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.

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.

It 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)

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.

In 2008, many people received a stimulus check of a few hundred dollars. In 2011, many people got a payroll tax holiday instead of a check in the mail. There wasn’t a lot of news made about the payroll tax holiday but it’s almost as big of a “stimulus check” as the first stimulus check.

Surprisingly, based on how it was structured, the more you made, the more of a holiday you got because it was based on a percentage of your payroll taxes. When the “deficit supercommittee” failed to reach an agreement yesterday, that payroll tax holiday was put in jeopardy. You see, it’s set to expire at the end of the year and people expected the supercommittee to address that. As it stands, they’ve addressed… well, nothing.

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Founder Federal Credit Union, a credit union in Lancaster, South Carolina; will be giving $10 million back to its members in the form of a bonus dividend. About half will go to depositors based on their interest earned and the other half will go to borrowers based on their interest paid. There’s no doubt that its 200,000 members are thrilled.

This illustrates the fundamental difference between credit unions and banks. Both pay out dividends and both pay them to their “owners.” The difference is that the depositors and borrowers are the owners of the credit union and that’s why it’s going back to them. Commercial banks pay dividends also, but the customer isn’t the owner. Shareholders are. Founders Federal has returned $30 million dividends in the past eleven years. This is just one of the reasons why credit unions kick ass.

Another warm and fuzzy moment? Bonuses for employees. $1,300 for full timers and $650 for part-timers.

Want to get a 2% return on an investment in just one day?

Buy a Forever Stamp from the Post Office on January 21st, 2012 and mail something on January 22nd (well, on the 23rd because the 22nd is a Sunday). On January 22nd, the post office is set to increase the current stamp price of a first class letter from 44 cents to 45 cents. Also increasing will be the price of mailing a post card, a three cent increase to 32 cents. Letters to Canada and Mexico will now cost 5 cents more to 85 cents. Letters anywhere else outside the United States will see a stamp increase of 7 cents to $1.05 a pop.

Forever Stamps, as you’ll remember, can be used on any first class letters so buying them today means you don’t need to find penny stamps come January 22nd.

(Photo: queen_of_subtle)

On several occasions, when playing golf with my good friend and his dad, the dad has joked about how he hasn’t gotten a raise in three years. He’s semi-retired and is getting Social Security payments and his “I haven’t gotten a raise” joke is in reference to how Social Security hasn’t gotten a cost of living adjustment (COLA) in three years. The last time there was a COLA for Social Security was back in 2009, when it was increased 5.8%. The SS COLA is supposed to adjust benefits so they keep on pace with inflation, which seems like a very sensible thing to do, but official inflation figures (CPI-W is used for SS COLA) has been low these past few years and a 3rd quarter spike in inflation in 2008 (resulting in that 5.8% increase for 2009) gave the COLA a ton of ground to cover, so there has been no adjustment these past few years.

Well, the wait is over, the cost of living adjustment for Social Security will be 3.6% starting in January 2012. That’s the good news. The bad news is that the premiums retirees are expected to pay for Medicare Part B is probably going to go up, thus taking a piece of that COLA bump. That won’t be announced for another month though.

Medicare will cut Social Security’s “raise” in 2012 [Reuters Money]

Last week, Bank of America caught a lot of flak for introducing a bunch of fees on their checking accounts. This week, it’s Citi’s turn and the fees will start in December.

• If you have a mid-level Citibank account, you’ll get a $20 per month fee if you don’t maintain a balance of at least $15,000 in your accounts, up from $6,000.
• EZ Checking account holders will now see a $15 per month fee if they don’t maintain at least a $6,000 balance and the EZ Checking package is getting phased out.
• Basic Banking accounts will see a fee increase of $2 to $10 per month, which you can avoid if you maintain a balance of $1,500 or make one direct deposit and one automatic online payment per month.

Today it’s Citi, last week it was Bank of America, tomorrow it will be another brick and mortar bank. It’s only a matter of time. If you want to avoid being forced to change banks because you want to avoid fees, start moving your banking now.

(Photo: redvers)

Many news outlets have been reporting that Bank of America will be instituting new fees to those with low account balances and it comes as no surprise. They are just the latest to announce tests in which account holders in certain states would be seeing these new fees. Wells Fargo has done this, Chase has done this, and many more will follow. While I support legislation to clean up aspects of our finances, like the Fair Credit Reporting Act, some laws have unintended consequences. This aspect of the Dodd-Frank bill will simply shift overdraft fee and transaction fee revenue into account maintenance fees.

Quote of the Washington Post story:

“We’re in a new economic reality. We’ve seen our customers’ behaviors change, their financial needs change,” said Susan Faulkner, Bank of America’s deposits and card product executive.

We should read that as – “We’re in a new economic reality. We aren’t banking billions in fee revenue anymore and so we need to make a change.” While I appreciate the new reality, and banks deserve to make money just like any other business, I do find the corporate-speak to be entertaining.

In the end, it’s almost as if we’re just playing a game of whack a mole. Banks charged too much in interchange fees and overdrafts, so the government stepped in. Banks will now just charge annual fees instead. There’s no law that says a bank is required to offer a free checking account and there likely will never be one. Banks are beholden to their shareholders and shareholders love earnings. When laws reduce those earnings, they have to find new sources of revenue and these new fees are it.

I have a Bank of America account and I don’t intend to ever keep $50,000 in deposits there so if they institute a fee, I’ll simply use my Ally Banking Online Checking account as my primary account. No fees, they reimburse ATM fees, and I can mail in my checks (until they offer scanning). That’s all I want from a checking account.