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Super-NOW Bank Accounts 2007-10-10 18:36:50 Super Negotiable Order of Withdrawal Accounts
Scarcely had the federal government authorized banks to offer money market savings accounts than it also granted them permission to introduce checking accounts that pay money market interest rates — accounts known as “Super-NOW’s.”
Depending on the policy of the individual bank, Super-NOW accounts may offer all of the features of regular NOW accounts, including free check-writing privileges and no service fees as long as a minimum balance is maintained. If you are to earn money market rates, you must maintain the legal minimum of $2,500 in your Super-NOW account. If you are to benefit from free check-writing privileges, the bank will generally require you to maintain the same balance as is required for a regular NOW account.
The interest paid on Super-NOW accounts usually varies from day to day, but in general is a point or so below that paid on money market savings accounts. Should a Super-NOW account fall belo Read more:Super
Money Market Account Features 2007-10-10 17:23:32 Features of MoneyMarketAccount
s
Like other bank services, money market savings accounts are subject to government regulations, Individual banks, however, may offer special inducements within prescribed limits. Here is a summary of the main features offered by a typical money market account:
Minimum investment. To open and maintain a money market savings account, a minimum of $2,500 is legally required, although some banks require a higher initial investment but thereafter sometimes permit the depositor to reduce the account to $2,500. So long as this minimum remains in the account, money market interest rates will be paid. There is usually no charge for servicing the account.
Interest rates. There is no maximum interest limit and rates can either be linked to some other marketplace factor such as the rates being paid by the federal government on its Treasury bills, or can be set at any other level the institution may choose. New interest rates are generally posted every seven days
Money Market Accounts 2007-10-08 19:50:33 Bank MoneyMarketAccounts
As part of the continuing deregulation of banks to allow them to compete more successfully with other financial institutions, federal authorities in late 1982 authorized them to offer money market rates to their customers. This has brought banks into direct competition with private brokerage houses, for whom these funds have been a primary source of income in a period of high inflation and high interest rates. For consumers, the benefit of such funds in recent years has been the high interest rates they have paid. Although these rates are not guaranteed — they traditionally vary with the rates being paid on such federal securities as Treasury bills — in the early 1980’s their yields were, on the average, significantly higher than yields offered by most other forms of investment.
In the competitive atmosphere of late 1982, when bank money market accounts first became available, both commercial and thrift institutions were offering initial in
Reinvesting a CD 2007-10-08 19:48:10 Reinvesting a Certificate of Deposit
During the life of a certificate of deposit you should discuss with an officer of your bank what you want done with the funds in the account at maturity. If you fail to make provision for taking the cash or reinvesting it, depending on bank policy and the law in your state, one of several things may happen: the cash could be transferred to a passbook account paying lower interest; it could be held by the bank at no interest; it could be reinvested in a new CD for the same time period. Check over your certificates of deposit at regular intervals to remind yourself of their dates of maturity. It is a wise idea to keep a calendar noting their maturity dates a week in advance.
Fluctuating-Rate CD’s 2007-10-08 19:44:15 Certificates of Deposit with Fluctuating Rates
Many banks offer special certificates of deposit that pay variable rates of interest. Depending on the bank, they may be called “Premium Rate Certificates” or “Investment Accounts,” or some similar name. Like ordinary CD’s, they are sold for specific lengths of time and interest penalties are exacted for early redemption. However, the interest rates are not fixed but are linked throughout the life of the certificate to some other indicator of the bank’s choosing — the average yield on U.S. Treasury securities, for instance. If that yield rises, so does the interest rate on the certificate; if it falls, the rate of the CD declines as well.
A variable-rate CD is a bit riskier than an ordinary certificate in terms of interest payments, but it does offer the possibility of higher profits if interest rates rise. Like a fixed-rate CD, principal and accumulated interest are guaranteed by the FDIC or FSLI
Certificates of Deposit 2007-09-28 17:01:38 There are many types of certificates of deposit (CD’s), but all share a common characteristic: the money deposited must remain in the account for a specified time, with severe penalties for early withdrawal. On most CD’s the interest remains the same throughout the life of the certificate. By and large, the longer the life of the certificate the higher the interest rate, except, in some cases, very long term certificates. At one time, stringent regulations governed CD’s in denominations less than $100,000, making them somewhat unattractive investments. In recent years, these regulations have been eased, and the purchase of lower priced CD’s has become a desirable investment for many people.
The main advantage of fixed-interest CD’s is that the interest rate is guaranteed for the life of the certificate, whether or not prevailing rates of interest fall. This, of course, can become a disadvantage if general interest rates rise.
The primary drawback of a CD i Read more:Certificates
, Deposit
Investment Accounts 2007-09-17 17:26:13 Investment Bank Accounts
In the luxurious world of investments, quite often we hear advises what securities to invest in, but not as often we get advises concerning the types of accounts we should open to start investing. There is a lot of different types of investment accounts, each covering a specific purpose, and new types of accounts are being created to satisfy investors’ demands. What are some of the main types of investment accounts and what purposes they serve to? In the following posts I’m going to review some of the investment accounts that are available currently.
While safety of deposits remains a key element in all types of bank accounts, more and more banks are offering interest rates that match and even exceed those of money market funds promoted by brokerage houses. These high-yield, investment-type accounts have become increasingly available to the average person as the deposit requirements have been lowered
Supplemental Bank Services 2007-09-12 15:18:15 Supplemental Bank Services
Review
Most banks offer depositors, and in some cases non-depositors as well, a variety of convenience services. Here are some typical examples and their relative costs.
Safe-deposit boxes. Millions of consumers find these boxes, which are locked and kept in bank vaults, useful for the safekeeping of stock and bond certificates, valuable personal papers, jewelry, sterling silver and other precious objects. Only those whom the renter of the box has designated are allowed entry. (An exception to this rule: law-enforcement officials who have obtained a court order.) The boxes come in a variety of sizes; yearly rentals vary according to size from as little as $10 to as much as $200 or more.
Money orders. People who do not have checking accounts but wish to pay their bills with a check-like device have the option of purchasing money orders at most banks. The cost — usually $1 or more — is greater than the normal charge for handling a depositor’
NOW Accounts 2007-09-11 17:12:34 Negotiable Order of Withdrawal Checking Accounts
Some years ago, federal regulations were significantly eased to permit banks to pay interest on checking accounts. Both savings and commercial banks offer a variety of NOW (Negotiable Order of Withdrawal) checking accounts, all of which have two things in common. Each pays interest on the funds that are in the account, and each requires a depositor to maintain a minimum balance that is usually greater than the balance needed for maintaining a regular checking account.
As with other types of accounts, the customer should shop around to determine which institution provides the most benefits. Among the several factors to be considered are the following:
Free checking. Some NOW accounts involve no monthly or per check fees as long as the minimum balance is maintained.
Minimum balances. These vary from bank to bank. As with a regular checking account, a NOW account from Bank A may require that you maintain $300 in your account while Bank
Special Checking Accounts 2007-09-11 17:08:06 Special Checking Accounts
Unlike regular checking accounts these are sometimes called “economy” or “budget” accounts. They require no minimum balance, but the depositor is charged either a fee for each check issued or a monthly maintenance fee, or, in sortie cases, both. This kind of account makes sense for someone who writes few checks or cannot conveniently maintain a minimum balance. Again, shopping around, reading contracts and asking questions can save you money. One bank may charge 20 cents per check and another only 10. But the bank that charges 10 cents may also impose a $1.50 service fee per month, while the bank that charges 20 cents per check may charge no service fee at all. And some banks levy a service fee but make no charge per check. Read more:Special
EFT Errors Settlement 2007-12-06 16:56:15 Electronic Fund Transfer ErrorsSettlement
If you suspect that an error has been made in an electronic transfer of funds, call your bank immediately. The law requires that you make the call within 60 days, but the sooner you give notice the easier it will be to correct any error. Unless the bank asks you to, you need not follow your call with a written description of the error, although it is good practice to do so, since it will provide you with evidence that you notifed the bank. Include your name and account number, the date of the error and a description of the discrepancy. The bank is required to investigate and resolve the problem within 45 days of receipt of your notification. If, however, the bank has not completed its investigation within 10 days, it must provisionally credit your account for the amount you claimed you lost through the error, plus the interest on that amount.
If the bank discovers that your claim is correct, the credit must be made permanent. If the bank dispu
Your Rights as an EFT Customer 2007-12-06 16:51:19 EFT Customer
’s Rights
Like anything else, electronic fund transfers are subject to error. A malfunction in a computer or a mistake by a programmer could, for example, transfer $1,000 from your account to the account of your utility company when in fact your bill was $100. If you lose your automatic teller card and it is found by someone who discovers your personal identification number, that person is in a position to empty your account. To protect bank customers and banks alike, Congress passed the Electronic Fund Transfer Act, which is implemented through Regulation E of the Federal Reserve Board. Following are your rights as an EFT customer.
Statement of Terms. When you open an account with an EFT feature, you are entitled to receive a statement listing all of the terms and liabilities associated with the account.
Receipt. Both automatic teller machines and point of sale terminals must provide you with receipts of all transactions. A receipt includes information on the amount of m
Electronic Fund Transfers 2007-12-04 22:09:07 Electronic Fund Transfers
(EFT)
By now, most depositors have some familiarity with the machines in bank lobbies that enable customers to make withdrawals from, or deposits to, savings and checking accounts without the aid of a human teller. But such machines are only one aspect of electronic fund transfers. An increasing number of other transactions are also being handled by computers. Here are descriptions of a few of the electronic services available in a number of banks.
Preauthorized Payments
One of the relatively new forms of electronic banking is the preauthorized payment, in which money is automatically deposited or withdrawn from an individual’s savings or checking account. For example, an employer who is authorized by an employee to do so, may place the employee’s paycheck in his or her account through an electronic fund transfer. Some major companies deposit a single payroll check (actually a computer tape authorizing payment) for all their employees who are patro Read more:Electronic
How Good Is Your Credit Rating? 2007-12-20 08:58:58 The Three C's Of Your Credit Rating
In the days before computers and credit cards, loan officers usually sized up applicants on the Three C’s of Credit:
Character (a moral commitment to pay the money back),
Capacity (the means to do so) and
Collateral (property that could be seized and resold in the event repayment was not made).
The Three C’s are still important in securing loans, but creditors today are more apt to rely primarily on computer models and statistical graphs that rate by points the typical characteristics of people who do, and don’t, repay their debts.
According to a California firm that develops such systems for banks and other creditors, only about 20 to 30 percent of all credit applicants get enough points to be approved. While each institution has its own system, Consumers Union, publisher of the magazine Consumer Reports, analyzed some common denominators and came up with the hypothetical scoring test shown below.
Generally, the older you are
How To Calculate Your Credit Rating? 2007-12-16 17:26:02 Credit Rating
Test
The “test” given here can indicate only your relative credit-worthiness. It cannot tell you whether you will actually get credit from particular lenders, whose policies may vary widely according to their experiences, profit targets and tolerance of risk under different economic conditions at different times. One lender, for example, might sign you up if you scored a total of 75 or more points, while another might approve you only if you exceeded 125 points.
Before applying for credit, especially a major loan, it is a good idea to see for yourself just what your credit history is. You have the right under law to ask the lender for the name of the credit reporting agency the institution uses, and to obtain a copy of your record from that agency so you can weigh your chances, correct any errors or append your side of the story. Then discuss your prospects with an officer of the institution where you hope to get a loan.
Be leery of outside organizations that
Debit Cards 2007-12-15 14:58:09 What A Debit
Card Is?
Debit cards are less common than credit cards, but an increasing number of banks and savings institutions offer them now. You can use debit cards like credit cards in making purchases. However, unlike credit cards, which bill you later for the amount you have been charged, debit cards transfer your money immediately and directly out of your account with the bank.
With a debit card you can draw on a checking account, a savings account, and, with some, a personal line of credit extended by the bank as an overdraft privilege — you can even draw from a predetermined loan that is secured by your home or other property as collateral.
Debit cards are being used more and more in such places as department stores and supermarkets. Instead of having to cash a check with the manager’s approval, or using the store’s own charge card, a clerk inserts your debit card in a point-of-sale terminal and types in the information, and the amount is immediately de Read more:Cards
Credit Cards 2007-12-14 14:41:23 What A Bank Credit Card Is?
Credit cards, whether issued by banks or other institutions, are another form of revolving credit. These cards entitle their holders to a predetermined maximum against which they may borrow, and the principal repaid is automatically restored to the credit line.
You can use a credit card to pay for goods and services from participating stores, restaurants, airlines and the like and can also borrow cash against it. Interest rates on bank-card purchases tend to be high, and the rates for cash advances even higher. Business institutions that accept credit cards pay a fee to the issuer — the bank, for example — to help defray the cost of credit card transactions, while on a cash advance the customer must bear the entire cost.
Thousands of banks around the country offer major credit cards and until recently, most of them were issued without charge. Many customers made use of their cards to purchase goods and services and then, by paying in full during Read more:Cards
, Credit Cards
Bank Loans 2007-12-13 10:17:56 Types of Bank Loans
Bank credit for consumers falls into two general categories, closed-ended and open-ended. A mortgage, for example, is considered a closed-ended loan because it is for a specific amount and must be paid off over a specified period. (Mortgages are discussed in Chapter 4.) A bank credit card provides an open-ended loan: it gives the cardholder a specific amount of credit against which he or she may draw in making purchases.
Installment Loans
These are closed-ended credit agreements. The borrower receives a certain amount of money and agrees to repay it over a stated period, usually month by month, at a predetermined rate of interest that will neither rise nor fall during the period of the loan. Because the loan is amortized, the borrower has the full use of the funds only for the first month.
The interest charged on installment loans varies from bank to bank and with the purpose for which the loan is to be used, so consumers should shop around for the lowest rate. Hi
The Fair Debt Collection Practices Act 2008-02-22 13:13:47 Main Concepts of The Fair Debt Collection Practices Act
If you find yourself in financial difficulties, there are several specific steps you can take to protect your credit standing. Although creditors can always turn over your account to a collection agency, some prefer not to do so and would rather make an arrangement for repayment with [...]
The Fair Credit Billing Act 2008-02-20 14:28:55 Correction of Billing
Errors and Other Rregulations of the Fair Credit Billing Act
This important piece of legislation is designed to give consumers a method of dealing with the errors in — or disputes about — billing that are almost certain to occur from time to time in credit card accounts. The difficulties can arise for [...]
When to Pay Credit Card Bills 2008-02-07 18:03:42 How To Optimise Your Credit Card Expenses?
Although most credit card accounts carry the same annual interest rates, they do not all calculate monthly interest charges the same way. Consequently, consumers may find themselves paying differing amounts in interest on the same purchases.
For example, if the interest is calculated on the basis of the consumer’s [...] Read more:Bills
Fair Credit Reporting 2008-02-04 10:16:19 The Fair Credit Reporting
Act
When you apply for credit, the lender may ask a credit reporting agency for a summary of your financial history before deciding whether to grant the loan. This is standard procedure, particularly when substantial sums are involved, and every day, thousands of such credit reports are issued to lenders throughout the [...]
Equal Credit Opportunity 2008-02-02 12:32:33 The Equal
Credit Opportunity
Act
Before 1975, when the Equal Credit Opportunity Act became effective, a considerable number of Americans — women, older people and minority group members — often had difficulty in obtaining loans and credit. Since then, discrimination on these bases has been forbidden by law. Prospective lenders no longer have the right even [...]
The Truth in Lending Act 2008-02-01 11:11:46 The Truth
in Lending
Act is a US Federal Law Protecting Consumers in Credit Transactions
The primary purpose of this federal legislation, enacted in 1968, is to make the borrower aware of exactly how much a loan will cost. There was a time when lenders could simply advertise “8 percent interest.” Unless the borrower carefully examined [...]
Protections For Users of Credit 2008-01-31 07:35:55 Legal Protection Of Borrowers
Like millions of Americans, you probably make at least some of your purchases on credit. The practice of buying now and paying later, though vital to both individual and national economies, can be dangerous if abused. Each year hundreds of thousands of people find themselves over their heads in debt and unable [...]
The Perils of Cosigning 2008-01-30 08:11:57 Bank Loan Cosigning Perils
There may come a time when a friend or relative applies for a loan and the lending institution refuses unless the applicant can find a cosigner. If someone you know asks you to cosign a loan, consider the request very carefully before you agree.
Chances are that the lender would not have required a [...]
Getting a Loan 2008-01-29 15:21:41 How To Successfully Qualify For A Bank Loan?
Before applying for any kind of loan, it is prudent to analyze just how much money you need and precisely how long you need it for. Then compare the rates and conditions you will have to abide by for the use of someone else’s cash.
Financial institutions offer [...]
Your Credit Bill Of Rights 2008-07-23 16:03:14 According to the Fair Credit Reporting Act and other acts, you have the right to :
Obtain from a credit bureau a report of what’s in your credit file.
Know who has inquired into your credit file—stores, banks, employers, etc.
Request reverification by the credit bureau if information is incorrect.
Get missing data added to your file.
Have detrimental credit [...] Read more:Rights
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