How Durbin Amendment Affects Consumers

The Durbin Amendment was put into play effective October 1, 2011. The amendment has limited the amount of money banks can charge merchants that process debit card transactions for purchases.

In the past, banks made a lot of money from these swipe fees but now with the new limitations, banks are losing a lot of their reliable profits. As a result, the customers of the big banking facilities are now incurring more costs for services that in the past have been free.

Consumer Consequences

Consumers are struggling with their financial obligations with the recession and the high rates of unemployment. Adding new and larger bank fees makes it nearly impossible for some to survive financially from one month to the next.

Banks are imposing fees for many things consumers are not accustomed to paying. There is still the deficiency in bank customers that regularly neglect to review bank statements and account disclosures which detail changes being made to banking services, including new or increased fees.

Without opening the mail, consumers are often in the dark about what they are actually paying for just to maintain a checking or savings account. Maintenance fees, transaction fees, and monthly debit card usage fees are growing more common and more expensive.

Avoiding Financial Mistakes in Banking

In order to avoid paying more than necessary, there are a few things consumers can do now to create a more stable financial future. These actions include:

Comparing offers of other banks – see what else is out there that better suits your banking needs at rates you can reasonably afford and transfer your accounts to a facility with better opportunities and more customer-friendly incentives.

Be diligent about recording transactions – even one overdraft on your account can incur a $40 or $50 charge so it pays to be consistent in recording transactions and helps to leave a cushion in your account to protect you from simple math mistakes.

Use cash – instead of forking over various transaction fees for using ATMs outside of your banking network, plan ahead with your budgeting to make free cash withdrawals from the teller that allow you to avoid electronic transactions and their subsequent fees altogether.

Make savings a priority – the only way to ensure you have financial stability is to pay yourself first. Most banks allow for automated deposits from your paycheck or other bank accounts at no additional charge. Make a commitment to put away some percentage of your income to build up an emergency fund that can help you avoid financial disasters such as bank overdrafts or unexpected expenses.

Read the fine print – stop throwing away your bank statements. Be sure to review each statement and piece of correspondence that comes from your bank. If you neglect to read all of the information you are being given by your bank, you are likely to miss out on important details concerning fees and other account changes. Make sure to also read the fine print that often contains the most important details.

Deal with bank concerns – if you are not happy with the changes that are taking place concerning your bank accounts, stop by the bank and speak to a supervisor or branch manager. While there is no guarantee they’ll be of assistance, pleading your case can make a difference if you have been a long-time customer in good standing. Some banks will be willing to waive certain fees or account requirements simply because you spoke up.

Saving Money Despite Durbin Amendment Bank Changes was created by and is property of American Consumer News.

Now the bank will impose stipulations on basic checking accounts including minimum balance requirements and out-of-branch-only banking. The move by Bank of America may be a sign of things to come across the board at other banks. Free accounts may soon become a thing of the past. Wells Fargo was the first bank to stop free checking.

Bank of America launched the eBanking account service in August. This service allowed customers who banked solely online to have a free checking account. The stipulations with this banking program is the free account would require a $8.95 if they needed to access assistance from a branch teller or wanted to obtain paper statements.

Other changes have been instituted by Bank of America. An Emergency Cash option was made available to customers who wanted to make ATM withdrawals which exceed their current account balance. The charge for the service is $35 and the customer must directly except the charge before accessing the cash, unlike with a overdraft fee.

Not all banks have ceased their free checking options as of now. There are still banking institutions trying to keep up with free checking account offers including but with the need to make up profits since the recent changes made in the banking industry, it is likely consumers will have a harder time finding a new checking account provider totally free of charges.

Bank of America (NYSE: BAC) Cuts Out Free Checking Offers was created by and is property of American Consumer News.

One particularly simple way to save cash is to automate the process. By establishing and an automated withdrawal and deposit of funds from one account to the other, you are more likely to stick to your savings plan. One reason is because the automated process doesn’t allow you to get your hands on the cash that you are likely to spend. Many people find saving money to be a nearly-impossible task. Because of the onslaught of bills and expenses each month, they have a hard time making saving cash a priority.  They feel that whatever money is “left over” will go into the savings account and are surprised each and every time when there is no money left over.

By establishing an automatic plan to save, you essentially set your mind to accepting the withdrawals each time. You no longer have a reason to worry about what’s left to save and as time goes on and you see the account grow, you will likely become a more motivated, more confident saver.

How Automation Makes It Easy

Setting up an automated savings plan is pretty simple. In fact, there is more than one way to do automatically deposit a set amount of money into your account on a regular basis. The first way you can automate your savings deposit is through your employer. If you have signed up for direct deposit of your paychecks, you can complete a form that allows you to direct deposit the bulk of your money into one account and assign another amount to your savings account. This way, each time your direct deposit goes into the bank, you will add a little more to your savings account on a regular basis without any extra steps.

For those who do not have access to direct deposits, you can visit your local bank branch and request that your checking and savings accounts link together so you can establish an automated transfer from one account to the other. Again, with automated money transfers, you never have to touch the cash or remember to make a deposit.

Set It and Forget It

Once you start depositing money into your savings account, forget about that money. Of course, you should always keep your eye on your banking statement for errors but as for the money, forget you ever had it. Don’t fool yourself into thinking that you could “borrow” from your savings account unless it is for a true emergency. The likelihood of you paying yourself back early on is not realistic. Over time, as you begin to see the account growing, you may be less likely to use the money impulsively. But in the beginning, you have to learn to practice self-control and leave the money alone.

Keep the Accounts Updated

If you get a raise or other increase in income, don’t forget to make adjustments to your automated savings accordingly. Should you pay increase, it makes sense to have your savings deposit increase as well. Don’t forget to update your bank accounts and automated deposits of your paycheck. In the event you get a cash bonus or other unexpected windfall, plan to put it into the savings account and let it sit for awhile, otherwise it will probably burn a hole into your pocket.

Need To Save? Get Set to Automate was created by and is property of American Consumer News.

So how do the underbanked make their mark on the credit world? First, a good starting place would be opening a bank account if one has not been established. If a lender really needs to learn how you hand finances, a bank account can sometimes provide them enough information if they are interested in earning your business.

Secondly, after a bank account has been set up, it may be wise to apply for a secured credit card. Secured credit cards work the same as all other major credit cards with the exception that your line of credit is based on the amount of money you initially deposit into an account. You are essentially securing the card with your own money. Before applying for just any card, do you research about the cards and their terms. It is also important that you select a card that reports to the three major credit bureaus so you can begin to establish a credit history.

As time progresses, make sure that you do not go over your secured credit card limit and that you are using the card responsibly. Keep adding money to your savings account and once you have a sizeable amount of money in the account, go to your bank and inquire about applying for a small loan. This small loan can be secured with the funds already in your savings account. This loan, called an installment loan, will require regular monthly payments. It is critical that the loan repayment terms are met in a timely manner each month to keep boosting your credit.

Your credit score will be dependent upon your timely payments and payments in full and will continue to increase if you are using your credit wisely. Remember that applying for too much credit can be detrimental to your credit score so only apply for the credit you need and the amount you can handle. Once you have established your credit, keep an eye on your credit reports and make sure the information that is being reported is accurate. Put in writing any discrepancies and report it to the credit bureaus immediately.

Your Credit History: What to Do When you Do Not Have One was created by and is property of American Consumer News.

The holiday season is over for most of us. But guaranteed a part of that season is going to stick with us for a long while – years even. How is that possible? Two words – credit cards. If you are one of many people who shopped for Christmas on credit, the statements you are about to receive month after month may be anything but spirit-filled.

The annual tradition of opening and contributing to a “Christmas Club” account is strong with my family, though it has stopped at my generation unfortunately. I actually wrote this article to make myself stop procrastinating and go out to open an account. Most banking establishments will offer a type of account where you deposit a small sum of money on a regular basis throughout the year. Most people will opt to deposit a set amount every payday and the bank will require that you abide by the payment schedule you set up for the account. There can be penalties if you do not make regular contributions or if you withdraw your money early. At some point before the holiday season start, depending on the policies of the financial institution, you will receive a check for the full amount of money deposited into your account.

These types of accounts do not earn large amounts of interest but the amount you save by making small deposits every week or so compared to the amount of credit card fees could be astronomical! Also, because you are obligated by the bank to pay fees or penalties for withdrawing money early or for not making regular deposits, you may feel more resigned to leaving the money alone and waiting for that nice check at the end of the year.

It is a good idea to check out the policies of several local banks to determine which one would be most compatible with your needs. If your paycheck is directed deposited into your bank account, you may be able to save a step and set up an allocation of funds directly into your Christmas Club account. You will have to speak with your human resource/payroll department to learn the specifics.

Those who do not want to “lock up” their money in a bank account still may consider using the same principal at home to save up for the holiday shopping season. Setting aside a small amount of money every week will help you to avoid costly credit card disasters during crunch time.

Holiday Shopping Done – Let the Budgeting Begin was created by and is property of American Consumer News.