NEWS Column

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PerkStreet Shutting Down Operations

Perkstreet LogoPerkStreet is shutting down its operations. According to their website, they were pursuing investment the last six months and failed to do so. They’ll be shutting down. PerkStreet offered a checking account that had a debit card with 2% rewards – twice that of most other debit reward cards. It was a pretty compelling offer but it appears not compelling enough.

(click here to continue reading…)

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CFPB Introducing New Prepaid Debit Card Rules

I’m amazed that prepaid debit cards aren’t more heavily regulated than they are now. That’s about to change.

The Consumer Financial Protection Bureau is set to unveil some rules for prepaid products and is currently holding a hearing in Durham, North Carolina to discuss some of these changes. It’s said that the new rules wouldn’t involve controlling the fees, as one would expect, but institute similar credit protections that customers get on credit cards. For example, companies would have to reimburse customers for unauthorized charges and do better with security.

Why the scrutiny? Prepaid cards are exempt from the Durbin amendment, which put caps on merchant fees, and were overlooked by Dodd-Frank. As you can imagine, banks were pushing these more given less regulation.

I’d like to see some limits on fees. A lot of folks use prepaid debit cards because they’re part of the unbanked or they are low income. The fees may nominally look small, a few bucks here or there, but they’re enormous on a percentage basis.

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TradeKing & Zecco Merging

Ryan at CashMoneyLife sent me press release in which TradeKing and Zecco announced a merger. I’ve long been a fan of TradeKing. Zecco… not so much.

I have nothing against Zecco because I’ve never used them but their history of changing their fee structure has been a little disconcerting. In the beginning, they offered free trades, which seemed unbelievable and made me wonder if Zecco was a scam (it wasn’t). Then they made it so that you needed a $25,000 balance in your account to get 10 free trades. Then… they stopped their free trade program entirely. They were moving further away from free trades and closer to a fee structure like TradeKing, but without TradeKing’s customer service record. Their weaker customer service marks are understandable, you can’t expect to get free trades and top notch service. You get what you pay for and with TradeKing you get great customer service at only $4.95 a trade.

I’m interested to see how the merger works out. Hopefully Zecco is merged into TradeKing and nothing changes about TradeKing.

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IRS Reports Glitch Delay Tax Refunds

It seems the trusty Internet Revenue Service has experienced a bit of a hiccup this tax filing season. The IRS is reporting that a software “glitch” has delayed the processing of “several million taxpayers” as they try to upgrade their systems. After writing about how to get your tax refund faster, we didn’t account for software upgrades and how a “glitch” delayed so many. As always, you can still track your tax refund on the IRS website.

The IRS did re-iterate the timing differences for efiling vs. paper returns and for direct deposit vs. paper check. If you filed an electronic return with direct deposit, expect a refund in 7-13 days. Seventeen days for a mailed refund. Both are faster than last year.

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Verizon Scraps $2 Bill Payment Fee

If you were a Verizon customer, you probably heard about the $2 fee Verizon was trying to push on people who made one-time bill payments on their accounts. I’m a Verizon FiOS customer so I wasn’t happy to hear the news that they’d be trying to juice up their profits just a little more with this ridiculous fee. It turns out a lot of people weren’t happy (surprise!) and Verizon is backtracking by scrapping plans for this $2 fee. The funny part is that the CEO stated:

“At Verizon, we take great care to listen to our customers. Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time,” Verizon CEO Dan Mead said in a statement.

It doesn’t take a genius to know that customers aren’t going to like paying fees. They especially hate paying fees when they are trying to pay you for a service you provide!

The big lesson we can all learn from this and other failed new fees, like at Bank of America, is that the Internet has given consumers a big tool against companies trying to pull these types of stunts. Twenty years ago a company could have instituted a new “convenience” fee and likely gotten away with it. You might have had a local news station do one of those “On Your Side” stories where they pointed it out but nothing was possible on such a national scale. Now, companies like Verizon and Bank of America will really hear their customers when they try something like this.

Verizon – If you want people to use automatic bill pay, try a carrot next time. People don’t like being hit with sticks.

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Congress Passes Two Month Payroll Tax Cut Extension

After a lot of political dancing, arguing, and tomfoolery, it looks like Congress has extended the payroll tax cut for another two months as they work towards a yearlong agreement. The Senate passed, with bipartisan support, a bill two weeks ago that extended the payroll tax cut for two months, extended unemployment benefits, and an adjustment to Medicare payments to doctors. The Republican controlled House, led by Speaker John Boehner, was seeking to add provisions for a transcontinental oil pipeline and change how the cut would be paid for. Eventually Republicans acquiesced and a bill was passed in the House by unanimous consent and signed into law by President Obama last Friday.

So for two months, we’ll continue to enjoy the 2% payroll tax cut we’ve been getting all this year.

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Dollar Coin Program Ending

Dollar CoinIt looks like the dollar coin program is dead and it’ll “save” $50 million a year. They’re killing it because there are tons of dollar coins sitting in vaults and it’s a waste of space and money. Unfortunately, had we gone to dollar coins instead of constantly using dollar bills, we’d have saved even more money over the long run (GAO said $5.5 billion over 30 years).

Why are the coins a failure? My gut feeling is that coins are just not popular. Coins are heavy, noisy, and more obviously dirty. How often do people drop their change in a tip jar by the register because they don’t want to carry them? I use a credit card on small purchases because I don’t want to get change. A cup of coffee? Swipe. Magazine? Swipe. To be honest, I don’t really like small bills either because I don’t need them because everything goes on a credit card. They’re dirty, they smell, and they take up space. I suspect that people don’t love the dollar bill, they just like them slightly better than dollar coins.

If the government really wanted to popularize dollar coins, they’d do away with paper dollar bills. We don’t have 25 cent bills or ten cent bills, why have two versions of something? People don’t care that a paper bill has an extremely limited lifespan because they don’t see the cost. If you want the dollar coin to work, you have to kill the dollar bill.

Why do you think dollar coins aren’t more popular?

(Photo: lrargerich)

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USPS Closing 250 Mail Processing Centers, Longer Ship Times

The USPS announced that it would be closing roughly 250 of the almost 500 mail processing centers across the nation starting as early as March 2012. This is in addition to the planned closing of 3700 local post offices. In total, approximately 100,000 postal employees could be fired. Interestingly enough, these are all steps that the USPS can take on its own without Congressional approval. Congressional approval is required for other items such as reducing delivery to five days a week (eliminating Saturday delivery), raising stamp prices, and adjusting other labor costs like health care.

These closure are expected to save the post office billions but will result in slower delivery (fewer processing centers = slower processing). First class mail is supposed to be delivered in one to three days, now it’ll take two to three days. Finally, all this happening is in the face of a one cent increase in first-class mail prices starting January 22nd.

Takeaway? Buy some Forever Stamps if you are running low, prices go up 2.27% next year.

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