“Personal Finance: New overdraft rules and you - Los Angeles Times” plus 1 more

---

Personal Finance: New overdraft rules and you - Los Angeles Times Posted: 13 Jun 2010 02:58 AM PDT New overdraft rules for checking accounts go into effect over the next few weeks, and they're spurring a raft of mail from banks urging consumers to "opt in" — and often warning of potentially dire consequences if they don't. What are these new rules, how will they affect consumers, and what should you do about them? New rules: Responding to consumer complaints about burgeoning overdraft charges, the Federal Reserve announced that it would bar banks from automatically enrolling consumers in some types of overdraft protection plans for their bank accounts. These plans allow banks to approve a check or debit charge to a customer's account, even if the charge causes the customer's balance to go negative, and then assess an overdraft fee of as much as $39. Banks argue that the plans are a consumer service, preventing customers from being embarrassed (or harmed) by a denied charge at a restaurant or gas station, for example. But consumers complained that they had no idea they could spend more than they had in their accounts when using a debit card because they were enrolled in the plans without their knowledge, and the overdrafts were "approved" (and triggered big fees) without their being alerted that the account had insufficient funds. The Federal Reserve rules take effect July 1 for new accounts and Aug. 15 for existing accounts. The rules do not stop banks from covering overdrafts. But they bar banks from charging overdraft fees on ATM and point-of-sale debit purchases unless the consumer has actively enrolled in the overdraft protection service. Bankers say consumers should opt in to overdraft protection to avoid having a charge denied for insufficient funds. "This is not a one-time opt-in at the point of sale," said Nessa Feddis, a spokeswoman for the American Bankers Assn. "It's a general opt-in. If you don't do it, you could have a debit purchase denied." Other options: There are other options, and most of them are far less expensive than allowing the bank to approve an overdraft at $39 a pop. Consumer advocates suggest that you link your checking account to a savings account or a credit card. This type of arrangement typically results in a charge that is a fraction of what overdraft protection plans cost, says Leslie Parrish, senior researcher at the Center for Responsible Lending in Washington. For instance, most banks will charge a one-time fee of $5 to $10 to transfer money from a linked savings or credit card account into your checking account. That would cover all of the overdrafts made in a day. If you triggered five overdrafts, for example, this would still just cost $5 to transfer the money versus $195 ($39 times five) with a traditional overdraft program. If the money was transferred from a credit card you'd also face interest charges, but those charges are likely to be minimal if the overdraft is repaid quickly. There are other options out there too. Jim Kelly, chief operating officer of ING Direct, says his bank offers a better deal. If you set up an overdraft line of credit at ING to cover your ING checking account, there's no transfer fee. In this case, you are simply charged for the money you use at a 7.25% rate. Someone who borrowed $100 for 10 days by overspending on a debit card would consequently spend about 20 cents, he said. Customers do have to apply and have decent credit to get an overdraft line of credit, Kelly said. If they don't have that line of credit set up, the bank declines charges when there are not sufficient funds in the account to cover them, but doesn't charge customers to do it. "The bulk of our customers don't use it. But it's a convenient way to access an affordable credit facility if you do," he said. Exceptions: The new Federal Reserve rule will not stop all overdraft charges, however, even for those who do not opt in to overdraft protection programs. That's because the agency will allow banks to cover "regular" payments and debits, such as the automatic payment for your mortgage or gym membership, and charge a fee if that payment causes you to overdraft. In addition, the Fed did nothing about one of the practices that consumer groups find particularly egregious, that of "reordering" how transactions are processed from highest amount to lowest amount, regardless of the order that they reached the bank. Banks have said this practice is a service aimed at ensuring that customers' most important payments, such as the rent, are covered. But consumer groups say it's a thinly veiled plot to boost the number of overdraft fees the banks can charge by draining the account with the biggest transactions first, increasing the chance that your other transaction, no matter how small, will trigger additional overdraft fees. What you should do: If you are among the 20% of consumers who occasionally overdraw your checking account, you should become familiar with the terms of your bank agreement. "Understand your account terms and shop around," Kelly said. "Fees can make such a huge difference in the cost of operating an account. If the consumer is subjected to 'gotcha' fees, it can completely change your financial picture." business@latimes.com Five Filters featured article: Headshot - Propaganda, State Religion and the Attack On the Gaza Peace Flotilla. Available tools: PDF Newspaper, Full Text RSS, Term Extraction.

Personal Finance: Sacramento libraries start money book clubs for women - Sacramento Bee Posted: 13 Jun 2010 12:49 AM PDT It's summertime and the readin' is easy. But if you want to ramp up your beach-book list this summer, here's a thought: financial book clubs for women. Sponsored by the Sacramento Public Library, the nine book clubs starting this summer aim to give women a stronger foothold on their finances, especially in this still-shaky economy. Held at various library branches from Elk Grove to Natomas, each of the financial book clubs is led by local women – from stay-at-home moms to business owners – who attended the library's "Smart Investing for Women" lunchtime speaker series last year. Each volunteer chose her book from among 50 financial titles recommended by the Sacramento Public Library's business librarian. "It's a way for like-minded women to come together, learn together and share their experiences around money," said library communications director Gary Shaffer, who secured grant funding for the book clubs and investing series from the Investor Education Foundation of FINRA, the investment industry's regulatory agency. Are men invited? "Men, of course, will not be turned away if they wish to join one of the discussion groups," said Shaffer, but the book groups are focused "on investment challenges and concerns most relevant to women." It's not sexist, Shaffer said, simply a financial fact of life, noting numerous studies that show women typically live longer, have fewer years in the work force and less set aside for retirement than men. And many wind up supporting themselves following divorce or widowhood. In most cases, the financial book groups will meet once a month, through September or October. No reservations are necessary. The books, paid for by FINRA, will be given out after each group's first session. All the libraries but one are hosting their book clubs in the evenings, to accommodate women working day jobs. Gail Reed, who chose "Smart Women Finish Rich" for her discussion group at the South Natomas branch, said a book club format works because "we're all learning together and everyone's opinion is equal." A career consultant with a business called Put Your Talents to Work, Reed said she attended the library's investing series last year to "overcome my fears and develop that 'money confidence' so that when I (sit down) with a financial professional, I can ask the right questions and understand the concepts." PBS financial expert and author Pam Krueger, whose book "The MoneyTrack Method" was chosen by three of the library groups, said women often have the right instincts but lack that financial confidence to manage their money effectively. "Once they're confident about the basics of investing, women are better investors than men and better at managing risk," said Krueger, a former Bay Area investment broker who co-hosts the "MoneyTrack" PBS series with Sacramento comedian Jack Gallagher. "When you take out the testosterone, you remove the extra risk-taking … it's about investing, not gambling." The first book club to get under way, at the midtown McClatchy library branch, is reading two financial titles: "The Millionaire Next Door" and "A Random Walk Down Wall Street." Alice Levine, one of the volunteer discussion leaders, said many women who showed up last week admitted they "ignore their finances but know they shouldn't." The group's two books, she said, will look at the everyday lifestyle choices of financially successful Americans and at the Wall Street financial system. For Levine, the once-a-month sessions will "force me – in a very pleasant way – to think about personal finances, something I'm usually resistant to spending time thinking about." (Due to limited space, the McClatchy library's book club is closed, but a waiting list is available by calling Levine at (916) 455-0485.) To join one of the other eight groups, simply show up at the first session (see accompanying schedule for dates and locations). Or call the library's main number, (916) 264-2920. © Copyright The Sacramento Bee. All rights reserved. Have a personal finance question? Contact The Bee's Claudia Buck at (916) 321-1968. Five Filters featured article: Headshot - Propaganda, State Religion and the Attack On the Gaza Peace Flotilla. Available tools: PDF Newspaper, Full Text RSS, Term Extraction.

You are subscribed to email updates from Personal-Finance - Bing News To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610