Opt In to Overdraft Protection and Unlimited Fees

I read an interesting article and I am not sure what to think. I wanted to make my readers aware of this important change so that you can make an informed decision. If you have not already you may be receiving literature from your bank to urge you to opt in to overdraft protection. The reason for this is because recent legislation will require come August 15th that account holders make this choice.  Banks are obviously concerned and are willing to spend large sums of money to get those who often use overdraft protection to opt in. In fact a nytimes article states they collected an estimated $20 billion from ATM and debit card overage fees.

How are they pitching this great consumer account feature? By more or less trying to scare people that it is more of a risk to not opt in to overdraft protection. This includes using phrases such as “in an emergency.” I am not sure about you but I cannot remember any instance where I occurred and overdraft fee charge from an “emergency”.  Conveniently this same legislation will not impose a limit on the number of times banks can impose these huge overdraft fees. It would seem to me instead of muscling consumers to opt in maybe offer them literature on budgeting and responsible spending. I would think the rational solution is not offer people a way to live beyond their means but teach them how to track and control their finances. Then again how else will they pay for their big bonuses.

Let me know what you think and if you will be opting in to giving your money away in the form of gross overage fees.

Matt

    Today February 22, 2010 the first phase of the Credit Card Accountibility and Responsibility Disclosure act goes into affect. Given the time banks had from when the law was actually passed last year many consumers have already been hit with new fees and higher interest rates but as many things government it is better than nothing. And to be fair it does create some real consumer protections on a going forward basis that did not previously exist. For the details of what rules are active today and when the remaining rules phase in click this link, credit card reform passed and what it means to you.

Matt

I found an interesting article on yahoo today. I am sure it will not stop most of us, myself included, from enjoying these from time to time but it may cause you to reconsider how often. In the article it explains how text messaging is a cash cow for cell phone carriers. Especially if you are paying per message. The other lesson I took away from this is that selling a product can be very profitable. So maybe after reading this you will find your own “bottle of wine” and present it in a way that adds value. This way you are the one making the 60 to 200 percent markup. To conclude I too away the following from the article;

1 – Movie theatre popcorn is outrageously overpriced. Bring some snacks from home and pop a bag of the fluffy white stuff when you get home.

2 – When it comes to over the counter medication buy the store brand, you will save several dollars each time and the savings only gets better if you have children. Trust me I know from experience.

3 – When it comes to wine and other spirits you will save significant money by drinking these  at home. Even better have some friends over for a glass of wine and some good conversation.  I definitely have taken notice of this since a bottle Corona at a restaurant or bar is usually $5.00 to $7.00. I can get a 12 pack at the local package store for $18.99 which is $1.58 per bottle. Makes you think twice about going to the bar.

No one is saying you can not go out and enjoy yourself from time to time but if you are buying these items and then using a credit card to purchase them it gets even worst. So make a budget and if you have some cash left over at the end of the month, then treat yourself to a drink or dinner.  And if you were buying them often stash some of that cash away in an emergency fund or investment that will allow you to escape the rat race.

Yahoo.Com – Click Here To Read

Matt

   This week a friend of mine received a letter in the mail. Upon opening the letter there was a newspaper type page folded up, two tickets and a voucher for a $500 gift card. Of course the gift card requires you to make a purchase prior to receiving an actual gift card. The literature was inviting her to come to a presentation by National Grant Conferences. The marketing material has consumer testimonials claiming that people were given, thousands to tens of thousands to one person stating that they received 1.3 million for their business that they do not have to pay back.

    Now when people start throwing numbers like that around and want you to come to their “conference”, I immediately put my timeshare hat on. I might be young but I have been around long enough to know that people have been hawking these so called grant secrets, free money, the government has money just waiting for you to claim no strings, gimmicks for years. Remember the guy dressed like uncle sam. And apparently Kevin Trudeau ,who has had his fair share of legal issues, is now selling a book with free government money made available by the Recovery Act. On top of this pile of bull, he states he is not making any money from the book.  If you believe that I have a bridge to sell you.

   So of course I had to check out this “opportunity” and see if the company was legitimate. I googled National Grant Conferences and many, if not most of the results,  had headings with scam and rip off. I also checked out Rip Off Report which usually is pretty good but to my surprise they said they interviewed a list of people given by an insider and another list given by the company and the results were positive. Then I checked the Better Business Bureau to see if their report reflected the positive interviews and found very different data. The BBB profile gave them a grade of F, not a good start. It also show the company filed for bankruptcy in 2008 and has had lawsuits brought against it by various attorney generals. Not to mention, to join you have to drop a thousand bucks. That should be a red flag right there. Most of the time after joining they tell you that you need to buy this software and that software or it is going to cost an additional several thousand dollars to help you get a grant.  Seems kind of crazy for something you can look up for free.

   Now it is not to say there are not programs and grants out there that could be of benefit. An example would be a new program for student loan debt that I told my sister about. The program is called income based repayment and allows people with a small income to possibly qualify for lower payments and even partial or full forgiveness of the loans. Full details can be found at ibrinfo.org. Also, if you are applying for an SBA Loan or grant or just need advice in starting a business then go to www.score.org and you can be connected with a mentor who can help guide you in the planning and business plan writing process. They also have free templates to download that are helpful.

   Finally let me do you a anotherand give you the so called secrets these guys are selling. The links following this article has information about what the government is offering. This information is available at no charge. All I ask is for a comment from those who do qualify for these grants, what you were the qualifications and what did you get. Let us share in your good fortune.

IRS – Recovery Act benefits reminder

Government Grants 

IBR – Income Based Repayment Details and Calculator

   If you find any other good ones, please comment with the link and I will update the post. It may take a little work to find and apply for these opportunities but as they say, “nothing in life is free”.

Matt

Bank of America, JPMorgan and BB&T a week later have announced significant changes to their overdraft fees policy.

     In what appears to be a proactive move by banks to attempt to regain the confidence of consumers several banks are making major changes to their overdraft policies. Though I agree these changes are good I still feel that their should be some sort of consumer protection law that will prevent banks from possibly going back to their racketeering grade practices when things improve.

      Bank of America Corp. announced on the 22nd that it will cap overdraft fees starting October 19th, Bank of America will no longer will charge overdraft fees when a customer’s account is overdrawn by less than $10 in one day. Remember getting hit with a $35 fee because they let you go over by ten cents. The irony is the consider this a benefit to the consumer. I think that is right up there with benefits such as stubbing my toe real hard or slamming my head in to a wall repeatedly. Bank of America will still charge the fee however if the account is not  within five days. Another change in their policy is limiting the number of times the $35 fee can be charged to an account to four times in one day.This a reversal of a previous increase in the cap from 5 to 10. They had also increased the overdraft fee from $25 go $35, an increase that will remain. Currently new customers are automatically paired with overdraft protection with opting out only allowed in “special circumstances.” The new policy will allow people to opt out at anytime causing transactions to be denied at the register if there are insufficient funds. Please note you will have to go to your local branch to opt out as a phone number has yet to be released for this service.  An AP article spoke with a BOA spokesperson who answered this when asked about the more damaging policy changes made earlier to which she responded, “the company is responding to the “changing needs” of customers in the difficult economic environment.” As a consumer I would be concerned that my bank thinks that when times are bad gauge the depositor who pays their bonuses with more fees and gotchyas.

     JPMorgan Chase & Co. and BB&T are making changes to their overdraft fees policy as well. JPMorgan is not giving a specific date but beginning first quarter of 2010, the bank will make overdraft protection opt-in for all customers, post transactions to accounts as they occur, and eliminate fees when accounts are overdrawn by $5 or less. They also going to cap the amount of times a fee can be applied per day to three from six. These terms are much more pro-consumer and further reinforce my distaste over how BoAconducts business with consumers.

BB&T will be modifying its overdraft policy as well eliminating fees if a transaction exceeds the account balance by less than $5. They will also limit the amount of times an account can be charged to 4 times and will also make changes to alert ATM customers if a withdrawal will overdraw their account.

     Most banks automatically enroll consumers in so called “overdraft protection.” Consumer advocates as well as myself believe these  overdraft programs are misleading. Overdraft fees become an industry standard in the past several years, and a hefty source of revenue for banks.

Matt

     On September 14,2009 President Obama gave a speech in New York’s Federal Hall outlining goals that he feels are necessary to bring Wall Street in line to protect Main Street’s consumers. His plan does include some necessary measures but thanks to lobbyist I do not think it will reach for enough. I have captured what I think are the main points below. We can only hope that this well lead to policies that will provide real fairness in the marketplace for consumers.

•  Banks have repaid more than $70 billion, and in those cases where the government’s stake has been sold completely, taxpayers have actually earned a 17-percent return on their investment.
•  Obama stated that we have been able to eliminate a $250 billion reserve included in our budget because the concern that the financial system would continue to worsen has not been realized.
• A new Consumer Financial Protection Agency will be created to enforce the new rules created by congress to protect consumers from the criminal fees and practices of credit card companies, banks and private mortgage lenders.
• Obama believes the plan has helped responsible homeowners refinance to stem the tide of lost homes and lost home values. This referring to banks rewriting outstanding mortgages for eligible people to a payment they can afford.
• Obama believes that their “recovery plan is providing help to the unemployed and tax relief for working families, all while spurring consumer spending. It’s prevented layoffs of tens of thousands of teachers, police officers, and other essential public servants. And thousands of recovery projects are underway all across America, putting people to work building wind turbines and solar panels, renovating schools and hospitals, and repairing our nation’s roads and bridges.” President Barack Obama 
• Obama goes on to say, which I find interesting is that, “Under existing rules, some companies can actually shop for the regulator of their choice – and others, like hedge funds, can operate outside of the regulatory system altogether. We have seen the development of financial instruments, like derivatives and credit default swaps, without anyone examining the risks or regulating all of the players. And we have seen lenders profit by providing loans to borrowers who they knew would never repay, because the lender offloaded the loan and the consequences to someone else. Those who refuse to game the system are at a disadvantage. While holding the Federal Reserve fully accountable for regulation of the largest, most interconnected firms, we’ll create an oversight council to bring together regulators from across markets to share information, to identify gaps in regulation, and to tackle issues that don’t fit neatly into an organizational chart. We’ll also require these financial firms to meet stronger capital and liquidity requirements and observe greater constraints on their risky behavior. That’s one of the lessons of the past year”
• President Obama goes on to say that, “The only resolution authority we currently have that would prevent a financial meltdown involved tapping the Federal Reserve or the federal treasury.  With so much at stake, we should not be forced to choose between allowing a company to fall into a rapid and chaotic dissolution that threatens the economy and innocent people, or forcing taxpayers to foot the bill. Our plan would put the cost of a firm’s failure on those who own its stock and loaned it money.  And if taxpayers ever have to step in again to prevent a second Great Depression, the financial industry will have to pay the taxpayer back – every cent.”
• Obama stated, “So when, as happened this weekend, we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism.  We do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system.” Which I agree with immensely because it seems that many countries can conduct trade in whatever manner that is advantageous to their country but if do something to enforce laws that already exist to ensure fairness they scream protectionism.
• In order to keep cost down and reduce our deficit Obama said that he is pushing to restore pay-as-you-go rules which basically means that the government cannot increase or pass new spending if it does not include the mechanism that will cover the cost. I hope he is able to accomplish this because I am proud of our country but we have allowed it to grow week financially and that hurts everyone.

Now he really did not go into in his speech but there is the health care reform. I have say it all the time, I agree that we need reform I would just like them to start by fixing our current system and creating a fair market place where healthcare companies are not allowed to charge whatever they like. I think this applies to insurance companies such as car and home as well. Fingers crossed people that maybe we will finally get the change we were promised.

Matt

I realize this is off topic for my blog. However, being a resident of Connecticut this definitely hits close to home. It is unfortunate that there is truly no safe place in this world anymore. With that I just wanted to send my deepest and most sincere condolences to her family and fiance. They believe they have her murderer. I hope he is given an equal punishment. This was a young lady who besides starting a life with her finance, may have cured cancer or some other ailment that we cannot cure. Now we will never now.

Story from WTNH – Click to Read

    Just wanted to throw a quick post out there on how to save some cash fast. I am not a big fan of signing up for offers and sweepstakes because I know that 99% of the time it is just to collect my information to turn around and sell to marketers. However, I have two that I recommend because they save real money and so in this case the reward outweighed the risk.

Borders Rewards Card - If you are a book worm like me, like owning books, and like saving money, then this card has been a good deal. You will see these frugality sites and articles stating save money by going to your library to take out books and movies. I guess if you were spending a significant amount of money a year on books I  could see this helping but I often reference the books buy so owning them is easier. I have been getting crazy offers for 30%-40% discount offers. In fact I just got $5.00 off using one of these. I buy  maybe six books a year, average price $20, so for no effort at all I can save 25% or $30 a year on my book budget. I not taking early retirement on it but it is real money on purchases I would  make anyway.

Chuck E-Club- As a single dad this one has saved me some real cash. They quite regularly email me coupons to get a  large2 topping pizza with 4 drinks and 100 tokens for $28.99. If you just walk in the cost would be $38.99, which is a difference of a little more than 25%. No for a family to go out and have a meal and several hours of entertainment, $40 is not bad. This same package for$30 in my opinion is a steal. If you are a family of four and go on average once a month, you would save $120 a year. They also do promotions where you get free tokens with no purchase required. That is a discount of 100%.   Am I saying that t either of these will make you rich, no! I share Ramit’s belief, ( I will Teach you to be Rich author ), that you cannot thrift your way to wealth. Or at least I am not willing to commit to that level of sacrifice. However, I do believe if you are spending on certain purchases, and you can get good discounts for little to no effort, than you would be a fool not to save. I mean if  you do not want the money please feel free to donate it to me. I promise it will be put to good use. Finally, if you have any other quick tips like this please email  them to webmaster@faslip.com.

Thank you,
Matt