Today, the Obama administration will announce that all benefits payments from the government will be paid electronically, rather than with paper checks. This includes, but is not limited to, Social Security, unemployment, veterans benefits, railroad retirement, and other government benefits. If you do not have a bank account, you will instead receive a debit card through the Treasury Department’s Direct Express Debit MasterCard program.

This is a good thing and a long time coming. With electronic deposits, you get your money faster and taxpayers save money. Currently, 85% of benefit recipients are already getting their benefits direct deposited into their bank accounts. It’s estimated that this will save $303 million over the first five years and then $120 million each year thereafter. It’s estimated that it costs $1 to mail a check and only 10 cents to direct dpeosit it.

If you enroll for benefits on or after March 1st, 2011, you are required to receive them by direct deposit or debit card. Existing beneficiaries have until March 2013 to supply direct deposit information or request a debit card. The debit card has no monthly fees, no required credit check, and signup is free.

(Photo: swanksalot)

Don’t shoot the messenger!

According to a survey by GMAC, their GMAC Insurance National Drivers test, the dumbest drivers are in New York where the average driving test score was a mere 70.0%. New Jersey wasn’t that far behind with an average test score of 70.5%. The “smartest” drivers were in Kansas (82.3%) and Oregon (82.1%). Here are the results in an interactive app that doesn’t really work all that well.

It’s really an interesting study because they also asked how many people apply makeup while driving, eat while driving, or change their clothes while driving. Change their clothes! Who changes their clothes while driving? Apparently a lot of people do because 2.9% of the respondents in Kansas, the “smartest” drivers, have changed their clothes while driving.

As an aside, the number of people who text while driving is also pretty alarming. Many states have laws against texting while driving.

It only takes a few minutes to pull off to the side of the road to change, yet 3% of people in several states insist on driving at the same time.

Don’t be stupid, don’t change while driving.

(Photo: jshultz)

You may have read some recent news reports about how the financial reform bill (which the Senate passed last week) has become bloated with unnecessary and irrelevant amendments. Fortunately there are a few necessary and relevant amendments, such free credit scores for those rejected for credit. Another amendment included in the bill has to do with FDIC insurance. In the midst of the economic crisis, the FDIC insurance on deposit accounts was raised from $100,000 to $250,000. That increase in coverage was set to expire on at the end of 2013, January 1st, 2014 to be specific (it was extended once already through the Helping Families Save Their Homes Act from its original expiration date).

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Salle Mae Bank, which recently began offering their Sallie Mae online savings account, recently announced they were increasing their interest rate from 1.25% APY to 1.40% APY, putting it near the top of the interest rate list for high interest savings accounts. With no monthly fees, no minimum balance, daily compounding, and a competitive rate, Sallie Mae Bank has made a big splash in the online bank space despite being around for such a short period of time.

Their CD rates are competitive too, if my memory services me right (as of May 11, 2010):

• 12-Month: 1.55% APY
• 36-Month: 2.40% APY
• 60-Month: 3.00% APY

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If you have a savings account at SmartyPig, you’ll be happy to learn that in a month they’ll be increasing the interest rate on those accounts. It’s a variable interest rate with two tiers that applies to your aggregate goal totals. If your balance is less than $50,000 then the rate will increase from 2.00% APY to 2.15% APY. If your balance is over $50,000, you will earn 0.50% APY. If you aren’t familiar with SmartyPig, here is my SmartyPig review.

Update: Originally I erroneously wrote that there were interest rate tiers, there are not. If your balance is under $50,000 you earn 2.15% APY on everything. If your balance is over, you earn 0.50% APY on everything.

In banking terms:
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Yesterday, ING Direct announced a clever new take on CDs – it’s the Added Value CD. The idea is very simple, you can get a 12 month CD with a rate of 2.25% if you open it and fund it with “new money” from a non ING Direct account. According to their terms and conditions, the new money must increase your total deposit balance as of yesterday, October 7th, 2009. Withdrawing money and then contributing it again will not work.

The 2.25% APY rate is a 0.15% premium on ING Direct’s current CD rates and it beats the best CD rates in that maturity range. With inflation at a scant 0.19%, getting 2.25% looks pretty good.

The Added Value CD [ING Direct]

Since it’s passing, the CARD Act has drawn both criticism and praise from just about everyone. Some were upset about the tightening of credit card approval requirements for college students. Others celebrated rule changes that required companies to apply payments to the highest interest rate balances. Some warned that credit card companies would change their business practices and make credit cards less accessible, since they would be less profitable. The issue has been covered here when Bargaineering broke the story that Citi would start charging an annual fee unless cardholders met a certain spending criteria.

Both Chase and Bank of America announced that they would be overhauling their overdraft policies. It’s clear they’re doing this to get ahead of the curve on the legislation but couching in “consumer friendly” terms. Some changes include:

• Customers will be allowed to opt into overdraft protection. (both banks)
• No fee if the overdraft is $5 or less,Chase, or $10 or less for one day, Bank of America.

Update: Wells Fargo / Wachovia are joining the party in offering the option to opt out ofoverdraft protection and no fee if the overdraft is less than $5.

Why they’re doing this is irrelevant, it’s just good that they’re doing it.

Chase and Bank of America lower overdraft fees [MarketWatch]

(Photo: rosengrant)