BankFox Blog

Free Checking Still Exists

BankFoxStaff — Sun, 03 Oct 2010 22:32:29 -0400

When the financial reform bill was being debated in congress earlier this year, many argued that the restrictions on banks would lead to the end of no-minimum balance free checking accounts. But since the bill barring hidden overdraft fees went into effect on August 15th, banks still seem to be offering such accounts, although in a few cases with some catches.

To preserve a no-minimum-balance, no fee checking account, Bank of America introduced its new eBanking Checking Account. The catch is that to avoid paying a monthly fee, customers must do all their banking online or via ATMs, and receive their statements electronically. Use a teller at a branch to make a withdrawal or request a statement in the mail, and you have to pay $8.95 for the month.

If you're still interested in banking with a live teller, other banks offer free no-min-balance checking with different catches.

Chase, for instance, offers Chase Checking, which is a no-minimum-balance, no-monthly-fee checking account, but only if you make 5 debit-card transactions a month. If you don't, there is a $6 fee for the period.

Wells Fargo, on the other hand, offers their Value Checking account for free with no min balance requirements, but the catch is that you must have at least one direct deposit made to the account of $250 or more per month. Otherwise there is a $5 monthly fee.

In addition to traditional banks, many online banks also still offer no-min-balance free checking, with the obvious catch that you can't walk into a physical branch to make a transaction. Ally Bank's Interest Checking account and ING Direct's Electric Orange are two examples of no-fee accounts, and in both cases, they even pay interest on the money you hold with them.

In short, it looks like consumers still have many ways to get no-fee and no-min-balance checking accounts despite industry spokespeople saying such offerings would go away. However, to get such free checking accounts, there may still be a catch.

ShoreBank Fails And Raises Rates

BankFoxStaff — Sat, 04 Sep 2010 17:18:36 -0400

Bank failures have become pretty routine over the past two years, so much so that they hardly make news anymore. But the failure of Chicago-based ShoreBank made more headlines than usual, both because it was a fairly large regional bank, but also because the financial institution was famous for its unique pioneering of socially-responsible lending.

It's no secret that ShoreBank had been in financial trouble. Several articles had noted its shakiness before the failure, and BankFox had given ShoreBank its lowest health rating for years. More recently, it was one of the few banks that earned our worst rating in every single category.

Nevertheless, we here at BankFox also took note of the bank failure for a different reason. For the past two years, ShoreBank Direct's online High Yield Savings Account had offered some of the best rates out there, so many of our site's followers have had money parked with the bank.

Luckily, it seems as if the failure has not been a big issue so far for people with that account.

On the evening of Friday August 20th, account holders received an email saying the bank had failed, but that all deposits, even those above the FDIC limits, were being transferred to a new bank called Urban Partnership Bank. While the transition was going on, the ShoreBank online website and all available functionality would still work as usual.

A week later, all customers received an email saying that the new bank had decided to raise rates on the account, "to make your transition a little easier." No complaints from depositors about that!

Now two weeks since the bank failed, it's hard to tell from the bank website that anything has changed about ShoreBank at all, except for the notes at the bottom of the site that says the company will be rebranding as Urban Partnership Bank in the near future.

As we blogged last year, there are many reasons you should care if your bank fails, but it's comforting to know that because of the FDIC, it is mainly a non-event for most deposit clients.

The End of Overdraft Fees

BankFoxStaff — Fri, 06 Aug 2010 17:40:21 -0400

Last month congress finally passed new financial regulations meant to address the problems that led to the 2008 financial crisis. Although much of the bill is dedicated to trying to curb risky behavior of financial institutions, some of the legislation addresses issues that will directly affect how consumers interact with their banks.

One such issue is that banks will now have to explicitly get a consumer's permission to sign them up for overdraft protection, a service that lets consumers be automatically approved to take out more money than they have in their account, but in exchange, pay hefty fees on the transaction.

Over the past decade, banks had begun to sign up consumers for overdraft protection without them knowing. So when a consumer would purchase a cup of coffee, and accidentally overdraw their account by a few dollars, they would be charged an overdraft fee of $30 rather than just having the transaction declined.

Some banks were even going further to milk fees, processing large transactions before earlier smaller transactions, and putting holds on deposits, trigger several pho-overdrafts that would cost the consumer more than $100 dollars in fees.

Angry customers and consumer groups who have pressed for changes to this practice have finally prevailed as the legislation will go into effect on August 15. And according to a Wall Street Journal study, about three-quarters of all consumers will not opt-in to getting overdraft protection.

How banks make up this revenue is unclear, but it won't be easy given that overdraft fees have accounted for about three-quarters of service fee revenue according to The Economist.

Some have speculated that banks will begin getting rid of "free checking" and start charging monthly fees again. Others have lamented that banks may just start charging for other services for which they can bill consumers in an equally opaque way.

At least for now, consumers are rejoicing that unrequested overdraft protection and its associated confusing fees will become a relic of the past.

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.