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Checking Accounts

Wal-Mart Offers new GoBank Accounts Sans Overdraft Fees

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Walmart Is Offering Pre-Paid Debit Cards
Walmart Is Offering Reloadable Pre-Paid Cards
Joining other large retailers that engage in semi-banking practices, shopping giant Wal-Mart has opted to provide a card-based program for customers who may overspend their accounts while purchasing in their stores.

The world’s largest retailer had teamed with Green Dot Corp., a leader in creating reloadable prepaid cards. New mobile checking accounts issued by Wal-Mart under the cooperative effort will not require fees for overdrafts and bounced checks. An $8.95 monthly fee will be charged for these GoBank accounts. The fee is waived if there is a deposit of $500 or more each month.

Accounts can be opened by purchasing a $2.95 starter kit at any Wal-Mart Store. A smartphone is a necessity, since most of the banking transactions are done through an app. Credit Bureau ratings commonly used to determine eligibility are not part of the application requirements. The idea behind GoBank is to provide options for people who don’t have a lot of money and may have poor credit scores.

The kit includes a MasterCard debit card that can be used to withdraw money or make purchases. No fee is charged for ATM withdrawal services at the 42,000 locations around the country. If money is withdrawn from ATMs outside the system, a $2.50 charge is levied. A 3 percent fee is added to withdrawals outside the United States.

The new arrangement is one of several moves being made to help Americans who are still feeling the effects of the recent recession. Both Bank of America and Citibank have begun offering fee-free accounts this year.

Regulators have been looking more closely at overdraft fees, which in some instances can go up to $35 per incident. The regulators have responded to concerns by requiring banks to get written approval from a customer to provide overdraft protection, which allows a customer’s account to dip below zero. Those who choose to have the overdraft protection still pay high fees. Some customers at large banks regularly rack up fees in the neighborhood of $260 a year, according to the Consumer Financial Protection Bureau.

Wal-Mart’s Daniel Eckert, senior vice president for services, said GoBank was the retailer’s response to customer concerns that regular banking fees are too high.

Free Checking? Try A Credit Union

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Finding a financial institution that offers free checking is usually not hard, and many credit unions are joining the ranks, making it even easier. And the fees associated with checking where it isn’t free are plateauing, according to an article in Bankrate.com.

The 2014 Credit Union Checking Survey conducted by Bankrate reported that 72 percent of the country’s 50 largest credit unions charge no monthly service fee and apply no fees to point-of-sale transactions.

Free checking frees up money to spend elsewhere.
Free checking frees up money to spend elsewhere.

The figure is slightly down from the 78 percent posted in 2010. The continuing trend, however, is good news, showing that free checking is a staple at most credit unions and there is no indication that that will change.

In contrast, banks appeared moving in the opposite direction, with a drop among the institutions offering free checking from 76 percent in 2009 to 38 percent in 2013, Bankrate reported.

Some banks, while charging a checking fee, offer an offsetting opportunity. For instance, Alaska USA Federal Credit Union in Anchorage waives its $5 monthly fee if the customer uses direct deposit into a checking account. Others drop the fee if the consumer agrees to e-statements or maintains a minimum balance. With these trade-offs factored in, the number of free checking amounts rises to 96 percent.

That makes the talk about the demise of free checking moot, says Greg McBride, one of Bankrate’s analysts.

Credit unions have incentive to offer free checking, since they are not-for-profit cooperatives with obligations to members, rather than stockholders. There is a sense of providing service to members whereas banks are concerned with profit-making. Free or low-fee accounts are a matter of pride with the non-profits. It’s an attitude that is core to their business.

Bankrate also looked at other fees related to credit union banking and found that most of them are holding steady.

About 30 percent of the credit unions in the survey either had no fee associated with using an out-of-network ATM or allowed up to five uses per month of those ATMs.

Overdraft fees have risen slightly at the credit unions, according to the study, from an average of $26.74 to $26.9. The average bank fee for overdrafts is $32.20, while those who exceed their credit union balances commonly pay $25 to $30.

Surcharge fees paid by nonmembers to use a credit union’s ATM went up 5 percent between surveys, now standing at an average $2.41. Since 2010, such fees have risen by 20 percent, and it appears likely that the non-member usage will continue to see increases, industry leaders say.

Credit union membership has increased by more than 8 percent since 2008 and assets have grown by more than 30 percent. The financial crisis that hit the country a few years ago likely pushed the increase. As consumers began to feel “fee fatigue” more frequently, they took new looks at the historic benefits of credit unions and either switched from their banks or added a credit union to their financial options.

While current no- or low-fee offerings are expected to continue, credit unions are feeling the effects of a long period of low interest rates and other financial factors, as are their competitors. All financial institutions will continue looking at fees and evaluating services and offerings, industry leaders say.

Protect Yourself Against Check Fraud

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Check fraud is such a hot topic that Hollywood made a movie about it. The 2002 film, “Catch Me If You Can,” starred Leonardo DiCaprio as master fraud artist Frank Abagnale and Tom Hanks as the FBI agent who chased him all over the world. It was filmdom’s way of putting the spotlight on a problem that plagues real-life personal finances.

In the movie, DiCaprio’s character flitted across the United States and around the world using such cover as pediatrician, airline pilot, attorney and college professor to gouge a grand total of some $2.5 million out of unwary victims. He was caught, both in the movie and in real life, and spent five years in prison. Part of the agreement that set him free after such a relatively short term was that he would help the feds to combat the types of crimes he had himself so successfully perpetrated.

The switch from bad guy to good guy set him up as an authority and his crime prevention programs have been used by more than 14,000 companies, law enforcement agencies and financial institutions to protect their interests and those of the people they serve.

In an interview with U. S. News, Abagnale shared five tips for individuals to protect themselves against check fraud. Here they are:

1. Write as few checks as you can. The standard check provides such information as your name, address, often a phone number, sometimes your driver’s license number (In nine states such information is required by law, giving a fraudster near-direct access to your Social Security Number as well), the bank account number and routing number and a nice signature should he have a desire to replicate it. Use checks for making mortgage payments and paying bills, but be very chary of other uses. If someone wants to sell you a product at the door, use cash, don’t give him or her a tool to use against you.

2. Take special care at tax time. Ninety percent of those who owe Uncle Sam use a check to pay up and seasoned fraudsters are on the alert for such easily identifiable letters in your outgoing mail. They have only to modify the payee information and deposit. That benefits a criminal and puts you in hot water with the IRS.

3. Use secure mailboxes. Putting bill payments and other letters containing checks into the box at the curb or outside your door, then putting the flag up to alert the postman is an open invitation to anyone bent on fraud who happens to notice. Go to a post office or put the letters in a secured box for collection.

4. Treat checks and checkbooks like cash. Lock them in a safe place. Some people like the convenience of having some checks in the glove compartment of their car. It’s the first place people looking for money, credit cards, gas cards and/or receipts with your information on them will look. The smart ones will remove only the last check or two from a book, giving themselves time to use the checks before you notice you have any missing.

5. Balance your checkbook every month. It’s only common sense, but 51 percent of Americans don’t do it. Many fail even to open the statement and check the bottom lines. That gives banks an advantage in assigning responsibility — the criterion by which they decide if they will compensate you or let you eat the loss yourself. A federal law, Article 3, Section 406 of the Uniform Commercial Code requires that you notify your bank within 30 days of any discrepancies. If you don’t do it, the bank has no liability.

All good advice from someone who knows.

Banking with an FDIC-Insured Bank

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It is hard to trust anyone these days especially when it comes to money. Money talk is always serious talk which means that people are very stringent when it comes to where they will be putting their money. In these hard times, this is already the norm since money is so hard to earn that it’s almost impossible for someone to just put money anywhere. But what if you want to put your savings in the bank? Would putting your money in the bank be a much safer choice rather than just leaving it home in your closet?

Established in 1933, the FDIC or the Federal Deposit Insurance Corporation has served as a safety net for bank depositors. Ever since its inception, no depositor has lost a single dime from their FDIC-insured funds. The independent agency of the US government does not only insure US citizens, they insure other citizens from other countries as well as long as the banks they bank with are insured by FDIC.

An FDIC-insured account means that your bank account is backed by the US government in full credit and full faith. This reputation is something that other insurers cannot offer. Operating for over 70 years now, the FDIC is the people’s support system when or if their banks close. The insurance limit for every account you open in an insured bank is $250,000.  The agency however does not insure money invested in mutual funds, stocks, bonds, life insurance policies, municipal securities, and annuities even if the said investments are made in insured banks. The other types of accounts that the FDIC does not cover are safe deposit boxes and their contents. US treasury bills, notes or bonds are not insured by the FDIC as well but they are backed by the US government.

But what does this deposit insurance cover?

FDIC-insured accounts range from checking, savings, money market deposit, to time deposits and negotiable order of withdrawal (NOW). The depositors given this insurance are those who bank with insured banks. Banking with an FDIC-insured bank means your money is protected dollar for dollar. If you own two accounts in two different banks and these banks are FDIC-insured, it means that your two accounts also have the FDIC protection. This means that if these two banks close, you will have an insurance of $250, 000 for each account. If you have two accounts in one bank, you will not get two FDIC insurance, just one.

The standard maximum deposit insurance amount also known as the SMDIA allocates $250, 000 per depositor in every insured bank. This insurance will run through until December 13, 2013. By 2014, the said allocation per depositor will go back to $100,000 except for certain retirement accounts which will retain their $250, 000 per depositor insurance in every insured bank.

Banking with an FDIC-insured bank means that you as the depositor will receive insurance if the bank closes all of a sudden. Although this is something that most of us never imagine to happen, it is better to be safe than sorry.