Capital One to buy ING Online.. So Long ING?

Long time readers of this blog know that ING and I go way back. I became a loyal customer of theirs back in 2004. I’ve shared countless referrals to new customers for a free $25 bonus since this site began, but here’s something that has me rethinking that relationship with ING Direct.

To be honest, I’ve been a little wary since 2008, when ING received a bailout from the eurozone.

Truth be told, I haven’t actually seen any downside to that bailout as a customer, but it seems that one of the conditions of that bailout was that ING sell its U.S. online banking division. I won’t pretend that this condition makes any sense, since it seems a profitable arm of the conglomerate and it was likely the mortgage division, marketing no money down, interest only ARMs that got them in trouble in the first place. The problem is that Capital One looks set to acquire the ING Direct operation.

I’ve had a credit card with Capital One since the dawn of time, or very nearly. I have to say I haven’t had a problem with them in that capacity (certainly not as much as I have had with BofA), but I can’t get past the feeling that the famously simple and straightforward ING savings account is going to become bloated with 27 pages of fine-print disclaimers and hidden fees. Time will tell, and I plan on canceling my accounts at the 1st sign of such a downturn in service.

On the flip-side, this is probably great news for shareholders:

“Following the acquisition, Capital One — a McLean, Virginia-based bank which is best known for its credit card unit — will leapfrog two places up the rankings of the largest U.S. banks to become the nation’s seventh-largest bank by assets, according to SNL Financial, a financial services data firm.”

But isn’t this backwards? Where’s all that regulation we’ve heard touted by the administration? Shouldn’t banks be getting smaller, not bigger? After all, the mortgage-based banking fiasco at the heart of the 2008 meltdown became as big as it was in part due to those toxic mortgages being concentrated in relatively few, very large banks.

The banking system should either be a much larger network of smaller banks, to diversify the risk of failure or maybe we should have 2 different kinds of banks: simple, traditional banks (offering fixed rate mortgages, car loans, checking, savings accounts, CDs, etc..) and very large investment banks specializing in credit default swaps, toxic mortgages and other risky, black arts kinds of investments.

I don’t know. I’m no expert, and maybe that just makes too much common sense to ever be enacted.

Related Posts:

• 11 Things to Consider When Choosing an Online Bank.
• How to Find the Best Place To Put Your Savings.
• HSBC is Closing its Local Branch. Should I be Concerned?
• Get Bank Help Fast – on Twitter!
• Why Do You Bank Online?

Are Banks Using Business Cards to Pay for Loss of Consumer Card Fees?

I’ve already chronicled the many “unintended” consequences of the CARD Act of 2009 that affect consumers, but it looks like there’s a new one that affects business owners.

Since the CARD Act eliminates many of the fees and interest payments banks traditionally use to offset other expenses and because the CARD Act only regulates consumer credit cards, banks are paying for other services like free checking and general business costs on the backs of business card holders.

That may not sound like a big deal to many, especially with the “business is the bad-guy” mentally that seems so prevalent over the past few years, but it’s not companies like GE we’re talking about – it’s largely small, independent businesses.

Many of these are people who have lost their full time jobs as employees and decided to make a go of it on their own.

The biggest concern for most business card holders is a hike in interest rates on existing balances. This could mean thousands in extra payments a year for anyone carrying a large balance. That’s significant for many home-based or startup businesses.

To make matters worse, some unscrupulous credit card issuers have begun marketing business cards to individual consumers:

“A study released Wednesday by the Pew Charitable Trust’s Safe Credit Card Project says that consumers are still vulnerable to these practices, because more than 10 million offers for business cards are sent to U.S. households each month.”

Consumers may not even be aware that the CARD Act doesn’t pertain to business cards. It looks like credit card rates and fees that were once difficult to maneuver have just become more so. Be careful out there people.

Read more.

Related Posts:

• Banks React to the CARD Act.
• How The Credit CARD Act Of 2009 Might Be A Bad Deal.
• New Game, Same Old Credit Card Tricks And Traps.
• How The Credit CARD Act of 2009 May Be Affecting Your Rewards.
• 10 Credit Card Tips for 2010 and Beyond.

Spring Cleaning My Finances and Looking Ahead.

“The open palm of desire
Wants everything
It wants everything
It wants soil as soft as summer
And the strength to push like spring”

-P. Simon, Further to Fly

Spring is here (FINALLY)!

It’s been a long, cold, lonely winter here in the northeast, but the buds are present and the tulips are pushing through. That means it’s spring cleaning time – time to get our (financial) houses in order!

Here’s how I’m cleaning out the financial cobwebs in my life this spring, and using that desire to push like spring into a summer realignment of my retirement planning.

Consolidating bank accounts

Life’s been a bit crazy for me these past 7 years. Here’s what happened to me that had an effect on my finances:

• I moved to a town 2 hours away and changed jobs
• I became a homeowner for the first time
• I had a child
• I had another child
• I moved to another new town (20 minutes away) and bought a new house, to make room for an expanding family
• I had another child (that makes 3!)
• I changed jobs again

That’s pretty much it, but I think that’s enough.

All of the above changes have left me in a situation of having abandoned bank accounts strewn to the four winds. As of just last week, I had 5 bank accounts at four different banks! That’s not counting any high yield, online savings accounts at ING and HSBC either. That’s just local banks and credit unions.

Remarkably, most had little money in them and no fees associated with keeping them open, even though they were dormant. When I cleaned out the two accounts at one bank that had been dormant for more than 2 years, I had just under $50 between the two of them. I probably did them a favor by saving them the money to mail me bank statements every month stating that nothing had changed from the previous month!

Of course, all of these accounts make my book keeping a hassle too. I had piles of useless papers to be keep, or discarded securely and so many accounts in Quicken that my eyes glazed over every time I started to reconcile my banking activity. Not the thing you want to happen when maintaining your finances.

In fact, I made a sort of informal pledge to myself at the beginning of the year to simplify and streamline my financial life as much as possible. It’s already paying off. I no longer feel overwhelmed by the number of accounts and financial detritus cluttering my Quicken records. As a result, I am up to date on my banking for the first time in over a year! Go, Me!

Refinancing

Another effect of all this moving around over the past 7 years is that while I got a decent interest rate on my mortgage in 2008, rates had gone even lower since then.

Rates got so low that I initiated a refinance back in January with a local credit union, which meant yet another bank account (see above), but it was worth it.

It took about two months of processing, but I went from 6% to 4.5% – saving over $200 a month!

I was initially reluctant to refinance, but the rates just became stupid low, and it’s a bi-weekly payment schedule with no pre-payment penalties so it just made sense. Besides, it wasn’t a cash-out refinance, so I wasn’t setting the clock back on owning the home free-and-clear.

Looking ahead

“…And the strength to push like spring”

Rollover to an IRA

That covers what I’ve done so far this year, but the final result of that list of financial changes is due to the job changing: I have a dormant 401(k) plan.

I’ve written about this before. The simple problem is that for the first time in my professional life, I work at a company that offers a terrible 401(k) plan and no company match. I love the job, and it’s in a very secure sector, so it was still the right move to make. But while all this dust was settling on the new job and baby activity, I had put my retirement contributions on hold until I figured out what I wanted to do with it all.

Well, I finally figured it out, and now I need to implement it. No more dawdling, dammit!

In the next few weeks, I will be rolling over my 401(k) to a simple IRA and start implementing my rollover plan detailed here.

Next steps.

After that, I figure it’s a good time to create a new budget to account for the savings from the refinance and the new contributions to my IRA as well as the hidden costs of living in this new house with another child. But more on that another day.

Related Posts:

• How to Save for Retirement When Your 401(k) Plan Sucks.
• Are You on Track to Retire Comfortably?
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• New Debit Card Fees Got You Angry? Switch to a Local Bank.
• How to Find the Best Place To Put Your Savings.

How to Waste Your Money in 15 Easy Steps.

I came across a Yahoo! finance post the other day that highlighted 25 different money leaks. Some were OK, some were pretty lame. I decided to pick some of the better ones and add some of my own for this list. These are 15 items I think most people probably waste at least a little bit on now and then. Mostly this list should get you thinking about were and how you waste money regularly, so that you can stop and pocket that money instead. This list is by no means meant to be one of items people should never spend money on. Rather, it is a collection of things we often spend on and may have never considered a cheaper alternative.

Here we go… 15 money wasting leaks.

1. Credit card debt. Carrying a balance – however small – in an excellent way to leak cash from what could otherwise be your savings. Even a modest credit card balance will cost you hundreds of dollars a year at a rate of 10% or more. Do what you can to Get out of credit card debt.
2. Excessive car maintenance. Premium gas, and unnecessary oil changes are just a couple of the car maintenance costs you can save money on .
3. Unhealthy habits. Cigarettes are costly, and spending the evening at the bar adds up quickly. You’ll not only save costs, but also save your health by cutting back if not quitting.
4. More cell phone than you need. Many people find themselves locked into a monthly cell phone contract costing the thousands. That’s all well and good if you really need those features and use the service, but many people simply do not. I was one of these people, and gave up my Verizon bill for a pay as you go Tracfone years ago and have been pocketing the savings ever since.
5. Buying name-brand instead of generic. Whether it’s clothes or groceries, many name brand products are identical to the generic, but you pay a lot more.
6. Not asking for a discount or cheaper alternative. Hey, it never hurts to ask. Right?
7. Not buying beverages in bulk. Soda is cheaper when you buy a 2-liter bottle than a 20oz. bottle. The same is true for many drinks. And snack food to come to that. If you like some chips with your brown-bag lunch, why not by the big bag and bring a few every day in a sandwich bag. You do bring your lunch to work instead of buying, don’t you?
8. Paying for something that’s ‘Free’. Why spend money when you don’t have to? You can get software for free and your credit report for free among other things, and yet millions continue to pay . Don’t be one of them.
9. Getting a tax refund. Loaning your hard earned money to the government for nothing in return is one of the most senseless money mistakes going. Yet every year we see stories about the millions who do, and what they’re going to do with their “extra money”. Do yourself and the country a favor – put that money in a saving account instead. You’ll earn interest on it and you’ll still have the money come tax time next year.
10. Stashing your savings in a low (no) interest checking account. While we’re on the topic of saving money, there are dozens of high yield savings accounts out there, pick one. I recommend ING and HSBC Direct , but there are many other options to choose from.
11. Paying late fees. This is just a result of poor planning. I know – I’ve done it! Get whatever system works for you in place so you don’t do it again. Either use personal finance software, or a cheap calendar to write due dates on, or get a planner. For Pete’s sake – do something!
12. Paying ATM fees. This is also because you didn’t think ahead. There is no other reason to pay ATM fees other than poor planning, plain and simple.
13. Shopping without a list. Be it grocery shopping, or clothes shopping. There’s a reason retailers love you to window shop – you spend more than you would have with a defined list of items. They love it because it’s money in their pocket. Keep money in your pocket instead. Use a list.
14. Paying for things you don’t use. Sometimes it’s poor or no planning that leads you to that splurge on that spur of the moment purchase. Other times it’s product packaging that forces you to buy more than you need. Case in point: Cable Television. Well, I cut my bill by $40 a month, and so can you! By the way, this is another example of “just asking” for the discount too, albeit there was a fair amount of negotiation with the asking.
15. Buying a new car, instead of a used one. I know a lot of people argue that a new car is worth the money for the peace of mind that comes from being free from repairs, but take it from me - buying a new car can be costly experience!

Feel free to leave any quick money savers you may have in the comment section!

Related Posts:

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• When Saving Money Can Cost You.