This Week In Your Wallet – January 18, 2011
This week brought more stories on the imposition of bank fees (and from me, a new suggestion of how to deal with them), an interesting piece of research about how many of us (many!) have cheated financially on our spouses or partners, and a heads-up from the IRS about the fact that they may not be quite ready to deal with your return.
High Interest Checking or a Credit Union, Perhaps? Last week in this newsletter, I wrote about how more and different bank fees are headed your way. The Wall Street Journal echoed the sentiment on WHATDAY. Well, today, let’s talk about two ways you can fight back.
- Look for a high interest rate checking account. There is a change coming to the debit card world at the beginning of July. That’s when a 12 cent ceiling on the interchange (or swipe) fees banks charge merchants each time they process a debit card transaction goes into effect. It’s great for merchants. It’s bad for you, because those banks are going to turn around and raise fees, likely on debit cards but on other products, too. There’s a loophole, however, and you can use it to your advantage. That ceiling only impacts institutions of more than $10 billion in size. Most banks that offer high-interest rate checking accounts aren’t that big. These accounts present a good opportunity. Right now, they offer interest rates of 3 percent, sometimes more. They ask you to receive your statements online, make at least one direct deposit or automatic payment monthly, and make at least 10 debit transactions a month. (Many of us, including me, make far more.) And they cap deposits at $25,000 to $50,000. But I like them. Maintain a $25,000 balance for a year at a 3 percent rate of interest? That’s $750 in your pocket. To find one go tocheckingfinder.com.
- Consider a credit union credit card. I spent some time on the phone this week with Ondine Irving who runs creditcardconnection.org, a website that lists more than 900 prescreened credit cards available from credit unions. If you have a balance that you’re looking to transfer, these cards are worth a look. The interest rate – unlike bank cards – is capped at 18 percent and many sport rates a good 6 percent lower. And credit lines average around $9,000, which is enough to absorb almost the entire debt the average family is carrying. Oh, and there are generally no balance transfer fees (very good news as these have been rising.) The hook: You have to join the credit union (which typically requires opening a very small account) before you can apply for a card. Here’s the order of operations. Go to CUNA.org (that’s the website of the Credit Union National Association) and find a few that you’re eligible for (there are 7,000, so don’t worry). Then go to creditcardconnection.org and check out their card offerings before you take the plunge. Transferring a $5,000 balance from a 24 percent rate card to an 18 percent one could save you $300 this year. Transferring to a 12 percent card could save you double that.
Attention All Itemizers. The tax changes from Congress came so late in the game this tax season, that the IRS needs til mid-to-late February to reprogram its processing systems. This only affects the 50 million or so filers who itemize, but if you’re one of them, it means you shouldn’t send your return in until the IRS is ready to go. If you’re expecting a refund, it’ll be delayed until afterwards. I’ll let you know when that happens. If you use Turbo Tax, the Intuit folks say you can go ahead and file whenever you’re ready – they’ll hold the return until the IRS gives the go-ahead.
Your Cheating Wallet. This week the folks at the National Endowment for Financial Education released an eye opening survey on financial infidelity. It took a deep dive into the 2/3 of couples who merge their money and unveiled a lot of secrets. Among them: 1/3 have committed some sort of financial deception (1/3 have also had a financial wrong committed against them). Topping the list of crimes-of-the-wallet? Hiding purchases, bills or actual cash. Lying about the debt they’re carrying. And lying about how much they earn. How big a problem is this? Big. Huge. Financial infidelity leads to financial arguments – and the more often you fight about money, the more likely you are to divorce. If you’re nodding along, as in “yup, I’ve done that,” here’s my suggestion: Give each other a little more freedom. Don’t mix all your money. You need to be able to buy a cup of coffee or a pair of shoes or an iPod without asking permission. Otherwise, the relationship generally feels a little too parental. Yours, mine and ours accounts work best.
Have a great week!
Jean
www.jeanchatzky.com
