May 24, 2018

Wal-Mart Offers new GoBank Accounts Sans Overdraft Fees

WalMart New Accounts

Shopping giant Wal-Mart has opted to provide a card-based program for customers who may overspend their accounts while purchasing in their stores

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 If money is withdrawn from ATMs outside the system, a $2.50 charge is levied.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.

Numerous Bank Fees Can Be Decreasing Your Assets

Banks and Fees: They Go Together

bank-feesThat little extra twinge you feel when you tote up your bank account is likely the added fees you pay for the privilege of banking. Typically, there may be some you didn’t even know about. Banks, according to a Market Watch article in the New York Times, aren’t always up front about such things.

The average checking account is subject to some 30 fees, but some institutions have lists of up to 50. That’s according to a 2013 survey by WalletHub.com, a financial website. And, the survey found, about 20 percent of the banks contacted don’t provide prospective customers a list of these charges when they submit an online application. Only two of the banks included in the survey earned perfect scores on the WalletHub quest for full transparency. Fewer than half – 48 percent – had direct links on their product pages to alert customers to the full gamut of fees.

It may or may not make you feel better to know that airlines are worse, with up to 150 potential fees. The list for banking fees is long an varied but may include a fee simply to have a checking account. (In 2009, some 76 percent of banks offered free checking. By 2013, the number was down to 39 percent.) Then, you may pay a fee to use a competitor’s ATM. And the list goes on.

Some of the fault lies with banking consumers. Only one in three makes the kind of annual assessment that would advise them of the fees they are paying. Only 15 percent reported ever having looked into fees at their particular financial institution, Kasasa found when it surveyed 1,000 adults. (Kasasa is a new financial institution devoted to creating communities by uniting small credit unions and small banks.) Federal regulations now require that such information be available, but it’s up to you to find it.

Banks have been more forthcoming in recent years, but there has been a commensurate increase in the number of fees. But to get the information specific to your bank account, you may have to plow through an average 44 pages of information, which still may be incomplete.

Five things to look for:

1. Banks are allowed to change the order of processing checks and electronic transfers. That means that if you have a $50 purchase and another for a minor item (a cup of coffee, perhaps) the larger item is processed first, increasing the bank’s potential to collect overdraft fees on a greater number of smaller purchases. The number of banks that do this has decreased in recent years. About 22 percent of the largest banks no longer do it and the percentage of those that do has gone from 51 percent to 49 percent.

2. The bank may hold a transfer for several days, increasing the institution’s potential for interest income. It may take several days, for instance, for payments to utilities to clear. For the customer, it may make a difference of only a few cents, but with millions of customers, the bank may see a significant advantage. No federal regulations are in place to force a bank to speedily process your payment.

3. Though many banks have created standard disclosure boxes, financial experts say there still is “vast room for improvement.” Making comparisons bank-to-bank is hard because of the length and different ways of identifying the same fees. Pew’s Model Disclosure Box has been adopted by 56 percent of the country’s banks, making it easier to make comparisons. The Consumer Financial Protection Bureau has proposed such mandated disclosure for prepaid cards, but has announced no plans to do the same for banking accounts.

4. Fees for overdrafts are the bank’s biggest money-makers. Such fees make up 60 percent of their fee income, according to the CFPB. More than half of bank customers don’t even know if they have overdraft protection or what their particular coverage consists of. Recent figures show that the number of involuntary closures of accounts based on overdraft issues is rising. It is possible to opt out of the service, with written confirmation of their choice.

5. About three-quarters of banks will let you go into overdraft at ATMs or at points-of-sale with your debit card. But each such transaction will push your account further into the negative, with a fee charged in each instance. The purchase amount will be pulled from your next deposit, along with the fees. Fees for overdrafts have increased steadily and now stand at $35 to $37 per instance at most banks. A transfer from another account at the same bank (savings, for instance) to cover the overdraft is usually about $10.

There. A word to the wise for those who don’t want to be fee-d to death.

Run On China Bank Gives Consumers Food For Thought

When The Rumors Aren’t True

Keeping close tabs on our money is an American fact of life. In general, we like to be able to deposit what we have in what we believe to be a secure holding institution and then relax.

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Customers getting money out of the Jiangsu Sheyang Rural Commercial Bank

But what happens when an alarm is sounded and there is the possibility that we relaxed too soon? How do we react when there is even a hint that our particular financial institution could be in trouble and that our share of the money being held could be in jeopardy?

Fortunately, the United States has built safeguards into its banking systems, including federal deposit insurance, and the likelihood of a “run” today is miniscule. But a recent story out of China shows what can happen when rumors run rampant and cool heads do not prevail.

How The China Bank Run Started

A customer in Yancheng, China, went to his bank and requested a withdrawal of 200,000 yuan, the equivalent of $32,200 in American dollars. The story goes (and the details have not been clearly defined) that when the customer’s request couldn’t be immediately honored, he assumed that the bank had run out of money and panic ensued.

Panic Rampant

Soon, depositors arrived in droves, by any and all means of transportation. Though regulators and spokespersons for the central bank assured the bank’s clientele that their money was safe, the flood of customers demanding their full amount kept arriving. The beleaguered bank stacked piles of yuan on its counters to create the appearance of plenty, but even that ploy and the sight of armored cars bringing cash to aid the besieged institution didn’t immediately quell the tide of anxious customers. The run continued for three days.

Customers’ concerns were probably magnified by China’s failure to meet a domestic bond recently. The default was a first in the mega-country’s current financial history, but it lent itself to ongoing itchiness about all aspects of the country’s financial security.

Lessons From The Bank Run

There are many versions of what happened in Yancheng, but the lessons for Americans are the same.

The news of this story spread quickly. All it took was one customer who used a twitter like service to notify his circle of friends. From that point hundreds of people heard about the customer’s experience and soon it gained world wide attention. The Chinese people have a heritage of fearing for the safety of their money. Older generations of people experienced government confiscation of property and wealth. It is no wonder that panic resulted.

So what is the lesson American people can gain from this? When rumors start, don’t panic. Check other sources for the truth to the rumor. Give yourself some time to make the best decision for you and your family. Though time would be of the essence in a real bank failure, it is foolish to over-react.

The bottom line is to look before you leap. Trust in the safeguards that have been built around the country’s financial practices. Certainly you are justified in making immediate inquiries if there is a suggestion that something is wrong, but don’t just assume that the rumors are true. Often, they are not.

CPSA Sets Standards For The Check Printing Industry

check-writingAlthough paying by check is not as common as it once was, it’s a financial practice that is likely to have long-term value in the economic scheme of things, according to the Check Payment Systems Association. And their prime role is to promote and protect what is referred to as the “paper-based” payment system.

The non-profit organization has been involved since 1952 in assuring that using personal checks and business checks will remain a viable option for individuals and businesses. It is dedicated to the integrity, security and convenience of checks. It has been at the forefront of developing safeguards that are built right into the checks you use. Its advice has been incorporated into check-printing practices for ValueChecks.net main check printing partners.

Preventing Check Fraud

One of CPSA’s most valuable contributions has been in developing strategies that thwart criminals bent on check fraud. In 1994 the association created a set of guidelines intended to prevent the production of counterfeit checks. The guidelines are voluntary, but have been applied by the majority of check-printing companies in North America. Would-be counterfeiters have been significantly stymied in attempting to use computer scanners, laser printers or photocopiers to produce fake checks.

Key to the effort is the Padlock Icon, touted as CPSA’s greatest contribution to the fight against check fraud. The small symbol appears on the front and back of personal and business checks that were designed with at least three safety features. Those who routinely accept checks recognize the Padlock as  evidence that the checks are protected by production safety steps. Only CPSA can legally grant the right to use of the Padlock on checks.  The association’s website lists authorized users, such as those check companies who print checks for Valuechecks.net.

CPSA partners with the American National Standards Institute to study issues surrounding the use of checks. It also does research to assist members with development of products and services. It’s influence is recognized and respected in Washington D.C. as federal government agencies consider these issues. Lawmakers whose business is to protect citizens make use of the information generated by  CPSA researchers.

Beneficiaries of the efforts being made by such organizations are those at the end of the chain — the individuals and companies that continue to make writing checks their standard for doing business.

Bank of America In Utah

In the latest Bank of America Merrill Lynch CFO Outlook survey, U.S. financial officers gave the economy its highest score in five years and were “significantly more confident about economic growth in 2013.” This new economic outlook may bring consumers to the investment table.

Have you considered investing in the Bank of America? You may want to do some research to find out about the bank’s assets, investing philosophy and what they are doing in your own backyard.

In a report published by the bank on January 1, 2013, small businesses in the state of Utah were granted $61.7 million in new credit. That figure is up from 2011 by 35%.

What about home loans for people in Utah? In 2012, Bank of America has provided 9,381 Utah customers with home mortgages. This figure includes 1,267 home loan modifications.
bank-of-america
What about helping communities in Utah? During 2012, $292,980 was given in grants and matching gifts to help local nonprofit community
organizations develop and grow.

What about donating to Utah charities? The Bank of America Charitable Foundation has donated $91,980 to match employee contributions to their favorite Utah charities. Employees pledged $19,342 to the local chapter of the United Way, which helps provide people with food and shelter as well as aid in financial education. Local employees also donated 1,388 volunteer hours to local communities.

What about helping the environment? During the years between 2007 through 2012, Bank of America contributed more than $37 million dollars to help renewable energy and energy efficiency projects as well as supporting nonprofits trying to focus on climate change.
As of January 1, 2013, one of their objectives is to provide financing of $50 billion for environmental improvements.

What about helping our American troops? They have a program that donates $1 for each written or photo contribution you make to them. Officially the money goes to the “Wounded Warrior Project.”

What about their debt? Recent quarterly reports say that their long-term debt has decreased by $18 billion dollars.

What about their expenses and spending? Expenses declined by $13 billion dollars in the first quarter of 2013.

Gather the information you need before investing in any company. Hopefully this article will give you some idea of what Bank of America is doing in Utah. What are they doing in your state?