo; tab).</li> <li><a href="http://www.wisebread.com/savedplus-giving-away-2000-to-wise-bread-readers#comments">Leave a comment below</a> this post saying &ldquo;I registered!&rdquo; Make sure to enter your email address in the &ldquo;E-mail&rdquo; box (see <a href="http://i.imgur.com/yT5qhRL.png">example</a>). Please enter the same email address you used for the SavedPlus registration so we can track you down when you win!</li> </ol> <p>The $1,000 prize will be divided among 3 winners:</p> <ol> <li>$500 grand prize winner.</li> <li>$300 second prize winner.</li> <li>$200 third prize winner.</li> </ol> <h3>Giveaway 2: $20 for First 100 Readers Who Try SavedPlus</h3> <p>We&rsquo;re especially excited about this second giveaway. Instead of a giveaway based on luck or skill, this is simply a generous <b>free $20</b> from SavedPlus to thank you for trying out their program.</p> <p>To enter, simply follow the <b>same three steps described above</b> &mdash; and then add one additional step: Link a savings or checking account to your SavedPlus account. Your $20 will be deposited within two weeks of the accounts being linked.</p> <h3>Giveaway Rules</h3> <p><b>Ends at 08/15/13</b> 11:59 pm PST. NO PURCHASE NECESSARY. Legal residents of the 50 United States (D.C.) 18 years or older. Winners will be randomly selected and announced on Wise Bread before end of September, 2013. Void where prohibited. If we cannot contact winners within three business days we reserve the right to pick new winners. $20 giveaway is limited to first 100 registered users. This is a giveaway hosted by SavedPlus. Wise Bread is not legally responsible for the prize distributions.</p> <h2>About Our Giveaway Sponsor</h2> <p>Saving money takes a lot of will power. Anything that can make the process <b>automated</b> and <b>painless</b> can make a huge impact. With just a few clicks you can set up SavedPlus to create an emergency fund, save for a mortgage payment, or even set aside donations for charity. In fact, SavedPlus has teamed up with local charities like <a href="http://www.businesswire.com/news/home/20130522005518/en">United Way of Silicon Valley</a> to offer customized donation options.&nbsp;</p> <p><a href="http://bargainbabe.com/the-science-of-saving-money/">BarbainBabe</a> &mdash; the blog founded by LA Daily News reporter Julia Scott &mdash; sums it up best:</p> <blockquote> <p>&ldquo;Once set up, SavedPlus allows you to set a savings percent (5-20%) to be transferred to your savings every time you make a purchase. SavedPlus offers flexible savings, putting the choice into your hands. SavedPlus allows you to save often, by transferring money into your savings with every purchase; save a little, by transferring a percentage set by you; and save without thinking because SavedPlus automates your savings!&rdquo;</p> <p>&nbsp;</p> </blockquote><a href="http://www.wisebread.com/savedplus-giving-away-3000-to-wise-bread-readers" class="sharethis-link" title="SavedPlus Giving Away $3,000 to Wise Bread Readers" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking Budgeting Giveaways Fri, 12 Jul 2013 10:36:33 +0000 Ashley Jacobs 980559 at http://www.wisebread.com Capital One 360 Review http://www.wisebread.com/capital-one-360-review <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/capital-one-360-review" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/couple-using-laptop-iStock_000018816191Small.jpg" alt="couple using laptop" title="couple using laptop" class="imagecache imagecache-250w" width="250" height="171" /></a> </div> </div> </div> <p>In 2012, Capital One bought <a onClick="_gaq.push(['_trackEvent', 'afclick', 'contenttext', 'capone360']);" target="_blank" href="http://www.wisebread.com/redir/9596682">ING DIRECT</a>, the popular bank that conducted most of its operations online. The transaction took place in February of 2012, but the name change didn&rsquo;t happen until November, when Capital One, N.A. and ING DIRECT legally became a single bank.</p> <p>The bank remained ING DIRECT until February 1, 2013, when it became Capital One 360. The colors changed from orange to a red and blue motif to match Capital One, but for the most part, ING DIRECT customers noticed very few changes. Sign-in information, routing numbers, payments (on loans), and other items are all the same.&nbsp;</p> <p>The main difference that affected consumers is that FDIC coverage treats ING DIRECT and CapOne 360 balances as part of Capital One. So, while customers used to have a limit of $250,000 in coverage for balances at each bank, now that ING DIRECT is no more, there's a limit of $250,000 coverage <i>total</i> for all the money you have in Capital One accounts. (See also: <a href="http://www.wisebread.com/7-banks-still-offering-free-checking-and-great-interest-rates">7 Banks Still Offering Free Interest-Bearing Checking Accounts</a>)</p> <h3>Features and Benefits of Capital One 360</h3> <p>For most people looking to centralize their banking and find competitive rates, Capital One 360 as a viable option. Having everything in one place can also make it easier to instantly transfer your money, and Capital One 360 makes it easy to access all of your accounts, including your investment accounts, from your account summary.</p> <p>Capital One 360 offers a variety of banking products and services.</p> <h3>360 Savings</h3> <p>This is the classic account that started it all. There are no fees, no minimum requirements, and no catches. Right now, the yield is <script src="https://home.capitalone360.com/js/accounttype.js"></script><script>document.write(type_3000_apy);</script>%, which is reasonably competitive, especially when you consider that there are no minimums and no fees. It&rsquo;s easy to link your account to other banks and set up automatic transfers to make saving easy.</p> <h3>Kids Savings Account</h3> <p>My son&rsquo;s savings account at Capital One 360 offers the <script src="https://home.capitalone360.com/js/accounttype.js"></script><script>document.write(type_3010_apy);</script></a>% yield that kicks the crap out of the 0.20% he was getting at the local credit union. It&rsquo;s easy to monitor the account from your own dashboard and to teach your child the value of saving early on.</p> <h3>360 Checking</h3> <p>You can open a checking account with Capital One 360 and earn a yield on the balance. Current yields range from 0.19% to 0.84%, depending on how much money is in the account. You can get an ATM card that is now accepted at Capital One ATMs in addition to the free in-network ATMs previously available.&nbsp;</p> <ul> <li>This account has no fees and no minimums, and you can use P2P Payments to send money to family and friends for free.<br /> &nbsp;</li> <li>Bill pay is free, even when you have paper checks sent.<br /> &nbsp;</li> <li>You can use CheckMate to deposit checks remotely, and the account comes with overdraft protection.<br /> &nbsp;</li> <li>If you overdraw your account, you won&rsquo;t end up paying a fee. Instead, you are just charged an interest fee (currently 11.25%) on the overdraft until it&rsquo;s paid off.</li> </ul> <p><strong>Note:</strong> New checking accounts get a $50 bonus!</p> <p><a onClick="_gaq.push(['_trackEvent', 'afclick', 'applytext', 'capone360checking']);" target="_blank" href="http://www.anrdoezrs.net/click-2822544-10281102?sid=959668"><strong>Click here to apply now</strong></a></p> <h3>CDs</h3> <p>The yields on the CDs from Capital One 360 are not as competitive as they could be, ranging from 0.40% to 0.90%. You can choose your term, and you can also choose when you want to receive your interest payments.</p> <h3>Mortgages</h3> <p>The Capital One 360 mortgage allows you to choose a 5/1 or a 7/1 ARM on a new purchase or a refinance. The closing costs are very straightforward, and right now the rates are quite low. You can also get a home equity loan with a variable rate starting at 4.0%, or lock in a slightly higher rate for 15 years.</p> <h3>ShareBuilder</h3> <p>The ING discount brokerage is part of Capital One now, too. You can invest in stocks, mutual funds, and ETFs, as well as trade options. There is no account minimum, and you can choose between paying a $12 monthly fee and getting a lower price on trades, or just opening the account with the Basic version. I have this version, in which regular purchases are $9.95 a transaction. However, since I have an automatic investment plan set up, I only pay $4 a transaction. It&rsquo;s easy, straightforward, and the pricing is competitive with the automatic investing.</p> <!-- <p><strong>Note:</strong> ShareBuilder is currently offering a $100 bonus for new account.</p> <p><a target="_blank" rel="nofollow" href="http://www.wisebread.com/redir/9596681" onClick="_gaq.push(['_trackEvent', 'afclick', 'applytext', 'sharebuilder']);"><strong>Click here to learn more</strong></a>.</p> --> <h3>IRAs</h3> <p>You can choose to open a savings IRA, or you can use ShareBuilder to open an investment IRA. With the savings IRA, you have all the money in CDs and savings accounts; you need to go the ShareBuilder route if you want to invest in stocks, mutual funds, or ETFs. You can also rollover your 401(k) into an IRA from Capital One 360.</p> <h3>Business Account</h3> <p>Capital One 360 also offers business banking products. You can open a business savings account, or a business CD. The current yield on the business savings account is lower than what you get with personal savings, though.</p> <p>You can also use the ShareBuilder 401(k) to set up a retirement plan for your small business. It&rsquo;s fairly easy to set up, and you can offer this benefit to your employees.</p> <h3>Bottom Line</h3> <p>Overall, <a onClick="_gaq.push(['_trackEvent', 'afclick', 'contenttext', 'capone360']);" href="http://www.wisebread.com/redir/9596682" rel="nofollow" target="_blank">Capital One 360</a>&nbsp;is a viable competitor. The products offered remain fairly competitive. Additionally, the low-fee, low-hassle structure of the bank makes it easy to open accounts, and avoid watching your wealth erode due to hidden fees and complicated requirements.</p> <p><a onClick="_gaq.push(['_trackEvent', 'afclick', 'applytext', 'capone360']);" href="http://www.wisebread.com/redir/9596682" rel="nofollow" target="_blank"><strong>Click here to apply now</strong></a></p><a href="http://www.wisebread.com/capital-one-360-review" class="sharethis-link" title="Capital One 360 Review" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking banking banks Capital One ing direct Fri, 21 Jun 2013 10:16:35 +0000 Miranda Marquit 959668 at http://www.wisebread.com Charged With an Overdraft Fee? Get Your Money Back! http://www.wisebread.com/charged-with-an-overdraft-fee-get-your-money-back <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/charged-with-an-overdraft-fee-get-your-money-back" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/cash-1229193-small.jpg" alt="cash" title="cash" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Picture this: You login to your checking account to review your transactions &mdash; and BAM!</p> <p>You've been hit with a $35 overdraft fee. Your account has a negative balance, and it's showing in bold red font. (See also: <a href="http://www.wisebread.com/banks-manipulate-your-transactions-may-charge-you-1750-overdraft-fee" target="_blank">Banks Can Manipulate Your Transactions, Then Charge You 1750% Overdraft Fee</a>)</p> <p>What do you do now?</p> <p>Two things: Get your money back, and make sure it never happens again.</p> <p>I'll show you how to do both. Let's start with getting your money back.</p> <h2>Getting Your Overdraft Fee Refunded</h2> <p>Banks spend lots of money trying to earn your business. Your deposits are used to lend money to other customers, in products such as a mortgages or business loans. They profit by charging interest and end up pocketing millions of dollars.</p> <p>So once they get you as a customer, the last thing they want to do is lose your business. You mean a lot to them.</p> <p>Knowing this, you're now in a position of power &mdash; negotiating power.</p> <p>To get your overdraft fee refunded, just call customer service and ask for the fee to be removed. Be polite, but firm.</p> <p>Tell the representative what you want, and why it's in their best interest to give you what you want.</p> <p>Don't get angry, but be persistent. If you've been a responsible customer, you'll get the waiver sooner or later.</p> <p>If you need more guidance, follow this simple script on <a href="http://moneytobless.com/how-to-negotiate-your-way-out-of-bank-fees/" target="_blank">negotiating out of bank fees</a>. Trust me; it works. I know, because I've used it myself!</p> <p>It'll be the quickest, easiest $35 you'll ever save.</p> <p>Yet you should only need to do this once. Because after you get your money back, you'll move on to the next step.</p> <h2>Make Sure It Never Happens Again</h2> <p>Once you get your money refunded, you should set up your finances so that <a href="http://www.wisebread.com/credit-card-fees-hidden-and-otherwise" target="_blank">overdraft fees</a> will be a thing of the past for you. Here's how.</p> <p><strong>Put Your Bills on Your Card</strong></p> <p>First, charge everything you can to your credit card. This includes routine expenses such as your cable, internet, and cell phone bills, plus other stuff such as eating out, groceries, and gas purchases.</p> <p>By putting these charges on your card, overdraft fees will no longer be an issue.</p> <p>Why?</p> <p>Because you can set up automatic payments to be sent from your checking account to your credit card before your bill's due date, so that you don't get hit with a late fee. Better yet, since you're charging purchases to the card <a href="http://www.wisebread.com/whats-your-credit-card-spending-style" target="_blank">that you'd normally make anyway</a>, you'll get more <a href="http://www.wisebread.com/perform-a-credit-card-rewards-annual-review" target="_blank">bonus points</a> or cash back.</p> <p>But what about other bills that can't be charged to your credit card? Some expenses must be paid directly from your checking account. These can include your monthly electricity and gas bills, your rent or mortgage, and other expenses such as DMV fees.</p> <p><strong>Plan and Manage Your Expenses</strong></p> <p>Here's how to manage both your credit card and non-credit expenses.</p> <p>Since many of us get paid twice a month, the first thing to do is to wait for your second payday of the month.</p> <p>Let's say you get paid at the end of May. Your credit card bill will likely be due in the beginning of June, for purchases you made in the April and May timeframe.</p> <p>Knowing this, just perform this simple calculation &mdash; since your paycheck goes into your checking account, enter your checking account balance first. Then subtract your upcoming credit card balance that you'll be fully paying off. After that, subtract the upcoming expenses that can't be charged on your card.</p> <p>Lastly &mdash; and most importantly &mdash; leave $200 as a buffer in case unexpected expenses pop up before your next pay period. Then you're free to do whatever you want with the money that remains &mdash; save it, invest it, or splurge with it (okay, don't splurge with it).</p> <p>That's it. Once you set up this process, maintaining it will be easy, like second nature, and you'll never have to worry about getting hit with an overdraft fee again.</p> <p><em>Have you ever been socked with an overdraft fee? Did you fight it and win? Tell us about it in comments!</em></p> <a href="http://www.wisebread.com/charged-with-an-overdraft-fee-get-your-money-back" class="sharethis-link" title="Charged With an Overdraft Fee? Get Your Money Back! " rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/darren-wu">Darren Wu</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking General Tips bank fees checking accounts negotiate overdraft fees Wed, 19 Jun 2013 10:36:33 +0000 Darren Wu 978034 at http://www.wisebread.com Save More by Avoiding Multiple Bank Accounts http://www.wisebread.com/save-more-by-avoiding-multiple-bank-accounts <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/save-more-by-avoiding-multiple-bank-accounts" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-4562214-small.jpg" alt="piggy bank" title="piggy bank" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Want to save more? Keep it simple.</p> <p>Conventional wisdom holds that people should spread savings across different accounts, and the typical American has multiple checking and savings and other types of financial accounts. However, they're more likely to save more with just one savings account, according to a new study by a University of Kansas researcher. (See also: <a href="http://www.wisebread.com/zen-and-the-art-of-hiding-money" target="_blank">Zen and the Art of Hiding Money</a>)</p> <p>People save more if they have just one account compared to multiple checking and savings accounts, according to Kansas University assistant professor Promothesh Chatterjee.</p> <p>&quot;Nowadays, the average American has multiple liquid accounts, typically a combination of checking and savings accounts,&quot; he said in a <a href="http://www.news.ku.edu/2013/04/17/trying-save-more-consolidate-your-bank-accounts-researcher-says" target="_blank">press release</a>. &quot;But our research finds this is the wrong strategy to encourage saving. We find that individuals are more likely to save if they have only one primary account, rather than many accounts.&quot;</p> <h2>Banking Implications</h2> <p>His research has implications for accepted banking practices and national policies. Banks frequently offer several accounts to new clients, but the findings argue against that practice.</p> <p>Americans save next to nothing &mdash; the current national savings rate is estimated at 5%. And the inability to save cuts across income and educational levels.</p> <p>&quot;Given that context, this type of research is important to lots of people,&quot; Chatterjee said.</p> <p>Why does having several accounts encourage people to save less?</p> <blockquote><p>Utilizing work on motivated reasoning and fuzzy-trace theory, we suggest that multiple accounts engender fuzzy gist representations, making it easier for people to generate justifications to support their desired spending decisions. However, a single account reduces the latitude for distortion and hinders generation of justifications to support desirable spending decisions.</p> </blockquote> <h2>Fuzzy Savings</h2> <p>In other words, people with <a href="http://www.wisebread.com/financial-iq-test-how-healthy-are-your-bank-accounts" target="_blank">more accounts lack a clear idea</a> of how much they have saved and use that muddled picture to rationalize their spending decisions. We feel good about ourselves over the long-term when we save, but we feel good right away when we spend, which prompts us to find justifications to spend.</p> <p>Simply put, if you have different savings accounts, it's easy to convince yourself that you have a ton of savings. If you have it all in one place, you can plainly see what you have &mdash; or don't have.</p> <p>Those who are opposed to consolidating accounts, according to the research, can at least try using <a href="http://www.wisebread.com/beyond-budgeting-pocketsmith-helps-you-forecast" target="_blank">software programs that add up different accounts</a>, allowing users to see the total in one place.</p> <p>His research used four separate studies with a total of 566 participants who had the opportunity to earn, spend, and save money. The results were published in the May 2013 issue of the journal &quot;Organizational Behavior and Human Decision Processes.&quot;</p> <p>The students participating in the study earned money for doing tasks on a computer, and then had chances to buy items, such as university T-shirts, notebooks, and a computer mouse, or add money to their savings, according to a <a href="http://bucks.blogs.nytimes.com/2013/04/18/fewer-bank-accounts-may-result-in-more-savings/" target="_blank">New York Times story</a> on the research. Those who kept earnings in a single account saved more than those with multiple accounts. The issue was not their mathematical abilities, but rather their motivation, Chatterjee said.</p> <h2>Targeted Accounts for Saving?</h2> <p>Others disagree and argue that using <a href="http://www.wisebread.com/a-comprehensive-guide-to-the-envelope-system" target="_blank">targeted savings accounts</a> is the best way to accumulate savings.</p> <p>Different savings accounts &mdash; for example for emergencies, a new car, and a vacation &mdash; offer a motivational tool for saving for specific goals, writes one proponent of <a href="http://business.time.com/2011/08/23/use-targeted-saving-to-achieve-your-goals" target="_blank">targeted savings accounts</a>, J.D. Roth, founder of website Get Rich Slowly and author of &quot;Your Money: The Missing Manual.&quot;</p> <p>When savings are combined, it's easy to lose track of how much you've saved for each goal and use money for one goal to pay for another use, he says, adding that online savings accounts offer higher yields and let customers split their funds into subaccounts and even name them.</p> <p><em>Do you use multiple accounts to manage your savings or just one? What works best for you in terms of reaching your savings goals?</em></p> <a href="http://www.wisebread.com/save-more-by-avoiding-multiple-bank-accounts" class="sharethis-link" title="Save More by Avoiding Multiple Bank Accounts" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/michael-kling">Michael Kling</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking Budgeting Financial News bank accounts saving strategies savings accounts Mon, 17 Jun 2013 09:48:33 +0000 Michael Kling 977910 at http://www.wisebread.com Money Market Accounts: Ideal for Emergency Funds http://www.wisebread.com/money-market-accounts-ideal-for-emergency-funds <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/money-market-accounts-ideal-for-emergency-funds" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/business-5162550-small_0.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>In this low-rate environment, many savers are looking for ways to get a little more bang for their savings buck. While you aren't going to see dramatic returns from any cash product, one way to boost your yield a little bit is to use a money market account. (See also: <a href="http://www.wisebread.com/why-savings-account-interest-rates-are-so-low">Why Savings Account Interest Rates Are So Low</a>)</p> <h2>What Is a Money Market Bank Account?</h2> <p>A money market bank account is a deposit account. The yield is based on the current money market rates, which are set in the &quot;money markets,&quot; where super-safe investments such as government or corporate bonds are traded. As a result, the interest rate is usually little higher than what you would find with a &quot;regular&quot; savings account.</p> <p>Your money market account is considered a savings account (even if your account comes with check writing privileges), so it is subject to all the same rules associated with savings accounts. The Federal Reserve's Regulation D sets forth the rules for withdrawing from accounts that are considered &quot;non-transaction.&quot; A money market account fits this description; you are only allowed up to six withdrawals a month, and only three of those can be via check.</p> <p>Because a money market account comes with limited checking writing abilities, and because of the competitive interest rate, it can be an ideal place to keep your emergency fund.</p> <p><strong>What <em>Isn't</em> a Money Market Account?</strong></p> <p>Don't confuse a money market bank account with a <em>money market mutual fund</em> (more on these investments later).</p> <p>Money market bank accounts and money market mutual funds are two completely different financial products. A money market bank account is an account set up through your banking institution and can be <a href="http://www.wisebread.com/what-you-need-to-know-about-the-fdic">FDIC insured</a>. A money market mutual fund, on the other hand, is an investment product that <em>is not</em> FDIC insured. Your capital is safe with a money market bank account; there is the potential for loss with a money market mutual fund.</p> <p>Make sure you understand the difference before you commit your money.</p> <h2>What to Expect With a Money Market Account</h2> <p>In many cases, a money market bank account requires a higher initial deposit than regular savings accounts. It's common to provide an initial deposit of $1,500 or $2,500 to open a money market account. Additionally, you might have to maintain a higher minimum balance to avoid penalties and fees with a money market account. It is not unusual to find a money market account with a $2,500 or $5,000 minimum balance.</p> <p>Realize, too, that because federal regulations limit your monthly withdrawals, you could be subject to fees for exceeding the maximum number of monthly withdrawals &mdash; or even have your account closed immediately and all of the money transferred to an account with a lower yield. Some banks purposely put lower limits on your withdrawals in order to prevent you exceeding the six allowed by regulations. Double check bank policy before opening your account.</p> <p>If you put your cash into a money market account, be prepared to keep it in there for middle to long term purposes. A money market account shouldn't be used as a regular transactional account, and you shouldn't expect particularly high returns (unless rates go up over time).</p> <h2>Who Should Use a Money Market Account?</h2> <p>The nature of the money market bank account makes it a decent choice for an emergency fund. With a competitive interest rate, it can provide you with <em>some</em> yield while you keep your money against an unexpected event.</p> <p>A longer-term <a href="http://www.wisebread.com/the-5-best-high-yield-cds">CD offers higher yields</a>, but the price of accessing your money before the end of the term can be too high. A money market account allows you instant access to your money; you can even write a check or access your account via debit/ATM card.</p> <p>If a &quot;regular&quot; or <a href="http://www.wisebread.com/5-best-online-savings-accounts">online savings account</a> isn't providing you with the yield you want (or the easy access that comes with check writing privileges), a money market bank account can offer you a slightly better deal. Just be aware that a money market account, like most cash products, comes with interest rate risk. Even the highest yield might not be enough to beat inflation, which means that you could see real losses in terms of buying power over time.</p> <h2>What About the Money Market Mutual Fund?</h2> <p>If you are a little more daring, you can consider a money market mutual fund. These mutual funds rely on &quot;like cash&quot; products, like short-term corporate debt, to provide returns. For years, these funds were considered almost as safe as savings accounts. However, following the financial crisis of 2008, some funds actually <em>lost</em> money &mdash; something unheard of before. Prior to the financial crisis, money market mutual funds were considered among the <a href="http://www.wisebread.com/intro-to-5-super-safe-investments">safest of investments</a>.</p> <p>Money market mutual funds are still considered fairly safe. They offer reasonable returns (for &quot;less risky&quot; investments), and some money market funds will even allow you to write checks in order to access the money in the account. Some consumers find money market mutual funds attractive for emergency funds as a result.</p> <p>However, your investment isn't guaranteed with money market mutual fund; you could lose your capital to more than just inflation. On top of that, you will want to watch for the implementation of <a href="http://www.washingtonpost.com/business/economy/sec-proposes-changes-to-money-market-fund-rules/2013/06/05/7126a7d8-cd45-11e2-8f6b-67f40e176f03_story.html">new rules governing money market accounts</a>. For the past few years, regulators have been trying to find a way to prevent a debacle like 2008, and the SEC is proposing new rules for money market mutual funds. You'll want to stay on top of potential changes so you can adjust your strategy accordingly.</p> <h2>Bottom Line</h2> <p>The money market account is a nice compromise between the yield that comes with a CD and the flexibility that comes with a more accessible account. It's in that &quot;just right&quot; that can make it an ideal emergency fund. And if you can handle a little more risk, there is the money market mutual fund, which can add a little <em>oomph</em> in terms of yield, and might even have check-writing privileges. Just be aware that your money isn't FDIC insured in a money market mutual fund.</p> <p><em>Do you have your money in a money market savings or mutual fund account?</em></p> <a href="http://www.wisebread.com/money-market-accounts-ideal-for-emergency-funds" class="sharethis-link" title="Money Market Accounts: Ideal for Emergency Funds" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking money market account Wed, 12 Jun 2013 09:48:33 +0000 Miranda Marquit 978093 at http://www.wisebread.com 6 Reasons to Love Your Bank http://www.wisebread.com/6-reasons-to-love-your-bank <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-reasons-to-love-your-bank" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/consultant-4757388-small.jpg" alt="banker" title="banker" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>No one likes banks these days. The media is telling us that <a target="_blank" href="http://www.wisebread.com/banks-manipulate-your-transactions-may-charge-you-1750-overdraft-fee">they are charging more fees</a> and are to blame for the financial crisis. But the reality is that now is the time to love your bank more than ever.</p> <p>Imagine that a security company guarded your house around the clock. If a burglar ever broke in and stole something valuable, like the family silver or your TV, your security company would replace them, no questions asked. You can come and go into your house as you please and even contact the company guarding your house around the clock &mdash; in person, by email, by phone. And sometimes, the company will even pay you for the privilege of guarding your house. (See also: <a target="_blank" href="http://www.wisebread.com/think-twice-before-ditching-your-current-bank">Think Twice Before Ditching Your Current Bank</a>)</p> <p>This is similar to what a bank does for your money.</p> <h3>1. Your Bank Keeps Your Money Completely Safe</h3> <p>The nuts and bolts of banks, as the average consumer uses them, is that you give your money to your bank, and your bank protects it. The very best reason to use a bank is that you don't have to worry about your money getting lost or stolen. Keeping it under the mattress is not the best bet. In the unlikely event your bank fails, the government insures your deposits up to $250,000. If you like any other company that provides similar services (insurance, for instance), then you should like your bank.</p> <h3>2. Your Bank Provides Amazing Services</h3> <p>Besides just protecting your money, your bank also provides amazing services. Your bank gives you the ability to pay for something nearly anywhere you want by <a target="_blank" href="http://www.wisebread.com/is-a-prepaid-debit-card-really-cheaper-and-better-than-a-bank-debit-card">using a debit card</a>. You don't have to carry around cash (and risk it getting lost or stolen). If you need or prefer cash, you can use an ATM to retrieve your money on nearly any street corner. And with ATMs you can even deposit checks, so you don't have to go to the hassle of waiting in line.</p> <p>But let's say you want to talk with a real person about your money. You can go to a bank branch and get personal service. You can sit down with a banker and have them help you customize your accounts. Just today, I walked into a branch of my bank, and within two minutes a banker helped me close a business account that I no longer needed. He was extremely friendly and asked me if there was anything else he could do to help me. Previously a banker set me up with a permanent fee-waiver for my ATM card. That's great service.</p> <p>Your bank likely allows you to transfer money online, get your account balance from anywhere, and track your spending and savings. Depending on the type of account you may even earn interest on the money you keep at your bank. And these are just the basic services your bank likely provides. Every day banks are rolling out more features &mdash; like banking apps &mdash; all for free.</p> <h3>3. You Can Often Get All of a Bank's Services for Free</h3> <p>All of the services I listed above? Many banks will give these services to you for free. Even if your <a target="_blank" href="http://www.wisebread.com/that-sneaky-bank-almost-got-me">account is listed as having a fee</a>, walk into your bank and ask a banker if there is a way to waive it. Often, if you &quot;bundle&quot; services, your bank will waive the monthly charge. For example, see about opening a deposit account, setting up recurring transfers, or enabling direct deposit. Or maybe it's worth refinancing your home with a mortgage from your bank.</p> <h3>4. If You're Paying a Fee, You're Likely Getting Great Side Benefits</h3> <p>If you are paying a fee on your account, you are likely getting some additional benefits. Some fee checking accounts pay interest, provide free checks, or give you a cash rebate for the amount spent on your debit card. (If you're paying a fee and aren't getting any benefits, ask how to get a fee waiver or see point six below.)</p> <h3>5. Banks Are Subject to More and More Governmental Scrutiny</h3> <p>Every day, banks become subject to more and more governmental scrutiny. Some of these regulations may be warranted, but for the most part they are harming the community bank down your street. (That's the bank where not only will they be more likely to know your name, but you're most likely to get a loan if you want to start a business.) And these regulations are costing banks money to comply with. But banks are still passing very few of these costs onto the average consumer. And that's another great reason to love your bank.</p> <h3>6. You Can Change Banks</h3> <p>If you don't love your bank, you should switch. It's that simple. Every other bank wants you as a customer and you should make the most of that situation. If you don't feel that your bank is giving you the services and support you need, find another bank. Consider an online-only bank or the community bank down the street. There are thousands of banks. Think of the services you need, and find a bank that meets your criteria. If you were trusting the safety and security of your home to a company, you'd spend some time ensuring that it's the best fit for you. Do the same with your money and find a bank that you love.</p> <p><em>What's great about your bank?</em></p> <a href="http://www.wisebread.com/6-reasons-to-love-your-bank" class="sharethis-link" title="6 Reasons to Love Your Bank" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/elizabeth-lang">Elizabeth Lang</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking banks checking accounts debit cards online banking savings accounts Mon, 27 May 2013 10:24:33 +0000 Elizabeth Lang 973807 at http://www.wisebread.com Ally Bank Review: Flexibility and Decent Yields http://www.wisebread.com/ally-bank-review-flexibility-and-decent-yields <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/ally-bank-review-flexibility-and-decent-yields" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-3064774-small.jpg" alt="piggy bank" title="piggy bank" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Ally Bank is one of the most prominent banks in the online space. While it seems that Ally is a new player in the banking game, the reality is that the bank&rsquo;s roots actually date back to 1919 when the company now known as Ally Financial was founded as the General Motors Acceptance Corporation.</p> <p>Ally Bank is a subsidiary of Ally Financial, and is known for its competitive yields on cash products, as well as its customer-friendly attitude.</p> <h2>A Brief History of Ally Bank</h2> <p>Ally Financial was started in 1919 as the General Motors Acceptance Corporation (GMAC), and was originally meant to help finance auto purchases for those buying GM cars. The company&rsquo;s headquarters is in Detroit, Michigan.</p> <p>Over time, the financial services offered by GMAC expanded to include consumer banking, mortgages, and even insurance. However, after decades, GM began selling its stake in the company. In 2006, a 51% stake in GMAC was sold to a consortium of buyers led by the private equity firm Cerberus Capital Management.</p> <p>GMAC was hit hard by the financial crisis, and in 2008 received TARP funds. In 2009, GMAC Bank was rebranded as Ally Bank. The overall company name was changed to Ally Financial in 2010. Ally is still about 74% owned by the U.S. government, and <a href="http://www.bloomberg.com/news/2013-01-30/tarp-watchdog-spars-with-treasury-on-ally-financial-exit.html">an exit plan is being developed</a>. Ally <a target="_blank" href="http://www.ally.com/about/company-structure/history/">claims that it has repaid about $6.1 billion</a> to the U.S. Treasury as of May 15, 2013.</p> <p>Along with the rebrand, Ally began focusing heavily on customer service, and offering no-nonsense accounts with competitive yields. The consumer banking side of Ally is fairly basic, offering a few products and services, and receiving recognition for its efforts.</p> <p>Ally is <a href="http://www.wisebread.com/what-you-need-to-know-about-the-fdic">FDIC insured</a>, so your accounts are protected up to the maximum amount. Additionally, Ally Bank has a mobile banking app that allows you to keep track of your accounts no matter where you are.</p> <h2>Features and Benefits Ally Bank</h2> <p>For savers looking for reasonably high yields, Ally Bank offers a few options. While you won't find as many products and services with Ally as you might find with other institutions, the offerings at Ally Bank focus on boosting yields on cash products, making Ally a decent choice for emergency fund holdings. On top of that, Ally Bank compounds interest daily, boosting your total earnings from interest.</p> <p><strong>Certificates of Deposit</strong></p> <p>Ally is well-known for its certificates of deposit. In 2012, <em>MONEY Magazine</em> awarded Ally the recognition for &quot;Best One-Year CD.&quot; CD rates change often, but as of this writing the High Yield CD with a one-year term has a yield of 0.94%.</p> <p>Ally also offers a no-penalty CD. This CD is a little different, in that you can withdraw your money early with no penalty (as long as you wait at least six days). This is a somewhat unique situation, especially since there is no minimum deposit to open the no-penalty CD. The yield on a no-penalty CD is lower than what you will get for a more conventional CD, but if you want the freedom to withdraw your money when you want, it can make sense to use this option.</p> <p>You can also choose the &quot;Raise Your Rate&quot; CD, which allows you to take advantage of <a href="http://www.wisebread.com/the-5-best-high-yield-cds">higher CD rates</a>. If the rate rises during the term of the CD, you have the option to raise your rate. However, you can only raise your rate once during a two-year term, and twice during a four-year term. This is still a nice feature, however, since it gives you the opportunity to improve your yield, even after you are &quot;locked in&quot; by a specific maturity.</p> <p>Ally also offers a handy <a href="http://www.wisebread.com/the-basics-of-cd-laddering">CD laddering</a> tool that can show you how to maximize your CD earnings with the help of a ladder.</p> <p><strong>Online Savings</strong></p> <p>Ally's online savings account has been recognized as one of the best savings accounts available. There is no minimum deposit to open your account, and no monthly maintenance fees. As of this writing, the variable APY on the savings account is 0.84%.</p> <p>You can set up automatic deposits to your <a href="http://www.wisebread.com/5-best-online-savings-accounts">online savings account</a>, and you can transfer money out of the account up to six times a month.</p> <p><strong>Money Market</strong></p> <p>If you want a little more flexibility with your savings account, Ally offers a money market savings account. You receive free standard checks, as well as a Visa debit card. You don't have to pay ATM fees on the Ally end, and Ally will also reimburse your ATM fees from other banks. Because it is a savings account, you are limited to the six transactions per statement cycle if you want to avoid fees, pursuant to federal law.</p> <p><strong>Checking</strong></p> <p>You can earn interest on your checking account balance with Ally, and this can make the account a valuable addition to your emergency savings strategy, providing you with the ability to use your MasterCard debit card, as well as get free checks.</p> <p>The checking account is compatible with <a target="_blank" href="https://www.popmoney.com/">Popmoney</a>, allowing you to quickly and easily send and receive personal payments. You can make deposits remotely with eCheck Deposit, and you don't have to worry about ATM fees. On top of that, you can earn cash back with Ally Perks.</p> <p><strong>IRA Products</strong></p> <p>You can also find IRA-friendly products with Ally. The IRA CD options come with much higher yields, but you have to be willing to commit to a longer term. You can open a Traditional, Roth, or SEP IRA with Ally. However, carefully consider this option before you commit some of your contributions to cash products.</p> <p>Ally Bank also offers links to other services that fall under the Ally Financial umbrella. One of these is auto financing and leasing. Even though this isn&rsquo;t a service of Ally Bank, it&rsquo;s possible to learn more about personal and business auto financing by following the link from Ally&rsquo;s main web site.</p> <h2>Bottom Line</h2> <p>Ally Bank has managed to successfully rebrand itself into a competitive bank with high yields and products that consumers hold in high esteem. Ally is straightforward in its materials, offering upfront information. As a place to park your emergency fund cash, Ally is a good choice, offering flexibility and good rates.</p> <p><strong><a target="_blank" rel="nofollow" href="http://www.wisebread.com/redir/9741181" onClick="_gaq.push(['_trackEvent', 'afclick', 'applytext', 'bank_ally']);">Click here to apply now</a></strong></p> <a href="http://www.wisebread.com/ally-bank-review-flexibility-and-decent-yields" class="sharethis-link" title="Ally Bank Review: Flexibility and Decent Yields" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking Fri, 17 May 2013 10:36:37 +0000 Miranda Marquit 974118 at http://www.wisebread.com The Basics of CD Laddering http://www.wisebread.com/the-basics-of-cd-laddering <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-basics-of-cd-laddering" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/coin-stack-5041472-small.jpg" alt="coin stacks" title="coin stacks" class="imagecache imagecache-250w" width="250" height="182" /></a> </div> </div> </div> <p>Right now, many savers are disappointed with the <a href="http://www.wisebread.com/why-savings-account-interest-rates-are-so-low">low savings account yields</a> offered by many banks. Many bear the situation because there isn't a safer option in terms of a <a href="http://www.wisebread.com/intro-to-5-super-safe-investments">place to keep your cash</a>.</p> <p>In order to boost yields, some savers turn to CDs to help find an edge. The downside to that approach, however, is that you might have to agree to lock your money away for five years if you want the best CD rates. (See also: <a href="http://www.wisebread.com/the-5-best-high-yield-cds">The 5 Best High-Yield CDs</a>.</p> <p>One way to take advantage of better rates without locking away <em>all</em> your money is to use a technique known as <em>CD laddering</em>.</p> <h2>How a CD Ladder Works</h2> <p>A CD ladder is designed to give you predictable access to your money (just in case you need it), while allowing you to take some advantage of higher yields.</p> <p>Putting together a CD ladder is fairly straightforward. You begin by dividing the desired deposit into five smaller deposits. Then, you open five different CDs, each with a different maturity. Once one matures, you can then roll it over into a five-year CD (or use the money, if you need it).</p> <p>Say you have $15,000 in your savings account. Here's how your ladder would work:</p> <ul> <li>$3,000 in a one-year CD, 0.90%</li> <li>$3,000 in a two-year CD, 1.20% yield</li> <li>$3,000 in a three-year CD, 1.25% yield</li> <li>$3,000 in a four-year CD, 1.51% yield</li> <li>$3,000 in a five-year CD, 1.62% yield</li> </ul> <p>In one year (year two of your CD ladder), the lowest-yielding CD will mature. Now you have the chance to roll it into a five-year CD. If rates have gone up in the intervening year, you'll be able to take advantage of that with your five-year CD. Even if rates have gone down, a five-year CD is still probably yielding more than what the one-year CD was anyway, so your money is still likely moving into a higher-yielding product.</p> <p>For year three of your CD ladder, it will be your two-year CD that you roll into another five-year CD. As you can see, setting up your CD ladder in this manner allows you to keep putting money into a longer-term CD that usually has a higher yield.</p> <p><strong>CD Features to Look For</strong></p> <p>Choose a CD that compounds interest daily and deposits your earnings automatically into your CD account. That way, your interest earns interest more often, and you can build on the money that you have in your account a little faster.</p> <p>In our example, the first CD will have a balance of $3,027.12 after one year. After you roll it into a five-year CD with a 1.65% yield at the end of that one year, the next time you access the money it will have grown to $3,286.44. In the meantime, all your other CDs have matured with their interest added to the total, and you are rolling over the principal plus all the accrued interest into new five-year CDs. It's slow going, but anytime you invest in safe, FDIC-protected products, you can't expect to see dramatic returns.</p> <p><strong>Annual Rollovers Provide Flexibility</strong></p> <p>Interest rates are expected to rise at some point, and when they do, you'll be in a position to take advantage of the higher rates once a year. In the meantime, you receive some measure of protection from the possibility of falling rates by having your higher yield locked in on your four other CDs. Over time, a CD ladder can provide you with a decent cash cushion, even if it won't provide you with the means to retire (unless you start with jumbo-CD cash).</p> <h2>Does This Work With an Emergency Fund?</h2> <p>A CD ladder can also work as part of an <a href="http://www.wisebread.com/figuring-the-size-of-your-emergency-fund">emergency fund</a>. If you want to be able to access your money more regularly, just in case, create a short-term ladder. You can do this by dividing your cash reserve into four sections instead of five:</p> <ul> <li>$3,750: three-month CD</li> <li>$3,750: six-month CD</li> <li>$3,750: nine-month CD</li> <li>$3,750: one-year CD</li> </ul> <p>When your three-month CD matures, roll it into a one-year CD, and it will mature at month 15, three months after your original one-year CD expires. Each time a CD expires, renew for a year, and it will mature at the same time annually. If you need the money, you know you'll have it in three months.</p> <p>The downside to using a CD ladder for an emergency fund is that, as of this writing, a one-year CD is only slightly higher than the rates offered by high-yield savings accounts, and the three-, six-, and nine-month CDs might not have as high rates. This strategy works best if you think that high-yield savings account rates are going to fall, and you want to lock in something right now &mdash; just in case.</p> <p>Using a CD ladder for your emergency fund also presents another conundrum. In the event that you need to access the money before a CD matures you might face early withdrawal penalties. CD laddering can work well as part of a wider emergency fund strategy. Make sure you have more liquid funds in an account that you can access immediately if need be. Those funds should be able to help you stave off financial disaster while you wait for one of your short-term CDs to mature.</p> <h2>Bottom Line</h2> <p>A CD ladder can be a safe way to squeeze a little more yield out of your cash. With rates as low as they are right now, you might not even beat inflation, but your money will be in an account protected by the FDIC in the event of bank failure. You can use your CD ladder to build up a tidy amount of cash over a period of years, or you can use it as part of your emergency fund strategy.</p> <p>No matter how you use your CD ladder, though, you need to make sure you understand the terms of the CD, including early withdrawal penalties and the rollover policy practiced by the bank.</p> <a href="http://www.wisebread.com/the-basics-of-cd-laddering" class="sharethis-link" title="The Basics of CD Laddering" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking Wed, 24 Apr 2013 09:48:40 +0000 Miranda Marquit 973630 at http://www.wisebread.com Why Savings Account Interest Rates Are So Low http://www.wisebread.com/why-savings-account-interest-rates-are-so-low <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-savings-account-interest-rates-are-so-low" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-3636177-small.jpg" alt="piggy bank" title="piggy bank" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>In 2006, I started writing about personal finance. One of the first topics I wrote about was the online high-yield savings account. (See also: <a href="http://www.wisebread.com/5-best-online-savings-accounts">The Best 5 Online Savings Accounts</a>)</p> <p>Back then, these accounts were all the rage. I opened an account offering 5% APY and wrote about how great online accounts were for emergency fund purposes. A deposit of $1,000 meant a little more than $4 in interest the first month.</p> <p>Now, you'd be hard-pressed to find a high-yield account offering much more than 1% APY, providing you with right around 83 cents in interest the first month. That's a <em>big</em> difference.</p> <p>But why are <a href="http://www.wisebread.com/how-to-earn-a-good-interest-rate-in-a-low-rate-environment">interest rates so low on savings accounts</a>? Shouldn't we want to encourage savers in our current economy?</p> <h2>Depositors vs. Borrowers</h2> <p>In reality, banks can pay whatever yield they want on a savings account. If a bank wanted to start paying 5%, it could. There's nothing stopping it, except the desire to turn a profit.</p> <p>Banks set yields on deposits based on the rate they can get for lending money. The difference between what a bank receives on mortgages and auto loans and other credit, and what the bank pays out in yields to depositors, represents one of the bank's revenue streams.</p> <p>In 2007, when I bought my home, the best interest rate available to me was 6.02%. By then, the yield on my savings account had dropped to 4%. Now, you can get a mortgage for right around 3.50%. As long as a bank is able to lend at a rate higher than what it pays to depositors, there's a better chance of profit.</p> <p>So why even pay depositors at all? The reason is that banks are required to keep <em>some</em> capital in their reserves. They are required to keep money in &mdash; for lack of a better word &mdash; the vault in order to lend. For the most part, credits and debits appear on paper and digitally. But those records have to show that the bank has money in reserve.</p> <p>Hence the need for depositors.</p> <p>Banks need to attract depositors to put money in the bank, so they have something to lend (or something to leverage). A bank pays a yield in order to encourage you to park your money in an account; the bank then lends the money at a higher rate than it pays you.</p> <h2>The Federal Reserve and Savings Account Rates</h2> <p>So why are mortgage (and other loan) rates so low? What sets <em>those</em> rates?</p> <p>The Federal Reserve plays a large role in determining what the rates look like. There are two main rates that come into play:</p> <ul> <li><strong>Federal Discount Rate</strong>: This is the rate at which the Federal Reserve lends money to the banks.</li> <li><strong>Federal Funds Rate</strong>: This is the rate we're all familiar with when the news talks about the Fed &quot;setting rates.&quot; This is the rate at which banks can lend money to each other.</li> </ul> <p>The Federal Reserve prefers banks to lend to each other, rather than borrow from the Fed, so the Federal Funds Rate is often a little lower than the Discount Rate.</p> <p>Since consumer spending drives about 70% of economic activity in our country, the ability of banks to lend to each other, and to consumers, to keep the money going 'round the economy is a big part of what the Federal Reserve does.</p> <p><strong>Lower Fed Rates Encourage Borrowing</strong></p> <p>In times of economic turmoil and difficulty, the Fed lowers the two rates in order to encourage borrowing. Right now, the Fed Discount Rate is at 0.75%, and the Fed Funds Rate is operating in a target range of between 0% and 0.25%.</p> <p>In a down economy, with so much of the activity dependent on consumer spending, the goal is to attract consumers to loans. These low Fed rates bring loan rates down. Since banks can borrow from the Fed, and from each other, at such low rates, it means they can lend to consumers at lower rates, encouraging them to borrow.</p> <p><strong>Fed Purchases of Treasuries Reduce Mortgage Rates</strong></p> <p>Another twist is the fact that the Federal Reserve is still buying long-term Treasury securities. The rates on long-term Treasury securities often influence mortgage rates. As long as the Fed maintains its monthly bond purchase program, long-term Treasury rates are expected to remain somewhat low, keeping mortgage rates down with them.</p> <p>Of course, once the banks are no longer enjoying higher rates of return on the money they lend, it means they no longer pay their depositors a truly high yield.</p> <h2>When Will Savings Account Rates Go Up?</h2> <p>Following the last policy meeting for the Federal Open Market Committee (FOMC), the body that sets interest rate policy, Federal Reserve Chair Ben Bernanke announced that interest rates will remain ultra-low until 2015. The bond purchases will continue for now, but they are likely to be reduced as a prelude to an interest rate hike from the Fed.</p> <p>No one knows for sure when the Fed will decide to hike rates. The FOMC makes its decisions based on how members feel the economy is faring. If the economy is heating up, the Fed raises interest rates in order to slow inflation and keep growth in check.</p> <p>As the economy improves, interest rates are more likely to rise. There isn't the need to encourage banks and consumers to borrow, so rates are allowed to rise. Once the interest rates on loans begin rising, the yields on savings accounts are likely to begin rising as well.</p> <p>Until then, consumers are stuck looking for yield in places other than savings accounts. Many are turning to the stock market, since all of these efforts at economic stimulus are aimed at helping businesses borrow at lower rates (and boost their profits). However, there are larger risks with stocks than with cash held in a bank <a href="http://www.wisebread.com/what-you-need-to-know-about-the-fdic">insured by the FDIC</a>.</p> <p>If you have debt, though, now is a good time to aggressively tackle it. With interest rates lower, more of your payment goes to principal. And paying off high-interest debt will offer you a better return on your money than watching it languish in a savings account.</p> <a href="http://www.wisebread.com/why-savings-account-interest-rates-are-so-low" class="sharethis-link" title="Why Savings Account Interest Rates Are So Low" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Banking interest rates savings account Wed, 17 Apr 2013 10:24:31 +0000 Miranda Marquit 973515 at http://www.wisebread.com