Banking Column

This column focuses on all matters banking from reviews of the best high yield savings accounts to whether your funds are adequately protected by FDIC insurance. The bank, and not your mattress, should be where you’re putting your savings and anytime we discuss banks, it’ll appear in this column.

Popular Resources in Banking:

- Best Online Banks
- High Yield Savings Account Rates
- Best CD Rates (12-18 months)
- Highest CD Rates (< 12 months)


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 Banking 
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Why I Stopped Laddering My Certificates of Deposit

CD LadderFor years we’ve had our emergency fund in a certificate of deposit ladder at ING Direct, now Capital One 360. Then a funny thing happened a while ago (I don’t remember exactly when but it’s over a year now since all my CDs have matured), the interest rate on a savings account was higher than what you would get for a 12-month CD. If you look at yields today, the same holds true.

If you look at the rates at Capital One 360, you can get a 0.75% APY on your savings account. To beat that with a CD, you need to go to 60 months! Anything less than that and you’re better off keeping your money in a savings account. At Ally, the rates are better but not much better. Ally will pay you 0.85% APY on a savings account and a 12-month CD is only slightly better at 0.94% APY.

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 Banking 
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I Love Remote Deposit on Bank Phone Apps (and Other Must Have Features)

In the last few years, more banks are offering smartphone apps that let you do almost any banking chore you want via the phone. I can’t even imagine the days before online banking when you’d have to find an ATM just to check your balance. Now, you can download an app, login, and see your balance in seconds. No more wasted gas, no more wasted time, you just get the information want in seconds.

Not all bank apps are the same though. Some offer better functionality than others and it’s amazing what some of them will let you do. In playing around with the ING Direct/Capital One 360 app, I saw that I could actually create a new account within the app itself (I believe, as of this writing, they are alone in this).

That got me thinking: “What are must-have features of a bank app?”

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 Banking 
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Best Bank Accounts for Kids

Piggy BankWhen my lovely wife was growing up, she’d work small summer jobs and put those savings into a certificate of deposit. Even back then, CDs weren’t exactly offering blockbuster yields (they never do relative to other riskier options), but she diligently contributed them into CDs and left them to to mature. The value in doing so wasn’t in the interest she earned but the habit of saving and understanding the importance of saving.

If that’s a lesson you want to teach your kids, the options today are far better than they used to be. Back then, if you were under 18, it was extremely difficult to open an account at the bank. In my case, I simply gave the money to my parents and they saved it on my behalf. It was good enough. Back then, online banking was just starting and I couldn’t log in to check my balance or do anything banking related. These days, with smart phones and always-on internet, giving your kids an account with their name on it can bestow a sense of responsibility and ownership that will help those lessons stick.

So what are the best bank accounts for kids?

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 Banking 
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Do You Trust Justin Bieber to Teach Your Teens about Money?

Justin Bieber by SeckIt’s true: Kids need to learn about how to manage their money, and teens need to learn how to properly use plastic. When was the last time you counted bills out to a cashier to pay for something? You really expect your teens to function well in a mostly-cashless society without practice with plastic?

So, while teaching teens to manage their money with the help of plastic is probably important, the next issue is whether or not a prepaid debit card is a good idea. And, on top of that, you need to ask yourself whether or not a prepaid debit card endorsed by a celebrity a good idea.

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 Banking 
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Why Does Capital One Have So Many ABA Routing Numbers?

Capital One Bank LogoWhat happens when banks buy banks? You get a mess of ABA routing numbers.

In a process that is years in the making, I’ve been consolidating more accounts I no longer need. This time, my Capital One Banking account is the one that is getting the ax. I opened the account years ago because of a Costco promotion that gave it a pretty good interest rate. When Capital One ended the relationship in the middle of 2012 and the interest bonus ended that calendar year, I decided I was going to close it. It’s March, I’m about three months behind schedule, but today I took the first step in cutting my ties – I added it as an external transfer to one of my other accounts.

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 Banking 
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Where to Find Free Checking Accounts Now

Check CardA few years ago, during the depths of the credit crisis and new legislation, banks were scrambling for ways to generate more revenue. With there long time friend Mr. Overdraft gone (and the ability to re-order it to increase fee revenue), many experts predicted the death of the free checking account. Now that we’ve exited the credit crisis, was the prediction of the death of free checking accurate?

Nope.

Some banks instituted fees but then offered easy ways to get out of them, which is like not having them in the first place. So where do you need to go to find free checking?

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 Banking 
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RCK IT Adjustments and a Reminder to Check Your Statements

It’s been a long time since I found something funny on a statement, so long that sometimes I feel like even a quick scan of my statements is a waste of time. However, it just takes one strange charge to remind you how important it is to review your statements each month and to never waver. Banks do a great job of stopping fraud and so it’s very easy to become complacent. Thieves love complacency!

Just a few weeks ago, I was looking through my Bank of America statement when I saw this little gem:
RCK IT ADJUSTMENT

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 Banking 
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Bank Stress Tests Don’t Matter

IndyMac FailureDid you hear? Ally Financial failed the Fed’s stress test. Of the 18 banks they tested, 17 passed and Ally Financial failed to maintain a Tier 1 Common ratio above 5% under a “severely adverse” economic scenario. If only these stress tests were performed over five years ago, say before Washington Mutual or IndyMac collapsed, then maybe it might mean something.


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