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The Secret Catch to Bank of America's "Keep the Change" Program
Bank of America's Keep the Change (background) program has a big, big catch to it.
The savings account where your money is likely going has a pitiful .2% APY.
Yup, for real. From the fine print:
Savings accounts eligible to receive matching funds include, but are not limited to, Regular Savings, which requires a minimum opening balance of $25 and pays a variable Annual Percentage Yield that was 0.20% as of 08/28/08.
0.2% APY means your money is not working for you. When you could open an online savings account that offers upwards of 3.75% APY (Dollar Savings Direct, WaMu), there's no reason you should be using BofA.
Still not convinced? Look at the other requirements:
- $300 minimum balance, or
- Automatic monthly transfer of $25
- $3 withdrawal fees if balance is under $2,500 and more than 3 monthly
Considering that the best online savings accounts have no minimums, no fees, and no requirements, you should not be keeping your money with Bank of America.
It's great that BofA is helping people automate their savings — it's the easiest way to start pocketing more of your own money — but customers still aren't getting a good deal.
(Yes, you do get matching funds from BofA of up to $250 in one year, but you could get the same by smartly opening certain savings accounts. And you could move the money into a money market account, but the requirements for that are even worse.)
Saving your money smartly means making it work hard for you. If you want your money to make you money, open an online savings account now.
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HSBC Direct Back Up and Running After Outage
After their system problems last week, HSBC Direct says they're back up and running.
Dear JASON,
As a follow-up to my email last week, I am pleased to let you know that our systems have now returned to normal operating conditions. As always, we continue to monitor all systems closely and will let you know if there is any change in status. I can confirm that all customer information, data and funds were secure at all times.
In the event that you were charged fees as a direct result of our system issues please know that these will be refunded. If any deposits were delayed you will receive interest from the date they were originally deposited.
Should you have other questions about your HSBC Direct account please submit your question through "BankMail" when you are logged into your account, or contact our Customer Service team at 1-888-404-4050.
Providing consistent world class service levels is our priority and is something that we failed to do last week. We fully appreciate how important it is for you to have reliable access to your online accounts and we are committed to providing this. Again I apologize for any inconvenience you may have experienced.
Thank you again for your support and for saving with HSBC Direct.
Sincerely,
Kevin Martin
Executive Vice President,
Head of HSBC Direct U.S.The Consumerist has a bit more about how much the outages affected customers, especially people who were waiting for their direct deposited paychecks to clear.
The widespread problem is limiting access to HSBCDirect accounts, and at least 8,000 Catholic Health System employees up in Buffalo are still waiting for their direct deposit payments to materialize.
…
The bank is keeping select upstate branches open late so Catholic Health System employees can come in and trade their pay stubs for cash. As for affected HSBCDirect customers, the bank promises to "return full–system functionality to you as soon as possible."
Glad to hear everything is working right again. You're not having any problems with HSBC, are you?
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How Savers and Consumers Differ On Gas Prices
The price of gasoline divides America into savers and consumers like no other issue.
The biggest differences between savers and consumers come in their attitudes toward energy policy. In his book the Age of Turbulence, Alan Greenspan wrote at the end of the energy chapter: "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."
If it is true, it is a policy: war for oil. I have never had anyone say that to me, nor have I heard any politician or major news service advocate, or try to justify, war as an oil policy.
It does illustrate the contrasts of savers and consumers on policy because it is the ultimate consumer policy: plentiful oil must be available no matter what.
Expanding Energy Supply is a Priority
American policy has been mostly consumption policy because it emphasizes production. Drilling for oil is a production policy, but so are wind energy and solar energy.
Those who advocate off shore oil drilling want to expand supply, but those who want to expand wind energy or solar power also want to expand energy supply.
The oil drillers often argue with the advocates of wind and solar energy, but the argument is over environmental policy and relative cost.
Both sides are saying technology will allow us to have the energy we need or want at reasonable prices.
Savers Limit Gas Usage No Matter the Price
Alan Greenspan suggests a policy of "… significantly higher gasoline prices to wean us off gasoline-powered motor vehicles."
That pressures people to save fuel, but unless savers have some way to cut their consumption by as much as the percentage increase in price, it will cost them much more. That is why savers want to limit the gallons they use no matter the price.
Savers know gas mileage for cars can be much higher and they want to mandate automobile mileage standards so that everyone has the choice to use less energy and save money. They want to expand rail service and have less air travel because rail uses less energy per passenger mile.
Savers look for ways to reorganize physical space so that people can live closer to work and shopping. They look for ways to make it cheaper to move closer to work: a tax deduction for all moving costs, for example.
Notice that Congress has many ways to compromise on policy. A little more off shore drilling can be traded for higher automobile mileage standards.
America needs policies that save energy and money.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
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12 Ways to Save for a Down Payment on a House
We've been saving pretty aggresively to build up a down payment for a house, as hard as it may be.
Thankfully, our automated finances force us to put the money away, so we don't have to wait until the end of the month to see what we have left over to contribute.
MSN Money has a new article up, "How to come up with a down payment," that offers 12 ways to save money for house purchase.
- Set up an automatic saving plan.
- Get a gift from your parents, grandparents, other relatives or friends.
- Sell a car, boat, motorcycle, collectibles or other assets.
- Liquidate stocks, mutual funds, savings bonds or other investments.
- Allocate your income tax refund.
- Take a loan from your 401(k) retirement plan and repay yourself with interest.
- Withdraw funds from your 401(k) plan, subject to taxes and penalties.
- Collect on a loan that you made to someone else.
- Get a bonus from your employer.
- Explore homebuyer programs for public servants if you qualify.
- Apply for a state or local government down-payment program.
- Use a private down-payment assistance program.
While some of these make great sense — an automatic savings plan, setting aside a bonus and allocating your income tax refund — do they really expect someone looking for a downpayment to have a boat to sell?
I'd also warn against taking money from your 401(k); not only will you have to pay taxes or interest on what you take out, but you'll be losing out on any compound interest you'd otherwise be making.
What tips do you have for saving for a down payment?
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DollarSavingsDirect Launches 3.75% APY Online Savings Account
There's a new online savings account competing for your money — the Dollar Savings Account from New York-based Emigrant Savings Bank — offering a 3.75% APY.
Available at DollarSavingsDirect.com, the account requires a $1,000 minimum for the 3.75% rates. All accounts under $1,000 get a 1% APY, according to CNN Money.
Emigrant Savings Bank also offers EmigrantDirect, an online savings account offering a 3% APY.
We're not quite sure what exactly the difference between the two accounts are — besides the obvious interest rate.
With a 3.75% APY, the Dollar Savings Account is the highest-yielding free online savings account, tied with WaMu.
HSBC, FNBO, and WTDirect follow behind them.
It doesn't look like the rate is temporary, so it'll be interesting to see how long it lasts.
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WTDirect Offering Bonuses to New Online Savings Accounts
WTDirect, which recently upped its online savings account to a 3.31% APY, has just announced that they are giving away bonuses to customers who open a new online savings account.
Now through September 5th, open a WTDirect Savings Account and receive a bonus based on your deposit amount. Customers that keep a balance for 60 days earning our high rate will receive a bonus of $100-$250.
Deposit and balance for 60 days Bonus
$10,000 $100
$15,000 $150
$20,000 $200
$25,000 $250
Be sure to use promotion code “WTF3SOB” when completing the online application!
It's not unusual for banks to offer sign-up bonuses, but WTDirect's possible $250 contribution is the most generous I've seen — assuming you have $25,000 to open with.
ING Direct, for instance, has been giving $25 to customers who open an account with at least $250 for some time now.
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HSBC Direct Addresses System Problems
Had problems accessing your HSBC Direct account recently? The company knows about it, and they say they've pretty much got it worked out.
Dear JASON,
I want to update you on our recent systems issue and extend my apologies for any inconvenience you may have experienced in trying to access your HSBC Direct account.
Our teams have worked diligently to test and re-engage the impacted systems to ensure that we are able to return full–system functionality to you as soon as possible. Most of the impacted systems are now up and running and we continue to work through any remaining issues.
As part of HSBC Group, one of the largest and most highly–capitalized financial institutions in the world, with over 140 years of experience helping our customers achieve their financial goals, we remain committed to meeting your needs and understand how important continuity of our online services are to you.
I will continue to keep you updated on our progress, and again I sincerely apologize for any inconvenience this system issue may have caused you. And I thank you for saving with HSBC Direct.
Sincerely,
Kevin Martin
Executive Vice President,
Head of HSBC Direct U.S.I don't check into my account that often — everything is automated — but want to know: have you had problems accessing your HSBC Direct account recently?
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How Exchange Rates Affect Savers' Bottom Lines
Last spring, the Washington Post ran an article entitled "Foreign Buyers Flock to DC Office Market." The article explains that foreign investors bought 10 times as much commercial property in the District in 2007 as they did in 2006, with 2008 looking like 2007.
Buyers from Europe, Australia, Asia Pacific and Latin America have bid up prices to a record $867 a square foot.
Washington is an office-based economy with a stable or growing job base, so it is good to have the construction industry creating jobs and making way for even more office jobs. It would be better if the savings and savers financing the buildings were Americans.
Foreign nationals have so many dollars to invest because Americans buy so much oil and import so many products from Europe, China and other countries abroad. In 2001 and 2002 Americans paid around a dollar for a Euro, Europe's universal currency. By 2005 they had to pay around $1.35. Today, it is around $1.57.
A bottle of French wine that was $10.00 in 2002 now costs Americans $15.70. A higher price for wine makes it easy to see how higher exchange rates and a falling dollar value discourage consumption.
It might not be as obvious how higher exchange rates and a falling dollar value can benefit American savers. American buying abroad has supplied so many dollars to foreigners they are using their surplus in America's capital markets.
Some of it is loans but some of it is to buy America's assets like the office buildings mentioned above. It is sobering for real savers to see Americans trading assets like office buildings to pay for import consumption, but the devaluing dollar will begin to change that.
The devaluing dollar that limits American consumption will also limit the dollars foreigners have to invest in United States capital markets. If Americans have to rely more on its own savers, then savers can expect to earn higher interest rates.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
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Mint Launches Re-Design; Are Conversion Rates Up?
Mint, the online money management and personal finance tracking tool, has launched a re-design of their site.
From their blog:
Starting today, you’ll find a refreshing new look which reflects the new features we’ve added to the site since launch; enhanced budgeting tools, brokerage and investment accounts, mortgage accounts, student loans, and auto loans. We’re also kicking off a series of “how-to” guides designed to simplify your financial life, giving you practical, actionable advice on things like saving for retirement, paying off your student loans, buying a car, creating a personal budget, and more.
According to TechCrunch, the re-design is aimed at increasing conversion rates — and it's doing just that.
That normally isn’t big news, but what caught my attention is that Mint has been bucket testing various redesign formats with some users and is seeing conversion rates increase by 20% over the current site.
That equals “hundreds of thousands” of more registered users over the course of a year given their current growth rates, says CEO Aaron Patzer. When we last checked in with them, they had 350,000 registered users and were tracking $11 billion in assets. Those numbers are likely substantially higher now.
Even though Mint is one of the more well-known online finance-tracking applications, it hasn't always done what I've needed it to do, including loans, investments, and more. The re-design is apparently supposed to help users track these accounts (which have been added in the past months) easier.
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These Are Odd Times for Savers
America has relatively low interest rates at a time when banks and credit intermediaries are curtailing loans and cutting bank lending. Low interest rates do not normally go with less borrowing. Low interest rates, or falling interest rates, should increase borrowing and lending whereas higher interest rates decrease borrowing and lending.
Low interest rates are part of the Federal Reserve Bank's current policy to keep up spending and avoid a recession at the same time home mortgage foreclosures help limit lending since defaulters restrict the banking sector's loanable funds.
As savers, we need borrowers or interest rates would be zero. In general, the fewer the borrowers the lower the interest rate, but we should worry too about the new mix of loans.
Banks are having trouble finding enough business and industry borrowers. In the search for new borrowers they keep turning to more consumer lending and promote the use of consumer spending and consumer debt with heavy advertising.
A recent New York Times article entitled "Given a Shovel, Americans Dig Deeper Into Debt" quotes an advertising executive. "One of the tricks in the credit card business is that people have an inherent guilt with spending." … "What you want is to have people feel good about their purchasing."
The article also reported from Federal Reserve Bank data showing the percentage of disposable income used to pay debt keeps going up year by year reaching 14.5 percent in 2007. That is one piece of data and one sign of the rising consumer debt among many signs including personal bankruptcies.
The growing reliance on consumer debt and consumption spending makes it harder for the Federal Reserve Bank to maintain the economy. Sure, they can lower interest rates, but credit card interest rates continue above 20 percent for millions of consumers.
The lower interest rate policy applies primarily to business loans, but essential consumer spending depends more on people's income rather than interest rates.
America must keep up consumption spending to prevent a recession but threats to continued consumption grow with the numbers who earn stagnate wages, or who are unable to pay credit card debts, or file for bankruptcy, or have reached credit limits. Defaults limited new loans.
Government spending and tax cuts will stimulate consumer spending, but government, especially the federal government, are already running big deficits.
These are tough times for savers with interest rates low and limited ability for the Federal Reserve Bank to stimulate the economy. As savers we are in the awkward position of hoping others will go on buying, buying, buying so that we can save.
As savers, we can't change the rest of the world, but we can avoid get rich schemes, pay our monthly credit card balance and do our best to avoid paying interest and fees even as we earn less from our savings.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
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