Banking 
6
comments

Why debit cards make you more vulnerable to fraud than credit cards

Debit cards can have pretty kitties, serious fraud riskThere are a lot of good things about using debit cards. They force you to limit your spending to the money you have on hand, they don’t leave you vulnerable to revolving debt and interest charges that credit cards can, and you can get pretty kitties printed on the front if you want.

One big downside, though, is how vulnerable they leave users to fraud.

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 Banking 
1
comments

What to watch out for with payroll cards

Payroll cards can help avoid check cashing costs, but can have nasty fees of their ownIf you’re currently getting a paper paycheck and your employer hasn’t already tried to get you to switch to a payroll card, they probably will at some point.

Last year businesses loaded paychecks onto 4.6 million payroll cards, and that’s expected to grow to 7.1 million cards by 2014, according to Aite Group, a financial services consulting firm.

It’s easy to understand why employers love payroll cards, which work like prepaid debit cards. They cut down on the cost of cutting paper checks and eliminate losses to payroll check fraud, which is so easy a 16-year-old could do it a lot and and not get caught for a really long time.

Why an employee would like them isn’t as clear.


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 Banking 
2
comments

3 banking dealbreakers

Monthly fees are a dealbreaker for many One thing I’ve heard often from experts in the banking industry is that there’s a lot of inertia around people’s banking choices. What I mean by that is, people tend to stay with the same bank until it does something so heinous, so unforgivable, that they are forced to move on.

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 Investing 
6
comments

What are Bank Stress Tests?

During the financial crisis, government officials often talked about performing “stress tests” on the financial institutions to see how they would fare if the financial crisis worsened. I didn’t really understand what they meant by “stress tests” because I didn’t see how you could do traditional stress testing, as you would on like a chair, on a bank. If you’ve ever been to an IKEA, you’ve probably seen them demonstrate durability with stress tests (the classic robotic pushing down on the POÄNG Chair and the labeled floorboards that talk about the number of people who have walked over them), but how do you stress test a bank?

In reality, a bank stress test is simply scenario analysis. What would happen if the stock market, say the S&P500 index or the Dow Jones Industrial Index, fell by 20%? 50%? What happens if the yield on the 30 year Treasury increases or if the Fed increases the federal funds rate? Analysts run these various scenarios and look to see how the bank will perform (i.e. survive) under these extreme conditions.

In learning that’s what stress tests were, I was surprised these weren’t part of the usual risk analysis process. I’ve always understood risk analysis to be a look at the probability and severity of a event happening, it appears that banks, perhaps in their zeal, ignored anything with a low probability even if it might sink the firm. As an investor, I’d like to know what the various risks to a company should things go north or south.

Then again, when your bonus is tied to annual performance, big wins in 2010 followed by catastrophic losses in 2011 still means a huge 2010 bonus. :)


 Your Take 
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comments

Your Take: What Do You Look For in a Bank or Credit Union?

Ceramic Piggy BankThis week Liz Weston wrote about how to shop for a new bank and it made me think about how we chose the banks we work with now. For us, the criteria for judging a checking account differed from the criteria for judging a savings account. We use the two different types of accounts for different purposes, so the criteria for picking the “best” for us will vary between the two.

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 Personal Finance 
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How to Kick 11 Fearful Financial Situations in the Face

This post is part of the one day blog event “The Spectrum of Personal Finance.” In this event, comic book nerd Brian of My Next Buck, will discuss 8 different emotions (taken from the Green Lantern comic series) and relate them to personal finance. Here at Bargaineering we will be looking at Fear. To view the rest of the event look at the bottom of the page to see the other blogs hosting articles.

When I started looking through the personal finance blogosphere a year ago I was frightened of all the information I was gathering. There was so much out there and I didn’t necessarily understand what I was reading. I didn’t want to make a misstep with my hard earned cash, so I didn’t do anything at first.

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 Personal Finance 
9
comments

40 Money Tips for College Students

Carnegie Mellon FlagI remember the first day I set foot at college, it was a mixture of excitement and fear at the prospect of being on my own. I arrived in Pittsburgh, PA a few days early and had the opportunity to wander around an empty campus. Carnegie Mellon University, especially in 1998, wasn’t a large campus, you could walk from one end of the campus to the other in less than twenty minutes, but it was still intimidating. After five years, a few degrees, and a great experience, I departed for the “real world.”

One thing I wish I had when I started college was a list of things I had to do for my finances like I did for my academics. College is where you set many of your life’s foundations. Whether it’s spiritual, physical, academic, or financial, your foundations are laid in your youth but set when you’re in college. I was fortunate enough not to make too many missteps and managed well enough, but I wish I had a list… so I wrote one, I hope it can help you whether you’re starting college or just starting over. I hope it helps. (and it sure beats reading another list of best paying careers!)

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 Reviews 
23
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Ally Bank Application Review

Ally BankTwo weeks ago, I applied for an account at Ally Bank, the new rebranded name for GMAC Bank. Their rates have fallen in recent weeks but are still competitive, so I wanted to open an account to take advantage of certificate of deposit rates while they were still strong.

Ally claims the account opening process takes only 10 minutes, which, after my experience, is probably accurate if you don’t run into any problems (more on that later). It’s also important that you have all the information present, including but not limited to your social security number, your driver’s license, and any banking information for the accounts you want to link to your Ally account (ABA routing number, name, account numbers, etc.) It’s all fairly standard stuff.

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