Happiest Credit Cards

Liz Pulliam Weston recently published an article summarizing and analyzing J.D. Power and Associates 2008 survey of credit card user happiness. They surveyed 8,000 users on five factors: interaction with the company, billing and payment processes, fees and rates, reward programs, and benefits and services.

I was a little surprised to see that the highest score was 783 out of 1,000 for American Express, with Discover taking second with 751. Everyone else surveyed scored less than the industry average of 724!

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 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.


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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High Yield Savings & CDs at Struggling Banks

My advice? Skip them.

A few months ago, I opened a Washington Mutual account because they were offering excellent interest rates on both their certificates of deposit and their high yield savings accounts. We’re talking 4% numbers, 5% for the CD, in an period of 3% averages, it was pretty meaty stuff.

At the time, I was focusing on FDIC insurance and how it would protect your funds. Your principal was not at risk. A scant month or so later, WaMu fails. JP Morgan Chase assume the deposits, all of which were insured, and things are as they ever were. Then the online savings interest rate, which is never guaranteed, falls. I didn’t have a CD so I don’t know if the CD rates were honored by JP Morgan Chase but they didn’t have to be.

When a bank fails and is assumed by another bank, with the FDIC as an intermediary, the new bank does not have to honor the former bank’s certificate of deposit rates. The CD is normally a contract but in this particular case, either party can cancel it at will. The new bank can change the interest rate but the CD owner can redeem the CD early without penalty. Sometimes they honor it, sometimes they don’t, it all depends on how badly they want those deposits and at what price. When a bank is struggling, it often increases those rates to get more deposits and the new bank may not want to pay above market interest rates for no good reason.

But, if Bank A buys or merges with Bank B, it must honor all of Bank B’s contracts – which includes CDs. In a failure, Bank B goes first to the FDIC and then to Bank A, which is why they don’t need to honor CDs. If it’s a purchase or merger, they are required to honor them because they purchased the contracts when they purchased the bank.

Knowing what I know now, I’d avoid the hassle of opening up an account with a bank that’s been in the news as having liquidity issues (fortunately none of the big banks left have been in the news for this). It’s a crapshoot as to whether you’ll have your CDs honored (when Citi Wells Fargo acquired Wachovia [I can’t keep these failures straight!], it was a purchase and thus CDs were honored; when JP Morgan Chase “acquired” WaMu, it was a failure and CDs didn’t have to be honored) and the bottom line is that it’s simply not worth it.

I earned an extra percent or two of interest for a few months in return for the hassle of opening and then subsequently closing an account. Not worth it.


Call Center CSRs Ruin Customer Experience

Yesterday I wrote about how I closed my Washington Mutual account by mail and the infuriating experience I had with a call center CSR. If you don’t feel like reading the entire saga, here’s the thirty second recap. I wanted to close my WaMu account and was given incorrect information that led to additional headaches and a $4 service fee. I called to try to close the account and discovered I was given incorrect information and charged the fee, so I was struggling with the CSR to get both the fee removed and the account closed. Eventually I learned the correct process and had the fee removed, end of story.

The infuriating part of the entire process was the fact that the first person you talk to isn’t going to help you unless it’s on their script. I understand the need for companies to outsource call centers to areas with a lower cost of living. The bottom line is the bottom line, cutting expenses is has a direct impact on that and outsourcing customer service is something all businesses are looking at. The problem is that you cheapen the user experience in interacting with your company and, if you frustrate them, you could potentially lose a customer because they don’t want to deal with your crap.

Unfortunately, it’s gotten to the point where people have associated accents with outsourcing and outsourcing with garbage customer service. I’ve been primed to believe that if I hear an accent then chances are I’m dealing with an outsourced CSR who is forced to follow a script and probably answers phones for multiple companies. They are effectively living, breathing robots.

Businesses need to think of customer service not as a cost they should be reducing but an opportunity to build a relationship at the first level, not at the escalation level. I was so frustrated at hearing the same canned response from the CSR that by the time I got to the supervisor, who coincidentally had no accent and all the authority (thus reinforcing an entirely unreasonable association), I was already formulating a blog post about how I’m glad WaMu got gobbled up. The supervisor was great though, she immediately removed the charge and told me how to properly get the account closed.

I was leaving and they were making it easy (they could’ve demanded the $4 fee), which made me kind of sad they were being gobbled up… but companies really need to rethink their call center strategy. There’s are quite a few similarities between all the hated banks, hated cable companies, hated internet companies, hated cell phone companies, and other hated companies – infuriating outsourced call centers. (and relentless fees!)


How To Close An Account At Washington Mutual

WaMu SucksBefore Washington Mutual was acquired by JP Morgan Chase, in better times for the bank, they offered a yield on their online savings account that was tops in the land. Since then, the rate as fallen to 2.25% APY, which doesn’t even register on the radar of high yield savings account rates, and so I opted to close my account when I opened a Dollar Savings Direct account.

This is the first online savings account I have ever closed and I had no idea it would be such a headache. I don’t know if this is unique to WaMu’s policies or if it’s universal to online savings accounts but it was a pain. First, let me tell you about my experience and then I’ll explain the easiest way to do it.

How To Improperly Try Close A WaMu Account

In Maryland, there are no convenient WaMu branches to visit so I would have to do it by mail. Yep, they can’t close an account over the phone, which makes sense but is quite infuriating. The first time I called, I was told that I needed to zero out the accounts (I had both checking and savings) and then I could close the accounts by phone. So, I transferred all the funds out of my checking into my savings and then initiated a transfer out of savings. The checking to savings transfer was instantaneous, so I immediately closed my checking. I was told I could just call back in a couple days once the savings was zeroed out and could close that by phone. That was wrong.

What happened was that once the checking was closed, the $300 minimum daily balance requirement kicked in for the online savings account. I was assessed a $4 fee, overdrawing the account! When I called today, I had to fight with the call center CSR, who had no power but the follow the script she was given, to understand the actual process, then escalated to a supervisor who reversed the $4 fee. Overall, the experience with the call center CSR, through no fault of her own, was frustrating and infuriating but the supervisor was accommodating and great.

How To Properly Close A WaMu Account

There are rules as to how you can close out interest-bearing and non-interest bearing accounts, just forget about them. You only need to know the two ways to close a WaMu account:

  1. Visit a branch and close it with a teller. I didn’t have this option, but this is by far the easiest.
  2. Send a letter to WaMu’s Bank By Mail, indicating that you want to close your account. You’ll need to provide your account number (which you can get by viewing one of your statements through online banking) and a return address so they can send you your balance by check.

The mailing address for that letter is:
Washington Mutual BBM
PO Box 659588
San Antonio TX, 78265-9588

Don’t close any accounts over the phone, you’ll just end up decoupling your checking and savings and be hit with fees.

(Photo: Sërch)

 Your Take 

Your Take: Applaud the FDIC on WaMu & Wachovia Deals?

WaMu SucksThe bailout bill and its failure to pass the House, coupled with the 777 point fall of the Dow at the beginning of the week, has really dominated the headlines recently so it’s not surprising that not many people have focused on this bit of news – the FDIC managed to broker the sale of Washington Mutual to JPMorgan Chase and parts of Wachovia to Wells Fargo (link) Citigroup and they didn’t bankrupt themselves (or go to the government for more money).

For weeks (if not months), people have talking about how the failure of Washington Mutual, the largest thrift with $307 billion in assets, and the failure of Wachovia, who had a loan portfolio of $312 billion, would bankrupt the FDIC. The FDIC isn’t entirely off the hook though, the FDIC is backing some of the downside loss on the bad debt, but as it stands right now they managed settle two big issues without much loss.

If you’re curious as to the details of both deals, here’s an article about JPMorgan Chase acquiring WaMu assets and here’s an article about Wells Fargo buying up Wachovia’s deposits and banking business. While it still remains to be seen whether everything involving these banks is OK, it definitely two headaches off the radar for now.

Do you think we should applaud the FDIC for dodging a huge bullet (at least for now)? Or did we just shuffle the deck chairs?

(Photo: Sërch)


What Happens To CDs After Bank Failure

JPMorgan Chase BranchWith the very public and very large failure of WaMu, you might be wondering what happens to all those nice, fat 12-month 5% APY certificate of deposits you may have recently opened. In the case of WaMu, it appears as though JPMorgan Chase will be honor those CDs to term. If you review the FDIC’s FAQ on the WaMu takeover, “JPMorgan Chase accepted Washington Mutual’s interest bearing accounts including CD’s at the contract rate; therefore, they are not waiving early withdrawal penalties.” That means the CD’s will stay the same (in fact, you probably could open a 5% APY CD right now and it would still be honored, though you can close to that high of a CD rate at other banks).

The WaMu example is an example of a best case scenario, where nothing happens except the name of the bank on the statements. The best case scenario is that a bank acquires the deposits of your failed bank and continues to honor the CD’s terms as JPMorgan Chase does. (Of course, this depends on what your definition of best case is, if you got locked into a long term low interest rate from a few years back, maybe best case is they cancel all the CDs!)

Not all cases end this way, but even the worst case scenario is no big deal. The worst case scenario is that the FDIC is named the receiver, no bank buys the deposits, and they terminate the CD. Even in the worst case, you get all of your insured money back (just a little earlier than you anticipated).

Or, skip all the CD hullabaloo and stick the funds in one of several very popular and totally liquid high yield savings accounts.

(Photo: thetruthabout)

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