BankFox Blog

Wire Transfer Fees Differ

BankFoxStaff — Sun, 04 Jul 2010 15:16:20 -0400

Every once in a while, we like to survey banks on a particular topic and report back to our readers on how much the banks differ. This month we decided to compare how much banks charge their consumer customers for sending or receiving domestic wire transfers.

We surveyed ten different banks with the goal of getting a mix of large and small, and both branch-based and online-only banks.

In general, it appears fees for sending a domestic wire transfer are fairly consistent, generally costing either $20 or $25 per transfer, although we did find one bank (Clear Sky) that only charged $15 for the service. Some banks also offered a small discount for initiating the entire transaction online.

However, there was a larger discrepancy in how much banks charged to receive wire transfers. Some banks, like Ally, EverBank, and Schwab, didn’t assess a fee at all for the service. Meanwhile, most of the more traditional banks that have branches, assessed fees between $10 and $15 for each wire transfer received.

Here’s a table with the full results:

Bank Name	Wire In	Wire Out
Ally Bank	$0	$20
Bank of America	$12	$25
Cambridge Savings	$10	$20
Cambridge Trust	$10	$20
Chase	$15	$25
Citibank	$10	$25
Clear Sky	$10	$15
EverBank	$0	$25
Schwab	$0	$25
Wells Fargo	$10	$20

Silly Bank Password Policies

BankFoxStaff — Thu, 03 Jun 2010 08:04:41 -0400

Ever since online banking was first introduced more than 15 years ago, security of financial data has been a concern. And as hackers have become increasingly sophisticated at stealing information, banks have been forced to continually develop new ways to stop them.

Although many of the advances in security technology are needed, some policies surrounding passwords have increasingly become a pain in the neck for consumers. And now, a new study from researchers at Microsoft concludes that some of these annoying security protocols don’t even reduce fraud anyway.

There are two password policies in particular that the report concludes are unnecessary:

The first is requiring consumers to frequently change their passwords. Supposedly many banks have this policy because it limits the amount of time a compromised password can be used and thus cuts downs on fraudulent activity. However, since stolen login info generally is used quickly, the chance of the policy working is "as likely as a crook lifting a house key and then waiting until the lock is changed before sticking it in the door," according to one of the researchers speaking with The Boston Globe.

The second policy that researchers call unnecessary is requiring "strong" passwords, ones that are a certain minimum length and include a variety of characters like uppercase letters, numbers, and sometimes even symbols. Many banks have this requirement to make it harder for hackers to guess passwords. But the researchers have concluded that there are better ways to protect against guessing hackers, such as cutting off access if someone fails to login more than three times. And strong passwords don’t protect against phishing attacks or keystroke-stealing spyware, the most typical ways hackers get passwords.

There is even an argument that both of these security policies make consumers LESS safe. As passwords are frequently changed or become unusually long, they become harder to remember which forces people to write them down or store them on their computer, making them more likely to be compromised than if they were just in the person’s head.

Thus, we at BankFox hope that banks take heed of this research, and allow consumers to use easy-to-remember passwords that don’t need to change all the time.

We hope that instead, banks spend their security resources preventing larger breaches. For instance, all the password changes in the world wouldn’t have stopped an employee of Rocky Mountain Bank from accidentally emailing thousands of customer records to a misspelled gmail account, nor would it have prevented Bank of America from losing personal information on more than a million of its customers.

Banks are susceptible to sophisticated attacks, but as shown by the above situations, security breaches can also come from poor internal management and policies. We hope that banks are smart about their security processes and don’t unnecessarily subject their customers to annoying time wastes if they don’t create any additional protection.

Could Rates Stay Low For Years?

BankFoxStaff — Wed, 05 May 2010 10:50:12 -0400

Last week the Federal Reserve said that it was leaving its benchmark interest rate near zero where it's been for the past 16 months. Given that interest rates have been so low for more than a year and that the economy has finally started to improve, some analysts have started to wonder whether the fed will soon change its policy and start raising rates to more normal levels.

We at BankFox wish we could predict the future – it would make investing a little bit easier. Yet despite us not having a crystal ball, we've seen a great deal of evidence that suggests it will be a while until the fed raises rates. And even when it does, it appears that they may keep them relatively low for a while, perhaps as much as several years, given all of the following factors:

The job market is still really bad: Keeping interest rates low encourages individuals and businesses to borrow and spend money, which generally leads to more hiring (or at the very least, less firing) in the overall market. Despite a slightly improving economy, the unemployment rate is still the highest it has been in years, and economists agree it will take at least a few years of growth to get it back to a comfortable level. Until unemployment is under control, we think it’s unlikely the fed will substantially raise rates.

Banks continue to have trouble: As we posted several weeks ago, banks keep deteriorating as they deal with the backlog of bad loans. It is generally less expensive (and more politically viable) for the fed to keep interest rates low to help troubled banks, rather than bail them out with loans or clean up the mess after they fail completely. Until the vast majority of bad loans are purged from the system, it’s likely the fed will keep rates low to minimize the number of bank failures, and this could take years.

Inflation is still very low: Typically the reason interest rates aren’t kept low for too long is that it can lead to prices on everyday products rising quickly. However, despite an extended period of low interest rates, inflation has barely appeared. In fact, with businesses having so much extra inventory, we’ve seen them cut prices so much that the country has been flirting with deflation (where prices go down). Until serious inflation starts appearing, there is much less reason for the fed to raise rates.

The housing market is still very weak: Between giving tax credits to first time home owners and buying up mortgages that others don’t want, the government has bent over backwards to prevent housing prices from plummeting too much further than they already have. But now some of those programs are ending, which means that the housing market’s improvement might stall or reverse itself. Leaving rates low helps the housing market recuperate, and until there is multi-year improvement, the fed is unlikely to raise rates too much to stunt any recovery.

So although the economy is showing some signs of improvement, there’s evidence that we will be facing low interest rates for a while. We shouldn’t even be surprised if our rates are low for years - after all, Japan has seen interest rates below 1% for more than 10 years since its economy stalled in the 90s. Hopefully the US economy won’t follow a similar fate.

Regardless, all of this is not good news for us savers who want to earn interest on the money we have in savings bank. Despite already having a year with record low interest on our bank accounts, it doesn’t look likely we’ll be earning much better rates anytime soon.

Move Your Money

BankFoxStaff — Thu, 01 Apr 2010 08:52:18 -0400

A recent viral video created by the Huffington Post as part of their Move Your Money campaign has consumers reconsidering whether they should do business with large banks that received federal bailout money.

The video, which has been viewed almost a half a million times on YouTube, overlays headlines and news segments from the current financial crisis with clips from It's a Wonderful Life, a movie about a depression-era community banker who makes personal sacrifices to keep his town free of predatory business practices.

The message of the video and campaign is clear - if you don't like the practices of the large banks, take away your business from them.

At BankFox, we're glad to see that consumers are getting more discerning about where they bank. Although we don't think every large financial institution is evil or that every community bank is run by saints, we believe it's important for people to investigate the practices, policies, and health of their banks to decide whether the financial institution is worthy of their business.

To allow people to learn about small banks in their area, we recently added a feature to BankFox that lets consumers find healthy, local community banks near their city. Try out the new tool in order to find a local bank near you.

Banks Keep Deteriorating

BankFoxStaff — Wed, 03 Mar 2010 10:27:41 -0400

About 18 months ago, bank failures were at the center of the news as storied financial institutions like Washington Mutual, Wachovia, Lehman Brothers, and Merrill Lynch all disappeared as standalone organizations. Media outlets were abuzz with news of these epic failures or last-ditch mergers.

Today, although bank failures continue to happen, they have become commonplace and less newsworthy, especially as there have been fewer large banks in the mix.

But that doesn’t mean that banks are out of the woods – in fact, according to the FDIC quarterly report that recently came out, banks are in a lot worse shape now than they were 18 months ago when banks were making more headlines.

Some highlights of the FDIC Q4 2009 report:

There are now 702 banks on the FDIC problem list, up from 552 just last quarter, and up from 252 at the end of 2008 when the financial crisis was in full swing.
Overdue loans are up about $25 billion from last quarter to an all-time high of nearly $400 billion.
Banks only increased their reserves to cover losses from these overdue loans by $7 billion this quarter, meaning future losses for banks are likely on their way.

The report did have some positive news though. For example, the overall amount of construction loans that were overdue dropped for the first time in several years.

Such good signs in a gloomy picture like to make us hope that perhaps the worst is behind us, and the industry will turn around soon. However, given some of the statistics in the report, there’s still a lot of evidence that the worse may be yet to come.