A few months ago, I wrote about how you can try to talk your way out of an overdraft fee. On Thursday, I was again reminded of how it seems like people still are having problems managing their money. Every morning I check the overdraft report. This report tells me who has gone overdrawn, and if necessary, I shut down their debit card. A typical day will show about 25-30 people on the report. In the past few weeks, we’ve been averaging 50-60! That’s double the amount! It amazes me that people pay $30-$36 for an overdraft charge, yet continue to use the account.

The number one cause of people going overdrawn is due to the lack of a check register. How can you know how much money you have available to spend if you don’t have a record of what you have spent? Online banking, telephone banking, and asking the tellers for a balance are not reliable methods of tracking money. They don’t know what checks are outstanding or what check card transactions haven’t posted yet.

The “posting” process confuses people, or they don’t fully understand it.  My bank doesn’t make checks available until the next day, so if I make a deposit one business day, the funds aren’t available until the next business day.  I make sure the deposit clears and is available before I write any checks off of it.

There are methods of overdraft protection.  You can link your savings account as a buffer, and in case you go overdrawn, it will transfer the funds into your checking account to cover.  You can apply for a line of credit that will cover items if you do go overdrawn.  Sometimes there are monthly fees for that.  I know there are people that keep a $100-$200 buffer in their checking account by pretending that money is not even the account.

How do you keep from getting overdraft fees? 

Posted under Bank Secrets

The financial institution I work for is set to announce its earnings tomorrow.  I went out after work with a few other office managers who seem to think that after tomorrow we’ll all be out of jobs because our bank is the next to fail.  While it’s a concern, I don’t think that is truly reality- yet.  I am one of the optimists and I say that we’re going to be fine.

If all the people would stop freaking out about IndyMac bank failing, then so many other banks won’t be in trouble, like others are predicting.  I can’t even begin to tell you how many questions I have had about FDIC insurance and how to style accounts so that they are covered in the past few days.  It’s been horrible.  I am tired of telling people to add a beneficiary to their account to get $100,000 extra FDIC coverage!  I understand it is my job, but I also feel that consumers should do a good job of educating themselves on their money.  I had a customer today tell me that the person who opened her account should have let her know about the $100,000 per depositor FDIC coverage.  We have signs put up all around the branch letting people know about this.  It’s not like we are hiding it.

I think it all boils down to making smart money decisions.  Sure, if you’ve got more than $100,000 in an account, make sure you add a joint owner or beneficiary! Just make sure that you do it as soon as possible for peace of mind.  If people start making a run on the banks, of course they are going to run out of money and will have no choice to go under.  Make sure you cover your assets.

I am worried that I will be out of a job soon, but at the same time, I know that is something I cannot worry about.  It’s totally out of control.  I’m going to sit back, take one day at a time, live frugally, save my money, and pay off my debt.  After all, isn’t that all we can do?

Do you think more banks are going to fail? 

Posted under Bank Secrets, Economy, Save Your Money

It’s no secret that since the economy took the plunge banks have started tightening up on their lending standards. Many people are excited about lower rates, but just exactly how many of them can get approved for a loan in this economy?

In February of this year, many banks were still lending at 100% loan to value (LTV). Basically what this means is that they would allow you to tap into more equity in your home, but it would cost you a higher rate than if you went with the standard 89.9% LTV.

For example, if your house is worth $300,000, and you don’t owe anything on it, before you would have the possibility of a Home Equity Line of Credit or a Home Equity Loan of $300,000 if you wanted to go 100% LTV. Today, the most you could borrow out of your home’s equity would be $269,700, which is 89.9% of $300,000.

The reason banks are doing this? To cover their assets. I know many banks went crazy lending money to anyone who wanted it about 1-2 years ago. Now they are seeing the repercussions of this in today’s economy. Banks were lending too much money and consumers just couldn’t handle it. Here came the foreclosures.

If you were to go into the bank today and ask about home equity lending, you would probably be asked a couple questions: how much do you think your home is worth, and what is the total amount of any mortgages on the property? From there, the banker would tell you what amount you could get financing up to.

Banks are using the same lending procedures for auto loans, unsecured loans, and lines of credit. If you don’t have good credit and a good income, you’re probably not going to get approved. Use common sense when you are applying for any type of loan. Make sure you ask questions first before you sign. If you have any questions about lending, I’d be happy to help!

Posted under Bank Secrets, Loans