Your Take 

Your Take: FDIC Sets Bank Interest Rate Caps

Federal Deposit Insurance Corporation SealNear the end of May, the FDIC Board of Directors approved a rule that capped the interest rate “less than well capitalized institutions” could offer. For quite some time they listed weekly national rates. It was only until last month did they institute rate caps, which are defined as 75 basis points above the national rate. The national rate is just the simple average of rates paid by all insured depository institutions and branches for which data are available.” If a region has a much higher prevailing rate, then banks in that region will be allowed to use local averages plus 75 basis points as the rate cap. This rule wouldn’t go into effect until January 1, 2010.

The idea is that a bank that isn’t well capitalized will be in dire need of some liquidity and boosting your rates is a great way to increase deposits but put you in a difficult spot down the road. When Washington Mutual offered 5% APY certificates of deposit, everyone knew that it was a play for deposits. This rule would make that impossible.

What do you think? Is this a good idea or a bad idea? Do you think that the government is overstepping?

Incidentally, the current rate cap, effective 6/8/2009, on a savings account is 0.96% and a 12 month CD is 1.98% APY. Those are some pretty sad rates.

 Personal Finance 

BVC #12 – Keeping Financial Documents [VIDEO]

In this latest video I take a step away from the whiteboard and talk about something my wife and I did over the weekend, we consolidated our financial and personal documents. We’ve been married for about a year and a half but never went through the process of consolidating all of our important documents. In this video, I talk about how we did some hardcore spring cleaning and how long you should be keeping financial documents.

As always, everyone has slightly different opinions and one opinion I respect is that of Jeff Rose, a Certified Financial Planner in Illinois. Just a few short weeks ago he wrote about how long you should be keeping financial documents so please read his advice as well.


Top Online Banks: Savings or Checking Accounts

The key to finding the best online savings account at the best online bank comes down to interest rates. The bells and whistles are nice but ultimately it’s about the money and the bank with the highest interest rates will win. That’s why we’ve included a table of the best interest savings account rates followed by a review of some of the more popular online banks. The best online bank for you may depend on a lot of factors outside of the interest rate, which is why minimum balances, fee, and other details are included in the table. One thing is clear, online savings accounts always pay more than a regular brick and mortar.

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 Personal Finance 

BVC #2 – Sitting On The Sidelines Is OK [VIDEO]

Thank you everyone who left a comment on my first Bargaineering VideoCast about Filtering Personal Finance experts, I took your advice to heart and made some changes. I still have to work on a LOT of things, like being videotaped, but at least you won’t get sick watching it!

This video talks about how there seems to be an aversion to “sitting on the sidelines.” You have money burning a hole in your pocket and you want to invest it so it can grow right? Well, when the rules of the game are changing, sitting on the sidelines may be the smartest thing you can do. Remember Rule #1 – don’t lose money!

The next video will be a product review, something where video adds value over an audio-only podcast.

I’d love to hear what you all thought, please give me more tips! (and my next video won’t have quite so much crap in the background, my wife made sure of that!)

 Personal Finance 

Your Financial Network Map

Have you ever drawn a financial network map?

A financial network map is a one-page diagram that shows the links and relationships between each of your financial accounts, which include but are not limited to bank, brokerage, mutual fund, retirement, credit card, and service accounts.

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WaMu Review: Free Checking & Online Savings Account

At the request of a reader, and because I enjoy wrecking my attempts to simplify my personal finances, I just opened a Wamu Free Checking and Online Savings account, the only bank I didn’t have an account at on my list of high yield savings accounts. (I also did it because Nickel said it might be interesting to see an FDIC takeover from the inside, should that ever happen with WaMu (the media reports aren’t looking good though)).

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 Banking, Reviews 

HSBC Direct Review

HSBC AdvanceHSBC Direct has usually had one of the most competitive interest rates, so I opened an account there. I didn’t open it because I was planning on moving funds from a 2.70% ING Direct account, I did it because the cost of opening an online savings account was near zero and because I could then start funneling income deposited into a 0% Bank of America checking account into the new HSBC Direct account. It doesn’t make much sense to move funds from ING or Emigrant to HSBC, but it does make sense to change the destination of funds from Bank of America.

There were a few other non-financial reasons for opening the account. First, there’s no marginal cost to opening another savings account. HSBC has a well known international name and has consistently been among the leaders in interest rates. I would be hesitant to open an account at a lesser known bank. HSBC’s international presence is also a benefit. When we were in China and Taiwan, HSBC was everywhere (along with Citigroup) and that’s a side benefit. Lastly, my mom has an HSBC account, in part because of the China and Taiwan presence, and having that link is convenient as well.

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 Personal Finance 

Effective Complaining: Hit Credit Cards, Not Banks

Stop ComplainingOn Sunday, I reviewed Gotcha Capitalism, a powerful and comprehensive guide for consumers, and gave it glowing reviews. Today, I want to talk about a couple stats Bob Sullivan shares with the reader about complaining to companies and success rates (Keep in mind that the book was published in 2007).

The point of the section was to illustrate that the places where you are more likely to succeed are exactly the places that people don’t try. The success rate at a grocery store is 57.1% but only 14% of people ever try, whereas the success rate with a television company is an abysmal 20.2% yet 84% of people complain. If you want to make the most out of your time, go after credit card companies. Ask to have fees removed, refunded, or waived because you’re such an awesome customer.

Here are the numbers:

  1. Credit card companies: 64.6% success rate
  2. Airlines: 60.0% success rate
  3. Grocery stores: 57.1% success rate
  4. Retirement: 52.2% success rate
  5. Internet: 51.5% success rate
  6. Hotels: 37.0% success rate
  7. Banks: 33.3% success rate
  8. Insurance: 28.9% success rate
  9. Cell Phones: 26.8% success rate
  10. Television: 20.2% success rate

Here are the rates at which people actually complained:

  1. Television: 84% complaint rate
  2. Credit card companies: 79% complaint rate
  3. Cell Phones: 71% complaint rate
  4. Hotels: 54.0% complaint rate
  5. Insurance: 38% complaint rate
  6. Internet: 33% complaint rate
  7. Retirement: 23% complaint rate
  8. Banks: 18% complaint rate
  9. Airlines: 15% complaint rate
  10. Grocery stores: 14% complaint rate

If you have all the time in the world, complain to everyone! 🙂

(Photo by aturkus)

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