Category Archives: Banking

Get the Best Interest Rate: A Review of MoneyAisle.com

Ever heard of Money Aisle? I didn’t before a reader asked me to check them out. It turns out, Money Aisle lets banks compete for your savings via an online auction. All you do is pick your investment (savings or CD’s), the amount you will invest, the duration of your savings (if choosing a CD), and your state.You then see a screen that lets you know what round of bidding you are on as some banks get eliminated. Once all banks but one have been eliminated, you are shown your results. You can then enter your info to get set up with the bank on the results page. Here are a few examples of my experience on the site:

Savings Accounts

I did two searches for savings account on Money Aisle. The first was for a minimum deposit of $1,000. The results came up with a bank in MA that offered a 3.55% interest rate. It turns out that that interest rate is the same that they offer on their website. So did they really “bid” for my business? I would say no.

The second search for a savings account was for a $10,000 minimum deposit. The results came up with the same bank in MA for the same interest rate. Once again, it does not seem there was any type of bidding.

Certificates of Deposit

I did two sets of searches for CD rates. The first set was for a 12-month CD for $1,000 and $10,000. The $1,000 12-month CD came back with a bank in MI that offered a rate of 3.25%. Turns out, they offer that rate on their website as well. The $10,000 12-month CD yielded the same results at the same bank.

The second set was for a 36 month CD in denominations of $1,000 and $10,000. The $1,000 CD search netted me a bank that was willing to offer me 3.5%. After searching their site, it turns out that they do not offer that rate to customers. I would have to say that they bid on that one! Their rate on their site is for 3%, a half percent difference. The search for a $10,000 CD netted me a rate of 3.21% that happened to be the same on the banks website.

Comparing it to BankRate.com

I personally still like BankRate.com. I did the same searches on their website and came up with better results. The nice thing about BankRate is that they have financial strength ratings. It turns out, most of the banks that Money Aisle recommended were not the best financially. Even though all of the banks offered at MoneyAisle are FDIC insured, unsuspecting customers may sign-up with a bank that is financially unsound.

However, it seemed that for at least one of my searches on MoneyAisle, banks actually bid for my business. I would recommend using MoneyAisle to search for some great rates (hopefully they actually bid) and then check BankRate for the stability of the bank. You can also search on  BankRate to make sure you are getting the highest rate possible.

Do You Still Balance Your Checkbook? I Sure Don’t

The other day I received an interesting question from Bobbi concerning balancing a checkbook. Here it is:

With banking and statements being completely accessible online, do you still balance your checkbook on paper?

Personally, I have never really balanced my checkbook. I know that many of you will think that is outrageous, but it has always worked for me. I don’t even look at my statements online. For the past several years, I have used Quicken on a daily basis. It automatically gets my transactions for me and I don’t have to worry about writing them down. I have never overdrawn my account. I guess I would never know if one of my small transactions were wrong, but at least I keep track of the big ones with receipts. Quicken also helps me stick to a budget as it has a great budget tool in it.

My fiance still religiously balances her checkbook. I always see her doing it every week and it makes me cringe every time. She is always like 1 cent off somewhere and she goes nuts trying to find that penny. I would have easily given up at that point and just added (or subtracted) the penny from my checkbook. I just do not have the patience. Hopefully she will still let me use Quicken when we combine the money!

Have you stopped balancing your checkbook? Why or why not?

Make the Most of Your New FDIC Insurance

I posted about the FDIC insurance limits several months ago and since then they have changed. I figured I would update the limits in this new post as many people have come across this article via Google search.

The FDIC (Federal Deposit Insurance Corporation) insures deposits for most banks and savings institutions. In the event that your bank should fail, the FDIC will step in and insure your deposits up to a set limit. The limit for deposits is  set at $250,000 per insured per institution. This limit was increased from $100,000 on October 3, 2008 in order to calm fears of failing banks. The $250,000 limit is set to expire on December 31, 2009 unless congress extends it permanently.  So, if you have a money market account at ABC bank, that account will be covered for $250,000. In other words, if ABC bank goes belly up, only $250,000 of your deposits will be insured. If you hold several accounts in only your name at ABC bank, you will still only get $250,000 in coverage. For example, if you have 3 savings accounts with $500,000 each in them (a total of $1.5 million) you only have FDIC insurance of $250,000. If you have accounts that are titled with someone else, that account gets additional FDIC coverage. For example, if you have $250,000 in a single account (only in your name) and $250,000 in a joint account with your spouse, you will have $250,000 in FDIC insurance for each account. Here are some more examples that may be easier to understand.

1st Example

Sergio

$100,000 in a checking account owned by him
$90,000 in a savings account owned by him
$175,000 in a money market account owned by him

Total of $365,000 at this particular bank.

Even though he has three separate accounts, he still only has $250,000 worth of FDIC insurance and $115,000 is uninsured.

2nd Example

Sergio and his wife Lisa

$140,000 in a checking account owned by Sergio
$150,000 in a checking account owned by both
$130,000 in a money market account owned bySergio
$145,000 in a savings account owned by both

Total of $565,000 at this bank.

Since the accounts are titled differently than the 1st example, Sergio will get some additional coverage. His single accounts will get coverage of $250,000 and his joint accounts will get $250,000 in coverage. Since the single accounts add up to $270,000 they are covered up to $250,000 with $20,000 not covered. His joint accounts total up to $295,000 and they are covered up to $250,000 in his name. However, his wife also gets $250,000 in FDIC insurance for these accounts. Combined, the joint accounts have $500,000 in coverage. That makes them fully covered.

As I mentioned earlier, the FDIC insurance coverage is also on a per institution basis. What I mean by this is that you can have $250,000 in a checking account at 400 differed banks (for a total of $40 million) and it will all be covered by FDIC insurance. I know, it is an extreme example, but wouldn’t we all like to have that much money?!?

I imagine there are some of you out there that are say “I am in a credit union, does that mean the FDIC won’t cover me”?

The short answer to that is yes, but you do still have coverage by another organization.

Credit unions (which I am a member of) provide the same type of insurance coverage through the NCUA (National Credit Union Administration). This coverage has the same limits and limitations as the FDIC. Both the FDIC and the NCUA are backed by the Federal Government.

IRA Limits

Here is a quick overview of the IRA limits. I think these confuse people and should be clarified better by the FDIC. The FDIC covers your IRA for $250,000. This is as long as it is held at an FDIC institution AND is invested in FDIC insurance covered products. That means you must be invested in that banks CDs, money market accounts, or savings accounts. If you are invested in money market mutual funds, mutual funds, stocks, bonds, etc. you DO NOT receive the FDIC insurance. You invest in those products at your own risk.

For example, if you have an IRA at Fidelity or Vanguard and it is invested in their mutual funds. You do not receive the insurance on your account. If you have an IRA at Bank of America and it is invested in their CDs, you will receive coverage up to $250,000.

Once again, these limits will revert back to $100,000 per account after December 31, 2009. Please keep that in mind as you plan for the future.

When browsing FDIC banks you may be tempted by some of the best CD rates to go over the FDIC limits, but this is not a good move. No matter how good a bank deal is, you should always stay under the FDIC limits. This is a hard rule that should never be broken.

Move 2 Years Worth of Major Expenses to a Savings Account?

I typically enjoy reading Money Magazine. But this month’s edition of “The Crisis: What Do I Do Now” kind of upset me. This month’s editor’s note contradicts itself quite a bit. Eric Schurenberg gives his take on “What Not To Believe About the Crisis”. When he gets to the section about how the economy is “fundamentally strong” is where it gets kind of strange and out of whack. In that section he has this to say:

In times like this, phrases like “fundamentally strong” conjure images of Herbert Hoover, as John McCain now knows. Even so, I happen to agree – in the long run. For now, we have a lot of debt to work out. Housing prices have further to fall, and a recession is probably inevitable. But over the next several years, I believe you will be rewarded for acting calmly today. If you haven’t already, move what you need to cover major expenses for the next TWO YEARS into a bank account or money fund. But don’t bail out now, not when stocks are 30% less risky than they were a year ago. As Harold Evensky, the veteran financial planner, tells his clients, “Now is the worst time in the world not to be invested.” The reason you diversified was to get through times like this. Although it may not feel very pleasant right now, this was part of your plan. Stick to it.

I could not believe that he recommended that you put 2 years worth of expenses into a money fund! Are you kidding me? He then stated that you should stay invested! Now that is what I call contradiction!

What do you think about this recommendation? Am I right to be outraged by it or do I not see it as the rest of you do? Do any of you have TWO YEARS worth of expenses in a money fund?