News

Insider Info Special:  More Bank Fees Coming

While you’re on vacation, your bank is planning some “gotchas” with new fees & changes to its terms & conditions.  Protect your wallet!

There is a banking trade publication called the Fee Income Report.  In the pages of Fee Income Report, bankers would share tips about ways to take advantage of customers via fees.

Banks typically raise fees and change terms & conditions twice a year:  Once during summer (usually Aug.) and then again around Christmas.

Those are the two times of year when most people are out of their routine and focusing on family & vacation.  Perfect times to stick you with a “gotcha,” right?

In that spirit, USA Today reports that the giant monster mega banks are getting ready to pile on checking account fees.

Wachovia, where I banked and would recommend when I was living in Georgia, but would not now, for example, is doubling its fee to transfer money from one account to another to cover insufficient funds to $10.  The actual real cost to the bank for such a transfer?  Zero dollars.

Bank of America, meanwhile, is increasing the monthly fee on its MyAccess accounts by 50%.

So what can you do about it?  Take your business to a credit union (where customers are owners) or to a smaller community bank (where they build relationships with customers).

New Student Loan Laws

Struggling with student loan debt?  A new income-based repayment plan, effective 7/1, could drive your monthly payment down to $0 if your income & family size qualify.  How low will yours go?

There is a radical change coming on the student loan front that I want you to know about.

Effective July 1, 2009, an income-based repayment plan (IBR plan) will become available to borrowers with federally guaranteed student loans, such as Stafford & Grad PLUS loans.

Under the new program, your payment will be based on your current income & family size.  Your monthly payment could be an unprecedented zero dollars.

You must apply for the IBR.  Contact the lender(s) who hold your student loan(s) for more details.

In addition to the IBR, other new provisions going into effect include loan forgiveness options for certain workers.

Employees of nonprofits & certain levels of government can have loan forgiveness after making on-time monthly payments for 10 years.  If you work in the traditional for-profit sector, it will take 25 years of on-time payments before you are eligible for loan forgiveness.

Advice

9 Seats for $9 on Every Flight

A new American air carrier is launching with budget prices to rival the international hard discounters.  Who’s offering 9 seats for $9 on every flight?

When you are talking about budget air travel, it does not get much cheaper than the hard discounters do in Europe & Asia.

Ryanair – the most successful of them all – has stripped every frill out of its planes to deliver the lowest fares.  For example, the seats do not recline, there are no seat-back pockets, and you will not find any window shades.  They even cram 199 seats onto a 737 that usually only holds 150 people.

Oh, but what savings!  A flight from England to Ireland costs the equivalent of $1.75!

Now, an American airline is launching with prices to rival the international hard discounters.  Jet America offers nine seats for $9 on every flight and fares step up from there.  They are starting with one single aircraft per route and will add more over time so they do not risk growing too quickly.

The only other hard discounters in the United States include Spirit Air and Allegiant Air.

I compare the hard discounter trend in air travel to the discount bus services that are available in the United States.  Bolt Bus (fares starting at $1) and Mega Bus are both prime examples.

The Power of Negotiating

Consumer Reports says that you can get a better rate on hotels 83% of the time just by asking.  However, negotiating a better price doesn’t stop there.  See other product categories where haggling works.

William Shatner has the right idea as the Priceline Negotiator.  How good of a negotiator are you?

Consumer Reports reveals that you can get a better rate on hotels 83% of the time just for the asking.  Remember my mantra: “Wow, that much?  You don’t have anything better?”

Turns out it is not just hotels where you can reap the benefits of negotiation.  You can get a lower cell phone bill and better prices on clothing & jewelry about 80% of the time.  Ditto for new cars & airfares.

Then you have a 75% of negotiating a lower rate when buying an appliance and a 71% chance when you purchase electronics & furniture.

Credit card fees can be lowered about 60% of the time through deft negotiation.  Of course, that particular figure may drop radically in the near future when you consider today’s anemic credit market conditions.

One area where people try to negotiate but usually fail is with medical bills.  Even so, Consumer Reports says it will still work more than half the time.

Polite persistence is the key to taking advantage of negotiating power.  As Consumer Reports says, “Be patient and be nice.  Demanding a discount rarely works.”  Here are a few additional tips from the magazine:

• Learn how to read the inventory tag on items.  This’ll let you know the date when an item went on the shelf.  Stores will be more likely to negotiate on items that have been sitting around.
• Offer to pay cash on the spot and to take the item with you.
• Be willing to walk if you don’t get the deal you want.

Analysis

Cash for Clunkers

The “Cash for Clunkers” program promises rebates of $3,500 or $4,500 for trade-ins when you purchase a newer fuel-efficient vehicle.  Will your old guzzler qualify?

The “Cash for Clunkers” program is taking form and promises rebates of $3,500 or $4,500 for trade-ins when you purchase a newer fuel-efficient vehicle.

The effective date for the program – officially known as the Car Allowance Rebate System (CARS) – has not yet been set.  Nevertheless, I expect it to be sometime toward the end of July or the beginning of August.  There should be a 2-month buying opportunity through October.

Say you start from a baseline of 18 mpg on your current vehicle.  If the new car you intend to buy gets 22 mpg or more, then you would get the $3,500 voucher toward the purchase.

Please note that participating dealers will apply this taxpayer-subsidized credit directly to your purchase.

You are only eligible for the full $4,500 voucher if your next purchase gives you at least 10 mpg more than your old vehicle.

Meanwhile, there is a lower threshold for SUVs & trucks.  You will get the $3,500 voucher if your new vehicle get 2 mpg or higher.  If it gets 5 mpg or more, you then get the $4,500 voucher.

The vehicle you are trading in has to be drivable and the dealer has to agree to crush it.  There are also several rules to prevent abuse of the program.  For example, the car you are dumping has to have been registered and insured continuously for at least 12 months prior.

Other countries that have experience with similar programs saw an immediate big increase in sales as a direct result of the program.  That is the hope for the American auto market too.

Remember, of course, that there are still some great deals on vehicles available regardless of the “Cash for Clunkers” program.  The more shopping you do, the better the price you will get.

Best Online Banks

Looking for the best online bank?  2 of them stand head & shoulders above the rest.  See a list of the top places to “stash your cash” in cyberspace.  How did your bank fare?

Looking for the best online bank?  Consumer Reports has a list of the top places to stash your cash in cyberspace.

INGDirect.com was named as the best bank with a score of 80 (of 100), while HSBCDirect.com came in with a score of 78.

The online banks were ranked on customer service, fees, and other criteria.

On the bottom of the tally, three of the giant monster mega banks got atrocious scores for their online banking arms.  Wells Fargo came in dead last with a score of 50, followed by Chase (58), and Bank of America (61).

Just to illustrate the disparity between best & worst, ING pays 1.5% APY for savings v. Chase (.01%), Wells Fargo (.05%), and Bank of America (.2%).  Those are just embarrassing, silly numbers.^*

Do not read this and then turn around to do business with these giant bank clowns…they are ripping you off with high fees & low interest rates.

*Rates accurate as of 6/23/09.