In the city, it is not a rare sight to have a line of people waiting to use the ATMs. Many of us accept it as the consequence of living in highly populated area. I am usually the orderly fellow to patiently stand in line just like everyone else.

But, it does drive me nuts when there is that one person who becomes consumed in the mindless fiddle with the ATM to complete a simple transaction that should take no longer than two minutes. Everyone else on line would’ve agreed with me.

If it weren’t for the privacy factor, I’d walk right up and try to help speed the process along.

That’s why I suggest all banking customers to get familiar with the ATM interface so as to avoid pissing off all the other people who are waiting on line. On the plus side, it saves time and helps prevent crime (such as ATM skimming).

Mastering the ATM

Being an ATM ninja may not be something to boast about but you will be grateful when it shaves off those few precious seconds when you’re in a hurry.

To the point: There are only three reasons to use an ATM – to make a deposit, withdrawal, or a balance inquiry. While technology has advanced greatly, ATMs can’t do much more than that, yet.

• Learn to navigate the ATM interface for the 3 basic transactions. Please don’t pick the ATM in one of the busiest streets in town to do this. Wait for a time with low traffic to practice making each of those transactions. Don’t be afraid to ask a bank representative to show you how.
• Set your ATM preferences beforehand. It can get annoying when the ATM keeps asking the same question every single time you are making a transaction (and you keep giving the same answer every time). You can set the quick withdrawal, language, and receipt printing preferences at the ATM or through your online account.
• Know what transaction(s) you will be making before you get to the ATM. We all are wasting time when we don’t know what we are doing. Get in, do your business, and get out.
• Don’t stare and sulk at how much little money you have in your account! Go do something about it.

Time yourself the next time you go to the ATM. A cash and check deposit should take only a couple minutes to finish.

Note: Please keep it green. Don’t print the receipt. Save trees and your time.

(Photo credit: TheTruthAbout)

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Yesterday, my father woke me in a hurry saying:

“I just remembered my credit card bill payment is due today. What should I do?”

He doesn’t understand English. He is computer illiterate. He hasn’t used an ATM in the 23 years he’s been in the U.S.

What he does know is to review the transactions and how to sent the check in for payment.

In this day in age, it is relatively easy to make any bill payment in seconds with the help of the Internet. Where the predominant excuse is “I don’t have money”, my father just doesn’t know how. He has always been on time with his credit card payments but this time, it just happened to slip by him.

The Options
In the event that a credit card bill payment was due today, our instincts would be to jump on a computer and pay it online. The transaction goes through immediately and the worries are gone.

No late payment fee. No APR hike.

But, it is also great to know your other options when some things don’t go as planned:

1. Paying online is the way to go. Online banking was a great invention. Simply link your checking account to the credit card account and you can pay your balance with a few clicks. Not to mention that most smartphones make this process a total breeze as well.
2. Make a payment over the phone. Almost everyone has a phone these days but we tend to forget the things we can do with a simple phone call because we’ve been spoiled by easy access to the Internet. But, we can make credit card payments over the phone.
3. Ask to have the due date extended. If you’ve been a responsible customer with a good payment history, the credit card company may be lenient enough to push back your due date so that you have time to send in a check.
4. Walk into the bank with the check and bill payment slip. In the rare occasion that none of the previous three methods will work, taking a trip to the bank is the last resort. This applies to cardholders whose cards are issued by financial institutions with a brick-and-mortar branch. Bring the payment slip and a check and the payment is processed on the spot.

Easy as Pie
My father did not register his accounts online and he doesn’t really trust having his personal information on the internet. I would have signed up his accounts or called in to get things done but he preferred option #4. He’s the type that is accustomed to the old-school style of banking – with a teller.

So, I searched up a nearby location and went with him to drop off the payment so that he’ll know what to do the next time something like this happens again.

He was a little frantic as most people would be but it is not a big problem as long as you don’t remember that you didn’t pay your credit card bill 5 minutes before 5:00PM.

(Photo credit: RambergMediaImages)

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The financial industry was a different beast twelve months ago. This time has shed some light on the toxic relationship between three key parties: the government, financial institutions and consumers.

Thinking of the times before the economy fell, we were able to get a credit card easily and most people didn’t have too much trouble obtaining a mortgage for their home purchases. Lenders were lenient and credit was readily accessible. Such was the alleged reason for the credit crunch and subsequent recession.

While I believe big banks were at fault for bring down the global economy, the government’s attempt to stick up for consumers by reprimanding the financial industry will eventually come back around to bite us in the rear – which will trigger another government intervention, thus repeating the cycle.

The Death Spiral Begins Continues
The media and financial experts predicted this a long time ago – that banks will try to replace lost revenues by implementing or changing their financial products and services.

It’s a natural response that is exhibited by all life on Earth. When you destroy a garden of beautiful flowers that used to be the feeding ground for bees, they’ll move to another garden. If you lost your job, you’ll look to replace that lost income by searching for another source of income. If a “fat cat” banker can’t charge you for “this”, they’ll charge you for “that”.

With financial reform, these were some bank revenue sources that suffered:

• The group under the age of 21. This is a severe blow to the college student market for card companies.
• Penalty fees. Overdraft, late, and over-the-limit fees were reduced with restrictions. No more multiple penalties for a repeated violation.
• Interest charges. To reduce lending risk, banks cut credit lines and close accounts while new laws forced them to drop APRs if customers paid on time for 6 months straight. Also, potential borrowers weren’t able to meet their lending criteria.

Here are some of ways that banks have negatively influenced us since:

• Increased APRs. Around the end of last year, many cardholders saw their APRs jump for no apparent reason (even those who paid in full every month). This could be due to the new rules that card companies have to cut interest rates on good payment behavior.
• Reduced credit limits. Just like with APRs, credit limits were being slashed with no explanation and many took hits on their credit score. Banks were cutting their risk by reducing their extension of credit.
• Inactive accounts were closed. To them, inactive credit card users are the top echelon of deadbeats (those who are lose money to banks). Credit scores took a dive for those with large credit lines and long histories.
• Reduced rewards. There were some pretty amazing rewards and cashback credit cards out there before the economic downturn. Now, the rewards programs are abysmal. I curse the geniuses who came up with rotating categories.
• Card conversions. Some cardholders are seeing their accounts being converted to different cards with different perks and programs such a no pre-set spending limit card.
• Non-free checking. As of late, the sizzling news is that free checking may soon become extinct. We may see the days when we are nickel-and-dimed for simple things such as talking to a teller or receiving a paper statement.

So the game we are playing goes like this:

1. Banks want to make money and impose industry practices to bring about a profit.
2. Consumers suffer and grow increasingly unsatisfied by these practices.
3. The government steps in to defend the consumers by imposing new rules on banks.
4. Banks want to make money and create new industry practices to bring about a profit.
5. Consumers suffer some more and become more unhappy with banks.

Hurting Many to Help a Few
It feels as if financial reform has caused banks to cut the harm they do to the irresponsible customers and transfer their financial burden onto the entire customer base. It’s similar to one of those situations where one person arrives late to basketball practice but those who were on time had to run 5 laps while that one person watched.

Sure, we can’t blame those who had to undergo foreclosure and bankruptcy due to unfortunate events that were out of their control. But, I do think put quite a tight leash around the necks of banks. The majority of you (I hope) are handling your personal finances responsibly. Yet, you may find that your bank accounts and credit card accounts are becoming less and less attractive.

Are these effects sinking in for you yet? Do you feel financial reform has done good for the consumer population?

(Photo credit: Daniel Morris)

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Yes! Finally, another bank has followed the footsteps of USAA bank. I was one of the many banking customers who envied the USAA iPhone mobile banking app that allowed its members to deposit checks with the help of the phone’s camera.

With an update released on July 1st for the Chase Mobile iPhone App, I (and all other Chase checking customers) can now use my iPhone to deposit my checks from anywhere I please – extremely handy when I don’t have time to run to the ATM.

How It Works

1. Log onto your Chase checking account through your Chase Mobile iPhone App as you normally would.
2. Go to “Deposits” among the tabs on the bottom.
3. You’ll be asked to enroll in Quick Deposit if you haven’t already done so.
4. Enter the amount equivalent to the value of your check.
5. Using your iPhone camera, proceed to take images of the front and back of the check.

• Flatten your check before you snap the images.
• Make sure the entire check can be seen within the blue box on the screen.
• It is best to perform the check capture on a dark, non-reflective background.

6. Review that the check information is correct and that the images aren’t blurry.
7. Submit your deposit and wait for a confirmation email.
8. Hold onto your check until it has cleared. Afterwards, you can destroy it.

Many Chase checking customers have stated the check processing time took only a few minutes before they received an email that confirmed the deposit. Like an ATM deposit, you’d still have to wait a day or two before the money is actually posted to your account.

Quick Deposit by Chase is free – no fees of any kind. The drawbacks to this service are that Chase doesn’t allow you to deposit a check with an amount over $1,000 and there is a $3,000 deposit limit per month.

If you want this nifty feature on your iPhone, go get the update!

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So for the past two years, we’ve watched the Dow Jones tumble… and 401k’s emptied… and people lost jobs… and banks collapse… and foreclosures everywhere… and so much more. With the constant bombardment of dismal financial news, one thing we often hear and read from the media is: the Fed has cut rates and is keeping them near all-time lows.

It used to be such a pleasant sight when high-yield online savings accounts like HSBC Direct Advance and ING Direct were offering interest rates upwards of 5%. Back when the Fed dropped rates whenever it deemed necessary, I’d feel a bit of disappointment, as I knew the interest rate in my savings accounts would drop as well.

How Does That Happen?
Firstly, you should know that the federal funds rate is a target rate that the Federal Reserve strives for – it is not set in stone. This is the rate at which banks (such as Bank of America and Chase) borrows funds from Federal Reserve banks for whatever reasons they may have – but most notably, for lending purposes through mortgages and credit cards.

Banks are businesses that profit from lending your money at a higher interest rate than the interest rate on your savings account. So, a bank needs money to make money. Sources of money include customer deposits (such as those from you and I) and federal funds.

The bank’s cost to acquire capital is what determines the interest rates on depositor accounts. Banks have no direct control over the Fed rate but they can change the interest rate on their financial products. When the Federal Reserve announces a rate cut, it is becomes cheaper for banks to raise capital through borrowing federal funds than to attract deposits through offering higher interest rates. So, banks will reduce interest rates on savings accounts accordingly.

The demand for loans and credit has taken a plunge during the recent recession. With the government placing blame on banks for irresponsible lending that caused the credit crunch and the fall of the housing market, stricter lending ensued. Since banks aren’t lending as much, they don’t need as much of our money.

An Economic Force
The federal fund rate is such a big deal because it is a seemingly simple term but it has a drastic effect on the economy and is therefore a powerful tool in enforcing monetary policy. A rate cut lowers the cost of credit through lower interest rates, which encourages more borrowing and less saving with the goal of jumpstarting the economy – they want us to spend.

We will see high-yield savings accounts with interest rates higher than 5% when the U.S. economy experiences stellar growth – a time when the Fed raises rates so the economy doesn’t grow too quickly. Until then, we must live with the measly 1+%.

(Photo credit: LateNightTaskForce)

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The rare dilemma of having too much money and where to put it next is a dilemma that we all wished we had. For those who are able to resist splurging on the newest gadgets and fashion with the intent of saving for the future, you may have exhausted all possible financial retirement vehicles – and desperately seeking more options to grow your nest egg.

Such avid savers do exist because reader Josh posed some questions regarding a similar situation.

Josh’s wife doesn’t have a 401k or any sort of employer-sponsored retirement plan. After maxing out her Roth IRA, what other ways are there to help her reach her retirement goals?

While there are a plethora of other options that one could invest and save money, none of them can really provide the tax benefits that make 401k’s and IRAs such popular retirement vehicles.

• A taxable brokerage account. Despite not being a tax-advantaged account, a taxable brokerage account is a valuable alternative because they offer the widest variety of investments without income and contribution limits. For an aggressive approach, individual stocks are great for rounding out your portfolio allocation. Many advisors also suggest investments that would be bad for retirement accounts – such as tax-exempt funds and municipal bonds.
• 529 college savings plan or Coverdell ESA. Education costs are going up year after year. If you have children, the decision to start saving for their college education costs now would be wise. The 529 plan and Coverdell Education Savings Account are tax-advantaged since the contributed money grow tax-deferred and can be withdrawn tax-free for eligible educational expenses. These accounts won’t need $100,000s of dollars (hopefully) and will go towards your children, so they serve the purpose of reducing your financial burden in the future rather than actually helping you save for your own retirement.
• Money market funds, high-yield savings accounts, and CDs. While these accounts don’t have the ability to match the higher potential gains of true investments, they are the safest methods of building a savings. These accounts are often havens for liquid cash but not the best choices for meeting your retirement goals. Currently, they don’t pay enough to compensate for inflation. Outside of establishing an emergency fund and having some solvent cash, money for retirement should have a better home.
• Peer-to-peer lending. The social lending industry is growing at such a rapid pace that it could be the best new way to diversify one’s investment portfolio. For some people, stock selection may not be within their realm of expertise so investing in your peers may be a unique and intriguing alternative to buying shares of a company. Even though I’m a small and recent lender at LendingClub, I’ve found that peer-to-peer lending can be a great way of investing – I feel like a bank and I’m making (so far) an annualized return of 13.20%. Like all other investments, peer-to-peer lending doesn’t come without risks. People can default so it is best to diversify peer-to-peer loans.
• *Pay down any form of debt. Sure, this isn’t considered an investment or a type of savings. But, debt is counterproductive towards your retirement goals. If there is extra cash that won’t earn more than the 29.99% APR on your credit cards or even the 5.5% APR on your mortgage, why not pay them down so you are not losing money? Becoming debt-free early on paves a smoother path toward retirement.

The fundamental rule is not to spend or lose it – courtesy of Warren Buffett’s great investing mind. Many people find themselves in this situation where they feel like they are constrained to the typical 401k and IRA. Branching out and diversifying is a sound investment mentality.

With or without tax benefits, all we want is to see the money grow.

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Although HSBC Direct (which is now dubbed HSBC Advance) has never treated me bad, my plan to simplify, automate, and consolidate my finances has led me to close my HSBC Direct Advance online savings account. It was actually easier than expected and went smoothly – taking only a few minutes of my time.

Steps to Closing Your Account

1. Download any past account statements. It is always a good idea to keep a record of the financial transactions should you need it later – because you won’t have access to them after the account is closed.
2. Retrieve or transfer any remaining funds. A financial account is never officially closed if there is still an existing balance. You most likely have a checking account linked to the online savings account. Initiate a transfer to your checking account.
   

   Note: HSBC Advance has a $10 transfer limit. Since I had so little in the account (most of my money is in my ING Direct account), I moved money to HSBC Advance so that I could meet the transfer limit.

   Another option is to have them send you a check for the remaining balance (when requested in the next step).

3. Send your request via the BankMail feature. On the left panel when you log in, you’ll find “BankMail”. Select “Other” as your message subject. Simply write:
   

   I would like to close this account. (Please send me my remaining balance in a check – if needed.) Please send me confirmation when account closure is complete. Thank you.

   No need to give a reason – they don’t need one nor will they ask for one.

4. Wait for a letter in the mail. If you’ve signed up for electronic statements, then the account closure verification letter would come in the form of snail mail. It’ll state “CLOSED” in the white space under all the numbers.

I’ve got nothing bad to say about HSBC Advance. It was a quick and simple process – as opposed to the many horror stories I heard about others trying to close their bank accounts.

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The exact definition of a “direct deposit” is quite vague in the banking world. Most of us understand a direct deposit to be a method of receiving payment electronically into our bank accounts. The typical forms of direct deposit are wages and Social Security income.

Why Do I Need to Fake a Direct Deposit?
Many bank accounts often have a monthly fee that can be waived under certain conditions. Sometimes, they require that you have one direct deposit per month to avoid paying that fee.

Or, a bank may be offering a promotional bonus to new customers who open a bank account – and the bonus is rewarded once the terms are met, such having a direct deposit.

For example: A couple months ago, I opened a checking account when Chase was offering a $100 bonus for new Chase Checking customers. To get the $100 cash bonus, I needed to set up direct deposit or make five debit card transactions. I had to meet the same conditions if I wanted to waive the $6 monthly fee.

Therefore, faking a direct deposit would beneficial to avoid paying account fees and to earn bonus cash.

How Can I Tell if a Transfer is a Direct Deposit?
The easiest way to determine whether or not a credit in your bank account is a direct deposit is to set up account alerts. Account alerts is a common online banking feature that would serve as a detector.

Configure your alert settings to email or text you whenever you receive a direct deposit greater than $0.01. Now, you can go on ahead and test which transactions are considered direct deposits.

Ways to Fake a Direct Deposit

• Online savings accounts. Online banks such as ING Direct and HSBC Direct both offer popular online high-yield savings accounts. Perform a direct deposit test by making a small transfer from these savings accounts into your checking account. If this works for you, set up monthly automatic transfers to your checking account.
• Paypal. Electronic payment services such as Paypal have accounts where they hold money for you. Try to withdraw funds from these accounts and see if your checking account recognizes the transfer as a direct deposit.
• Amazon. If you sell your stuff on Amazon, you’ll know that you had to provide your bank routing number and account number to receive payment. Every two weeks, Amazon disburses payments to you. This is very much like received a biweekly paycheck and it is considered to be direct deposit.
• Affiliate and advertising networks. If you have your own website, affiliate and advertising networks will often pay you on a monthly basis (if you meet minimum payout requirements). Choose to receive your commission and earnings through direct deposit. Although it isn’t really faking a direct deposit, it is an alternative method of getting it.

Once you have found a method of getting a “direct deposit”, you would have to remember to initiate the transaction (or have an automated system set up) and confirm it with the account alerts.

Note: A direct deposit transaction is never initiated through the receiving bank account. That means that you shouldn’t request a transfer while being logged into your checking account.

So, to those who are paying those nasty monthly account fees – stop. And to those who will use fake direct deposits to take advantage of account bonuses – enjoy!

(Photo credit: ericskiff)

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Much like the need for an annual visit to your doctor it is always wise to give your financial health an annual checkup as well.

In the health report that your doctor gives you, the doctor alerts you to any potential health problems and gives you a diagnosis. Similar to a medical report, your financial reports will reveal any discrepancies that negatively affect your financial well-being.

Regular medical exams are safeguards to good long-term health because any problems will be brought to your attention and reduce the damage that would be done. Regular financial checkups are just as important to long-term financial stability and freedom. If you found fraudulent activity on your credit report, you’d be able to solve the problem early instead of having the identity thief ruin your credit – something that would be detrimental to your financial future.

Fortunately, reviewing your financial reports do not carry the same costs as a medical checkup – in fact, it doesn’t cost you a dime. No insurance, no co-pays, and no fees. Everything is FREE (many thanks to the Fair Credit Reporting Act).

Start your financial checkup now:

Your Credit Report

• Visit AnnualCreditReport.com.

This is the only place you can obtain all 3 credit reports for free – one each from Transunion, Equifax, and Experian. The numerous ads and jingles for places offering “free” credit reports on TV are all false. You may choose to view all three annual reports at once or spread them out over the course of the year.

Your Credit Score

• Visit CreditKarma.com.

Firstly, you should be aware that the credit score from CreditKarma is not a FICO score. Their credit score is a TransRisk score based on your Transunion credit report. A FICO score, which most financial institutions use, is rarely available for free. Nevertheless, the CreditKarma score serves the purpose of analyzing your credit to point out areas of concern and to show you places where you can improve your credit.

Your Banking Report

• Visit ChexSystems.

Sure there is such a thing called a “banking” report. ChexSystems is a consumer reporting agency just like AnnualCreditReport.com. A ChexSystems consumer report consists of information such as security alerts, bad account history, and inquiries under your name with regards to your deposit accounts such as savings and checking (take a look at a sample ChexSystems report here).

Curing Your Financial Woes
Unlike a medical checkup, you will not have a professional beside you to treat your financial health because you are solely responsible for your financial habits. Luckily, there is a bunch of resources online (e.g. personal finance blogosphere) that can help you if you discover that your financial health isn’t doing too well.

If need be, don’t be afraid to visit a financial professional to answer your questions and solve your problems.

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Here are referral links to sign up for ING Direct Online Savings Accounts and Electric Checking Accounts that will give a bonus of $25 upon opening a new account with a minimum deposit of $250.

ING Direct is probably the most popular online bank with its easy-to-use web interface and excellent customer support. It is a great start to a steady financial future. You should have your account set up in minutes and start earning interest on your money.

Simply click one of the links in the box below to sign up (you can only receive ONE bonus per person):

ING Direct Online Savings
Referral #1
Referral #2
Referral #3

ING Direct Electric Checking
Referral #1
Referral #2
Referral #3

NOTE: If you try to sign up and there is an error or a message that the link has already expired/been used, choose another link or leave a comment with your email and I’ll refer you directly. For those who successfully open an account through one of the links, please leave a comment so that I can remove it.

Don’t have $250 to deposit? Then sign up here (I receive affiliate commissions).

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