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I’m Just a Number at Chase Bank

July 30, 2011 Leave a comment
I'm Just a Number at Chase Bank

'Upset Business Man" by nuttakit on freedigitalphotos.net

I am was just a number at Chase bank.

For about 9 years I banked with Washington Mutual and had no problems whatsoever. For the last 3 or so years I’ve been banking with Chase and had no problems, until this year.

The Beginning

I walked into my local Chase branch today with high hopes that they would understand my plight. The checking account that I held with them was an emergency checking account with about $900 in it. The truth is, I had attempted to close my account in 2010, but the banker that I spoke to at this location was pleasant and they talked me into keeping the account open with some emergency money in it “just in case.” They’re big pitch was that they had branches all over the United States and that there were no maintenance charges or minimums. I happily kept that account open.

Since that account was an emergency account, I didn’t keep up with it. After a few months Chase locked me out of my own online account due to inactivity. I didn’t think twice about this since I had no reason to log in to my emergency checking account. I was smart enough to set up text messaging so that I would be alerted to any transactions in case there were unauthorized charges. A few days ago I was alerted to a charge and immediately called Chase to regain access to my online account.

After logging in, I was surprised to see 3 months worth of maintenance charges. I knew about the debit card limitations that the politicians had enacted into law and I knew that banks were trying to find new ways to maintain their profitability. I figured the 12 years that this account had been open would amount for something and I would be able to get those maintenance charges back. Boy, was I wrong!

At the Bank

I sat down with one of the banking representatives. He was very professional and curteous and told me that he had a $35 limit to the amount that he could credit back. I told him I was fine with this since the charges amounted to a total of $36. I joked that the $1 difference would be the penalty I paid for not reading all the documentation that was sent about my account being changed. I admitted that it was my mistake, but I hoped they would understand my situation. He went to talk to his manager because the last maintenance charge was more than 60 months old and he needed authorization to refund it. I wrote out a check for $1,000 in front of him and signed it since I needed to get my account above the minimum to avoid the maintenance charge.

No Trust

Unfortunately he came back with bad news. The manager was unwilling to refund the last $11 worth of maintenance charges because it was more than 60 days old. I told the representative that I was willing to split up my direct deposit as I had done in late 2010, but I felt like I was buying a car at this point. All I wanted was my hard earned $35 back. The manager did not trust that I would do what I said and I was told that they wanted to see the direct deposit go through first. I entertained this thought. I asked them if they could offer a signed letter stating the conditions and the representative said they could not. At this point I am furious and starting to shake.

I was willing to do what the manager said, but I wanted to be assured that they would give me back my $35. They couldn’t even provide me with any assurance! This was getting a bit personal since they didn’t want to trust me and I couldn’t trust them. They had started off by saying they could give me back $35 and then they took that back. There was no way I could trust them after that.

In the end I closed my account and destroyed the check that I had written and endorsed for $1,000. They can keep my $36, but not my $900.

Summary

  • I laid out my situation, told him this was an emergency checking account, and that I had tried to close it once before but was talked into keeping it open by an employee at that branch
  • I wrote and endorsed a check after I was told that $35 out of $36 was refundable
  • The manager changed her mind in the middle of it all
  • I offered to split up my direct deposit as an incentive so I wouldn’t have to close the account
  • They did not trust that I would do so
  • I couldn’t trust them after they got my hopes up and changed their mind
  • My account was closed

Risk/Reward Analysis

There’s a risk/reward lesson here that I wanted to outline. I’m perplexed at the fact that the manager was willing to let me go as a customer over $36. This decision cost her branch about $900 instead of $36. I understand that she didn’t want to trust me, but lets do a bit of risk/reward analysis here.

Worst Case for Chase

Here’s the worst case for the bank. I get my $35 back and deposit $1000. I turn around and close the account after everything has cleared. They’re out $1000 + $35 + 900 = $1935.

What Happened

This is what happened. I didn’t get my $35 back and I didn’t deposit $1000. I closed my account right there and then. I consider the $1000 a lost opportunity cost. They’re out $1000 + 900 = $1900.

What Would Have Happened

If they would have trusted me, I would have been able to get my $35 back and deposited $1000. For the sake of keeping the math simple, I am going to leave out the direct deposit numbers. They gain $1000 + direct deposit.

  • Risk:  $1935 – $1900 = $35 + unsatisfied customer
  • Reward:  $1000 + direct deposit + satisfied customer
  • What Happened:  They lost $900 and I am hesitant to ever do business with Chase or recommend Chase again

The numbers can be tweaked to be more accurate, I know. The fact of the matter is, no matter how you tweak the numbers, the decision that this particular branch manager made was a bad business decision. I would think that keeping customers is more important than giving back three month’s worth of maintenance fees.

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Categories: Banking, Personal Finance

Liquid and Bump Certificate of Deposits

July 25, 2011 Leave a comment
Liquid and Bump Certificate of Deposits

"Splash Blue" by Idea go on freedigitalphotos.net

I have been wracking my brain for ideas on what to do now that I am nearing my Rewards Checking limit and won’t be earning much interest on any amount over that limit. I looked into savings accounts, but the interest is so low I just don’t want to go there! I’ve thought about moving money into riskier investments, but I would be increasing the risk profile of my finances as a whole and I don’t want to do that. I asked myself a few questions to narrow down what type of options I should be looking for.

Questions

Will I need this money in the near future?

Yes, actually. I will be needing this money for an engagement ring. I know banks have payment plans, but I don’t like being in debt. I’ve even learned that being in 0% APR debt has its impact on my credit score!

Can I take on more risk at this time?

Now that I have started investing in LendingClub notes in addition to my stock market investments, I have taken on all the risk I can digest. The recent economic worries pressuring the stock markets have not been fun to observe!

Liquid Certificate of Deposit

This instrument provides a low yield in exchange for a higher level of liquidity. The level of liquidity is depending on the bankin institution so one must read up carefully before purchasing. Some institutions allow multiple withdrawals and some only allow one. Some institutions have limits on their withdrawals and some have time constraints.

This would be a good option for me if the interest rates that I’ve seen weren’t so low! The rates are comparable to higher interest savings online savings accounts and I would rather put my money in one of those instead of having to deal with all the fine print.

Bump Certificate of Deposit

This instrument provides a chance to bump up the yield once or multiple times depending on the institution and the length of the CD to maturity. I have seen some decent rates and it makes a lot of sense to invest in a 4 year CD if you are able to bump the rate up a few times. If interest rates rise in those 4 years then you can bump as you go. If they fall, then you have locked in a higher rate. This is only an option if you can lock up that money for a long period of time.

This isn’t a good option for me, espeically since buying a house is on the horizon post-engagement. I just can’t tie up much of my savings right now, which is a bummer. I’m not one to take a penalty for early withdrawal. I don’t plan on looking into the math involved and the literature reads as if the penalty could leech into my principal. I’m just not going to deal with that.

Keep on Looking

It looks like I have to keep looking. I’ll definitely make use of these instuments in the future when I don’t have so many large purchases staring me in the face.

Categories: Banking

Online Coupon Codes

July 5, 2011 Leave a comment
Online Coupon Codes
“Barcode Discount Bag” by digitalart on freedigitalphotos.net

If you are purchasing things online without using coupon codes, then you are probably paying too much. There are various sites around that list coupon codes, also known as discount codes, for various online retailers. For example, back when I purchased my FICO scores from myFICO.com, I used a coupon code for 10% off that I found online. Everytime I shop online, I look for a coupon code. Even large shops like Amazon have promotions that they run from time to time that you may not know about. It never hurts to surf around the web.

It doesn’t matter how large or small your purchase is. I would suggest that you always look for a coupon code to try before you buy online. If you have ever been to retail stores in the mall, you know that coupons and discounts are not really “sweet deals.” The stores already have these coupons figured into their sales projections. The stores profit the most when shoppers purchase products at the full price. The same type of marketing goes on online. The truth of the matter is, online stores should be able to provide deeper discount since they have less overhead than a brick and mortar store.

The typical coupons that I have seen are for 10-15% off of an item. Many of them are for specific items or departments in an online store. One popular site that I go to is RetailMeNot and I have found countless coupon codes on there. Instead of pointing to a particular site, I would say Google is your best bet for finding the specific code that you’re looking for.

The worst that can happen is that your code doesn’t work and you end up purchasing something that you need at full price. The best that can happen is that your code works and you save some money. Try it out!

Categories: Discounts

Save with Priceline

July 1, 2011 Leave a comment
Save on Hotels with Priceline

Screenshot from priceline.com

Priceline has been around for awhile and has saved me a lot of money over the years. If you are okay with staying anywhere within a subset of a city, then this is the place to book your hotel. They also offer other things such as flights, car rental, vacations, and cruises. I’ve also used Priceline to rent a car before and it was a great experience. I won’t be covering the car rental in this article.

My Hotel Booking Experience

I recently went to Chicago on vacation and used Priceline to book my hotel. My transportation was 100% public so I didn’t have to rent a car. Chicago is a really great city, you should visit if you have never been there. When I went on Priceline, I was able to choose from several different areas of Chicago. I narrowed my choices down to “Millenium Park, Look & Grant Park Areas” and “North Michigan Ave – River North Area.” All the places I wanted to visit were around these areas. I was then able to choose between 1 and 4 stars for my desired hotel star level. Since I was hunting for a good deal, I started up top and chose 4 stars.

The next step was to research recent successful bids for the area. Priceline provides a link on their homepage that shows the most recent winning bids for the area that you input. I saw that there was a winning bid for a 4 star hotel downtown for $75 so I put in $70 as my bid. My bid was accepted and I found out that I was staying at the Hyatt Regency Chicago. Their normal daily rate was upwards of $200, so I felt like I got a really good deal. In the back of my mind I kept thinking there had to be a catch.

The vacation was a while ago and I am happy to report that there wasn’t a catch. The hotel filled one of its empty rooms and Priceline’s business model works like a charm. If your initial bid is not accepted, don’t worry! Wait 24 hours and try again. Remember, wait the full 24 hours or else your wait timer might get reset. Make sure you book in advance so you can go through as many iterations of bidding as required to get a great deal! The winning bids fluctuate from season to season. I happened to visit Chicago when nothing was going on in the City so I was able to secure a rock bottom rate. YMMV.

There are various forums online that provide tips and tricks to bidding on Priceline. Make sure you Google them and read up. They also provide recent bids by people like yourself. Happy bidding!

Categories: Discounts

Aftermarket Discount Vouchers

June 28, 2011 Leave a comment
Aftermarket Discount Vouchers

Screenshot from lifesta.com

My research has led me to an interesting site that sells vouchers for daily deals that people do not want anymore. The theory is simple, people buy a deal on Groupon or a similar website and then sell it on Lifesta because they either don’t want to use it or can’t use it. Of course, all the deals listed on Lifesta are current. Many of the deals are at a discount to even the original deal price, but be careful. I’ve seen some that are more and those people are hoping you don’t see how much the original deal price was.

I think this website is a great way to save money. It won’t always have what you’re looking for, but it is worth it when it does. You can’t always count on someone selling the deal for less, many sell it at the same price as the deal value. There is a posting fee as well as a percentage cut that Lifesta takes from each sale. The transactions go through Lifesta so the seller doesn’t see your personal information.

Experience Lifesta!

I hope this site becomes more popular as group discount sites become more popular. So many of my friends don’t know about Lifesta. Heck, I didn’t even know about Lifesta until a few days ago!

Lifesta

Categories: Discounts

Indexed CDs

June 27, 2011 Leave a comment
Indexed CDs

"Risk Blocks" by jscreationzs on freedigitalphotos.net

I was surprised to arrive upon an interesting type of Certificate of Deposit while researching online. The normal CD is usually based upon a certain APR, compounded at a certain rate until maturity. These interesting CDs were called Indexed CDs and they provided exposure to an underlying index such as the stock market, currency market, or commodities market.

The particular one I ran into tracked a basket of precious metals. The prospectus was very transparent in the methodology that was used so I was very interested in it. The more I read, the more interested I got. In a nutshell, this was what they offered.

The Good

  • $10,000 minimum deposit
  • 5 year CD
  • FDIC insured up to FDIC limit
  • Principal is guaranteed if index doesn’t perform

Wow, I can get the same amount of money out that I put in even if the index performs badly? Are you serious? There is an instrument out there that gives me exposure to the volatile precious gold market with no downside risk? Sign me up, right? No.

You’ll notice I haven’t named the bank where I found this product. That is because I don’t want you to consider what they offer. If you search around Google, I am sure you’ll find it if you really want to take a chance. I dug really deep, because that is what I do before I commit money. Here are some issues that I had.

The Bad

  • Must pay taxes on “phantom income” every year
  • High opportunity cost risk
  • Banks time these offers strategically

The Ugly

Let me go into a bit more detail on the above list. At the end of every year, if the calculations show an increase in the index, you have to pay taxes on the difference just like in a regular CD. I’m not completely sure about how to get those tax dollars back if you break even at the end of 5 years and only get your principal back. Please ask a financial professional if you’re interested in this type of product.

Say you put your money in the account and at the end of 5 years nothing happens. You come out even and no money is lost. That’s where opportunity cost comes in. You could have put that same money in a 5 year CD for a fixed percentage and earned interest! Their minimum deposit is nothing to sneeze at and 5 years is a long time for your money to sit idle.

Here’s the last point that I want to make. Banking institutions are not stupid. They have departments that do risk analyses of their products before they offer them. This particular bank only offers select indexes at select times of the year. Besides risk analysis, banking institutions also have departments that monitor the markets and make informed judgments. Look at the state of the precious metals market right now and tell me if these bankers aren’t smart.

Categories: Banking

4 Online Calculators

June 27, 2011 Leave a comment
Online Calculators
“Yellow Calculator” by nuttakit on freedigitalphotos.net

There are a bunch of online financial calculators that I use to look up things such as interest payments, APY, mortgage ammortization, and much more financial voodoo. The site that I am most dependent on is Bankrate.com because they have never let me down. I have looked up CD rates on there and I have also use many of their calculators to help me make financial decisions. The following are a few that I have found extremely useful.

Simple Retirement Calculator

This calculator asks you a few simple questions like how much you would like to have saved by retirement, how many years you have until retirement, and how much have you saved up so far for retirement. It then makes a few assumptions, explains them to you, and calculates how much you would need to save every year or per month to reach your goal under those assumptions. This is a good baseline to go by, but you should consult with a professional financial advisor before making any decisions.

CD Rate Calculator

This calculator shows you the resulting APY and earnings after a period of time that you can set. I’ve used this calculator many times because the APR and resulting APY differ due to how CDs are compounded.

Compound Interest Calculator

This calculator is a must-have in everyone’s toolbox. You hear financial professionals talk about the power of compound interest all the time. This calculator will show you the results of compound interest over a period of time that you can set. You can also include additional contributions. I used to set up a spreadsheet to do this before I found the calculator.

Lunch Savings Calculator

I bet you are surprised to see this calculator listed! It helps you quickly figure out how much you could save if you bagged your own lunch instead of eating out everyday. I would suggest clearing out the “Expected Rate of Return” box for a straight up calculation.

Bottom Line

I hope these calculators help you out as much as they have helped me.

Categories: Banking