Credit Unions vs Banks

While this comparison has been published by a credit union and might be considered biased because of that, I think it is a fair representation of why a credit union might be better than a bank.

Credit Unions
> Not-for-Profit
> Profits Benefit Members
> Don’t Need a Bail Out
> Don’t Cost Taxpayers Anything
> Locally Owned
> Low Fees
> Surcharge-free ATMs (28,000 to be exact!)
> Approve Loans in Members’ Best Interest
> Still Lending Responsibly
> Most CUs have 3,500+ Branches
> Voluntary Board of Directors
> Member-owned
> Small = Nimble, Can Serve Quickly
> Transparent

Banks
> For Profit
> Profits Benefit Stockholders at Customers’ Expense
> Need a Bail Out
> Cost Taxpayers
> Typically, Not Locally Owned
> High Fees
> ATM Fees
> Approve High-risk Loans
> Slowing Lending Due to Poor Lending Practices
> Limited Number of Branches
> Paid Board of Directors
> Bank-owned
> Large = Bureaucracy, Overhead
> Concealed

BankSimple closer to reality

Entrepreneuer Josh Reich’s BankSimple concept (the bank that isn’t a bank because banks suck) continues to get closer to reality and is expected to go live this Fall for its first 10,000 customers.  Heavy on the technology and light on the fees, he received a pretty nice write-up in Business Week.  This just might be a good option for those of you reaching the end of the BS you have to put up with at Chase.

Innovator: Building a Better Bank

Fed up with poor service at traditional banks, Josh Reich is building BankSimple—an alternative with “the agility and mindset of a tech company”

By Ira Boudway

Ask Josh Reich about banks, and he’s quick to tell you they “suck.” Traditional banks, Reich says, have become giant tangles of computer systems that can’t talk to each other and can scarcely keep track of their customers. So the 32-year-old developed what he calls BankSimple, an alternative bank with “the agility and mindset of a tech company.”

Read more …

Citi’s iPhone banking app has critical security flaw

Citigroup announced that its iPhone banking app had a significant security flaw that might allow hackers access to sensitive banking information, including account numbers and access codes and urged its customers to upgrade to a newer version.

Given Chase’s track record at screwing up technical aspects of its banking services, such a flaw in their iPhone app surely can’t be far behind.

Chase by phone

Having trouble getting around Chase Bank’s phone tree.  Try the handy phone tree guide (click on the image for a large version).

Problem with Chase bank? Try Charlie Scharf

I came across this article which names Charlie Scharf as the head retail banking for JPMorgan Chase.  That would make him the top dog for Chase Bank, and, if you are getting nowhere with Chase customers service, one more person to try and contact to get some help.

For the record, here is our list of contacts for Chase.

Charlie Scharf CEO Retail Financial Services
Phone: 212-270-5447
Fax: 212-270-5448
E-Mail Address: charlie.scharf@chase.com

New debit overdraft rules start!

Federal Reserve rule E took effect yesterday (July 1st) for new account holders, and August 15th for existing account holders.  Rule E directs banks to only enable overdraft protection for debit card purchases if customers specifically opt-in.

As we have previously reported, Chase trying very hard to convince customers to sign up for overdraft protection through letters and an advertising campaign, and have apparently signed up about 1/3 of their customers using their deliberately confusing and fear-based, like the following advertisement:

There are few things more embarrassing than standing in line with your purchases all bagged up and being told your card has been declined. Besides the embarrassment…

This is no deal for customers as a small purchase, which is often the cause of an overdraft, can cost a whole lot more when you tack on a $35 overdraft fee.  This works out to be thousands of percentage points of interest for borrowing a little bit of money for a short time, and WAY higher than the fees charged by the heavily criticized payday lending industry.

A better option would be to apply for a small overdraft credit line to be attached to your checking account and is used whenever either a debit or check causes your account to go negative.  I have personally done this for years, and the occasional checkbook balancing error which causes an overdraft costs me $7 for a draw from the line of credit, a much more reasonable fee.

Chase calls their new opt-in protection Chase Debit Card Overdraft Coverage, and you can find the details here.  Their existing overdraft protection program still exists and is a much better deal, as it allows you to connect your checking account to a line of credit, savings account, or credit card for overdrafts, and it will only cost you $10 each day that overdrafts are covered this way.

Also somewhat alarming if you read the fine print, is the fact that overdraft protection doesn’t actually always “protect” you, as the fine-print specifies that Chase can choose not to cover an overdraft anytime they don’t want to.  The fine-print also specifies that automatic payments may continue to be paid (and rack up an overdraft charge) when your account goes negative even if you have NOT opted-in to their program.

Chase Blueprint – good or bad?

When I started reading about Chase Blueprint, I thought I had finally found something Chase had done right.  Blueprint is what Chase calls a financial management tool that is attached to a subset of their credit cards and allows card holders to create plans for paying off various things they have charged on their credit card.  There is no additional charge for using Blueprint.

But, like most things with Chase, I decided to dig a little deeper and see if there was anything fishy behind it, and there was.

The first thing that struck me odd was the fact that Blueprint is being presented by Chase as a financial management tool.  Hey, that’s great, I am all for people learning how to manage their money better.  When it comes to your money, there are two main things you can do with it, save it or spend it.  Well, Blueprint fails overall as a financial management tool because in order to manage your finances with Blueprint, you have to first spend your money, which, isn’t exactly one of the cornerstone principles of good personal financial management.

When you spend money, you can either spend money you have, or money you don’t have.  One of the whole premises behind Blueprint is that it help you break up your credit card bills into subsets of spending so that you can make plans to pay off various things in various time frames, all the while happily paying interest to Chase.  Because it only applies to the spending of money you don’t have, once again it fails as a good financial management tool.

What is Blueprint really for?

1. To make people feel more comfortable keeping balances for longer periods of time.
2. To help Chase customers who tend to rack up large balances on their credit cards be more diligent about paying it ALL off eventually.

Yes, it is a tool to help Chase get people to hold onto their balances longer, and be more likely to pay them off eventually.  Yes, it is a tool that primarily benefits Chase.  On the one hand, you have to give Chase credit; Blueprint does make good business sense for them.

Ok, so, big deal, it benefits Chase.  It’s free anyways, so who cares.  Right?  Wrong.  The Blueprint service only applies to a subset of Chase credit cards, the Platinum, Slate, Freedom, Sapphire, and Chase business cards.  Almost all of these cards have much higher APR’s or an annual fee than other cards many customers have from one of the many institutions that Chase has acquired over the last five or more years.  The majority of the cards that have Blueprint have a VERY HIGH initial APR if you have only average credit scores.  You would have to have PERFECT credit scores to get the lowest advertised APR of around 13% on most of these cards, which itself is not a very good rate anyways.  And if your credit score goes down for some reason (for instance because Chase lowers your credit limit on another card) they can move you to a higher interest rate despite the new rules in the Credit Card Act of 2009, because the tiered interest rate is built into most of these cards from the start.

So, in order to benefit from Blueprint many Chase customers would have to switch to a higher cost card.

If you really want a tool that improves your ability to manage your finances, try one of the great online personal financial management tools like GreenSherpa, a service that allows you to aggregate financial information from not just your credit card, but your bank and other accounts as well, all in one place.  You are much more likely to practice proactive financial management (i.e. BEFORE you spend) with a tool like GreenSherpa than with Blueprint.

Also, read the book Your Money or Your Life to get a handle on what you spend your money on and why.

Chicago Tribune article discusses filing chapter 7 to escape mortgage

For those of you struggling with mortgage debt, chapter 7 bankruptcy may be an alternative as described in this recent Chicago Tribune article:

Moral bankruptcy?

Financially struggling homeowners say they’re just being shrewd when they file for Chapter 7 to escape a mortgage

Cash-strapped, jobless and denied a loan modification, Del Phillips faced the same straits as millions of homeowners who risk losing their homes to mortgage lenders.

Some have struggled unsuccessfully to keep their homes, and others have just walked away. Phillips decided he wanted revenge and was willing to ruin his credit record for it.

read more …