Bank of America to charge monthly fee to debit card users(bucks.blogs.nytimes.com)
bucks.blogs.nytimes.com
Bank of America to charge monthly fee to debit card users
http://bucks.blogs.nytimes.com/2011/09/29/banks-adding-debit-card-fees/?hp
135 comments
This particular situation is more nuanced than the usual profit-from-the-poor story. Every bank and credit union receives these fees, and in the case of not-for-profit credit unions, the interchange fees truly support[ed] "free checking" accounts. Whereas merchants can lower their prices to pass the money back to the consumers (but won't), banks, conversely, have nowhere to recoup their losses except to charge the debit card users. I would rather see an honest fee like this than watch as overdraft penalties are raised to cover the lost revenue.
[deleted]
Switching to the credit might not help. Some merchants charge more for credit card purchases (to cover the transaction fees). Well, technically they gave a cash discount to people not using credit cards because credit card association rules prohibited charging more than the advertised price to credit card users, but the net effect was the same.
And now, due to the Wall Street Reform and Consumer Protection Act 2010, credit card associations are no longer allowed to have that control, so merchants can instead advertise the cash price and add a surcharge for credit cards (ARCO just recently started taking credit cards, and that is what they are doing).
Furthermore, merchants can now charge extra to people using rewards cards. A lot of people don't realize this, but when you use a card that give cash back, or mileage, or points or whatever, the bank and credit card company do not pay for those rewards. They charge an extra 0.97% of the transaction amount to the merchant to cover the rewards.
And now, due to the Wall Street Reform and Consumer Protection Act 2010, credit card associations are no longer allowed to have that control, so merchants can instead advertise the cash price and add a surcharge for credit cards (ARCO just recently started taking credit cards, and that is what they are doing).
Furthermore, merchants can now charge extra to people using rewards cards. A lot of people don't realize this, but when you use a card that give cash back, or mileage, or points or whatever, the bank and credit card company do not pay for those rewards. They charge an extra 0.97% of the transaction amount to the merchant to cover the rewards.
There is actually something more fundamentally troubling about this new fee ...
it drives Americans to use more credit.
It was pointed out to me recently that this tendency towards credit that is really 'built-in' to the rules in our society, would probably end up doing us in one day. Sometimes you don't even think about it. I recall once, shortly after the onset of the financial unpleasantness that began in 2008, I was at an airport trying to rent a car. I thought, "Hey...I'd better start practicing what I preach!" So I whipped out a simple debit card, with more money behind it than the value of the car I was renting. "Nope...we don't accept debit...only credit". I thought, "That's a little strange...no wonder the financial system is taking a crap." I didn't have a lot of time, so I just did the credit card thing.
Point is, there are a large number of places out there that will not allow you to do business with them unless you are willing to go into debt, for however brief a period of time. When you consider the size of the US and the number of transactions being made every day...that's a little concerning.
it drives Americans to use more credit.
It was pointed out to me recently that this tendency towards credit that is really 'built-in' to the rules in our society, would probably end up doing us in one day. Sometimes you don't even think about it. I recall once, shortly after the onset of the financial unpleasantness that began in 2008, I was at an airport trying to rent a car. I thought, "Hey...I'd better start practicing what I preach!" So I whipped out a simple debit card, with more money behind it than the value of the car I was renting. "Nope...we don't accept debit...only credit". I thought, "That's a little strange...no wonder the financial system is taking a crap." I didn't have a lot of time, so I just did the credit card thing.
Point is, there are a large number of places out there that will not allow you to do business with them unless you are willing to go into debt, for however brief a period of time. When you consider the size of the US and the number of transactions being made every day...that's a little concerning.
Travel is very prone to this. Car rental, hotels, airfare tickets (sometimes). You also get car rental collision insurance with most credit cards too. Most car rental agencies will also allow you to put a deposit of several hundred dollars instead of a credit card.
It's any industry that is prone to customers doing massive damage easily, like crashing cars, trashing hotel rooms, etc.
It's any industry that is prone to customers doing massive damage easily, like crashing cars, trashing hotel rooms, etc.
One difference between debit and credit is when they do things like authorize payments, but then never actually capture them. When it comes to debit cards, some banks will pull that money out of your account, and not release it until may be 10 days after the authorize expires. On the other hand, these things can happen instantly (or within a day) on a credit card. Some people are rather annoyed when they do something like book a hotel room on a debit card, but then pay on their credit card when they checkout. The authorized amount disappears from their account for ~14 days and they think that they were charged twice (because their bank isn't necessarily transparent about this).
I know the standard when I've stayed at hotels that do accept cash (AKA Debit) they wan't $100 or more as collateral, I assume to avoid the whole problem you just described.
However, what I didn't know, which I soon realised was that the hotels pre-authorization hits like $500 on a room I pay $50 for a night. I found this out when I'd just moved country, had zero-credit, had a single $1000 visa card and was planning on putting a weekend away with my wife on credit so I'd have two pay checks in before I had to fork out the cash.
The worst was when we booked a campsite out of season. It cost us $14 a night and they required booking by credit card. They had $500 pre-authorized for over two weeks until we'd stayed, and I paid them cash. It's absolutely absurd.
Thankfully since the hotel incident we've always kept a burner credit card for things like this. I don't get the logic behind extending someone credit and then allowing it to be held-up in pre-authorization that will never get processed for the full amount when the credit could be spent at a restaurant or something.
However, what I didn't know, which I soon realised was that the hotels pre-authorization hits like $500 on a room I pay $50 for a night. I found this out when I'd just moved country, had zero-credit, had a single $1000 visa card and was planning on putting a weekend away with my wife on credit so I'd have two pay checks in before I had to fork out the cash.
The worst was when we booked a campsite out of season. It cost us $14 a night and they required booking by credit card. They had $500 pre-authorized for over two weeks until we'd stayed, and I paid them cash. It's absolutely absurd.
Thankfully since the hotel incident we've always kept a burner credit card for things like this. I don't get the logic behind extending someone credit and then allowing it to be held-up in pre-authorization that will never get processed for the full amount when the credit could be spent at a restaurant or something.
Authorizing an amount, but never capturing it ('capture' is the industry term IIRC) is a hack on the system so far as I'm concerned.
1) I've gotten security calls from banks before just because some gas stations were authorizing the card for $100 prior to capturing for the actual amount of the gas. It even took the person on the phone a while to tease out that it was a $100 auth and not a $100 purchase.
2) The hotels a authorizing for a large amount because they want to make sure that you can pay for damage. They don't care if it goes on your credit. They get their money, then payment just becomes a matter between you and your credit card company. Note that not all hotels will authorize for $500.
1) I've gotten security calls from banks before just because some gas stations were authorizing the card for $100 prior to capturing for the actual amount of the gas. It even took the person on the phone a while to tease out that it was a $100 auth and not a $100 purchase.
2) The hotels a authorizing for a large amount because they want to make sure that you can pay for damage. They don't care if it goes on your credit. They get their money, then payment just becomes a matter between you and your credit card company. Note that not all hotels will authorize for $500.
> I don't get the logic behind extending someone credit and
> then allowing it to be held-up in pre-authorization that
> will never get processed for the full amount
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Reminds me of something I tweeted a while ago:
"Something's wrong when its easier to earn credit card cash back than interest on savings..."
http://twitter.com/#!/suanyeo/status/106413797811568640
"Something's wrong when its easier to earn credit card cash back than interest on savings..."
http://twitter.com/#!/suanyeo/status/106413797811568640
Maybe from the mile-high view, but the reason cash rewards work is because the credit card company is essentially sharing part of the fee they extracted from the vendor with the customer. Fundamentally different than interest on savings.
I wish to god I had the link handy, but I saw the "Rewards" programs explained in painful detail before and actually shows that the card companies do no sharing of the profit margin, the 1% or 2% comes out of the retailers pocket on the backend when the transaction is processed.
In this particular article it talked about that being the reason why some retailers discouraged processing charges with certain cards that have typically higher rewards.
Sorry for the hand-waving, I know that is the worst way to make a point... "This guy I know told me that his friend said..." :(
In this particular article it talked about that being the reason why some retailers discouraged processing charges with certain cards that have typically higher rewards.
Sorry for the hand-waving, I know that is the worst way to make a point... "This guy I know told me that his friend said..." :(
It is just interesting seeing it at work. I get 1% cash-back on all purchases, and 2% on some others. I've already save up quite a bit on my cash-back, more-so than I have earned in interest on my savings account with 10k+ in it.
I am not even spending an absurd amount, just what I need to survive, and bills.
I am not even spending an absurd amount, just what I need to survive, and bills.
>it drives Americans to use more credit.
Oh it does not. $5/mo is just a way for BoA to disincentive people from using their debit card.
It means more transactions get pushed through VISA network, more fees for visa, and probably a kickback for BoA.
My check card can also be processed as credit, and it usually is. This isn't because I'm buying things on credit, it's just that that's how it is being processed. The money still comes directly out of my checking account.
Oh it does not. $5/mo is just a way for BoA to disincentive people from using their debit card.
It means more transactions get pushed through VISA network, more fees for visa, and probably a kickback for BoA.
My check card can also be processed as credit, and it usually is. This isn't because I'm buying things on credit, it's just that that's how it is being processed. The money still comes directly out of my checking account.
The bank likely won't care if you use your card with a PIN ("PIN debit") or with a signature ("Signature debit"), which you refer to as "processed as credit". Either way, they still know it's your debit card that was used even though PIN and Signature debit transactions arrive at the bank through separate networks, so you'll probably get hosed with the fee unless you're in one of their "premium" accounts.
Community banks and credit unions everywhere are licking their chops at the opportunity to siphon off disgruntled customers.
Community banks and credit unions everywhere are licking their chops at the opportunity to siphon off disgruntled customers.
I disagree.
The fee structure for "credit" purchases is different than that for "debit" purchases. It's in the interest of VISA to have me run the transaction as "credit". Would it surprise you if there was cooperation between BoA and VISA (or any other CC provider) to encourage the use of this? The $5/mo charge just encourages it even further.
The fee structure for "credit" purchases is different than that for "debit" purchases. It's in the interest of VISA to have me run the transaction as "credit". Would it surprise you if there was cooperation between BoA and VISA (or any other CC provider) to encourage the use of this? The $5/mo charge just encourages it even further.
You're absolutely right, the structure is different for Signature and PIN debit. Pre-Durbin there was a large gap between Signature and PIN debit interchange income and banks wanted you to use Signature debit for that reason.
With Durbin rules implemented that gap has narrowed and now the bank wants you to use an actual Credit Card vs. a Signature Debit transaction because they will make more interchange income off of it.
With Durbin rules implemented that gap has narrowed and now the bank wants you to use an actual Credit Card vs. a Signature Debit transaction because they will make more interchange income off of it.
>The bank likely won't care if you use your card with a PIN ("PIN debit") or with a signature ("Signature debit"), which you refer to as "processed as credit".
Mine does. They have a $1.50 charge whenever I use my PIN for non-ATM transactions. If I sign, there is no fee. It's been this way for the last 10 years I've had a debit/checking line with them.
Mine does. They have a $1.50 charge whenever I use my PIN for non-ATM transactions. If I sign, there is no fee. It's been this way for the last 10 years I've had a debit/checking line with them.
I was speaking in terms of charging the $5/month fee. Pre-Durbin amendment there was a much wider gap between PIN and Signature debit revenue which is why the bank encouraged you to use Signature debit by surcharging you for using PIN debit.
have relatives at another evil bank in another western country.
the way they tell it is that the bank really doesn't want the less fortunate out there as customers. if they could figure out a way to drop them without the public backlash they would.
the way they tell it is that the bank really doesn't want the less fortunate out there as customers. if they could figure out a way to drop them without the public backlash they would.
This makes sense to me. Revenues scale with deposits, but many expenses scale with number of customers. Below a certain balance, the bank actually loses money on each additional checking account - better for them if you just go somewhere else. Also, the less money you have in your account, the less certain they can be of the maturity of the loan you've made them. Given they can basically borrow from the fed for free, why would they want your money?
Maybe the poor should start pooling their own money. For example, I heard about some system where a group of people all pay into a pot once per month, and they rotate through who gets the pot. It basically becomes a forced way of savings because there is peer pressure not to come up short. Though I guess this isn't fully a replacement for a bank, but I guess it could help people save up to a level that they don't have to be a 'bad customer' to a bank.
It is called a Chit fund: http://en.wikipedia.org/wiki/Chit_fund
It is so popular in South India that it is now a regulated financial industry. There are quasi-government bodies that operate chit funds.
It is so popular in South India that it is now a regulated financial industry. There are quasi-government bodies that operate chit funds.
Yep, common in Trinidad (and many other places I'm sure). They call it a Sou Sou.
http://www.urbandictionary.com/define.php?term=sou-sou
http://www.urbandictionary.com/define.php?term=sou-sou
If you want to research a foul way of doing business, read up on Chexsystems and the collusion of major banks with national check-cashing firms. 20 years ago a consortium of bankers got together and essentially said, "if we build a credit-report system for bounced checks, we can limit our liabilities from poor people and make them give us 3-5% of their income by blacklisting them from all the nation's banks".
Blacklisting people who bounce checks seems a lot more reasonable than many other banking practices. Don't bounce checks; you're committing a form of fraud, providing a promise to pay money you don't have. I see nothing wrong with refusing to do business with people who regularly commit fraud.
Wow. I was in chexsystems for seven years. My fraud was that two automated payments to PG&E and Speakeasy bounced. Why did they bounce? A woman in a volvo ran a red-light while I was commuting to my stupid dot-com job, causing me to spend a month in the hospital, half of that in and out of a coma. I had no friends or family nearby to visit me, let alone to tend to my finances while I was incapacitated. I'm an engineer, I don't mind the $5k/year vig I had to pay to the loan-sharks (because banks won't turn large checks into cash if you don't have an account with them, even though they are valid checks written off of accounts with them). I don't mind having to go to the ghetto to visit these loan-sharks. I don't mind that I couldn't get a car-loan, a mortgage, student loans, a credit card, or a lease without a co-signer. I still survived, I just went through an incredible amount of stress and inconvenience. I still don't mind, life is suffering. I accept that.
What I do mind is the needless suffering my very poor aunt has to endure because of this extortion aimed at the poor. She nets about $14k/year, without health-insurance, from serving lattes to entitled engineers like myself. Of that $14k has to spend $700/year to the same loan-sharks. Her "fraud" was assuming that debit card purchases would be reflected instantly when she carefully checked her account before paying her utility bill two years ago.
She made a mistake that frankly she wasn't educated enough to anticipate was even possible. Now she's suffering needlessly for it.
For a person in the real world, you know the one who serves you your half-fat breve latte with a twist, foam and room, the system has refused to do business with her in order to extort enough money from her to ensure that she can't climb up any ladder.
Yeah, fraud.
What I do mind is the needless suffering my very poor aunt has to endure because of this extortion aimed at the poor. She nets about $14k/year, without health-insurance, from serving lattes to entitled engineers like myself. Of that $14k has to spend $700/year to the same loan-sharks. Her "fraud" was assuming that debit card purchases would be reflected instantly when she carefully checked her account before paying her utility bill two years ago.
She made a mistake that frankly she wasn't educated enough to anticipate was even possible. Now she's suffering needlessly for it.
For a person in the real world, you know the one who serves you your half-fat breve latte with a twist, foam and room, the system has refused to do business with her in order to extort enough money from her to ensure that she can't climb up any ladder.
Yeah, fraud.
There's a reason I said "regularly"; blacklisting someone who bounced one check seems excessively harsh. And I also consider it entirely unreasonable for any bank to refuse to cash their own checks, under any circumstances; I haven't run into such a bank but I can easily believe that they exist.
In any case, those sounds like two quite painful tales. There's a reason I don't set up automatic payments for anything (I prefer manually using online bill pay each time).
In any case, those sounds like two quite painful tales. There's a reason I don't set up automatic payments for anything (I prefer manually using online bill pay each time).
This is used to trap poor people. Joe Anonymous accidentally miscalculates the available balance of his checking account and makes a debit card purchase of gum for $0.99. His account balance is now -$0.23. PNC hits him with an overdraft fee of $25, and an additional daily overdraft fee each day until Friday (payday), bringing his balance into the negative by hundreds of dollars. Joe then has to choose between paying his rent and bringing his account current at PNC. After a month or so, PNC blacklists him and he can't open a bank account anywhere.
Not fraud as far as I can see. At least not on Joe's part.
Not fraud as far as I can see. At least not on Joe's part.
With many banks, you can go to the bank and tell them to simply refuse payment of any overdraft, rather than granting it and charging you. Your card will then get declined if you don't have enough in your account.
The automatic overdraft "protection" scam was recently made illegal. Now you have to opt-in to have overdrafts covered.
Banks made a ton of money off of this, so this is another reason why they are trying to find new ways to raise revenue. At least a $5 fee is out in the open, and consumers can choose.
Banks made a ton of money off of this, so this is another reason why they are trying to find new ways to raise revenue. At least a $5 fee is out in the open, and consumers can choose.
[deleted]
Clearly time to go back to using cash! ;)
This is why I use the local credit union and avoid BoA like the plague.
"The formula sets the cap at 21 cents, plus .05 percent of the transaction amount, plus another penny in certain cases, for fraud-control measures."
I understand that running to the government for solutions is rarely a good thing, but in this case, shouldn't "digital currency transactions" be something that the federal government maintains as a free utility to society? Isn't something like this just as important as printing currency?
I understand that running to the government for solutions is rarely a good thing, but in this case, shouldn't "digital currency transactions" be something that the federal government maintains as a free utility to society? Isn't something like this just as important as printing currency?
So you know cash has processing fees associated with it, right? Really. They're totally orthogonal to the cost of physically creating paper or metal currency, and they're mostly subsidized by merchants. Cash management is a hard problem. WalMart spends about 3 million every year moving pennies around -- that actual coin type. Every time a salon owner has to spend time driving to the bank or money leaves a cash register, that's just another cost incurred because the merchant accepted cash money as a payment type.
Checks also have processing fees associated with them. They're mostly subsidized by banks.
Credit cards have processing fees, paid for mostly by merchants.
Merchants really want banks to subsidize their use of debit cards, like banks subsidize their use of checks.
There is no such thing as free, there's just free-from-the-perspective-of-your-own-P&L-statement.
Checks also have processing fees associated with them. They're mostly subsidized by banks.
Credit cards have processing fees, paid for mostly by merchants.
Merchants really want banks to subsidize their use of debit cards, like banks subsidize their use of checks.
There is no such thing as free, there's just free-from-the-perspective-of-your-own-P&L-statement.
> WalMart spends about 3 million every year moving pennies around -- that actual coin type
I tried googling the data but I didn't find it. Is there a reference for that?
I tried googling the data but I didn't find it. Is there a reference for that?
Yes. Google walmart "moving pennies" and click on the first result
Please don't use google as a reference. Please, when you want to make a reference, use anything else.
The first two results are to hacker news (this page!) and after that the results are to pages about penny stocks.
http://www.google.dk/search?q=walmart%20%22moving%20pennies%...
I know my google-fu is worthless but I can at least follow directions, and it still comes up with nothing.
The first two results are to hacker news (this page!) and after that the results are to pages about penny stocks.
http://www.google.dk/search?q=walmart%20%22moving%20pennies%...
I know my google-fu is worthless but I can at least follow directions, and it still comes up with nothing.
I also understand that maintaining roads is not free, however I'm not paying fees to private companies for the privilege of using them because of how important they are to national infrastructure. I should be paying less overall in taxes to maintain these roads then I would be paying a collection of individual for-profit companies to get the same level of service...in theory.
Is digital currency still too immature to consider the same?
Is digital currency still too immature to consider the same?
Real costs are probably higher than you expect. Sure, it's so cheap it might as well be free to write a program that debits one number and increases another and run it a few billion times, but reliable financial systems require more than that. Consider what it takes not just to implement a chargeback, but to be able to implement a chargeback, and to be able to stand behind it legally, and to be able to defend against lawsuits, to be able to prove compliance with various regulations, etc etc. Everything looks easy from the outside.
I don't see any compelling reason to think the government would intrinsically do any better, it would just move the costs around and probably incur more of them overall when the full accounting was made, which it never would be, because who can regulate the regulators?
I don't see any compelling reason to think the government would intrinsically do any better, it would just move the costs around and probably incur more of them overall when the full accounting was made, which it never would be, because who can regulate the regulators?
Is there any evidence that there is a competitive market driving the prices down though? Looks like this regulation was designed to push down costs by fiat, but people wanted to keep their profit margins and shifted the costs, so no worse than what you are saying the government would do. The government should be trying to design cmpetition into the system.
Why do banks in the USA charge so much for generic P2P wire transfers between accounts? It's cheaper and quicker to give someone a check in the USA in a face to face situation vs. a simple wire transfer to their bank account. Wire transfers would be cheaper for the bank since they wouldn't have to process paper checks. ACH is kind of there, but that's not open to the general public.
I think he was saying that the gov't should make it free, not that it is a free service with artificial costs attached to it.
It can be done. Up until 2005 Denmark's government-regulated debit card network called Dankort was completely free of fees.
Eventually the banks lobbied the government to allow per-transaction fees to be charged for use of the card, but after only a few months of that practice there was so much protest among consumers that the per-transaction fee was converted into a fixed annual fee.
http://en.wikipedia.org/wiki/Dankort
Eventually the banks lobbied the government to allow per-transaction fees to be charged for use of the card, but after only a few months of that practice there was so much protest among consumers that the per-transaction fee was converted into a fixed annual fee.
http://en.wikipedia.org/wiki/Dankort
How do you maintain something as "free" when it costs money? Do you mean having no fees for the digital currency transactions and having the tax payer pick up the cost?
Tax payers have been paying for manufacturing of tangible currency for many centuries. Creating and supporting financial environments is one of the features of governments.
It depends on whether or not there's still room for innovation in digital currency transactions. If there is room for innovation then the private sector should focus on it before everyone combines their effort on a consensus.
Well, I'm switching (I don't have a credit card). What is a good alternative? I know everyone loves USAA, but none of my family has any relation to the military. BoA is "great" because it is everywhere, is there actually anything as wide spread in the (northeast) US?
I don't even care about widespread. I'll take anybody with a descent website.
I don't think it's true of all of their products, such as insurance, but I believe the general public can sign up for USAA banking. This was true a few years ago when I was looking for a new bank, but I ended up going elsewhere for unrelated reasons.
You're in luck:
"USAA's investment products, most checking and savings products, credit cards, life insurance, and shopping and discounts are available to other individuals."
This was a somewhat recent change to expand eligibility.
"USAA's investment products, most checking and savings products, credit cards, life insurance, and shopping and discounts are available to other individuals."
This was a somewhat recent change to expand eligibility.
My coworker just got back from an internship at USAA. She mentioned you no longer need to be related to a service member to open a checking account.
Hands down, they are an amazing bank. I've had Paypal issues which they reversed within 2 days. No ATM charges and monthly refunds for any charges. Monthly interest refund. Great services overall by the people and the web.
I believe you can also take out a credit card. Insurance is only for military members.
Hands down, they are an amazing bank. I've had Paypal issues which they reversed within 2 days. No ATM charges and monthly refunds for any charges. Monthly interest refund. Great services overall by the people and the web.
I believe you can also take out a credit card. Insurance is only for military members.
Is that in writing anywhere? The USAA website suggests otherwise.
https://www.usaa.com/inet/pages/pub_eligibility_task_entry
Who is eligible?
Active, retired and honorably separated officers and enlisted personnel of the U.S. military.
Officer candidates in commissioning programs (Academy, ROTC, OCS/OTS).
Adult children whose eligible parents have or had a USAA auto or property insurance product.
Widows and widowers of USAA members who have or had a USAA auto or property insurance policy.
There are other ways to get in, but it is still via (sometimes indirectly) the military. Occasionally they open it up to employees of various government agencies. You can also get in if your spouse is a member. My wife was previously married to a member of the military and got in that way. I got in when she married me.
USAA is awesome. If I didn't have them I'd probably look into BankSimple.
https://www.usaa.com/inet/pages/pub_eligibility_task_entry
Who is eligible?
Active, retired and honorably separated officers and enlisted personnel of the U.S. military.
Officer candidates in commissioning programs (Academy, ROTC, OCS/OTS).
Adult children whose eligible parents have or had a USAA auto or property insurance product.
Widows and widowers of USAA members who have or had a USAA auto or property insurance policy.
There are other ways to get in, but it is still via (sometimes indirectly) the military. Occasionally they open it up to employees of various government agencies. You can also get in if your spouse is a member. My wife was previously married to a member of the military and got in that way. I got in when she married me.
USAA is awesome. If I didn't have them I'd probably look into BankSimple.
Yep, it looks like anyone can get a USAA bank account even if they are not military or a spouse/child of a USAA member.
https://www.usaa.com/inet/pages/why_choose_usaa_main
USAA's investment products, most checking and savings products, credit cards, life insurance, and shopping and discounts are available to other individuals.
The catch is that the remote check deposit feature is only available to people who are eligible for USAA auto/property insurance, and the criteria for that are the criteria you linked above. Not having remote deposit kind of limits the utility of the account.
https://www.usaa.com/inet/pages/why_choose_usaa_main
USAA's investment products, most checking and savings products, credit cards, life insurance, and shopping and discounts are available to other individuals.
The catch is that the remote check deposit feature is only available to people who are eligible for USAA auto/property insurance, and the criteria for that are the criteria you linked above. Not having remote deposit kind of limits the utility of the account.
I thought remote deposit was available to folks with an insurance product or a line of credit (a simple credit card, for instance) with USAA? Or maybe it was an AND and not an OR?
Edit: I'm wrong. It does indeed require that you're eligible for property and casualty insurance, that you have a checking or savings account, and that you have or qualify for a credit card or loan through USAA.
Edit: I'm wrong. It does indeed require that you're eligible for property and casualty insurance, that you have a checking or savings account, and that you have or qualify for a credit card or loan through USAA.
You can deposit your checks at UPS stores. If you only rarely use checks this works well as a solution.
You no longer need any relation to the military to join USAA. That said, I recently switched from USAA to Ally. Same features, better rates, and better support. Both banks have decent web sites, and let you withdraw for free at any ATM, so for me they beat even BoA for convenience.
I really like Ally. I was a little hesitant about them based on their GM past, but now I've switched I'd never go back to a brick and mortar.
People always ask me the same questions: Q: How do I get money out if there are no ATMs? A: I use any ATM, Ally refunds the fee, so even those sleazy but oh-so-convienent ATMs are great.
Q: What if there's a problem? A: When is the last time you saw your bank manager? I never spoke to mine at BofA. Whenever I had anything more than a trifling issue, the teller directed me to call the BofA phoneline anyway. I may as well endrun the whole hassle and talk directly to Ally (who also have very quick wait times).
The only thing Ally doesn't do yet is scanning checks. I haven't got a physical check for a while now, but if I do, I put it into my BofA account (which is otherwise entirely dormant) and have Ally debit it out.
People always ask me the same questions: Q: How do I get money out if there are no ATMs? A: I use any ATM, Ally refunds the fee, so even those sleazy but oh-so-convienent ATMs are great.
Q: What if there's a problem? A: When is the last time you saw your bank manager? I never spoke to mine at BofA. Whenever I had anything more than a trifling issue, the teller directed me to call the BofA phoneline anyway. I may as well endrun the whole hassle and talk directly to Ally (who also have very quick wait times).
The only thing Ally doesn't do yet is scanning checks. I haven't got a physical check for a while now, but if I do, I put it into my BofA account (which is otherwise entirely dormant) and have Ally debit it out.
Ally is rolling out the eCheck deposit feature: http://community.ally.com/straight-talk/2011/04/ally-bank-in...
In the meantime, you can simply mail them your checks, using their free pre-stamped envelopes. It only takes a couple of days for your money to show up. Faster and easier than going through a brick and mortar bank.
In the meantime, you can simply mail them your checks, using their free pre-stamped envelopes. It only takes a couple of days for your money to show up. Faster and easier than going through a brick and mortar bank.
For a while international wire transfers required being in a physical bank at BoA, but they've recently (last couple of years) added it to their 'ebanking' site. The frustrating part of this was that their system operated on Central Standard Time... which sucks on the west coast because you have a very short window to do the transfer in (between bank opening in PST timezone and 2pm CST (aka noon PST)... and the BoA closest to me opened at 10am PST...).
If you have high balances, you should consider "bank of internet". The name sounds like a joke, but they are similar to Ally in terms of services, but offer money market rates on the checking account. I use them, and don't need a savings/money market account, so it really simplifies things.
They also don't charge foreign exchange fees, and their method for computing atm fees is the amount mod $5. When I was living in china, I actually made money every time I withdrew from the ATM, because the USD amount would be $83, and I would get $3 refund for non-existant ATM fees.
They also don't charge foreign exchange fees, and their method for computing atm fees is the amount mod $5. When I was living in china, I actually made money every time I withdrew from the ATM, because the USD amount would be $83, and I would get $3 refund for non-existant ATM fees.
amount mod $5
How does that work at ATMs that only give out $20s? n20 mod 5 is always zero. Unless, of course, "amount" here refers to the withdrawal amount plus* the ATM owner's fee?
How does that work at ATMs that only give out $20s? n20 mod 5 is always zero. Unless, of course, "amount" here refers to the withdrawal amount plus* the ATM owner's fee?
Yes. The bank doesn't actually know what the ATM fees are. They just see cash withdrawal for 102. Some ATMs send two transactions, but many just bundle it as one transaction.
I got my USAA account before I joined the military, and I know for a fact that you don't need to be in the military to have an account. Best customer service on the planet.
PNC bank is fucking awesome. I'm not creative enough to think up enough good things to say about it: they just rock.
PNC has a great website, the people are great (at least at my local PNC), they're very professional, and they're pretty smug about being the only bank left that has "free checking".
http://www.pnc.com
They even refunded me the $17 they charged for a box of checks. (I had gone in and asked for a truly-free checking account, and felt tricked into the $17; so I went back and they genuinely felt sorry for the mixup, and made sure I was satisfied in every possible way.)
~~~
EDIT: incase you're wondering how PNC bank's website looks, here ya go: http://dl.dropbox.com/u/315/random_pics/pnc.png (also shows you the formats you can export your data in.)
PNC has a great website, the people are great (at least at my local PNC), they're very professional, and they're pretty smug about being the only bank left that has "free checking".
http://www.pnc.com
They even refunded me the $17 they charged for a box of checks. (I had gone in and asked for a truly-free checking account, and felt tricked into the $17; so I went back and they genuinely felt sorry for the mixup, and made sure I was satisfied in every possible way.)
~~~
EDIT: incase you're wondering how PNC bank's website looks, here ya go: http://dl.dropbox.com/u/315/random_pics/pnc.png (also shows you the formats you can export your data in.)
Jesus, dude - that's enough info to start hacking someone's life in that png - be sure to blur the email and last numbers of the account before you use a public link.
Yeah, I know. But I have faith in people, even the not-so-good ones. We're all in this [crazy life] together; all we can do is to try to help each other, and shrug off the bad times.
This page lists a few of the (dwindling) large-ish not-online-only banks that still have fee-free accounts: http://www.pfstuff.com/checking/
Chase is also semi-ok if you keep a decent amount of money lying around; it's fee-free with a $1500 minimum balance, or w/ direct deposit.
Chase is also semi-ok if you keep a decent amount of money lying around; it's fee-free with a $1500 minimum balance, or w/ direct deposit.
What is a good alternative?
http://www.fatwallet.com/forums/finance/783099/
Alliant Credit Union is usually near the top of the list. My Alliant checking account has been my primary checking account for years. Not only is my Alliant checking account free, but I currently earn 1.10% APY with it:
http://www.alliantcreditunion.org/depositsinvestments/checki...
Deposits can be made at tens of thousands of ATMs across the country:
http://www.alliantcreditunion.org/about/atms/
I also have my HSA at Alliant because they're usually near the top of the list of best HSA providers:
http://www.fatwallet.com/forums/finance/542257/
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If there's nothing holding you back from obtaining a credit card, why not switch entirely to a credit card?
Used wisely (e.g. paid off every month, never carrying a balance) you can make a rewards credit cards pay you. Credit cards also provide a bit more financial flexibility.
Used wisely (e.g. paid off every month, never carrying a balance) you can make a rewards credit cards pay you. Credit cards also provide a bit more financial flexibility.
You can use https://www.hellowallet.com/ (I have no relation or interest) to find credit unions and banks in your zip.
I switched from BOFA to Schwab about two years ago (after them nickle & diming me for years with spurious fees) and I couldn't be happier. Like Ally, there's no physical bank branches (but they do have physical brokerage locations), you get interest on your checking, and they refund all ATM fees.
They also have an iPhone app that can scan checks, and their integration with their brokerage account/trading is really nice as well.
My favorite part by far is the customer service. They always have very friendly, helpful, and knowledgeable people picking up the phone and I've never had to wait in a phone queue.
I don't think their interest rates are as high as some of the other online banks, so if you run high cash balances rather than high brokerage account values it might not be for you.
They also have an iPhone app that can scan checks, and their integration with their brokerage account/trading is really nice as well.
My favorite part by far is the customer service. They always have very friendly, helpful, and knowledgeable people picking up the phone and I've never had to wait in a phone queue.
I don't think their interest rates are as high as some of the other online banks, so if you run high cash balances rather than high brokerage account values it might not be for you.
Schwab is awesome. If you're so inclined, it's easy to do (reasonably priced) stock trades. As far as pure checking goes, they've got everything you would expect, but get this: no ATM fees. At all. Any fee charged by any ATM will be refunded to you at the end of the month. Plus, they do it internationally, too! If I recall correctly, they have effectively zero currency conversion fee, as well.
Capital One also has some decent accounts if you need somewhere to keep cash savings with ATM and check access.
Capital One also has some decent accounts if you need somewhere to keep cash savings with ATM and check access.
Can't recommend Schwab enough. The no international ATM fees is amazing when traveling (especially if you are going between countries since you tend to get killed on those secondary conversions if you take out large sums). The only disappointment I've had with them is that my Invest First credit card (2% cash back on everything) is going away at the end of October, because surprise, surprise it's being taken over by BoA. They (Schwab) recently rolled out check deposits from their app so BoA taking away my most used card and implementing this fee structure I'm going to get rid of my account secondary account with them and use just Schwab.
Here is a list of online banks and credit unions you might want to consider:
Ally: http://Ally.com
INGDirect: http://INGDirect.com
Fidelity: http://personal.fidelity.com/accounts/aong/fcma_learn.shtml
Schwab: http://www.schwab.com/public/schwab/banking_lending/checking
Everbank: https://www.everbank.com
Alliant FCU: http://www.alliantcreditunion.org
Incredible Bank: http://incrediblebank.com
Salem Five Direct: http://www.salemfivedirect.com
Bank of Internet: http://www.bankofinternet.com
PerkStreet: http://www.perkstreet.com
Personally, I'd go with Ally. Free ATM rebates. Competitive interest rates. Easy to set up automatic transfers to savings. Free ACH transfers. Remote deposit being rolled out now.
You can't go wrong with any of the other banks either (ING and Schwab are great also), but Ally really has a nice offering.
Also, be careful when and where you use your debit card.
If someone gets a hold of your debit card info, they are accessing your cash directly. With a credit card, they are creating a future liability (no cash out of your account). Further, the consumer protections are not nearly as good on debit cards as they are for credit cards.
I talk about this at length here: http://www.seedlingfinance.com/443/why-i-always-use-a-credit...
Ally: http://Ally.com
INGDirect: http://INGDirect.com
Fidelity: http://personal.fidelity.com/accounts/aong/fcma_learn.shtml
Schwab: http://www.schwab.com/public/schwab/banking_lending/checking
Everbank: https://www.everbank.com
Alliant FCU: http://www.alliantcreditunion.org
Incredible Bank: http://incrediblebank.com
Salem Five Direct: http://www.salemfivedirect.com
Bank of Internet: http://www.bankofinternet.com
PerkStreet: http://www.perkstreet.com
Personally, I'd go with Ally. Free ATM rebates. Competitive interest rates. Easy to set up automatic transfers to savings. Free ACH transfers. Remote deposit being rolled out now.
You can't go wrong with any of the other banks either (ING and Schwab are great also), but Ally really has a nice offering.
Also, be careful when and where you use your debit card.
If someone gets a hold of your debit card info, they are accessing your cash directly. With a credit card, they are creating a future liability (no cash out of your account). Further, the consumer protections are not nearly as good on debit cards as they are for credit cards.
I talk about this at length here: http://www.seedlingfinance.com/443/why-i-always-use-a-credit...
FWIW the US portion of INGDirect was purchased by Capital One.
True. Although if Capital One knows what's good for them, they won't change a thing about INGDirect (except maybe offering remote deposit!).
I'll certainly be keeping an eye on it, but I don't expect any massive changes in the near-term.
I'll certainly be keeping an eye on it, but I don't expect any massive changes in the near-term.
I've had accounts at Bank of America for the better part of a decade, due to my employer they have been completely free. Just recently BofA sent me a letter detailing all the new monthly charges for my accounts, to the tune of an effective annual fee of $372. The irony is that I never use those accounts anymore, having switched to a vastly superior local credit union about a year and a half ago. Despite having pumped six figures in deposits through them more than once over the course of having them as a bank BofA never treated me any better than if I were some junkie or drug dealer, it was a breath of fresh air to move to a bank that didn't treat me as if I were nothing more than a cow to be milked for fees.
I fail to see why anyone selects a big bank like BofA/WellsFargo/Chase for their personal accounts, when they are known to have a plethora of fees and dubious ethics, and there are almost always better options in regional credit unions. What am I missing?
ATM locations, mostly. Chase has an ATM on every street corner in NYC (OK, an exaggeration, but only just). I know plenty of credit unions refund a certain number of ATM fees, but you can't do thinks like check deposits at them any more.
Check whether your credit union participates in this: http://www.co-opfs.org/public/locators/ATMlocator/index.cfm
You can look for the logo on your ATM card.
I don't guarantee anything but you might be surprised. In fact if you already belong to a credit union you might be very surprised. Check for the logo on your card. I belong to a credit union tied to a university that I've since moved about 2 hours away from, and except for loans (which I do so infrequently I don't mind driving for that, there's a full branch about an hour away) I've got plenty of ATM coverage everywhere I go.
You can look for the logo on your ATM card.
I don't guarantee anything but you might be surprised. In fact if you already belong to a credit union you might be very surprised. Check for the logo on your card. I belong to a credit union tied to a university that I've since moved about 2 hours away from, and except for loans (which I do so infrequently I don't mind driving for that, there's a full branch about an hour away) I've got plenty of ATM coverage everywhere I go.
It turns out that basically every grocery store in the country is a no-fee ATM for withdrawals.
Some banks and credit unions are adding "online checking depositing": you upload a photo of the check to their website. They OCR the photo and process the check. No signature endorsement necessary.
Also, a good way to avoid ATM fees is to get "cash back" when using a debit card at the grocery store.
Also, a good way to avoid ATM fees is to get "cash back" when using a debit card at the grocery store.
They put cash limits on the checks usually, which neuters the functionality. And you still can't deposit cash.
Might not be the case anymore, but I remember hearing in the late 90's that some banks would charge you fees for getting "cash back" with your debit card at a merchant. This is probably bank-dependent though.
There's nothing special about getting "cash back" from a grocery store, there aren't any special fees associated with it. You're just buying cash from the store, it would be no different than if it had a stack of individually barcoded $20 bills on the shelf that they charged $20 each for.
I have a credit union account (First Tech CU), and I regularly deposit checks at a different CU's ATM (BECU has fancy ATMs that scan checks, so I prefer them).
In fact, any CO-OP Network ATM works just as well as my own CU's ATM (no fees, deposits, etc). They have locations nationwide, as most credit unions are members.
Edit: also included in that list: most ATMs at 7-Eleven.
In fact, any CO-OP Network ATM works just as well as my own CU's ATM (no fees, deposits, etc). They have locations nationwide, as most credit unions are members.
Edit: also included in that list: most ATMs at 7-Eleven.
People choose them because the big banks have historically offered a much larger range of financial services.
Additionally, there are many people who still need to (or like) going to a bank in-person. The big banks offer many more branches than a smaller outfit will.
Also, the flexibility they offer when traveling both nationally and internationally is typically much better compared to a regional bank or credit union.
Additionally, there are many people who still need to (or like) going to a bank in-person. The big banks offer many more branches than a smaller outfit will.
Also, the flexibility they offer when traveling both nationally and internationally is typically much better compared to a regional bank or credit union.
Advertising, brand recognition, mind share, whatever you want to call it. People buy what they know.
I switched to a credit union after the recent banking scandals, and I couldn't be happier.
Inertia. 20 years ago, at the start of college, I got a free checking account at a smallish local bank. Which got bought by a bigger regional bank, which got bought by another bank, which merged into BofA. I had no particular reason to switch until BofA started charging ridiculous fees.
And, in theory, credit unions let you "think global, bank local" to keep your money circulating in the local economy from the credit unions' auto and home loans.
They tend to buy local banks.
Some of us choose smaller banks, like Washington Mutual, but then they get bought out by bigger banks, like Chase. Chase has not been as bad as Bank of America for me, so I've decided to stick with them. It's cool to have your bank in lots of places while traveling.
I thought about a couple credit unions in my area, but they both close at 5pm on Fridays and are not open on weekends. They are also far from where I work, so it would be hard to get there during lunch hour. If one of them were open just a few hours on Saturday, I would probably go for a credit union. But it's just too inconvenient. Chase stays open until 6pm, so it's easy to drop by after work, and they are open on Saturdays.
The thing I hate about Chase is that my Savings was free until it dropped below $500 (I think), now there is a monthly fee, even though I've had over $500 for a long time now. When I ask how to get back to free savings, they try to steer me to automatic transfers to activate fee-less savings. I can't get a straight yes or no out of them if there is any other way. They are like stepford wives, programmed to only talk about automatic transfers. Do they get fired if they say a simple "yes" or "no"? Is that really so difficult?What is truly ridiculous is that banks get a 3% merchant fee for every credit or debit transaction charged to their card. So, essentially, they are charging their customers for the very privilege of making money...
And we wonder why the banks are failing... this is why! You don't charge your customers for the privilege of making money! I told my bank that I flat out refuse to use my debit card unless THEY PAY ME at least 1% of the merchant fee, seeing as they are getting 3%.
Right now, I use a Fidelity Retirement Rewards Amex card for all of my purchases. I get 2% cash back on every purchase. For those merchants that don't accept Amex I use a Fidelity Retirement Rewards Visa, which pays 1.5% cash back on every purchase. I encourage everyone I know to do the same.
The reality is that credit/debit card companies make a ridiculous amount of money in merchant fees (up to 3%). DEMAND that they share that profit with you.
And we wonder why the banks are failing... this is why! You don't charge your customers for the privilege of making money! I told my bank that I flat out refuse to use my debit card unless THEY PAY ME at least 1% of the merchant fee, seeing as they are getting 3%.
Right now, I use a Fidelity Retirement Rewards Amex card for all of my purchases. I get 2% cash back on every purchase. For those merchants that don't accept Amex I use a Fidelity Retirement Rewards Visa, which pays 1.5% cash back on every purchase. I encourage everyone I know to do the same.
The reality is that credit/debit card companies make a ridiculous amount of money in merchant fees (up to 3%). DEMAND that they share that profit with you.
Is that true for debit transactions? I always thought that credit card purchases cost the retailer money, which went to the credit company and/or rewards programs and/or banks, but that debit transactions cost the retailer nothing but cost the bank.
Debit transactions do cost the merchants, just not nearly as much. I think it's on the order of a transaction fee + .5% for debit vs transaction fee +3-4% for credit.
Right, they are still making money off of every transaction. It seems ridiculous to discourage debit card use. They are just greedy and want to charge both customers and merchants for essentially being a middle man and adding little value to the transaction.
Apparently rewards cards incur an extra charge for the merchant. Which essentially means that that cash back comes right out of the merchant's pocket. I don't mind that at all, but it does mean that the bank isn't "sharing the profit with you."
A debit card/check card/credit card substantially eases access to one's money (or money one doesn't have). So I think it's reasonable that they charge at least some fee for it, though if it turns out my BofA debit card is one of those that require it I will probably never use it again.
A debit card/check card/credit card substantially eases access to one's money (or money one doesn't have). So I think it's reasonable that they charge at least some fee for it, though if it turns out my BofA debit card is one of those that require it I will probably never use it again.
No, they don't. The reason this is happening, as mentioned in the article, is that the government recently capped interchange fees to 21 cents per transaction plus 5 basis points on the amount of the transaction. They are charging a fee now to make up for the lost revenue of these lowered interchange fees.
Obi Wan Kenobi thought Mos Eisley was a wretched hive of scum and villainy, but he obviously never visited a commercial bank.
BankSimple is rejoicing right now.
I have a mortgage and 3 separate accounts with BoA, but they still treat me like a 2nd class customer. This could push me over the edge.
I have a mortgage and 3 separate accounts with BoA, but they still treat me like a 2nd class customer. This could push me over the edge.
It really depends on the branch/employee. I've dealt with idiots, and really great retail bankers at BoA. The stanford mall branch is pretty good in Palo Alto.
I rarely go to the branch offices because it takes an hour to get through the line. Most of my experience is with over the phone help.
fun fact: In Germany it's exactly the other way round at least for 99% of the banks. You will get a free debit card at every bank but you have to put down a considerable amount of money as prepayment for a credit card additionally to the yearly fees. If you want a Deutsche Bank credit card they will lock 1000 EUR before they issue it to you and you will pay around 60-100 EUR yearly.
I think this holds for significant parts of the non-US world. In the Netherlands (and for that matter any European country I've visited) credit cards seem extremely uncommon. I am one of two people in my circle of acquaintances who owns a credit card and I only use it for buying stuff on-line (when no other option is available).
As I understand it you can also only get money from an ATM associated with your bank, making picking a bank an availability issue too. Here you can get money from an ATM not associated with your bank once every 24 hours, making ATM availability pretty much a non-issue.
As I understand it you can also only get money from an ATM associated with your bank, making picking a bank an availability issue too. Here you can get money from an ATM not associated with your bank once every 24 hours, making ATM availability pretty much a non-issue.
Just read in the article that the fed lowered maximum interchange fees. Has this translated to lower fees from payment processors for anyone?
It will for me since my account is priced in terms of "interchange + x%". Whenever interchange changes so do my fees. From what I've read so far, this will actually lead to an increase in my fees beginning in October, not a decrease. Visa will raise the interchange to the new maximum federally allowed value for some card types where they were previously charging less than this.
Maybe it's because I don't buy much stuff, but I never understood the point of using credit for small purchases like getting a cup of coffee. I don't understand why people would use cash for that either (unless the coffee shop only takes cash/ charges more for debit). The same goes for checks.
Could someone explain it to me?
Could someone explain it to me?
I don't use debit. Pay off the credit every month. Get rewards points for it. Just no reason to use an additional separate card.
I have two cash reward cards and use one until I max out the points (%2) and switch to the other for the rest of the year. It's like a free $300 bucks a year :).
Don't they already do this? If I don't have at least $1500 in my account each month I get charged. So I have this account I never use anymore save for some tiny charges, that I don't want to cancel due to credit score that has to have that much money in it at all times.
A checking account doesn't affect your credit score. If you have a line of credit (e.g. overdraft protection), that would be reported, but I can't imagine that would affect your credit score much as the limit on personal lines of credit are small (typically around $500).
Cancel the account if you are not using it.
Cancel the account if you are not using it.
Good to know!
I think BOFA and other major banks are hand feeding people to credit unions in droves. I went today and set up my account at RBFCU and I can't wait to get far away from BOFA. Both my parents and I were with them for 20+ years.
Goodbye worst company in the US. Hello Credit Union!
Time for the great BofA exodus of 2012...
They may lose a small but noticeable number of customers, but they'll gain those numbers back over time. Consumers are mostly frogs in gradually warming water, the difference being that many of us "frogs" don't have easy options for switching pots.
Its anyway the banks fug the customer. Either directly or indirectly using merchants.
No one seems to be adding: in a desperate attempt to avoid bankruptcy
Queue Bank Simple Invites.... now!
Banking has now officially become synonymous with desperation and lack of creativity. What was once saved for accountants in the backroom has splurged into the face of consumers. Once the "idea well" of ingenious ways to earn an extra-buck or two dries out big banks look to corporate tax-breaks. But what happens when supplementary hidden fees and costs just don't cut it? Apparently, this. Interestingly enough, BOA announced these plans with the concurrent release of "_% cash back on all debit card purchases"...coincidence?
Good thing we bailed these guys out...
I read a fascinating passage in The Big Short (an excellent book on the financial crisis by Michael Lewis) that told the story of a top banking exec boasting about the amount of money they made on "Free Checking" accounts. Far more than they made on the accounts they charged for, because the "free" accounts came with dozens of catches and fines that ended up costing the customer more.
What a foul way of doing business.