J.D. Power & Associates puts out annual customer satisfaction surveys in all types of industries from automobiles to finance to insurance to travel (and many more in between). When they published their annual scores for finance companies late last year, I wanted to write about it to see how some of the companies I work with performed against their peers.

Author’s Aside/Note: I know it’s a little late but this one had been sitting in the hopper and I felt that I should post it anyway.

The Finance category itself is broken up into retail banking, mortgage related, and credit card groups. At the time I first wrote this, I didn’t think the mortgage ratings were that interesting so I skipped over it. I chose to focus on the two services I used more - retail banking and credit cards. While I don’t discuss the mortgage ratings, go check out how well Countrywide Home Loans did (hint: not well).

Retail Banking

The Retail Banking scores were rated based on geographic region:

• Mid Atlantic: Commerce Bank (Bancorp)
• Midwest: Commerce Bank (Bancshares)
• Southeast: Bancorpsouth Bank
• Southwest: Wachovia Bank
• West: Bank Of The West

If you happen to have a Commerce Bank nearby and are a current customer (and you have kids), they’re running a summer reading program where kids can earn $10 for reading ten books.

Online savings account darlings WaMu and HSBC made appearances on the list as well (I looked primarily at the Mid Atlantic listing because that’s where I live, I suspect the scores are similar for the same banks). WaMu scored four points in overall satisfaction (with the highest score of 5 points under the Fees category) and HSBC scored three points. This past weekend we went to a wedding in Williamsport, PA, home of the Little League World Series, and saw scores of Sovereign Bank branches. Sovereign Bank scored a mere two points overall (and across the board). It was also funny to see M&T Bank’s whole name written out, Manufacturers & Traders Bank; I use them for my business banking and they’ve kept me very “satisfied.”

Credit Cards

In the Credit Card Satisfaction category, American Express edged out Discover for the highest rating in overall satisfaction and received the JD Power & Associates award. I personally use the American Express Costco TrueEarnings card because because I shop often at Costco and because it gives me 3% cash back on gasoline purchases (we also use a Discover Open Road card but that card caps rewards). My wife used to like their AMEX Blue card but it was recently replaced with the Citi CashReturns card because of the unlimited 1% cashback (and it once offered a 5% cashback on everything for the first three months).

The three companies that led up the rear with two points (out of five) were Capital One, Bank of America, and HSBC. I’ve never had a credit card from any of those companies. It’s interesting that when you arrange them by Overall Satisfaction (by clicking the sort arrows), HSBC appears below Bank of America. Bank of America has 2 points in all five categories while HSBC has three points for Rewards Program yet still appears below BoA. There must be some granularity within those points not captured somewhere.

Brokers

Finally, the investment broker category was the last of the categories I was interested in and it was broken into Full Service Investment Firm Ratings and Online Investment Firm Ratings. Raymond James took home the award in the Full Service Category and Scottrade (barely edging out Vanguard) took top honors in the Online Investment Firm Ratings.

I thought it was interesting that the only other “discount” online broker that made the list (TradeKing, Zecco, and many others didn’t make the list) was E*Trade Financial and they scored only two points.

With it being August, the 2008 ratings should be coming out soon in a few months. It’ll be interesting to see how much shifting around occurs with some of these scores.

Despite what I wrote in Beware False Indicators of Bank Health, there is a certain amount of comfort in having a physical bank location to go to. A few years ago, a physical brick and mortar bank meant that you weren’t ever going to get close to a high yield saving account’s interest rates. However, several national brand name banks have begun offering high yield online savings accounts in order to compete for your deposits.

I used the list of the 20 largest banks, according to FDIC information current as of May 2008, and only found five banks that offered high yield savings accounts. I was surprised not to see Washington Mutual (3.75% APY) on the list of the largest 20 banks.

#1 Citigroup - 2.25% APY

This New York, N.Y. based bank had approximately $2,199,848M in deposit assets as of May of this year and Citigroup has a high yield online savings account, known as their Ultimate Savings Account, offering a pedestrian 2.25% APY (They have an MMA offering 2.65% APY with bill pay). They used to have a standalone e-Savings account offer but it appears that you are now required to have a linked checking account and the interest rate is a laughable 1.50% APY. (To find this, go to Citi, click on Banking near the top, then click on Savings in the left sidebar, and look for Ultimate Savings Account)

#7 HSBC North America Inc. - 3.50% APY

HSBC, located in Prospect Heights, Ill. with $493,010M in assets, is also the namesake of HSBC Direct - a high yield online savings bank offering a 3.50% APY interest rate on its savings account. I wrote a review on HSBC Direct recently and was surprised to find that I was able to link the account to other high yield savings accounts (ING Direct in that case).

#11 Citizens Financial Group, Inc. - 3.30% APY

Whoops! Citizens Bank Direct is a division of Citizens National Bank, not Citizens Bank. CNB Bank Direct is still a high yield bank but it’s not affiliate with a top 20 bank. (Thanks zashachic!)

Citizens Financial Group is the holding company for Citizens Bank and they just entered the high yield online savings game with Citizens Bank Direct, offering a 3.30% APY interest rate. I don’t know much else as their online offering is brand spanking new (CNB has been around since 1920) but I did find a brief review of CNB at Bank Deals.

#14 Capital One Financial Corp. - 3.50% APY

Not surprisingly, financial services company Capital One has an online savings account offering called the Capital One Online Savings Account (clever huh?) offering 3.50% APY on balances over $10,000 (you earn 2.50% APY if your balance is under $10,000).

#17 BB&T Corp. - 1.75% APY

It’s almost embarrassing to list this but BB&T offers a high interest online savings account that offers 1.75% APY with no minimum balance requirement and no monthly maintenance fees.

The Rest

These banks were on the list but didn’t have high yield savings accounts. Many had money market accounts but none were strictly high yield savings accounts: #2 Bank of America Corp., #3 J. P. Morgan Chase & Company, #4 Wachovia Corp., #5 Taunus Corp., #6 Wells Fargo & Company, #8 U.S. Bancorp, #9 Bank of the New York Mellon Corp., #10 Suntrust, Inc., #12 National City Bank, #13 State Street Corp., #15 Regions Financial Corp., #16 PNC Financial Services Group, Inc., #18 TD Bank North, INC., #19 Fifth Third Bankcorp, and #20 Keycorp.

List of 20 largest banks provided by infoplease.com (based on FDIC data), Photo by thetruthabout.

According to an article in USA Today, Citigroup, Bank of America, Chase, Wachovia, Wells Fargo, HSBC, U.S. Bank and SunTrust, eight of the ten largest largest banks in the united states, will cash checks that they receive on the same day in an order that maximizes overdraft possibilities. They will cash the largest checks first and the smallest checks last - this rule also applies for electronic transactions as well.

The banks defend their move by saying they want to give priority to the largest checks because they say that the larger checks are typically more important and you’d rather get a credit card payment bounced than a mortgage payment. Consumer advocates that banks are trying to screw the consumer because banks are relying on fees to make their money now that the spread is smaller. To be entirely honest, the order those checks are cashed shouldn’t matter - you should always have enough money in the bank to cover every check you write, otherwise you shouldn’t write them (whoops, typo, thanks Nick).

The articles goes on to explain the plight of Sean Tucker, 29, whose ego wrote checks (one of which was for $3.33) his body couldn’t cash to the tune of six overdraft fees and $200 out of his pocket. I’m sorry Sean… you need to be cognizant of how much money you have in the bank and you certainly shouldn’t be writing checks if you’re even close to being over, it’s simply not difficult to keep track of that stuff and if you’re simply careless, you deserve the fees so you’ll learn not to do it next time.

Personally, I prefer the checks cashed from the largest to the smallest because I’d rather have a $50 water bill bounce than my mortgage payment.