Where to Find Free Checking

freeI read recently at Bankrate.com that checking fees have risen to a record level in 2012. “The banking industry finds itself in the middle of a fee-for-all.” Sounds a little like the airline industry doesn’t it?

I know what you’re thinking. “You’re probably going to ask me to switch banks, aren’t you?” If you’re at one of the big banks and are unhappy with the way you’re being treated, yes. If you’re happy and feel you’re getting your money’s worth, that’s great. You can probably skip this post and go read one of my other ones.

Here’s the problem. Banks have been limited in their ability to fee you for overdrafts and in what they charge for debit card swipe fees, so they’re looking elsewhere to increase revenue. They’re coming after you in other ways to make up the difference.

I remember when you could walk into just about any bank and open a free checking account, no strings attached. I opened my first account as a teenager in the early 2000s, and back then many banks were giving free gifts to people who opened accounts. Some offered cash. The only bank I’m aware of that offers a reward today is ING direct (soon to be Capital One 360), which gives you $50 for opening an Electric Orange account.

The best way to get free checking is to join a credit union or online bank. According the Bankrate report, 72% of the largest credit unions still offer free checking to their members. Many credit unions participate in an ATM network with other credit unions around the country, so if you use ATMs frequently look into this option before joining one. Many online banks, such as ING Direct and Charles Schwab, offer free access to any ATM in the country. The only downside for online banks is you can’t deposit cash. I get around this by depositing at my credit union and transferring it electronically to my checking account.

I know it’s a pain to switch banks. I’ve gone through the process a few times myself. The trick is to take your time. Give yourself a couple of months to transition your automatic payments. Leave enough money in the old account to cover any remaining drafts.

Now, what should you look for in a free checking account? Aside from FDIC insurance, the two most important features are no monthly maintenance fees and no minimum balance requirements.

Even at the biggest banks there are ways to avoid checking fees. Maintaining a minimum balance or a monthly direct deposit are the two most common ways to avoid fees. That’s great, but what if you lose your job? What sparked my search for a new bank in the first place was a letter from my old bank notifying me of a required direct deposit. I didn’t want something else to worry about if I became unemployed.

For those who won’t jump through the hoops, expect to pay a service fee averaging about $5.50 a month, or $66 a year. The price tags for overdrafts and out-of-network ATM withdraws will pinch you as well. If you insist on sticking with your big bank, use only their ATMs and don’t “opt-in” to overdraft protection.

In the end though, is the convenience of big banks enough to offset the higher fees? That’s a question only you can answer. As for me, I’m willing to inconvenience myself just a little to avoid fees and get better service.

Photo by nerdwallet.com/blog

How Safe is Your Bank Account From Being Looted?

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe. This is #14 in the series. 

After lying low for a couple years, ATM skimming is back.

We all use our debit cards to withdraw cash from ATMs. We’ve been doing it since we had our first checking account as a teenager. You insert your card, punch in your pin and out comes some cash, right?

In this scam, criminals are using technology to their advantage. If you don’t know what to look for your bank account could be emptied in a matter of minutes.

ATM skimming involves three steps. First, criminals insert a small device into the card scanner, which they use to capture the information on your card including your name, card number and expiration date. Some of these devices are as thin as a razor blade and inconspicuous enough that it’s easy to miss if you’re not paying attention.

Next, they install a tiny digital camera nearby that captures your pin as you enter it on the keypad.

Immediately after the skimming device captures your data, the criminals can access it remotely without having to go back to the ATM. They then duplicate your card’s information onto another card and, armed with your pin, begin emptying your account.

Gas stations and grocery stores have also been hit particularly hard in this scam. At gas stations for example, thieves install the devices at off-peak times, such as late at night, when nobody’s around.

Protect your dough

There are two things you need to do every time you scan your debit card at an ATM or at a merchant. First, check for any signs the machine has been tampered with. You need to feel the card scanner to see if it’s secure and solid. If it’s wobbly, find a new ATM. Look at the machine and surrounding area for cameras. If any seem to be hidden nearby, it’s probably the work of a criminal. Banks tend to put their cameras in plain view.

The other thing you should do is always cover the keypad as you enter your pin. Doing these two steps every time you use a debit card will greatly reduce the risk of your account being looted.

While it’s a hassle to have your money stolen, under the law you’re not on the hook. But the process to get it back from your bank could take a week or more, and you could have checks bouncing in the meantime.

Do You Put Spare Cash in the Freezer?

Since the recession began several years ago, our distrust of the banks has continued to grow. Questionable practices like making sub prime loans and an ever-growing list of fees make us wonder whether the banks really have our best interests in mind. Now it’s come to this: many of us are afraid to put our savings in a bank or other financial institution.

According to a new poll, 27% of us stash our extra cash in the freezer. The freezer! This is something I had never considered before. And it goes on – 19% put their cash in the sock drawer, 11% stick it under the mattress and 10% hide it in the cookie jar.

Think about this for a second. If a burglar robbed 4 houses, statistically he or she will find cash hidden in the freezer in one of them. Their chances of finding treasure in the sock drawer or under the mattress when you’re not home are pretty good too.

Keeping large amounts of cash at home isn’t a good idea. For one, it puts you at risk of losing it in a burglary. There’s also a chance you’ll lose track of it or forget about it altogether.

I know that interest rates are puny right now. If you’re lucky you’ll earn 1% on your savings. But sitting there under your mattress, it’s not even earning that.

Most banks and credit unions are insured by the FDIC and NCUA, respectively, for deposits up to $250,000 per account. That means if the bank goes under you won’t lose your money. Even at the low interest rates we have today, your money is much safer on deposit at the bank.

That’s fine if you’ve become disillusioned by the biggest banks. There are many other options out there such regional banks, credit unions and even online banks. You’ll often get better rates and customer service at local or online banks.

Finally, if you won’t need the money for 10 years or longer, you need to think about investing it. It’s important to overcome your fear of the market, because investing is the best chance you have to fight against inflation.

What do you think about people who keep cash at home? 

Photo by showthelove.com

Accessing Your Money While Traveling Abroad

I love to travel. Seeing the world is one of my strongest passions. I’ve lived in two foreign countries for an extended period (Turkey and Germany) and visited several others. Stepping off a train into an unknown environment is both challenging and exciting for me.

I don’t get to do it much anymore because I’m in the “real world” now, where you don’t get to do such things often. My full-time job pretty much claims most of my time. But I can dream, right?

Traveling to a foreign country, especially if it’s one you haven’t been to before, presents many challenges. Two of the most common questions I hear are “When should I book my plane ticket?” and “How do I access my money while there?” I want to focus on the second question today by giving you the best ways to access your money abroad and things to think about before you leave.

First, get an idea of what the exchange rate is between your home currency and the currency of your destination country. The exchange rate is how much foreign currency your home currency can buy. I’ve always used XE.com for exchange rates, but there are several others out there.

Once you know the exchange rate, you can begin thinking in terms of the foreign currency so you don’t overbuy on your trip. When I was traveling in the UK, I was surprised by how cheap everything seemed to be. But it was deceiving – the pound is worth much more than the US dollar, so everything just seemed cheaper. In reality the UK is a very expensive place to travel!

One thing you never, ever want to do is to exchange currency at one of those airport exchange counters. While convenient, they include a hefty fee on top of the normal exchange rate. In fact, it’s best to avoid exchanging or accessing any money until you arrive at your destination.

The single best way to access your money while abroad is to use your debit card at an ATM in your destination country. Before you leave your home country though, call your bank and ask them what they charge to access an ATM abroad. Find out if there are any ATM networks you can use for free. If your bank charges a big fee, this may not be the best method for you.

Another good way to access your funds while abroad is to use a credit card that has no foreign transaction fee. Capital One, for example, doesn’t have a foreign transaction fee on any of their cards as far as I know. Again, call your credit card company to verify what they charge for foreign transactions.

Whether you use a debit card or credit card, the amount of your purchase or withdrawal is converted to your home currency using the daily exchange rate, then posted to your account.

One other thing to be aware of is that most developed countries outside the US use a more secure form of payment known as Chip and PIN. To make a purchase at some places using a credit or debit card, you have to enter your secret PIN. The card also has a small chip inside that makes counterfeit nearly impossible. This means that you may not be able to use your card in some places unless it has a PIN associated with it.

Finally, let your credit card company and bank know where you’re going and how long you’ll be there. This prevents them from placing a temporary hold on your account due to suspected fraud.

Accessing your money in these ways while abroad reduces your hassle and lets you keep more of it in your pocket.

Photo by blogs.babble.com

Your Loyalty Could Be Costing You

No, I’m not talking about your loyalty to your spouse or significant other. What I’m referring to is the companies you regularly do business with. Your loyalty to them could be costing you a lot of money.

Companies used to reward loyalty. Take pensions, for instance. It used to be that you went to work for a company after finishing school and you worked for that company your entire career. Both my father and father-in-law have been working for the same company their entire working lifetimes. In exchange for our loyalty, the company provided us with a nice pension for retirement. Today, pensions have all but disappeared.

This same sentiment carried over to the consumer world as well. Now, companies routinely punish loyalty while rewarding new customers with specials and discounts. This trend is taking hold in more and more industries. Below are some specific areas where your loyalty could be costing you.

Cable and Satellite Providers

These companies are among the worst when it comes to punishing loyalty. How many times have you seen an ad for a steeply discounted rate for TV and internet service? If you read the fine print you’ll see that the rate is only valid for new customers and only for the first six or twelve months.

To get the best deals, you need to shop around every time your contract ends. If switching providers sounds like too much work, at least make some calls to competing providers and ask for their new customer specials. Then use that information to negotiate a better deal with your current provider.

Banking Services

Big banks love to reward loyalty with increased fees and minimum balance requirements. They don’t care about you, your family or your future, no matter what they might claim. To get free checking and better service, go with a credit union or online brokerage company like Schwab or Fidelity.

When it comes to savings accounts and CDs, there isn’t one bank that consistently offers the best interest rates. To find the best rates, go to Bankrate.com and select the product you’re looking for. Rates are updated daily, so you can be sure you’re always getting the best rate for your savings.

The Dentist Office

Occasionally when I pass a dentist office I’ll see a large banner announcing a “New Patient Special”. This could include an exam, x-rays and a routine cleaning. As an uninsured college grad on a strict budget, I took advantage of one of these offers a few years ago. At $85, the service was as good as I received from my regular dentist in the past. If you don’t have insurance, you could save over $100 using these offers.

Car and Homeowners Insurance

Insurance companies have different methods for determining the rate they will charge you. Because of this, you might be overpaying for insurance. Take car insurance, for example. Young men aged 18-24 are notorious in this industry because of their high accident rate, so they tend to have a hard time finding reasonable coverage. Progressive is known for taking on this group at lower rates than other insurers would. This isn’t a guarantee, but it shows that comparing rates can save you real money regardless of age.

It’s a good idea to compare rates for car and homeowners insurance (or renters insurance) every 2-3 years when your premium comes due. Sites like NetQuote.com and Insweb.com can help you get quotes.

Grocery Store Brands

Your loyalty at the supermarket could be costing you greatly. The typical family spends $6,500 a year on food. By shopping at discount stores and Walmart for the majority of your groceries, you could save 30%, or about $2,000 a year!

As I mentioned in a previous post, buying store brands is one of the best ways to save on groceries. But what if you just can’t bring yourself to try generic? Then look for the brand that’s on sale, and combine it with a coupon when possible. A couple of examples will drive home the point.

I’m a big frozen meal nut — I eat them 5 days a week at work instead of going out for lunch. There are certain meals I like, but I’ll only buy when they’re on sale. If none of my usual suspects are on sale I’ll try something new.

My wife really likes ginger ale, and sends me to the store weekly to buy some. There are always about eight different brands, but I only consider ones which are on sale. She gets her ginger ale and we save on our grocery budget!

Never be afraid to try things differently from the way you’ve always done them. You’ll save dough and you just might discover something that works better in your life.

Join a Credit Union for Friendlier Service and Better Rates

I recently opened up a checking account at a credit union. Why did I do this? Because we’re no longer in an era where you can show up at any bank and open a free checking account. These days companies (banks included) are trying to squeeze every dollar they can out of us. Bank of America demonstrated this when they recently announced a $5 monthly fee for using their debit card, only to retract after customer outrage.

Credit unions are similar to banks in that they offer checking and savings accounts, loans of all types, and often credit cards. But the key difference is that credit unions are owned and run by their members, while banks are not. When you open up any type of account or loan, you automatically become a member. You “own” a small piece of that credit union. Theoretically, credit unions exist only as a benefit to their members. For this reason, borrowers and savers alike will often find the best interest rates at credit unions.

At most credit unions there are certain qualifications you have to meet to be able to join. For example, you might have to live in a certain geographic area, work at a certain place, or have someone in your family who’s a member.

While credit unions are in business solely to benefit their members, they differ in both size and scope. I actually belong to two different credit unions — one small and one large. The small one is a county-wide entity with 4 or 5 branches spread out across the county. It’s here that I have my car loan. The larger one is state-wide, with branches all over the state. Because I have my checking account here, fee-free access to ATMs is important. Not only do they have their own network of ATMs across the state, but you can also find one at certain gas stations.

Credit unions also differ in scope. Some only offer a few basic services such as loans and checking accounts, while others also offer insurance and retirement planning, among other things. You might even find discount tickets or free workshops. I once attended a workshop on mortgage basics geared towards first-time home buyers.

One thing I like about credit unions is that the atmosphere is often friendlier than what you’d get at a cold, impersonal bank. Because credit unions are owned by their members and aren’t required to act in the interests of shareholders (as are banks), they’re able to make choices that benefit the customer.

I have a story which illustrates the superior customer service you can expect at the majority of credit unions. A few months back I was in the process of switching to a new bank, and I was setting up the bill-pay feature at my new bank to automatically send payment for each of my bills every month. I must have entered in the wrong amount for my car payment, because the following month I got a call from the credit union saying that my payment was one cent short. They called me about one cent! Instead of charging me a fee as the big banks would for a late payment, they did the right thing and called to report it to me before the due date.

Before joining a credit union, it’s important to consider your needs. Whether you’re looking for an auto loan, a CD (Certificate of Deposit) or something else, be sure to compare the rates of competing credit unions in your area. To find a credit union near you, use the Credit Union Locator at NCUA.gov.

Photo by RikkisRefugeOther