Debit Card Transaction Limits and $5 ATM Fees

Banks are hurting right now and are doing everything in their power to continue minting the kind of money their shareholders expect. Due to changes in legislation, some banks are considering limiting the size of debit card transactions. Chase Bank recently announced they are considering capping debit card transactions at $50 or $100 to protest government regulations which place a cap on interchange fees. The cap will limit interchange fees to $0.12 per transaction, which could cost Chase up to $1 billion in profits each year. They claim it will no longer be profitable for them to continue making these transactions at such a low cost.

Chase has already ended their debit rewards card program, which was a very popular program. Ending it, and potentially limiting debit card transactions to $50 or $100 has the potential to destroy Chase’s banking business, as many customers will look to go to banks with a more generous online banking program.

$5 ATM fees. Chase is trying out $5 ATM transaction fees on a limited basis in Illinois, and $4 ATM fees in Texas. They want to monitor how many people are willing to pay these higher fees, and if they are still profitable, they will be rolled into more markets.

Other banking fees. We’re not picking on Chase, I promise. We are just highlighting them because of how frequently they have been in the news within the last week or so. For example, Chase is also testing out additional fees including a $3 per month debit card fee, and $15 per month fee to have a checking account.

The big problem is that banks are like the airline industry – where one goes, others will follow. It’s not good news for consumers as most banks are only considered with making their shareholders happy. In the end, we suffer, while they make more money.

What can consumers do? The best thing you can do is put your money where your mouth is. If you have a problem with the fees banks are charging, let them know. If the banks continue to charge high fees or won’t waive the fees, then walk away. It’s as simple as that. There are plenty of great banks which would love to have your business. Here is a list of free online checking accounts, which don’t have minimum balance requirements and offer ATM access at thousands of locations. Why keep your money with a bank that will charge you too much money just for the pleasure of doing business with them?


Why Certificate of Deposits Are One of the Safest Places to Put Your Money

Volatile markets, falling home prices and an unpredictable economy are all reasons for one to be concerned about the safety of one’s money. If you are seeking to keep your assets protected, then I suggest using Certificates of Deposit, or CDs, as one of the safest places to keep your money. There are several reasons for this:

  • Insurance – If you open a CD with a FDIC insured bank your money is protected up to $250,000, up from the previous limit of $100,000. Just as with a savings or checking account if that bank should fail the federal government will make sure that all customers will get back their money up to that limit. There are no such guarantees with stocks and bonds.
  • Guaranteed Return – A Certificate of Deposit often comes with a fixed interest rate that is higher than a regular savings account and that can outperform stocks and mutual funds in a down market. There is no guessing at what your return will be at the end of you CD’s term. It can be calculated and you can plan on having that return on your investment.
  • No Broker Fees – Setting up a CD is just like setting up any other bank account and does not carry with it any origination or maintenance fees. Unlike a brokerage account there is no need to pay someone to keep looking at your assets, changing their allocation and charging you for the privilege.
  • Low Risk – Real estate has climbed and fallen over the past ten years. During that same time the stock market has been flat. Even bonds do not have the return rates they used to. Investing in any of those three over the past decade could very well have resulted, and for many did result, in a significant monetary loss. By contrast a CD would have continued to earn money during that same time period. The low risk of CDs can make it a wise portfolio investment during uncertain times.
  • No Monitoring – Once opened the CD takes care of itself. There is no need to fret or to pore over you monthly statement. Just sit back, wait until the end of the account’s term and enjoy the return.

Some may assume that uncertain times are when risks should be taken. But some investors are looking not for risk but safety. If so then a certificate of deposit is one of the safest places to keep your money.


Debit Card Scammers Use Text Messages to Hack

Most text messages from companies could be classified as junk mail, and like junk mail they’re beginning to hold spam. The newest trend in debit scamming is through text messages. Scammers are using text messages to tap into unsuspecting consumers bank accounts and drain them of their resources.

While there are a variety of text message scams, a few are becoming increasingly popular. According to reports, scam victims received texts that informed them that their bank account was frozen or that they have won cash prizes. The text then asks them to call a toll-free number to provide their debit card account number and PIN number. The automated system is a fake, and is designed to get consumers personal bank account information.

According to the Better Business Bureau of Minnesota and North Dakota (BBB), text messages claiming to “Win cash now!” and “Short on cash? Reply here!” are obvious scams. These text messages come with links that spread viruses throughout consumers’ phones. “Don’t take the bait. Scammers are preying on victims’ fears and greed,” the BBB said in a press release.

“These hackers are looking for you to respond with vital information that can ultimately lead to identity theft,” said Dana Badgerow, president and CEO of the Better Business Bureau, (a Credit Land Rep.). “Hackers want you to wire them money before receiving your ‘prize,’” she said “That is one of the biggest red flags of a scam.”

In DeWitt County, Texas, Sheriff Jered Shofner has warned residents of a telephone scam that has already affected several homes. It involves a call from a personal number where an automated voice is disguised to sound like they’re calling from a financial institution.

A pre-recorded message informs the call there is an issue with their debit card, then requests the caller to enter his or her debit card number for verification purposes. The thief then has access to the private debit card information and all the money in the bank account.

“Providing the numbers can lead to an empty bank account. Never give out your personal information unless you know exactly who you are dealing with, and they have a legitimate need for the information,” Shofner said in a written release.


Essential Treasury Management Services

What is treasury management and why is it important for your business?

Treasury management is a generic term used to describe popular banking products and services for businesses and non-profits.

Treasury management, also known as cash management, allows organizations to easily control cash flow in an efficient and effective manner, while staying up-to-date with financial statements and collections. There are many tools available, and there is not a one-size-fits-all approach. Hopefully, this article be a valuable resource as you research what banking tools are best for your organization. This is by no means an extensive article, and further research should be done before deciding on your banking solutions.

What are the most popular treasury management services?

Direct Deposit of Payroll:

Direct deposit is quickly becoming the norm for medium to large organizations. This service expedites the paycheck distribution while also providing enhanced security. Instead of mailing out checks, the bank or credit union involved will electronically deposit the funds into your employees financial accounts. It is a great time-saver and should be considered by any business with employees.

Positive Pay:

Positive Pay was developed to eliminate check fraud for organizations. Your financial institution will only pay for checks that match your company profile (i.e. check serial numbers and dollar amounts). If a check written in your company name does not match up with the above criteria, then you will be alerted, or the bank will simply refuse the check depending on the type of positive pay in place.

Merchant Services / Credit Card Processing:

If you are a brick and mortar shop or an e-commerce only business, you will likely need merchant services. This service allows you to accept payments from all major credit and debit cards. It also allows your to automate reoccurring billing. Usually financial institutions offering this service will also provide point-of-sale (POS) equipment and a loyalty card program. Make sure that before you choose merchant services provider that you understand all of the fees associated with credit card processing.

Other Treasury Management Tools:

If you are seriously considering banking services for you business, you may also want to research Bill Pay, Remote Deposit, Wire Transfer, Sweep Account Services, Bill Pointe, Business Checking, and Automated Clearing House.

In conclusion, make sure that you do your research before deciding on your business-banking partner, so that you get good rates and state-of-the-art equipment and services. Also, understand that every business has different banking needs. If you are small “Mom and Pop” shop, you might not need half of the services listed above; however, if you are a medium to large corporation, it is probably essential for your organization to have the best of these services because of the security, efficiency, and reporting available.


Money Markets versus Savings Accounts

It’s typical for people to want to invest their money or just save it; sometimes investing in CDs and Bonds seems a little scary and savings accounts may seem like the safe way to go. If you just want to start a savings account and have a chunk of money to put away, it’s a good idea to think about interest rates and your options when saving.

Simply Saving

A standard savings account requires little to no minimum balance but the interest rate, depending on the economy, is  typically less than 1%. So even though you’re usually not paying or at least not paying much to invest your money, you’re not making much money in a standard savings account. Financial institutions pay you interest rates to keep your money in their  accounts to they can lend it to other people but mainly, standard savings account rates are so low that the money you‘re putting away is literally just sitting there while the financial institutions are making a higher interest rate lending your money out and meanwhile, giving you a lower interest rate in return. Sounds kind of crazy when you think about it, huh?

Simply Money

Money Markets Accounts (MMAs) are becoming the trendy way to save, especially now when interest rates are at an all-time low. There are a few standard stipulations to MMAs, but the perk can be two to three times the interest rate than a standard savings account. Banks and credit unions are the easiest places to start a MMA account and the minimum, depending on the interest rate, is usually around $1,000. The higher the minimum, the higher the interest rate – so if you’re minimum account balance is $2,500, you’re interest rate, depending on the bank and economy can be as high as 3%. It really depends on how much money you’re willing to put away and not have access to. If you think about it, it’s an even better way to save than a savings account because you can take as much money out of a standard savings; an MMA discourages you from being able to drain your account for an impulse purchase because you have to keep that minimum balance.

For example: If you have $7,000 you do not want to spend and $3,000 of it you’re adamant about not touching for a long period of time, than find a bank that has a minimum of $3,000 and deposit your entire savings. This way, you’re making  interest on all of your money at a much higher rate with a minimum deposit you have no intention of touching in the first place. Additionally, the restrictions and higher minimum on MMAs discourage your from making regular transactions on your account like you would do with a typical checking account.

How is this possible?

MMAs are slightly different than a standard savings where banks and credit unions are lending money to approved borrowers. An MMA is money that is invested in government and corporate markets, which means as a MMA investor, you’re getting paid the current interest rate in the money market and not from current bank interest rates. Being able to invest money with higher rates has a slight downfall because banks have to restrict how much money is being taken out of the market. Financial institutions can sneak around the legal restrictions of these accounts by structuring it like a savings (so you get interest)  instead of a checking (where you get low to no interest). Because of these restrictions, money markets are structure like savings account regulations – with withdrawal limits (usually 6) and total transaction restrictions per month.

Where to go to find a Money Markets or Savings Account

Many times and depending on the financial institution, MMA and savings accounts have the same or comparable interest rates; in some cases it can be just as profitable to put your money in a standard savings. But for the most part, a MMA will have higher interest rates if you know where to look. and give you current information on which banks and financial institutions are giving the highest rates on MMAs and Savings Accounts. If you’re going to put your money in a bank, do a little research and see what bank will give you “more bang for your buck.” Now that’s money in the bank!


Simplify You Banking and Financial Needs

If you are a small business owner, chances are you are very busy trying to run a company or companies, balance your family and personal life, and have some time for leisure and relaxation. In order to be able to accomplish all of this without getting overworked and overwhelmed, you must be smart with you approach you finances.

Use Bill Pay: If you are not using online banking tools like bill pay, you are missing a primary opportunity to save time and money. Two basic types of bill pay are available. First, you can pay bills through your business checking or savings account through your bank, or you can pay through your utilities and services providers (i.e. mortgage company, heating, power, & light company).

Usually, these services can be automated, so you do not need to worry about missing your bill payments. This will save you time and will potentially save you money because you do not have to mail in payments. Another advantage of using bill pay is that it cuts late fees because your payments are always on time.

Caution: When using bill pay, make sure that it is working properly during the first couple of months. Also, make sure that your service providers or bank are billing you correctly and are not charging you fees for the billing service.

Consolidate Banking Accounts: Simplify your life by consolidating your bank accounts. Instead of trying to juggle multiple accounts, research and find out which bank or credit union can best meet your needs for your business, investments, and personal banking. This will allow you to take more control of your finances and avoid unnecessary time and money spent that is associated with trying to run accounts with multiple bank.

It is very important that you make an informed decision when selecting a bank for your various needs. Understand the rewards and fees associated with different financial accounts, as there can be a lot of variance in services and charges offered.

Use Remote Deposit: Remote deposit is a service offered by most banks and credit unions for businesses. Once you sign up with the financial institution, you receive a scanner, which allows you to scan customer checks and deposit them into you banking account. This can be done from the convenience of you office or home.

The advantage of this is that you save time, money, and gain convenience, since you can deposit check from your offices or home. Also, since this is all done online, your company will have access to all records online. This will help as you run reports to and answer customer service inquiries about payments. Some financial institutions have developed apps for smartphones like the iphone, which enable you to scan and deposit checks anywhere by simply taking a picture of the check and processing it through smartphone app.

Think Smart by Using the Free Tools Available.

As you look to simplify your schedule and banking related duties, take advantage of the many free tools that are available. The list above is just a sample of numerous opportunities, and it is up to you to explore them, and take action.


How to Create a Business Cash Flow Statement

Cash flow statements are extremely useful for a business to get a complete picture of all money coming into the business and all money going out of your business during a specific period of time.  When organizing your small business finances, you should create a cash flow statement annually at a minimum, but businesses of all sizes benefit from creating cash flow statements on a monthly or quarterly basis.

A common misunderstanding of cash flow statements is that it will show the same number as the “net income” from the Profit and Loss Statement.  This is not the case, because your net income on the P&L will show non-cash information, like depreciation and physical assets, and because net income is calculated from net sales – not actual cash payments.

How to Create a Business Cash Flow Statement

What Cash Flow Statements Are Used For

Business owners can rely on cash flow statements as the guideline for creating their budget.  It will show you where your income has been generated and where the money went.

If applying for a business loan, a lender will ask for a cash flow statement to analyze your ability to repay the loan.

If your business is publicly traded, you are required to create cash flow statements and follow the Generally Accepted Accounting Principles (GAAP).

How to Create Your Cash Flow Statement

There are three sections in a cash flow statement which can show the net change of cash coming in and out of your business during a specific period of time:

  • Operating Activities
  • Investing Activities
  • Financing Activities

Find your beginning cash balance – how much money do you have in the bank and in hand at the start of the month or period you’re creating a cash flow statement for?  For example, if your business has $1400 in the bank and $600 in petty cash, you’re starting cash balance is $2,000.

How much money came into the business –  include all income to the business from sales and  other business activities; including payment for old debts.  If you brought in $5,000 in sales and $350 from old debts people owed to you, your total cash in for the period is $5,350.

How much money went out of your business – include all expenses and purchases.  You’ll probably have salaries, rent, utilities, supplies, loans, taxes, etc.  If you spent $3000 in salaries, $500 for rent, and $220 for office supplies your total cash out would be $3720.

Calculate the cash flow – subtract the total amount of your cash out from your total amount of cash into the business for the period you are analyzing.  In our example, you would subtract $3,720 from $5,350 for a net change of $1,630.  If you have a negative number from this calculation, your business is operating at a negative cash flow and is in trouble.

Find your ending cash balance – add the net change you just found when calculating the cash flow to the beginning cash balance to get your ending cash balance.  In this example, it would be $3,630.  This becomes your beginning cash balance for the next period.


Is It Possible to Have Too Many Bank Accounts?

A good majority of people have several bank accounts which were set up for different reasons and purposes. Typically, consumers have at least one savings account and one checking account if not more. But is it necessary to have more than that when managing your money?

Benefits to Limiting Number of Bank Accounts

While it may seem logical to some people to establish several accounts to handle money for different reasons or to take advantage of higher interest rates, it can be detrimental to keep multiple accounts open. Here are some reasons why:

  • You’ll pay more in fees for maintaining a variety of accounts
  • You increase the risk of becoming the victim of identity theft
  • You have more accounts to monitor on a regular basis
  • You will have more terms and conditions to keep track of and abide by

Analyze Which Accounts Are Unnecessary

Consumers who have bank accounts open with several banks need to take stock of which accounts are in the best interest of their personal financial plans. You should consider consolidating financial accounts that are not used often and have no other benefit to you. Keep only those that remain active or you may face continual fees for inactivity with some banks. Do a comparison search online between several banks to see who is offering the best deal if your current bank is not up to par with your financial needs.

Multiple Accounts is Not Good Accounting

Some will open several accounts as a way to better track and manage money. It can be a wasted effort and incur too many fees to take the place of real accounting measures. While you may want a savings account strictly for savings, one checking account and a good ledger book is all you need to manage your money regardless of where it is coming from or going to.

When Multiple Accounts Make Sense

There are some exceptions for keeping multiple accounts. Some situations may dictate that having several accounts is actually beneficial including:

  • Dependent accounts – when a child has an account held jointly with a parent
  • Special tax incentives – some accounts will offer tax incentives for establishing and maintaining an account for a special purpose such as education, retirement, and health accounts.
  • Savings accounts for CDs – when a saving account is invested in certificates of deposit that have different maturity rates.
  • Small Business accounts – accounts that are opened by a small business owner as a way to separate business from personal finances.

Overall, it is best to limit where you are stashing your regular cash. As banks are constantly working to gain more business, they remain extremely competitive. You can use that to your advantage to get your current bank to up the ante with better incentives or you can find a new financial institution that is more inline with your needs.


Consolidating Bank and Investment Accounts

There are so many aspects to managing your personal finances that it can sometimes be a challenge keeping everything together.  In order to realize financial security in your life you must be able to juggle several tasks simultaneously.  You will have to know how to make money, save money, invest money and pay bills on a regular basis to ensure all of your financial goals can be reached.  With so many balls in the air at the same time, many people find it beneficial to consolidate their accounts to keep all of their finances in order.  Here we look at how you can consolidate your financial accounts and the benefits that can be realized by doing so.

Benefits of consolidating financial accounts

Consolidating bank accounts

It is not uncommon for individuals to have several accounts at different banks.  This could be due to several factors.  For example, you might use a bank with a convenient location for day-to-day transactions, or you might use an online savings account for lower fees and higher interest rates.  The problem with having your money spread all around is the difficulty in keeping track of your finances.  Managing multiple accounts increases the likelihood of making mistakes or noticing errors that could end up costing you more money in the long run.

By consolidating your bank accounts into one bank you can often save money across the board with reduced fees or other rewards such as favorable terms and interest rates as a result of having multiple accounts with one bank.  When you keep all of your accounts in one place you can receive consolidated statements which make it easier to see all of your finances in one easy place as well as providing convenient documentation that may be needed for tax season.

Consolidating investment accounts

When you have your investments spread out and managed by different brokerage firms or mutual fund companies, it is often difficult to know exactly what is going on with your money.  Consolidating investment accounts with one firm can offer the following benefits.

  • Keep track of investments. When all of your accounts are managed and located at the same place it is more convenient to track your assets. You can see in one place how your investments are performing.
  • Keep track of changes. Fees, commissions and policies are subject to change with each company.  These changes can be hard to follow if you have your accounts spread out, however by having your accounts in one place you can easily keep track of changes that can impact your money.
  • Special perks. The bigger your account, the bigger the perks you may receive. Some companies will reward bigger account holders with free services or reduced fees and commissions.

Making an informed decision.

There are many benefits associated with consolidated financial accounts, however this step may not be right for everyone.  It is important to consider both the advantages and disadvantages of any moves you make in regards to your personal finances.  What works for one situation may not work for another making it all the more important to make an informed decision.


Ally Bank Bows to FDIC, Slashes Rates

Should a well funded bank be able to set their own interest rates to attract new customers, or should they bend to the pressure from the Federal Deposit Insurance Corporation (FDIC) to lower interest rates? If you support the free market, your answer would probably be no. But that is what recently happened when the American Bankers Association (ABA) sent a formal letter of complaint on behalf of its members to the FDIC.

The complaint stated that Ally Bank was offering higher interest rates than its competitors, and that Ally Bank had plans to receive funds through the Treasury Liquidity Guarantee Program (TLGP).

The FDIC’s Temporary Liquidity Guarantee Program backs financial institutions and allows them to borrow money at near-Treasury rates in exchange for a fee. Because Ally has been approved to borrow money from the TLGP, some ABA members complained they were using the TLGP funds to attract new customers by offering higher interest rates that was reasonable in the current economic environment.

Should the FDIC control interest rates?

The government shouldn’t regulate every aspect of private industry, but the lines become less clear when there are government bailouts or even government ownership on the line. The FDIC responded to the ABA’s letter by sending a letter of their own to Ally Bank, essentially telling them to lower interest rates so long as they participate in the TLGP.

What does this mean for Ally Bank members?

Overall, not much will change except interest rates. Ally Bank accounts are still covered by the FDIC so there should be no problems with customer funds no longer being guaranteed, and there should be no other differences noted by customers. Unfortunately, it means that new customers who were lured by the promise of higher interest rates will see them fall a little bit – through no fault of Ally Bank. It’s just an unfortunate change of events from a customer perspective.