Does Your Bank Know Who You Are?
Banks know a few things about you: your name, address, and SSN... and what else?
Banks have a lot of information. What they make of that information may or may not be accurate.
Consider everything that happens in your bank account or with your credit card. You make payments to different businesses, your paycheck may be automatically deposited, and so on. With that information, banks make assumptions about who you are.
As technology improved (this is nothing recent) and the financial crisis made banks more skittish, "who you are" matters more and more. Banks and credit cards have cut credit lines based on transactions. For example, spending money at a certain pool hall makes them think you're a risky borrower, while buying birdseed makes them think you'll always pay on time.
Credit scores have traditionally done the job, but banks increasingly look at individual transactions - not just summary information about your borrowing history.
Why does this matter? You need to pay attention to what the bank knows about you and how you use accounts. Whether you agree with the practice or not, banks use data from your transactions (and those of thousands of others) to judge you.
Further reading:
Mint.com on Consumer Behavior
Mint may also provide insight into the economy. We know that consumers have tightened their belts, but sometimes data is slow and inaccurate. Perhaps personal finance aggregators can help us get an idea of what's happening as they evolve?
Mint.com is compiling and releasing data on the second quarter of 2009. For Q1, users were tight-fisted, and Mint can show how much spending has changed in various categories. Of course, Mint.com users don't behave the same as all consumers (they're probably more web-savvy and pay more attention to their finances), but any information is good information.
As we get into a new quarter, it's a good time to check in on your spending in recent months. If you don't use a service like Mint, download your transactions - or at least scroll through them - to see where the money goes after it leaves your bank account.
Bloggers Doing Podcasts
I'm sure plenty of bloggers have been doing it for a while, but I've noticed two independent blogs starting (and continuing) to podcast:
I haven't listened yet but I hope to hear them soon. Have you listened to these podcasts? How do you like them? What other personal finance bloggers have a good podcast? Please share your thoughts below in the comments.
Further reading:
FDIC Takes 2 Banks - 47 in 2009
Today they announced 2 bank failures:
- First State Bank of Winchester (Winchester, IL)
- John Warner Bank (Clinton, IL)
These failures bring us up to 47 bank failures for 2009.
Update: Make that 7 banks today.
Further reading:
No More Microsoft Money
Microsoft will no longer offer the product for sale. It turns out they're better at operating systems than at personal finance software, and consumers can do almost everything without Money.
What can you do as a Microsoft Money user? You can continue to use the product, but updates and support will dwindle in coming years.
You have plenty of choices besides MS Money. Get Rich Slowly highlighted 16 alternatives to the product. Some of them are online aggregators like Mint, and others run on your computer.
I personally use the last product mentioned on the page: GnuCash. It takes some getting used to, but it's free and open-source.
Further reading:
Free Bill Pay Services
Paying bills online makes life easy. You don't have to write checks, get them into the mail, and sort through your check register the old-fashioned way.
What's the cost? For most, nothing. You probably already have free bill pay through your bank. If not, your service providers may offer the option of having money pulled from your account automatically each month.
Too many people pay for online bill pay and ignore less costly options that work just as well. Find out about free bill pay options you can use.
Further reading:
Some Benefit From Reward Checking, Some Pay
How do they do it? The bank requires you to jump through some hoops, with requirements such as:
- Minimum number of debit card transactions per month
- Paperless (statements, etc) relationship required
- Maximum account balance that earns the high rate
- Direct deposit into the account required
Ken at Bankdeals highlighted how these accounts work and how the 20% who forfeit the rate help subsidize the more careful 80%. His posting includes links to articles with more detail.
If you're going to use a rewards checking account, make sure you can commit to the requirements - otherwise you'll just have one more account on the books that doesn't do you any good.
Further reading:
A Virus at the ATM?
Some ATMs can be hacked and infected with a nasty program that doles out sensitive information. The program allows scammers to get a printout of all cards used at the ATM, along with PIN numbers and other useful information.
Unfortunately, this malware is hard to detect. Unlike ATM skimmers, which you can see on the outside of an ATM, the programs run on the operating system inside the machine. So far they have not shown up in the USA, but they probably will soon.
What can you do? Keep an eye on your bank accounts. Log in from time to time to look for any suspicious activity. Notify your bank of any problems immediately - the sooner you act the better your chances of avoiding losses and overdraft problems.
You should also stick to ATMs that are inside bank lobbies or otherwise under surveillance. This doesn't guarantee safety, but it improves your chances.
Further reading:
When Laziness Costs Money
Other times, laziness can cost you. For example, leaving money in low-yielding savings accounts (or accounts that literally pay nothing) means you're leaving money on the table.
Savings accounts at major banks may pay less than 1% APY these days. Meanwhile, reputable online bank accounts pay more - in the 1.5% to 3% range.
Consider how much more you can earn if your savings account pays more. How much more per month would you get, and what could you spend it on? How much more would you have if you left the money to compound for several years? Learning the answer might motivate you.
Forbes covered the cost of laziness in several areas of our lives - including health, savings accounts, and more. Run the numbers for yourself and see if you can do better at the bank. You don't have to chase rates and continually open new accounts. Instead, just get a competitive deal, and transfer money from time to time if you can do a lot better for yourself.
Further reading:
Student Loan Help After July 1st
The Income Based Repayment Plan is available after July 1st. As the name suggests, your loan payments may vary depending on your income. With job losses and a tough economy, more and more borrowers may be eligible.
The program allows you to pay less and extend your loan if you meet the criteria. However, depending on how things work out the help you get today could cost you more over time. You'll probably pay more in interest if you take longer to repay your loan.
For some borrowers, a loan may be forgiven altogether after 25 years.
To qualify for the program, you must have certain government issued loans in good standing. Get the details at www.studentaid.ed.gov, or contact your lender.
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