This Degree Will Cost Me How Much?!

For decades, conventional wisdom told us that you needed to go to college if you wanted to have a professional career and make a high salary. If you wanted to be the boss, college was a must. Any money spent on a college degree would be recouped by the earning power gained from that degree.

Today, things are different. High school graduates are faced with the dilemma of having no money to pay for college because their parents were unable to save. Part time jobs and seasonal employment, which used to help college students pay their tuition bills, are now hard to come by with the unemployed workforce vying for positions that used to be reserved for teenagers and college students.

What are college students to do? Rather than forgo an education, students take out student loans. But at what cost? How much student loan debt will these students be saddled with upon graduation?

Let’s use a medical student as an example. A medical student needs a four year degree just to get into medical school, and will then be required to complete four years of medical school for a total of eight years. Here is a typical breakdown of the financial burden incurred by a medical student attending a private university:

Undergraduate school: Four years at an average tuition rate of $32,000 per year = $128,000

Medical school: Four years at an average tuition rate of $45,000 per year = $180,000

Total Bill: $308,000

Keep in mind that these are just the averages for tuition and do not include fees and housing. Typically, medical students will be assessed fees for their labs, using computers and other on-campus technology, health services, and the library. Grants may cover a portion of the tuition and fees, but medical students on average graduate with student loan debt of nearly $200,000.

Even if the student decides to stop at a 4-year degree and try to find a job based just on that education, they will be graduating with financial burden of $128,000 if no other financial aid options were available to them and they decided to pursue a degree at a private university. Regardless of the subject, a 4-year degree at a private university will run you approximately the same amount, meaning college will cause a debt burden that will be hard to remedy in a sputtering economy.

So, what’s a graduating high school student to do? It may be wise to consider the cost of a college before sending in the deposit to hold your spot at the school. Grants are available, but are limited and usually based on income, including parental income. Graduating with debt may seem like no big deal due to the perceived marketability of a degree, but it’s best to weigh the pros and cons before signing up for debt.


ING Direct Sale: Who Will Fill the Void?

I’ve been a satisfied customer of ING Direct for nine years, so imagine my dismay to learn that this arm belonging to ING Group of the Netherlands will be sold off soon. If you are not familiar with ING Direct, I’ll explain. An easy-to-navigate online bank, ING offers high-yield on savings and checking accounts along with investments and mortgages. Unfortunately, ING Group was one of the banks to receive a government bailout. The Dutch government gave the bank €10 billion (roughly $14.9 billion), which it must pay back. To do this, ING plans to have its U.S. company, ING Direct, sold by 2013.

Who will replace ING Direct?
Who will replace ING Direct?

Several banks have bid on ING Direct, but no deals are in place yet. The most noteworthy player in the game right now is Ally Bank, owned by GMAC. Frankly, I don’t trust Ally because of its parent company. It seems impossible that such a bank could keep ING Direct running with the same set of customer and corporate values. It seems I’m not the only one concerned either. Financial bloggers everywhere are raising eyebrows and wondering where they will put their money if ING falls into the hands of this undesirable competitor.

In a perfect world, Motley Fool would buy ING Direct and run it with sound financial values, but that’s not going to happen. Some may choose to stay with ING Direct because Ally already offers similar banking products, making it less likely that the account structures will change. The rest of us are looking at other options, but few make the grade. Here are the options I’m considering:


As an existing PerkStreet Financial customer and frequent guest writer on their blog, placing my savings at PerkStreet may be the best option. This is really a checking account, not savings, but I see no difference so long as I earn the cash. Balances over $5,000 receive 2% back on all non-pin purchases with the PerkStreet debit card. Everyone else gets 1% back. Special deals come up every month where you can get 5% off from selected retailers. Although I have yet to take advantage of the 5% cash back offers, I have been satisfied with the 1% earnings. Transferring my savings from ING Direct would add another 1% cash back to the account, yielding me an additional $600 a year for my trouble. No savings account can touch that return.

Smarty Pig

Another big contender, Smarty Pig, is an online savings account that currently pays 1.35% Annual Percentage Yield (APY). As far as I know, that’s the highest savings yield currently available. In addition, when you make non-pin purchases from selected retailers, you get 10% back on your spending. The social savings aspect of the bank allows family and friends to contribute to your account. Although the 10% on purchases is tempting, it only applies at retailers that have partnered with SmartyPig.


Ally Bank competes well against ING Direct, with a comparable 1% APY. This is the least likely option for me, given my distrust of the company. However, I like to keep an open mind and am willing to consider Ally if it turns out to be the best option. Checking accounts also earn interest, but at only .9%. So far, the bank has created some highly competitive banking products that should appeal to ING Direct customers, if they can get over the difficulty many have in trusting a bank spawned from the notoriously unfriendly GMAC.


One Year Later, Debit Cardholders Still Confused About Overdraft Protection Fees

The Federal Reserve’s implementation of new policies last summer has essentially backfired. It was intended to protect debit card users from unexpected overdraft fees and clarify bank policies. Instead, it seems to be helping banks rake in the money by signing account-holders up for overdraft protection plans. Plus, according to a new study by the Center for Responsible Living, the majority of debit-card holders are still confused about what exactly they’re agreeing to.

The New Rules

The Federal Reserve implemented new policies last year to clarify and protect debit-card users against overdraft fees. With these new rules, banks are required to have account-holders agree to their terms before they can go into effect. Basically, an account-holder either decides to opt in or opt out of a protection plan. By opting into a protection plan, you are guaranteed to pay more in fees and maybe even accumulate a little debt. Who knew that was possible with a debit card?

The new policy is relevant to point-of-sale transactions which are approved by the bank when there are insufficient funds in the person’s account to cover the purchase. Before this new rule, the bank would approve the purchase rather than declining it, costing the average account-holder $35 in overdraft fees. According to Time, 80% of debit cardholders said they would rather their card be declined in this instance to avoid fees.

Isn’t the whole point of a debit card to only spend what you have?

Same Old Confusion

A study recently released by the Center for Responsible Lending found that 33% of cardholders opted for overdraft protection fees. The Center also found that 60% of these account-holders did so in order to avoid fees in the event their debit card was declined, meaning they do not want their debit card to be approved when there are insufficient funds in their account. The study also found that for nearly half of the participants who opted in, getting the bank to quit advertising the overdraft protection through email and other methods was a factor in their decision. Despite the questionable behavior of the banks, consumers still seem to be confused about debit card policies. These overdraft protection plans are only bringing in more revenue for banks, which are set to make $38.5 billion this year, up from $36.5 billion last year.

Debit cardholders who opt into this service which allows them to use their debit card when it would otherwise be declined, are probably better suited for a credit card. With so many credit card offers currently featuring low interest rates and no annual fees, a cardholder could save money on fees even with an outstanding balance rather than continually paying overdraft fees on his/her debit card.


Dormant Bank Account Fund Approved

What happens to money left unclaimed in bank accounts that people have forgotten about? In some cases, the account holder will remember (or be reminded) that it’s there, but in others, that simply doesn’t happen. In the United States, each state runs a missing money program where unclaimed funds go. Each state is required to keep the money or other valuable property in an individual’s name until it can be claimed. If it isn’t claimed after a certain point, it can be used by the states.

But things are different in the UK. In cases when there is unclaimed money it could be put to use helping good causes – and that’s exactly what’s happening, thanks to a new initiative involving a major financial group of businesses…

The Co-operative Financial Services will run the fund that collects money from dormant bank accounts to use in the Big Lottery Fund, after receiving authorization from the Financial Services Authority (FSA), which regulates providers of financial services in the country.

As reported on Think Money, the new fund will be known as Reclaim Fund Ltd, and will be run on a purely non-profit basis. As such, it will operate independently from the rest of The Co-operative Financial services, with its own Executive and its own Board.

It’s part of government plans in which all money held in bank accounts that have been untouched for 15 years or more will be put towards charitable causes. However, some of this money will be held back by Reclaim Fund Ltd, just in case account holders do realize they have a dormant account and want to claim their money back.

It is thought that the Reclaim Fund will receive a total of £400 million or so from dormant bank accounts, with the first distribution to the Big Lottery Fund in the region of £60-100 million, transferred in phases over the next 12 months.

In England, some of the money will be used to fund the ‘Big Society Bank’, which according to the Financial Times will lend money to businesses whose goals will produce “a social benefit”.

It’s good to see the UK government doing good things with the money – and it’s something the US might want to consider in the future.


Bank Accounts 101: Which One is Best for You?

In this day and age, pretty much everyone over the age of 18 should have some type of bank account. Bank accounts are essential if you want to get direct deposit from your job or if you want to pay for your everyday purchases with a debit card. However, with so many different types of accounts out there to choose from, it can be confusing to know which type is best for you. Here is a brief overview of the different types of accounts available and the basic features of each one.

Savings Accounts

Savings accounts provide an incentive for customers to save money. Savings accounts with banks and credit unions will usually come with an interest rate that is higher than a traditional checking account, but lower than CDs or money market accounts. Savings accounts will allow you to make deposits and withdrawals, but there is usually a cap on the amount that you can make in a monthly period. Some banks will even charge you a fee if the balance on your account falls below a specified minimum amount. You should not use your savings account to pay for your everyday expenses. This is what your checking account is for. Most banks will let you open a savings account for free, so customers can easily open both a savings and a checking account.

Checking Accounts

A checking account is the most basic type of bank account. You will usually get checks and a debit card for free when you open an account. You will use these items to pay for your everyday expenses. Most people will also set up direct deposit with their employer so that their pay check will automatically be credited to their account. Because you will have a lot of money going in and out of your account on a monthly basis, you will want to choose a bank or credit union that does not place any stipulations on this.

Money Market Accounts

A money market account is an interest-bearing account that invests your money in short-term debt including CDs, Treasury Bills and commercial paper. Money market accounts usually offer rates that are higher than other types of accounts, providing you with more money-making potential. However, these accounts usually require you to deposit a large amount of money initially to even open an account. Additionally, these accounts do not typically come with debit cards or checks and some banks will charge a service fee if your account balance falls below a specified minimum.

Certificate of Deposits (CDs)

CDs are also known as ‘time deposits’ because you have to agree to keep your initial deposit in the account for a specific amount of time. For this amount of time, typically lasting from three months to several years, the money will be virtually inaccessible. Because of the stringent terms of this type of account, the rewards are greater and you will be paid a much higher rate of interest. If you do end up taking take the money out for any reason, you will usually be charged a substantial early withdrawal fee. Therefore, do not open up this type of account if you expect that you will need the money before the maturity date.


Five Reasons to Use a Credit Union Instead of a Bank

As the economy continues to suffer and big name banks continue to take flak for unscrupulous practices, credit unions have begun to grow. Many people fail to realize the advantages a small credit union has to offer because they cannot see past the blaring marketing plans of big name banks. The major difference between credit unions and banks is that big banks are businesses. Commercial banks have one intention: to make more money from their customers (you). Big name banks often have very low interest rates, loan rates are competitive, and they are always trying to sell you things. On the other hand, credit unions exist to help their members. The following are five reasons why credit unions are your best banking option today:

1. Member Owned: This means that every person with an account at a credit union is a partial owner of that credit union. While wealthy shareholders typically own major banks, you don’t have to be a wealthy shareholder to have some say in the business procedures of a credit union. The minute that you open a credit union account, you own a portion of the credit union. You will get to vote on who you want to serve on the Board of Directors and therefore help guide the direction of your credit union. You are able to provide personal input into what financial services you are interested in having through the credit union.

2. Non-Profit: As mentioned before, big name banks are businesses. They run off of the profit they make from their customers. Because credit unions do not exist to make a profit, they often offer better services at lower costs. They are community oriented and tax-exempt. A credit union is not going to try to sell you something or dupe you into a service that you don’t want or need just to make some money. They are more customer-oriented because their customers are also their members.

3. Better Interest Rates and Loans: Credit unions offer higher interest rates on your savings, money market and CD deposits than typical banks do. They tend to also offer lower interest rates on your mortgage, auto loans, and credit cards. This is possible because of the way the non-profit aspect of a credit union works. The credit union makes profit and then returns the profits back to its member in the form of better interest rates.

4. Lower Penalties on Overdrafts: One of the most aggravating aspects of a big bank is their overdraft charges. Most everyone is going to have an overdraft or two at some point in their life. And most banks are going to take advantage of those times when we lose track of our balances or run out of cash. Big banks tend to charge outrageous fees even for the slightest overcharge. Because credit unions are smaller and more member-oriented they are typically more willing to work with individuals who are having financial difficulties. Many credit unions will not even charge for overdrafts and instead send you a notification and try to solve things with you.

5. Better ATM Access: It is a common misconception that credit unions have highly limited access to ATMs. Although credit unions are typically small, many allow you to access ATMs of other credit unions for no additional fees. So, while they will likely not have as many ATMs nationwide as some of the big national banks, they do offer fairly thorough ATM access, often through an ATM network.


What Should You Keep in Your Safety Deposit Box?

Safety Deposit Boxes at your bank are important for keeping items that are difficult to replace. These are private, so not even the bank knows what is in them. Keeping items in a fire-proof safe in the house is not as good protection from theft, fire and flood. Many are only fire-proof up to a certain temperature.

Write down the date you open your safety deposit box and where it is located, in case you forget. Write down the contents of your safety deposit box and store in a file in case you are looking for a certain document. “Did I put the birth certificate in my safety deposit box or is it somewhere else?”

You usually get the best deal on a safety deposit box with your current bank or credit union. The usual cost per year is $30 to $75.

What should you keep in your safety deposit box?

  • Birth certificates
  • Marriage certificates
  • Social security cards
  • Adoption records
  • Death certificates
  • Divorce records
  • Child custody documents
  • Military records
  • Deeds
  • Titles
  • Mortgages
  • Leases
  • Stocks
  • Bonds
  • Certificates of Deposit
  • Insurance policies
  • Expensive jewels
  • Medals
  • Rare stamps
  • Collectibles
  • Photos – and back ups of digital photos on CDs or DVDs, photo negatives
  • Videos
  • Video and pictures of house with its contents for insurance purposes
  • Copies of your driver’s license
  • Copies of the contents of your wallet (front and back of cards) in case your wallet is stolen
  • List of your credit card numbers
  • Account numbers account numbers, balances, online banking ID’s & passwords. Deposit accounts, PayPal, eBay, ClickBank and anything else a family member would need to know in case they had to take over the finances.
  • Copy of your will (not the original)
  • Current credit reports
  • Hard to replace items

Put these in air tight containers or zip locks to help prevent any damage in case something happens to the bank. Their vaults are highly resistant but not 100% guaranteed.

What not to keep in a safety deposit box

Safety deposit boxes are available only during bank hours so emergency items are not a good idea to store.

  • Passport
  • Power of Attorney
  • Medical directives
  • Funeral Instructions
  • Cemetery deeds
  • Estate documents
  • Will

Some states allow co-renters or family members to get wills out of safety deposit boxes. But other states require a court order, so check your state before putting your will in a safety deposit box. You can also get a co-renter for emergencies who will have access to your box. Or you can get an agent in the presence of the bank who will have access. Many times power of attorney does not give access to safety deposit boxes.

Law enforcement can obtain a court order if they suspect something illegal in your box. The IRS can also freeze your assets (Including your safety deposit box) in disputes.

See if your insurance will cover Safety Deposit boxes because the FDIC does not cover loss of these.

Make sure you know where your most important documents and valuables are.


Sallie Mae Debit Card Is A Helpful Convenience For Students, If Handled Responsibly

The student loan company Sallie Mae is preparing to release a student debit card in partnership with Mastercard. The new program, which will start this summer, allows students to receive financial aid money and tuition refunds in a special checking account.

Sallie Mae Debit Card Features

Perks of the accounts include:

  1. A free checking account (Here is a Sallie Mae savings account review).
  2. More efficient receipt of money. Students can expect to receive a refund the day it is issued rather than the typical two- to three-day bank lag.
  3. FDIC insurance on deposits.
  4. Surcharge-free withdrawals at 35,000 ATMs nationwide.
  5. No minimum account balance.
  6. The card will not allow the user to overdraw.

Saves students money. The new Sallie Mae debit card will save students money in the long run, especially compared to some of the main competitors in the space. With the new accounts, Sallie Mae is challenging Higher One, its main rival in student payments. Higher One runs a similar program but only has 600 fee-free ATMs. It also charges fees for PIN-based transactions.

Faster and safer for financial aid refunds. Sallie Mae’s move comes in time to comply with new rules taking effect in July requiring universities to refund unused financial aid money in 7 days instead of 14. In addition refunds and other transactions can be handled electronically, which is faster and safer than other types of financial transactions.

Added convenience. The cards will be convenient for students and provide an incentive to borrow from Sallie Mae. But with financial aid money in hand, they will need to be extra careful not to spend it carelessly since, for most students, it will need to be paid back with interest eventually.

A great option for students. Overall, this card is a solid option for students, since they will have added convenience, free checking, many fee-free ATM options, FDIC insurance, no minimum account balance, and the inability to overdraw their accounts.


Top 5 Things to Consider When Shopping for a Home Safe

When a tragedy strikes, will your meaningful belongings and documents be protected? It is never too late (or early) to add a safe to your house. Burglary, fire and floods are all variables that cannot be controlled however; you can do something to ensure that at least irreplaceable items and important documents will not be lost forever. Any size family and home can find a safe to fulfill their needs by considering the following five things.

What you need to consider for your home safe

1. Content – What do you intend on keeping in your safe? You should know that not all safes are created equally and certain styles are designed to be more protective of certain items. For example, Gardall safes are available in models that are specifically designed for firearms which is crucial, especially if you have children in your home. Different models of safes are even made from different material so considering whether you will primarily be storing documents, money, valuables, media files, firearms or a little of everything will help you choose the right safe for you.

2. Locks – What type of lock will you be most comfortable with? Most safes and safety security boxes come with a standard lock but some allow you the option to either change it or add on another lock for more security. Key locks are popular and if you happen to lose your key, most companies can send you a new one. Combination locks are quite common as well are are a preferred choice, alongside a key lock when double protection is desired. Lastly, electronic locks empower you to program different combinations for multiple users and you can change these as needed.

3. Location – Where is the best place for a safe to be stored in your home? Some models are free-standing that can be hidden in a closet, pantry, etc., or there are those that are installed in a wall or the floor of your home. These provide an added security feature of being able to hide them.

4. Waterproof – Do you need your safe to be waterproof? For many people, this is a top concern if they live in an area prone to flooding and hurricanes. However, water damage can occur regardless of where you live from roof damage, frozen pipes that burst or just a freak of nature. More and more catastrophes are happening today that are blamed on the weather that no one is prepared for them.

5. Fireproof – Is your primary concern with fire protection? A fire can happen to any home at any time and there is never the chance to gather your important belongings and get your family and pets out of the house. There are some safes that are designed to keep the contents of your safe cool for as long as two hours so when the fire is put out, you will find everything inside unharmed.

Buying a home safe should be a priority on the list of everyone. There are many sizes to choose from with various features so use this guide to help determine the kind of safe that will best fulfill your needs.


American Express Getting Into Debit Market

American Express has always been the most mysterious credit card company. Besides the fact that many establishments don’t accept the gold and black card, their presence in the debit market has been non-existent. As the companies first step in the wide world of consumer debit, American Express opened last week a new product called Serve.

The Serve web site is a prepaid electronic wallet, where consumers can access and transfer money through smartphones and computers equipped with Visa Inc., MasterCard Inc., and PayPal Inc. Consumers can go to the website on their phones and download an application for iPhones, iPads and Androids. Blackberry will have access to the technology later this year.

There is no initial cost for opening an account with Serve. Also, deposited funds don’t expire, nor is there a minimum balance required. Refusing to use a debit method attached to checking accounts sets American Express debit cards apart from Bank of America and JPorgan Chase & Co. debit cards which will likely see balance minimums and ATM fees due to the Dodd-Frank Act interchange fee cap. account holders will receive plastic cards linked to their electronic wallets. The Serve logo is on the front of the card, and on the back is a blue box that explains which merchants and consumers that it may be used at. Customers using the card will get one free withdrawal a month from an automated teller machine and be charged $2 for each subsequent withdrawal.

Debit cards are becoming the most common form of payment. According to Bloomberg, global consumer spending and cash transactions on Visa and MasterCard debit cards climbed 20 percent to $3.95 trillion last year. In the U.S., spending on debit cards rose 15 percent in 2010, compared with 6.3 percent for credit cards, according to the Nilson Report, an industry newsletter.

With a recent partnership with the social network FourSquare, American Express has made headway in exploring digital markets. Last year, American Express spent $305 million to buy the Internet-based payment processor Revolution Money, which is the tech foundation for Serve.

There’s no charge for using debit cards or checking accounts to fund a Serve account. Fees for funding accounts with credit cards have been waived for the first six months. After that, AmEx will charge 2.9 percent of the transaction total plus 30 cents, which is competitive with PayPal’s pricing, said Joanna Lambert, an American Express spokeswoman.

Customers can shop online without being required to enter sensitive information, such as a credit-card number and mailing address. They also will be able to send money person- to-person in the U.S. by entering a PIN number and the recipient’s e-mail address. The latter feature will be available worldwide later this year.