22 Very rare and old banknotes of U.S. dollars

From: http://wahfunny.com/

Very interesting collection of old and rare banknotes of U.S. dollars.

2 banks change rules on overdraft fees

by Teresa Mears

Here's a small victory for consumers:

Bank of America and JPMorgan Chase are planning to overhaul their debit card programs, changing the way they credit transactions and allowing customers to opt out of overdraft protection.

We'd like to think they're doing it because that's what the customers want, but they might have been just a teeny bit influenced by moves in Congress to crack down on overdraft fees.

Members of Congress have used words like "criminal" and "rip-off" to describe the practice of letting people overspend and then charging them fees without warning, The Washington Post reported. Customers are outraged that banks have raised fees, even as the government is investing vast sums to rescue the industry.

• Bing: Avoiding bank overdraft fees

"People out there are getting whacked," said Sen. Christopher Dodd, who is drafting legislation that would require banks to get permission from customers rather than doing automatic overdrafts. "They should have the right to say, 'Deny me the transaction.' "

Overdraft fees are big business for banks and are expected to yield more than $38 million this year.

Overdrawing your account by a small amount of money, spread over several transactions, can cost hundreds of dollars in overdraft fees.

Rather than refuse to process a debit transaction when the account is out of money, banks approve it and then charge a hefty fee, $16 to $35 per transaction. That means an outing with six transactions could cost $210 in overdraft fees, even if you spent only a few dollars more than the amount in your account.

You might figure you could save yourself from these fees by telling the bank you don't want it to approve any transactions if you're overdrawn. But many banks don't allow you to do that.

And T at Savvy Frugality even had a problem with the bank processing the debit transactions first, charging fees and only afterward processing a paycheck deposit, even if the paycheck deposit happened first. When T protested, the charges were reversed, but T is still looking for a new bank.

Beginning Oct. 19, Bank of America customers will be able to opt out of overdraft protection, and new customers will be asked whether they want overdraft protection when they open their accounts.

Chase also plans to allow customers opt out of overdraft coverage. Plus, the bank says it will now credit bank transactions chronologically rather than debiting the highest amount in a day first. So if you make six transactions and only the last one overdraws your account, you'll be hit with only one overdraft fee. Currently, banks often debit the largest transaction first, which causes more of the day's transactions to incur overdraft fees.

Bank of America says it won't charge fees for overdrawing an account by less than $10 in one day and will charge a maximum of four overdraft fees per day, at $35 per overdraft. Chase will no longer charge fees when accounts are overdrawn by less than $5 and will cap the number of overdraft fees a day to three.

No word yet on whether other banks plan to follow suit.

While you're waiting for the new rules to take effect, or if you're at a bank that won't allow you to opt out of overdraft protection, be vigilant to save yourself from those hefty fees. If you think you've been charged unfairly, ask for a refund. You may get it. And, Flexo at Consumerism Commentary has 10 tips for avoiding overdraft fees.

US Bank To Allow Check Deposits via iPhone

• By Charlie Sorrel

The USAA bank will soon let you deposit a check with your iPhone. Many banks have iPhone apps that allow online banking, but USAA, from its single branch in San Antonio, will be the first to dispatch with the decidedly old-school check.

Using the application, customers photograph the front and back of the check with the iPhone’s camera. Hit send and the check is whisked off into the clearing system. The paper check itself never needs to go to the bank, and you can just tear it up and toss it away (or, for the more paranoid, file it in a safe place). The service will be appear in an update to the already available iPhone app sometime this week. The application will also steer you to your nearest ATM, show you where the nearest car rental joint is and, weirdly, “record accident details to help you file a claim.”

What surprises us is that people still use checks. In Spain, cash is still king, but more and more people use debit cards that work just like checks, only without the dead trees. I almost never see checks, to the extent that when I do spot one being written, I stare and point. The app is free, and available now.
Product page [USAA via NYT]

$38 for a Cup of Coffee? Overdraft protection debate

Banking industry loves massive penalty fees; consumer groups up in arms

By Herb Weisbaum

Would you pay $38 for a cup of coffee? Clifford Phillips of Spokane, Wash., did. He used his debit card to pay for a latte, not knowing there wasn’t enough money in his checking account to cover it. The bank could have declined the transaction for insufficient funds. Instead it approved the electronic payment and dinged his account with a $34 overdraft fee.

At most banks and some credit unions, most checking accounts are now automatically enrolled – as a customer service – in an overdraft protection program. The financial institution lets you spend more than you have, loans you the difference (up to a certain amount) and hits you with a hefty fee.

Phillips didn’t know his account had this overdraft feature and doesn’t want it. He tells me he prefers “the embarrassment of having the transaction denied” to being socked with a $34 fee. But the bank won’t let him cancel.

“That’s not customer service, that’s exploitation,” he says. “I should have the right to say I don’t want it.”

Consumer groups hate these automatic bounce protection programs. They refer to them as overdraft loan programs because that’s what’s really going on here. The banks are giving you a short-term loan to cover the overdraft at a sky-high interest rate.

“The big banks are making a ton of money on this, so are some credit unions,” says Ed Mierzwinksi, consumer program director at U.S. PIRG. “This overpriced rip-off service makes no sense to anyone but the banks.”

Jean Ann Fox, director of consumer protection at the Consumer Federation of America, just laughed when I told her bankers call automatic overdraft protection a “customer service.” She says banks are “taking advantage of customers” by letting them overdraw and then slapping them with “gotcha fees” for each overdraft that’s allowed.

The banking industry sees it differently. Nessa Feddis with the American Bankers Association tells me customers appreciate the service “because they want their bills paid” and she insists most banks allow customers to opt-out. The ABA also points out that these fees are avoidable. “If people don’t want to pay these overdraft charges they can keep track of their transactions,” Feddis says.

The Fed considers new rules
The Federal Reserve Board has proposed rules for how banks should handle their overdraft service for ATM withdrawals and debit card transactions. There are two options on the table: opt-in and opt-out.

Opt-in would truly reform bank practices. It would require them to get your permission in writing before you could be enrolled in the overdraft program. Opt-out keeps things the way they are. Banks could continue to sign up customers without their express consent, but they would be required to let anyone opt-out if they didn’t want the costly protection.

It’s no surprise the banking industry supports the opt-out proposal while consumer groups want the rule that requires customers to opt-in. The American Bankers Association says not only is automatic enrollment better for people; it’s what people want. “Customers have demonstrated this is their overwhelming preference” says the ABA’s Feddis.

Consumers Union claims it’s just the opposite. In a letter to the Fed, it cites a poll by Consumer Reports National Research Center. The poll found “an overwhelming number of consumers want a real choice when it comes to overdraft programs.” Two-thirds said they prefer to expressly authorize overdraft coverage.

The survey found many people do not understand how automatic overdraft programs work. Consumer Reports found that 39 percent of the people thought their bank would either deny a debit transaction or allow it to process without charging a fee if it would overdraw the account. Nearly half of those polled (48 percent) thought their ATM card would not work if they tried to withdraw more money than was in their account.

“If banks believe the overdraft programs are truly beneficial, then they should be required to persuade their customers to sign up before they can charge them such high fees,” writes Consumers Union lawyer Zeichner Bowne.

Congress tackles overdraft fees
Last week Congresswoman Carolyn Maloney (D-NY), a senior member of the House Financial Services Committee, introduced the Consumer Overdraft Protection Fair Practices Act. This bill (H.R. 1465) would require banks to give customers a warning that their withdrawal from an ATM or purchase with a debit card is about to trigger an overdraft. The customer would then have the option to stop the transaction or accept the overdraft service and the associated fee.

Rep. Maloney says this legislation will give people greater control of their finances. “Giving consumers notice and choice related to the fees and programs they are enrolled in should be a basic right,” she says.

Bankers say they’d have to modify their networks to make this happen which could reduce the availability of overdraft protection for customers who want it.

If passed, this bill would also require banks to change the way they process checks, debit card transactions and other withdrawals from a checking account. Many banks automatically process daily debits from largest to smallest. The banks say this is another customer service. Because the bigger amount is more likely to be a mortgage, rent or other important payment, they think customers would want those to go through and have smaller debits bounce.

Consumer advocates claim banks pay the largest amount first because it increases the likelihood of an overdraft or multiple overdrafts, which results in more penalty fees. A national poll for Consumer Federation of America found that 81 percent of surveyed consumers want banks to process payments either in the order presented or smallest first.

The Maloney bill would prohibit banks from manipulating the sequence in which checks and other debits are posted if it causes more overdrafts and maximizes fees.

By the way, Rep. Maloney also authored the Credit Cardholders Bill of Rights, which is working its way through Congress.

My two cents
It’s one thing to overdraw your account by writing a check. It’s quite another when an overdraft takes place electronically – using a debit card or ATM. In these situations, the bank knows if you are going to overdraw the account and could either stop the transaction or give you the option to pay the penalty and proceed. In this case, customer choice is customer service.

The banks have lobbied hard for the status quo and for good reason; they’re making a ton of money. Consumers Union figures the nation’s banks collected about $7.8 billion last year in overdraft fees related to debit cards and ATM withdrawals.

According to the FDIC, the average overdraft triggered by ATM and debit card transactions is $17. The median fee for each overdraft is $27.

Consumer groups are doing their best, but the regulators need to hear from you. Time is running out. The comment period ends next Monday, March 30. Contact the Federal Reserve right now and let the Board know you want the opt-in rule. It’s just silly to make you cancel a service you didn’t ask for. If bankers are so sure customers want this high-priced overdraft protection they don’t have anything to worry about.

The Center for Responsible Lending web site has more information on bank overdraft fees and an easy way to comment to the Fed.

To comment directly to the Fed send an e-mail here. The subject line MUST include “Docket No. R-1343.”

Or fax your comments to 202-452-3819.

More information

ABA testifies on credit card and overdraft protection legislation

Consumers Union on overdraft programs

Consumers Union: Defend your dollars

Overdraft fees and opting in survey

© 2009 msnbc.com

10 lies that got you (and keep you) in credit card debt

By Karen Datko

This post comes from partner blog The Dough Roller.

While we don't have any credit card debt now, except for 0% APR balance transfers, there was a time when we did. While we never let our credit cards get completely out of control, we did build up several thousand dollars on our credit cards when I first got out of college.

So having gotten into card debt and then climbed out of it, we've learned many of the causes of this financial pain. The fact is, we can talk ourselves into using our credit cards in ways that will hurt our finances down the road.

So here are 10 lies we tell ourselves that get us in credit card debt and keep us there.

It's an emergency. Often we go into debt by convincing ourselves that we have an emergency. Certainly there are times when a true emergency arises. Medical expenses are a good example of a real crisis. But many times what we call an emergency isn't really an emergency. Whether it's a second car that needs repair, or even our child's college education, we can often go without addressing what at first seems like an urgent expense. If life or liberty isn't at stake, it's probably not a true emergency.

We deserve it. This one has snagged us more than once. After working so hard to save money and spend wisely, sometimes we let our guard down under the guise of a reward. Perhaps you've had a hard week at work, and spending $150 on a fancy dinner that you can't really afford seems like a good idea and something you've earned. The problem is that it's like taking one step forward, two steps back. The "reward" just digs you deeper and deeper into debt.

We all need a break now and again. But if you are fighting credit card debt, don't go into more debt as a reward. Find some other way to reward yourself that doesn't make your financial problems more severe.

It's a bargain. Bargains are great, but they shouldn't be used as an excuse to spend more than we have. Great deals also shouldn't be used to buy more than we need. The one thing I've learned is that great deals generally come and go pretty regularly. Regardless, it's not a great deal if you spend a ton of money on credit card interest paying off the debt over months or even years.

It's not much money. It's so easy to spend money we don't have if we spend it in small amounts. Here's a factoid: Last year the Bush stimulus bill sent out stimulus payments to those taxpayers who qualified. Under the 2009 stimulus plan, payments will not be sent in lump-sum checks. Instead, those taxpayers who qualify for a stimulus payment will see their take-home pay increased each month by about $7 to $13. Why? Because we are more likely to spend an extra $10 or so each month than we are a lump-sum $400 to $800.

The same is true with "small" credit card debt. Enough small charges on the card over time can grow into a mountain of debt. If you are fighting your way out of credit card debt, there is no such thing as a small credit card charge.

The payment is small. Let's be honest. How many have justified a purchase based on the monthly finance cost? We all do that when we buy a home, asking ourselves if we can afford the payments. But with credit cards, it can be a real problem. Because most cards calculate the monthly payment at about 2% of the outstanding balance, payments are extremely small compared with the amount owed.

For example, you can nab a $1,000 TV and pay "only" about $20 to $30 a month for it. The small credit card payments have probably caused more financial turmoil for many consumers than any other factor. Remember, the payment may be small and manageable at first, but buy enough on credit and the payments grow substantially. On top of that, you still have to pay back the borrowed amount with interest.

The card rewards make it worth it. We take advantage of many travel reward credit card offers and cash-back rewards. But if the allure of these awards is putting you deeper and deeper into debt, they just aren't worth it. If you pay off your card each month, the rewards are great. But if you don't, stay away from them. In fact, if the rewards are tempting you into credit card debt, get a card without rewards or just use your debit card.

Offers of 0% APR on purchases. The 0% APR and low-interest credit cards can be like a drug dealer giving away his product for free -- at first. Once you're hooked, prices go up, way up. In the case of credit cards, once the 0% APR introductory rate expires, interest rates can easily soar into the double digits. To avoid this, I've often turned down 0% APR deals, particularly those offered by furniture stores and other retailers. If you are going to use a 0% APR deal on purchases, make sure you can pay off the balance in full before the offer expires.

Offers of 0% APR on balance transfers. We've saved a ton of money with balance-transfer credit cards. We transferred home-equity debt from a home remodeling to 0% APR cards and have saved literally thousands of dollars in interest. But we also make sure to pay off the balance transfer before the 0% APR rate expires. We also make sure not to use the card for anything else while we still have a balance on the transfer deal.

Balance-transfer offers can be great, but just like 0% APR purchase offers, make sure you can pay off the debt before the 0% APR offer expires.

It's for my business. A business credit card, particularly for small companies, can serve many important roles. Business cards can be used by employees to easily track their expenses. They can also help keep your business expenses separate from personal expenses, which is particularly important at tax time. But like all credit cards, business cards can also cause you to spend more than you should. It's easy to justify the expense as necessary when you may be able to do without. All small-business owners have to decide for themselves, of course, just how necessary an expense is, but with business credit cards, it can be easy to spend more than you should.

I'll pay it off after graduation. This is perhaps the most insidious credit card lie of all. Study after study shows that the outstanding credit card balance for college students increases as they near graduation. There are a lot of reasons for this, but one reason is that they convince themselves that they can handle the debt once they graduate and get a job. The problem is that they start out in the workforce already in the hole. Credit card debt of $10,000 or more is not uncommon for college graduates. Add to that school loans, and debt can be overwhelming even before they get started.

So if you are a high school or college student, avoid revolving credit card debt like the plague.

Credit Cardholders' Bill of Rights: What it means for you

by Karen Datko

This post comes from partner blog The Dough Roller.

While the $700 billion bailout and presidential election have dominated the news, the U.S. House passed a major piece of credit card reform legislation. The Credit Cardholders' Bill of Rights Act of 2008 passed the House on Sept. 23 by a vote of 312-112 (with nine members not voting).

The bill, which still needs to pass the Senate before heading to the White House, would have a major impact on everything from how credit card issuers apply cardholder payments to outstanding debt to limits on interest rate increases.

Here are some of the more significant provisions of the act:

Retroactive interest rate increases and universal default limits. One of the biggest complaints leveled against the credit card industry is the practice of raising interest rates significantly due to a late payment or other default, or sometimes for no reason at all. The Credit Cardholders' Bill of Rights would limit a card issuer's ability to raise interest rates. Specifically, a credit card company could not (with some exceptions) raise interest rates on existing balances. Furthermore, if the interest rate on future balances was raised, the credit card issuer would be limited in how quickly it could insist that the old balance subject to the lower interest rate is paid off.

Here are some other interest rate-hike protections the act would provide:

• If a cardholder loses the benefit of an introductory rate, the new rate could not exceed what the interest rate would have been at the expiration of the introductory period.

• A consumer must be given a 45-day written notice before higher interest rates take effect.

Pro rata payment allocation. The act's provisions related to pro rata payment allocation are absolutely critical to balance-transfer credit cards. Here's the problem. Suppose you have a $5,000 credit card balance at 0% from a balance-transfer offer. Let's also assume that you've charged $500 worth of purchases that are subject to a interest rate of 10%. If you pay $500 at the end of the month, which balance does it go toward?

Under most credit card agreements today, the payment would go to the 0% balance first. Only when that was paid off would you begin to make a dent in the $500 balance subject to 10% interest. That's why I never use my balance-transfer cards for purchases. Under the statute, however, credit card companies would be required to allocate your payments across both the interest-free balance and the balance subject to a higher interest rate.

Double-cycle billing. The statute would also attack a practice that has long been criticized by consumer-advocacy groups, double-cycle billing. Under this practice some credit card issuers go back two billing cycles, not just one, to calculate a cardholder's average daily balance. The result can mean that you will pay interest on balances you paid off the previous month. This chart from a GAO report does a nice job of describing this practice:

Statements must be sent 25 days before payment is due. The Credit Cardholders' Bill of Rights would require credit card companies to send out your bill at least 25 days before it is due. The intent is to give consumers ample notice and an opportunity to pay the bill before interest charges accrue.

Over-the-limit transactions. This is where common sense and sunshine break through the dark clouds of consumer credit. Today credit card companies charge a fee if you go over your credit limit. The problem is that they let you go over the limit. Rather than rejecting a transaction that would cause you to exceed your available credit, the credit card companies approve the transaction, and then whack you with a fee.

One could argue that consumers should know their current balance and their credit limit, and not make purchases that send them over the limit. True enough. But there is something a bit twisted with the current scheme. The act would allow consumers to elect to have their credit card company reject any transactions that would send them over their limit.

Subprime or fee-harvester cards. This covers the truly dark side of the credit card industry. There are a variety of "bad credit" credit cards aimed at those with poor credit. The terms of the cards make payday loans look like a good deal. For example, check out the terms of the Tribute Gold MasterCard:

• Credit limit: $300

• Annual fee: $150

• Account-maintenance fee: $119.40 (billed monthly at $9.95)

• APR for purchases: 24.50%

Here's how that adds up, according to the credit card issuer: If you are approved for the $300 card, your credit line will be $300 and your annual fee of $150 will appear on your first statement. Your initial minimum payment of $30 must be received, cleared and posted on your credit card account before you can activate your card and use your credit card account. Your initial available credit will be $180. You will be billed an account-maintenance fee of $9.95 per month (total of $119.40 per year), beginning after you make your first purchase or cash advance.

The bill does not put a stop to these types of predatory lending practices, but it tries. What the bill provides is that if annual fees the first year exceed 25% of the available credit, the fees cannot be charged to the card. So in the case of the Tribute card, the consumer would have to shell out the $150 fee and annual account-maintenance fees rather than having them "conveniently" added to the card.

Impact on credit card offers. As you might imagine, the credit card industry is not in favor of the statute. Like any consumer-protection law, there would be some unintended consequences. For example, some credit card issuers have already started to raise interest rates on some cardholders in anticipation of this type of credit card reform becoming law. In addition, there is the potential for this act to have a negative impact on balance- transfer offers, cash-back rewards, travel rewards, and other lucrative credit card offers.

If you'd like to read the statute in its entirety, you can check it out at GovTrack, a great site to track federal legislation.