Both Series EE savings bonds and I savings bond are safe, low-risk savings products issued by the U.S. Treasury. The biggest difference is the how the interest rate you receive on the bonds is derived. EE bonds earn a fixed rate of return while I bonds earn a combined fixed rate and added adjustment rate based inflation rates.
More technically, EE bonds issued May 2005 and after earn a fixed rate of interest. Since these bonds earn a predetermined fixed rate of return, you know what the bonds are worth at all times. The fixed rate is determined by adjusting the market yields of the 10-year Treasury Note by the value of components unique to savings bonds, including early redemption and tax deferral options.
Interest rates for new issues of the EE bonds are adjusted each May 1 and November 1, with each new interest rate effective for all bonds issued in the six months following the adjustment. The present rate for this six month cycle of EE bonds can be found on the U.S. Treasury’s financial services website, TreasuryDirect which is located on the web at www.treasurydirect.gov.
I bonds have an annual interest rate that reflects the combined effects of a fixed rate and a semiannual inflation rate. The bonds earnings rate is a combination of a fixed rate of return, set at the time of purchase, plus a variable rate that is based on the semiannual inflation rate established on CPI-U changes announced in May and November.
These bonds are very similar to TIPs or Treasury Inflation-Protected Securities. The key difference between I bonds and TIPS is that they are non-marketable securities which means they cannot be bought or sold in secondary securities market like TIPS can. I bonds are registered in names of individuals or, for paper bonds only, their fiduciary estates. These bonds are an accrual-type security. They increase in value monthly as bond interest earned is added to the bond monthly and is paid when you redeem the bond or cash the bond.
EE bonds purchased in paper form are sold at half the face value which means you would pay $25 for a $50 bond. EE bonds purchased electronically via TreasuryDirect are sold at face value; i.e., you pay $25 for a $25 bond. The paper bond purchases will take time for the bond to reach maturity because it is dependent on the interest rate.
The EE bond minimum term of ownership is one year and the interest earning period is for 30 years. There is an early redemption penalty that stands at a forfeit of three of the most recent months’ interest if redeemed before 5 years, with no penalty if held for five years or more
I bonds are sold at face value, if purchasing a $50 bond you would pay $50. As with EE series bonds, if you redeem the bond within the first five years, there is a penalty that is forfeiture of the three most recent months interest. After five years there is no redemption penalty.
Check 21 is the informal name for an act created by Congress in 2003 to help modernize the check processing system with the use of digital imaging. Many banks now clear checks with just digital images of the checks instead of the checks themselves. These reduces check processing costs for financial institutions and significantly speeds up the transfer of funds. Since the digital images are used, the actual checks may not be returned to the customer with their bank statements. For those individuals who write checks and drag their feet before they make a deposit to cover the check, the faster processing may catch these individuals with no sufficient funds in their accounts much quicker.
Most financial institutions recommend that you change your password regularly so that your account is absolutely secure. This is especially the case if you use and easily guessed password that may be ascertained by individuals illegally peering through your discarded data or if you frequently sign on at a computer that you share with others or is easily exposed to others.
Laddering of CDs is a way to obtain high interest rates by purchasing long maturity CDs but at the same time building in a significant amount of flexibility so that you can adapt to market conditions. It involves a strategy that involves multiple CDs maturing in consecutive years. You start the ladder by buying several CDs at one time but with different maturity dates, for example, one year, two year, three year, four year, and five year CDs. Every year one of your CDs will mature and you can roll it over into a new CD with a longer term (if rates are high) and higher rate.
Emergency funds are a necessity for financial safety measures because they give you resources to fall back in times of financial emergencies such when you become very ill or disabled and can’t work, or if you or your spouse lose your job, incur large medical bills, or have an unexpected large bill such as a major car or home repair. Without an emergency fund, many individuals are forced to incur excessive credit card debt that could take you many years to pay off and end up costing you much more in the long run. Often, the lack of emergency funds force individuals to make decisions that complicate and deepen an issue that may have been more easily rectified had some short term funding been available.
Having an emergency fund of savings and investment in CDs should certainly alleviate any problems with short term unexpected cash needs. With an emergency fund in an account that does not penalize early withdrawal would certainly make it highly unlikely you would need to cash out a long term CD for unexpected short-term money requirements. However, short-term financial problems aren’t the only reason to withdraw early from an investment in a CD. Suppose you purchased a five-year CD three years ago when interest rates were very low; is it worthwhile to take the early withdrawal penalty and use the proceeds to buy a new CD at today’s much-better rates? That will take some analysis on your part, but it’s definitely worth the time.
The Fed Funds rate is the interest rates that banks loan to one another. It is the rate that banks loan each other to meet Federal Reserve requirements. Some banks will have excess funds to loan out, other banks will need funds to borrow. The Fed Funds Rate is the primary tool that the Federal Open Market Committee uses to influence interest rates and the economy. When the Fed expands reserves, the Fed Funds Rate has a supply facto pushing it down. When the Fed contracts reserves, the supply is restricted and the rate generally heads higher. Changes in the Fed Funds Rate have far-reaching effects by influencing the borrowing cost of banks in the overnight lending market, and therefore the returns offered on bank deposit products such as certificates of deposit, savings accounts, and money market accounts. Changes in the Fed Funds Rate also dictate changes in the Prime Rate, which is of interest to borrowers. The Prime Rate is the rate influencing rates for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Normally the Prime Rate is approximately 300 basis points higher than the Federal Funds Rate. So, if the Federal Funds rate is 4.5%, the Prime Rate will be 7.5%.
Not necessarily, as a drop in the Federal Funds rate also affects the Prime Rate on which investments as well as debts are based. While a drop in the Prime Rate may be good for adjustable rate mortgage payers and credit card holders, interest rate sensitive investments will also be affected. If you are about to roll over a Certificate of Deposit or make a change in some other money investment, check to see what direction rates are moving? If the Fed cuts rates, most all-future investments that pay interest will pay a lower rate including CDs. In addition, the Fed is trying to maintain an economy with stable prices and growth. If a low rate puts increased demand pressure on the economy, it is likely to heat up too quickly, prices are liable to rise and an increase in the general level of inflation will most likely be the result.
Some banks still return the physical check, but it is not likely to last much longer. As banking moves online, so have your cancelled checks. Most large banks now will show you scanned copies of your checks within days of when they clear. Digital images of checks reduces processing time and reduces the cost of check clearing. It isn’t old school, but it is the way that banking will ultimately be done – paperless.
More and more banking takes place in real time. This doesn’t mean that your paychecks will clear and be available the minute you deposit them, but it does mean that if you deposit the check at an ATM you may very well see a record of that deposit online by the time you get home. Banks traditionally update accounts overnight while most people sleep but online banking means that you can even see pending changes to your account on the day before it actually changes.
No, it isn’t. The Prime Rate was initially established as the interest rate banks set for the most credit worthy clients to lend at, hence it is the “Prime” rate. It no longer carries that connotation; loans are often pried below or above prime for the lowest risk clients. Each bank in accord with other rates arbitrarily sets the Prime Rate. Some banks set their Prime Rate 300 basis points above the Federal Funds Rate. Some base it on the market with other interest rates such as the LIBOR rate. Some banks update on the day of a change in the Fed Funds rate. Others wait a few days or longer. The rate is often adjusted very closely between large banks, soon after rates change it is common to see all large banks offering the same prime rate. So, the Prime Rate isn’t one thing for all institutions, but it does not differ much from one to another.
Credit Unions don’t have the full range of services that a bank may have, but that’s a good thing. By having lower costs credit unions are able to charge lower rates for loans and pay higher rates on deposits. If you are thinking of buying a home or a car in your new location you may get a better deal by joining your credit union. You can still have an account at a traditional bank if that’s what you are used to.
A wire transfer is an electronic payment service for transferring funds by wire (such as, through the Federal Reserve Wire Network or the Clearing House Interbank Payments System).
The International Bank Account Number (IBAN) is the international standard for identifying international bank accounts across national borders. These identifying account numbers were established to facilitate transactions within the European Union. At the present time, the United States does not participate in IBAN. When sending wire transfers to countries that have IBAN numbers, you should include those numbers in your wire transfer documentation. To obtain an IBAN number of a bank check that banks website or contact that bank directly to obtain the information.
SWIFT is the acronym for the Society of Worldwide Interbank Financial Telecommunication. It is a cooperative that operates a secure financial messaging network for its members. SWIFT enables its clients to automate financial transactions and messaging it does not specifically handle the financial transactions.
Absolutely. Good financial planning means establishing savings and investments that increase your assets and manage risk. Bank products are certainly a component of that formula. Long term investing requires measuring risk and reward to not only increase your returns on the capital you have but to preserve it as well. There will always be some aspect of risk in investing whether it is the return on investments turning negative or the erosion of purchasing power by raising inflation. Managing your primary bank investments whether it be a checking account, savings account, money market deposit account or certificate of deposit is a fundamental building block to sound financial planning.
Yes, deposit insurance coverage can actually be increased if the accounts are held in different categories of ownership. These categories include single accounts, retirement accounts, joint accounts and revocable trust accounts. The accounts must be distinctly, different owned accounts.
Laddering is one fundamental strategy to protect your assets and maximize returns in a rising inflationary market. Laddering involves buying securities, in this case – bank certificate of deposits that mature at varying intervals. With this strategy your CDs with short terms will have a slightly lower rate of return than the longer term CDs but if inflation rises so to will the rates the banks offer. As the CD matures the new rates you can invest the funds in should be higher to reflect the general rise in rate that are associated with rising inflation levels.
No, the FDIC does not insure safe deposit boxes or their contents. In the event of a bank failure, in most cases an acquiring bank takes over the failed bank’s offices,
including the locations with safe the deposit boxes. If an insured bank does not acquire the bank and the deposit boxes the safe deposit box holders would be sent instructions for removing the contents of their boxes.
Since there are several different types of bank accounts, inflation will have varying degrees of impact on them. Inflation erodes the value of our money. Higher inflation leads to a greater amount of funds needed to purchase consumer goods. As goods become more expensive we need our investment rates of return to be over and above the rising costs we are experiencing. An investment with a long term that pays a fixed amount will now become much less valuable since the rate of return it pays will most likely not keep up with inflation. Short term accounts that are used primarily for paying bills should be impacted the least. These accounts pay very little interest and the rates paid on these accounts are set frequently and are less likely to be eroded by rising prices and fixed rates of returns. Long term investments with fixed rates of return will impacted the most. The bank is not likely to voluntarily reset the rates on five-year certificate of deposit if after the third year inflation has risen to over five percent or more. The best strategy is one of diligence. Track your investments and their returns and watch for market changes in inflation and ant rate changes made at financial institutions.
Generally it is much easier to budget and save with only one primary bank account for bill paying. It certainly not recommended that spouses keep separate accounts just to pay bills. However, as long as the accounts do not have duplicated fees where there is an actual cost to you to maintain another account, there is nothing wrong with manage your finances with multiple checking accounts. Proper management would be the watchword to avoid excessive spending or unnecessary charges.
Missing a monthly car payment, no matter whether you missed the payment or bounced the check, is always going to affect your credit negatively. It is possible that if you make good on the amount of the payment and any fees your auto loan lender charges you for a returned check within the 30 day period that the payment is due there will no derogatory impact on your credit report. If this is a rare occurrence, and certainly if it happens once a month, you may want to ask your bank about overdraft protection programs. Enrollment in a program may cost you some money every month, but in the long run it may not be as expensive as a poor credit rating when it comes time to buy another car or purchase a home.
Banks maker money covering bounced checks because they get to charge you a big fee to do so. This is a form of overdraft protection more specifically courtesy overdraft protection because you don’t choose to use it, the bank simply adds the feature to your account. Check with your bank to see if your costs would be lower if you actually enrolled in their program. An overdraft protection service either ties in a savings account or even a credit card to pay for the over drawn check amount or the bank provides a credit line that covers the amount of the check until you pay back the credit line. If you bounce one check a month and it costs you $35, it might be worth signing up for a program that costs less.
Some banks would prefer that you bank online or use an ATM for deposits and withdrawals. So, use the teller whenever you must, but learn to transfer funds online and make deposits using the ATM. The bank is able to greatly reduce costs by having their customers use automated services but often these services are more convenient for the consumer as well. The bank has a lot at stake in making these operations safe and easy, so once you begin you may prefer to do everything this way instead of driving to a bank, parking, standing in line, and all the rest.
That depends upon how much you are paying. Most people and businesses prefer a money order or a cashier’s check, because you buy those from the bank, and the person is paid with the bank’s money, not yours. A certified check is as liquid as a cashiers check, meaning the check should be received as cash, but the certified checks minor difference is that the bank certifies the account holder has the funs in the account and then sets that amount aside until the check clears. However, a money order can only be written up to a value of $1000. For a purchase of more than $1000, use a cashier’s check.
Many Credit Unions don’t have the full range of services that a bank may have, but sometimes that’s a good thing. By having fewer products and lower costs, credit unions are able to charge lower rates for loans and pay higher rates on deposits. If you are thinking of buying a home or a car in your new location you may get a better deal by joining your credit union. You can always have an account with the credit union and still have an account at a traditional bank if that’s what you are used to or you need some of the services provided by the bank that are not offered at the credit union.
The FDIC is the Federal Deposit Insurance Corporation. It is the primary regulating body of state chartered banks that are not members of the Federal Reserve System. It insures the deposits of individual accounts up to $100,000.00 per account.
A bank is a fro profit institution. They provide loans, clear checks, hold deposits and related financial services. Credit unions perform similar functions but are organized as non-profit entities. The services it provides are to its members, which by law must share a common bond or affiliation.
First, try to resolve your problem with the bank. Address your complaint in writing with any supporting facts. If the outcome is less than satisfactory, search for the state agency that handles oversight of financial institutions. If this does not help, you can file complaint with the Federal Reserve. The Federal Reserve is responsible for most of the federal laws governing banks.
The FDIC insurance is established to protect only the depositors and only certain deposits. Since a safe deposit box is not technically a deposit, it would not be covered. In a situation where some depositors may also be creditors or shareholders of an insured bank they would benefit by the coverage of deposits but still within the guidelines of the maximum deposit insurance per account holder.
In the event of a bank default that occurs before any of those items listed is cashed or credited to another account, these items would be included in the insurance amount for the account of the depositor that holds them.
Credit unions have to restrict membership in order to receive the preferential tax treatment of a non-profit entity. Interpretation of the laws governing the tax status has swung from being fairly restrictive in the descriptions of what constitutes a member to becoming all encompassing resulting in nearly everyone being eligible for membership through some connection. Officially, anyone can join a credit union based on the specific credit unions definition of an eligible member. Membership restrictions that credit unions impose are broadly defined to cover anyone who shares a common bond of employer, educational institution, branch of the military or government, church or community.
The credit union is owned by the members.
Most banks pay a higher rate on certificates of deposits because the CD’s have a set length of maturity. This means the bank can use those funds for predetermined period of time without worrying about losing the funds via sudden customer withdrawal. Remember, banks make money by loaning out the deposits or investing the money at a higher rate of return. This is one of the reasons why CDs have early withdrawal penalties, if you extract the money suddenly the bank wants to be compensated for paying the higher interest rate.
Certificates of deposit generally pay a higher rate of interest than similar type bank accounts. They pay a higher rate because they have a fixed maturity date that for the most part guarantees the bank has the ability to use these funds for investment and lending activities. One way the bank can make sure that most customers will not withdraw their money early and cause potential imbalances in the banks costs of funds to invest and lend is to charge a penalty fro early withdrawal.
No. The prime rate is a benchmark rate used by institutions for pricing business and other credit. Banks set their own rates based on the demand for various kinds of loans, on the cost of money to the banks, and on the administrative costs of making loans. Each bank in accord with other rates arbitrarily sets the Prime Rate.
National banks chartered by the federal government are, by law, members of the Federal Reserve System. tate-chartered banks may choose to become members of the Federal Reserve System if they meet the standards set by the Board of Governors. Each member bank is required to subscribe to stock in its regional Federal Reserve Bank, but holding Federal Reserve stock is not like holding publicly traded stock. Reserve Bank stock cannot be sold, traded, or pledged as collateral for loans. As specified by law, member banks receive a six percent annual dividend on their Federal Reserve Bank stock; member banks also vote for Class A and Class B directors of the Reserve Bank.
On average, member banks tend to be the larger institutions. If you choose to bank at a member institution, you will likely be choosing a larger bank with many branch locations, alternatively, if you choose to hold an account with a nonmember bank, you’ll typically be choosing a smaller institution with fewer branch locations. Other than this fact, there appears to be measurable difference in the services of member and nonmember banks from the consumer’s perspective.
Inflation is defined as a rise in the general price level. In other words, prices of many goods and services such as housing, apparel, food, transportation, and fuel must be increasing in order for inflation to occur in the overall economy. Inflation may be measured in several ways with different gauges. The Bureau of Labor Statistics produces the Consumer Price Index each month. Another measure of inflation is the Personal Consumption Expenditure Chain Price Index or PCE Price Index. The PCE index is published by the Bureau of Economic Analysis and measures inflation across the basket of goods purchased by households.
Business cycles are the “ups and downs” in economic activity, defined in terms of periods of expansion or recession. During expansions, the economy, measured by indicators like jobs, production, and sales, is growing–in real terms, after excluding the effects of inflation. Recessions are periods when the economy is shrinking or contracting.
Reserve requirements are the percentage of deposits that depository institutions must hold in reserve and not lend out. Banks and other depository institutions (savings institutions, credit unions, and foreign banking entities) are required to hold a portion of their deposits as reserves. Depository institutions may hold reserves either as vault cash or as deposits with Federal Reserve Banks.
The way an “Internet bank” is regulated depends in large part on the type of institution it is. Some Internet banks are Internet sites on which customers of “bricks-and-mortar” depository institutions can access transaction services. Other Internet banks operate only through the Internet (“Internet- only”). The Federal Deposit Insurance Corporation (FDIC) monitors both types of institutions. Internet banks that qualify as thrift institutions may be regulated by the Office of Thrift Supervision (OTS). Those that are considered national banks are regulated by the Office of the Comptroller of the Currency (OCC).
Money market funds or money market mutual fund is a mutual fund not insured by the FDIC. Money market mutual funds are regulated by the Securities and Exchange Commission’s under the Investment Company Act of 1940. Money market mutual funds are category of mutual funds that invest in the money market or rather short-term debt instruments. Although they are not insured deposits, money market account are still one of the safest places for investors who need a place to park short term funds or are concerned about the risk of other investment alternatives. Most money market funds also give you easy access to your funds by allowing a limited of check writing priveledges from the fund. All mutual funds involve investment risk, including the possible loss of principal.
Money market mutual funds are certainly very liquid, there is no penalty for withdrawing your money and the mutual funds that run the account invest in only short term debt instruments like U.S. Treasuries and short term commercial paper. Risk, however, does exist. First, money market mutual funds are securities and have the inherent risk of potential loss of principal. Investor losses in money market mutual funds have been rare, but the loss of principal is possible. Second, the rate of return is variable. Past performance on all mutual funds is no guarantee of future returns and this holds true for money market mutual funds as well. Lastly, is the opportunity cost of investing in a relatively secure short term investment that has a comparatively low rate of return. This opportunity cost is the risk that a greater rate of return exists with higher risks or more importantly, that the low rate of return you receive will not keep pace with the rate of inflation.
A money market mutual fund pays a comparatively high yield for a very secure investment. Money market mutual funds are ranked just slightly higher than FDIC insured bank products on overall risk factors and money market mutual funds usually pay a slighter yield than bank products. Money market mutual funds often give the customer limited check writing privileges that offers easy access to their funds. For these reasons, money market mutual funds are one valuable resource for holding short term assets for an emergency fund or for preplanned large expenditures or as a safe heaven during times of investment uncertainty.
The first method is to simply use your banks owned ATMs. Most all banks do not charge for ATM activity on their own ATM machines. The other method would be to use your ATM/Debit card for purchases and request cash back at the same time, making sure it is a merchant that offers this service and does not attach any fees. As a footnote, some financial institutions are now offering to refund fees for ATM use on machines they do not own, restrictions such as limited usage and minimum balances may apply.
The easiest answer is open an account that best suits your needs with lowest costs and highest rate of return. To be a little less vague, the following features are some of the most commonly sought after by internet bank shoppers, The APY paid on the account, the fees for ATM use and the extent of access to an ATM network, the ability to link accounts to transfer money between accounts, general services provided by the bank such as additional products, 24 hour phone, service and electronic bill paying, safety and security (make sure they are FDIC insured).
The answer will be somewhat dependent the needs of the individual opening the account. What features you may need versus the features I may want are likely to be quite different. None the less, before you search for the right bank and bank services some of the common considerations you have will revolve around your requirements, such as; how much money you plan to keeping the account, how many checks or how often you plan to transfer funds from the account, what additional services do you need like ATM access, internet banking or multiple account types, are you looking to obtain a higher rate or simply greater service.
Membership depends on the individual credit union. Credit unions are still required to limit membership to people who have a common bond. Geography, a common employer, a common group, or something similar can determine the bond.
Credit unions can be very large or quite small in both deposits and number of members. Credit unions operate like most any bank by taking in deposits an making loans and investments. The range of products any particular credit union offers can be as competitive as the largest bank, however most credit unions restrict their product offerings to provide competitive pricing in the products they do offer their members or for products that are most sought after by their members.
Accounts called Christmas clubs offered by some banks have been around since the great depression. These accounts are simply savings accounts that established so a customer can make regular deposits over the year and withdraw the money at the en of the year for Christmas. These accounts pay very little interest and restrict the amount of withdrawals; as a result, the popularity of this product has waned.
Federal Regulation D defines what qualifies as a savings account for regulated financial institutions. The regulation establishes requirements for deposit accounts and specifies a depositor is permitted or authorized to make up to six transfers or withdrawals per month or statement cycle. The financial institutions may authorize up to three of these transfers to be by check, draft, debit card or similar type order. This is the primary reason as to why these accounts have withdrawal restrictions attached to them.
Inflation is one reason interest exists; creditors must be compensated for the decline in the purchasing power. So, rates generally are high when inflation is expected to be rapid. Inflation expectations are based heavily on recent inflation. So, rates generally are continuing to be high when inflation is runs above normal historical levels.
The health of the economy affects interest rates by influencing the supply of, and the demand for, credit. For example: People’s incomes fall in a recession, so the amount they save also decreases. The demand for credit by business generally declines in a recession, as business spends less on new buildings, equipment, and inventories. Also, the Federal Reserve acts to reduce interest rates during recessions, in order to stimulate economic activity. All other things held constant, the rising demand for credit in expansions pushes interest rates up. If the rates that consumers and businesses have to pay to borrow rise too rapidly, however, spending may decline, leading to an economic slowdown.
Lower interest rates make it easier for people to borrow in order to buy cars and homes. Purchases of homes, in turn, increase the demand for other items, such as furniture and appliances, thus providing an additional boost to the economy.
Lower interest rates mean that consumers spend less on interest costs, leaving them with more of their income to spend on goods and services. Lower interest rates make it easier for farmers, manufacturers, and other businesses to borrow to invest in equipment, inventories, and buildings. Also, the returns that investments will produce in future years are worth more today when rates are low than when rates are high. That gives business more of an incentive to invest when rates are low. Increased business investment, in turn, makes the economy grow faster, as productivity, or output per worker, increases faster. Interest rates do not seem to affect the amount that people save. That’s because higher interest rates have two conflicting effects on how much people save. First, the higher return that savings can earn gives people an incentive to save more. Second, however, the higher return makes savers feel richer, so they may spend more, rather than save more.
Unfortunately, no. While all banks are subject to the same maximum hold periods established by law and the rules issued by the Fed, each bank may make deposits available sooner. Each bank determines what its policy will be. It can make all of the funds available immediately or delay availability up to the maximums permitted by law. There is no requirement that banks uniformly provide the same availability schedule.
Under banking laws and regulations, a national bank cannot advertise a free account if you could be charged a maintenance or activity fee. But your bank can offer a free account and still charge for certain services such as check printing, ATM use, or overdrafts. Just because an account is advertised as free or no cost it doesn’t mean you’ll never run up a charge. Federal Reserve Board rules allow an institution to charge a checking account check printing fees, ATM fees or overdraft fees, even if it is advertised as free. The rules bar the bank from charging fees such as maintenance or activity fees.
Electronic check conversion is a process in which your check is used as a source of information–for the check number, your account number, and the number that identifies your financial institution. The information is then used to make a one-time electronic payment from your account, an electronic fund transfer. The check itself is not the method of payment.
Electronic check conversion is a process in which your check is used as a source of information–for the check number, your account number, and the number that identifies your financial institution. The information is then used to make a one-time electronic payment from your account–an electronic fund transfer. The end result is that your electronic transaction may be processed faster than a check.
Always save your ATM receipts until you are able to compare them to your monthly statement or you verify your transactions online. If you believe there’s an accounting error involving an ATM transaction, the federal Electronic Fund Transfer Act (EFTA) offers protections. To be fully protected under the EFTA the law states, “you must notify your financial institution orally or in writing no later than 60 days after it sends your periodic statement”. Your institution also must promptly investigate the matter.
Yes. The basic FDIC insurance amount applies to each separately chartered bank or savings association whether or not they internet based or not. In addition, you’re protected by the Electronic Fund Transfer Act, which governs consumer rights involving errors in the handling of electronic deposits, payments or withdrawals, and limits on consumer liability for unauthorized transfers.
Yes. Federal Reserve Board rules governing funds availability permit a bank to hold a large check ($5,000 or more) for up to seven business days if it’s a local check and up to 11 business days if it’s a non-local check.
As a rule, in financial markets, the longer money is being used or provided by a borrower or a lender, respectively, it is going to carry a higher rate of interest. We generally think of banks as lenders, but, obviously, for a bank to lend money it must obtain funds to perform this function. One of a bank’s principal funding mechanisms for this purpose is to “borrow” money from the marketplace in the form of CDs. In order to stabilize its funding, it issues some of its CDs with longer maturity dates, two to five years, and is willing to pay depositors a higher rate to attract these funds.
A routing transit number (RTN), or routing number, is a nine digit bank code, used in the United States, which appears on the bottom of negotiable instruments such as checks that identifies which financial institution it is drawn upon. You can find the Bank Routing Number and your Checking Account Number within the string of numbers located at the bottom of one of your checks. This code is also used by the Automated Clearing House to process direct deposits and other automated transfers. The routing number is derived from the bank’s transit number originated by the American Bankers Association, which designed it in 1910.
You can find the Bank Routing Number and your Checking Account Number within the string of numbers located at the bottom of one of your checks. Make sure you are using a check and NOT a deposit slip, since the numbers may not be the same. If your Account Number is not clearly recognizable, you can identify it by following the steps below.
The numbers at the bottom of your check include a 9-digit Bank Routing Number, your Account Number and the Check Number. You can find your Account Number through the process of elimination. It may be helpful to write the string of numbers down on a piece of paper first
The term “monetary policy” refers to what the Federal Reserve, the nation’s central bank, does to influence the amount of money and credit in the U.S. economy. What happens to money and credit affects interest rates or the cost of credit and the performance of the U.S. economy.
A senior official of the Federal Reserve Bank of New York discusses developments in the financial and foreign exchange markets, along with the details of the activities of the New York Fed’s Domestic and Foreign Trading Desks since the previous FOMC meeting. Senior staff from the Board of Governors present their economic and financial forecasts. Governors and Reserve Bank presidents (including those currently not voting) present their views on the economic outlook. The BOG’s director of monetary affairs discusses monetary policy options, without making a policy recommendation. The FOMC members, beginning with the chairman, discuss their policy preferences. The FOMC votes.
National banks chartered by the Office of the Comptroller of the Currency are members of the Federal Reserve System. The Office of the Comptroller of the Currency is part of the Department of the Treasury. State banks may apply for membership as well.
Accepting checks is part of contract law and usually governed by the Uniform Commercial Code. Individual states set the standards for the acceptable term on a check. It is a general standard that a check over 6 months old.
An internet bank is still a bank. It may be the internet site of existing bank with physical offices or it may be internet based only. In both cases, banks are governed by the Federal Deposit Insurance Corporation. National Banks are regulated by the Office of the Comptroller of the Currency and thrift institutions are regulated by the Office of Thrift Supervision.
Routing numbers are the nine digit numbers also know as an ABA number that is found on the bottom of check next to you account number. This identifies the bank and the region where the checks are cleared. If the routing number is valid, this does not mean the check is valid.
The prime rate is becnchmark rate set by private banks. This is not a government set rate nor does government intervention have anything to do with it. The prime rate was generally considered the rate banks offered their best customers. Though it is still used as a benchmark rate for many loans it is not an accurate depiction to consider it the rate charged the best customers.
The Fed Funds rate is the rate that one depository institution charges another for overnight funds that are available from excess reserves. The Federal Reserve does not set this rate, but does establish a target. The target is essentially manipulated by using various tools of monetary policy such as; open market operations, discount window borrowing, and reserve requirements. The Fed Funds rate will vary from depository institution and fluctuate day to day.
The discount rate is the rate at which eligible depository institutions may borrow funds from the Federal Reserve.
Most all banks are now very similar in the US. Technically, there are three main types of depository institutions or banks; banks, thrifts and credit unions. Thrifts and banks are very similar in structure, regulation and products offered. Credit unions are have some restrictions on members and are generally only available regionally.
It is a convenient place to store important items that would be difficult or impossible to replace. The safe deposit box also offers privacy, only you know what is inside, and security. Although many people like to keep valuables close by in a closet, safe or file cabinet at home or in the office, these places probably are not as resistant to fire, water or theft. Also, some insurance companies charge lower insurance premiums on valuables kept in a bank’s safe deposit box instead of at home.
No. By law, the FDIC only insures deposits in deposit accounts at insured institutions. Although you may be putting valuables, including cash and checks, into an area of the bank that has the word deposit in its name, these are not deposits under the insurance laws that the bank can use, for example, to make loans to other customers. A safe deposit box is strictly a storage space provided by the bank.
The bank is not required to notify you when a check bounces. You are responsible for keeping a current and accurate check/transaction register. By balancing it with your monthly statement, you will know your account balance and prevent overdrafts.
State laws generally provide that it is illegal to write a check—knowingly or negligently—without having sufficient funds to cover the check on the day you write it.
The rate of interest national banks may charge on credit cards and other types of loan accounts is not determined by Federal banking laws and regulations. The maximum interest rate is set by State law in the State where the bank is headquartered. Moreover, national banks can export the interest rates of that State to any State in which the consumer resides.
You may write your checks in numerical order, but that doesn’t mean the bank will post them that way. The same is true with point-of-sale or other electronic transactions: They don’t necessarily post in the order in which you made the purchases.
When several items come to the bank for clearing, it can choose to debit them from your account in several ways. Many national banks are opting to post the largest dollar items first instead of posting the checks in numerical order. Often the largest check represents payment for rent, mortgage, car payments, or insurance premiums.
If your bank adopts this policy throughout its territory, it normally will notify you via your statement.
Generally, banks honor a stop payment request. If you properly record a stop payment order and the bank cashes the check, the bank may be liable for the cashed check. However, the bank may not be liable if you fail to provide enough information to identify the check or you fail to provide sufficient notice to implement the stop payment order. A written stop payment order often expires after 6 months. It can be renewed for another 6 months. If a stop payment order is issued orally and is not confirmed in writing, it expires after a period of 14 calendar days.
Overdraft protection is an agreement with the bank or financial institution to cover overdrafts on a checking account. This service will typically involve a fee and be limited to a preset maximum amount.
Yes. Banks are allowed to charge fees for returned checks and overdrawn balances. The assessment of account fees is governed by the terms of your deposit account agreement, which you should have received when you opened the account.
Review your account agreement and contact the bank for more information.
Federal laws do not establish maximum amounts for fees that national banks can charge on your account. These decisions are made by the bank—and in some instances, are prescribed by State law. National banks are required to disclose any fees when the deposit account is established. Review your account agreement with the bank as well as any current fee schedule. If you feel that your bank’s account fees are too high, do some comparison shopping for your banking services.
Generally, a national bank will redeposit the check twice. However, there are no laws that determine how many times a check may be resubmitted.
Depending on the circumstances and your State’s laws, you may be held responsible for the entire amount of the check that you cash at the bank or deposit into your account.
If your bank credited your account for a check that was later found to be insufficient, the bank can reverse the funds. As the payee you must pursue the maker of the check for restitution. Use caution when accepting a check from someone you don’t know.
First, contact the merchant in writing. Ask them to cancel both the service and the charges to your checking account. Send a copy of this letter to your bank. You should also notify the bank that these charges are no longer authorized. The bank may require you to complete an affidavit. The amount of liability is determined by how much notice you give to the bank. To avoid liability for subsequent transfers, you must report any unauthorized electronic transaction that appears on your checking account statement within 60 calendar days of the bank’s transmittal of the statement. As for the eight months of unauthorized charges/withdrawals, you will have to address those directly with the merchant.
A national bank is a private business. Generally, it sets its own interest rates on savings accounts. If you feel that your bank does not pay an adequate interest rate, shop around—and purchase your financial services accordingly.
Yes. National banks are private businesses. No Federal banking law or regulation requires a national bank to open an account.
Yes, generally a national bank shall make funds deposited by cash available for withdrawal by the next day—or not later than the business day after the banking day on which the cash is deposited. A business day is a calendar day other than a Saturday, Sunday, or a Federal holiday. A banking day is a business day during which an office of a bank is open to the public for substantially all of its banking functions. This holds true if the deposit is made in person to an employee of the bank.
Generally, there is no limit on deposits. However, there are FDIC limitations to the amount of funds that are insured.
Deposits held in federally insured banks are insured up to at least $100,000 for each depositor by the Federal Deposit Insurance Corporation (FDIC). Coverage is higher – up to $250,000 per depositor – for funds held in Individual Retirement Accounts (IRAs) and certain other retirement accounts (defined by FDIC regulation). Deposits generally include funds held in checking, savings, money market and certificate of deposit accounts.
Any person or entity can have FDIC deposit insurance in an insured bank located in the United States. A person does not have to be a U.S. citizen or resident to have deposits insured by the FDIC.
When two or more insured banks merge, the deposits from the assumed bank continue to be insured separately for at least six months after the merger. This grace period gives a depositor the opportunity to restructure his or her accounts, if necessary. CDs from the assumed bank are separately insured until the earliest maturity date after the end of the six-month grace period. CDs that mature during the six-month period and are renewed for the same term and in the same dollar amount (either with or without accrued interest) continue to be separately insured until the first maturity date after the six-month period. If a CD matures during the six-month grace period and is renewed on any other basis, it would be separately insured only until the end of the six-month grace period.
The FDIC insures all deposits at insured banks, including checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs), up to the insurance limit. The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased these products from an insured bank.
Federal law stipulates that all time certificates of deposit (CD) that are cashed out early are subject to a minimum penalty. If you withdraw an amount within the first six days after deposit, the penalty consists of at least seven days’ simple interest. Other than that, national banks can set their own penalties; there is no maximum. Additionally, you may want to review the account agreement that the bank provided when you opened the account, as it explains the early withdrawal penalties.
Not necessarily. If you choose to roll over/renew the time certificate of deposit (CD) for another term at the bank, the bank can continue to pay the interest. Let’s say you haven’t decided in advance. Once the CD matures, you have 10 days to decide whether to renew or withdraw the funds. The bank can continue to pay interest until you decide, but it’s entirely up to the bank. You may want to review your Account Agreement, which explains if interest is paid after maturity. You should have received this Agreement when you opened the account and review the terms and conditions of the account.
Yes. Time certificates of deposits or CDs are not completely liquid. When you buy one, you enter into a contract involving a fixed amount of money, principal, for a predetermined period of time, the term, and an agreed-upon interest rate and yield.
Banks are permitted to assess an early withdrawal penalty whenever funds from a time deposit are withdrawn prior to the date of maturity. This penalty should be explained in the account agreement you received when you opened your account.
If a check is issued to you and your wife, the check is payable to all payees. It must be endorsed and negotiated by all of them. If the check were issued to you or your wife, the check is payable to each payee. It may be endorsed and negotiated by either or both of you. If the check is unclear as to whether it is payable to both payees or just one payee, such as being payable to you and/or your wife, then the check is payable to each payee. It may be endorsed and negotiated by either of you or both of you.
When you buy a CD, you enter into a contract involving a fixed amount of money, the principal, for a predetermined period of time, the term, and an agreed-upon interest rate and yield. The bank is simply honoring the terms of the contract; it is not obligated to change those terms when interest rates change. If you are wondering why banks don’t raise their rates on new CDs when market interest rates rise that is generally a reaction to competitive market conditions. Banks will raise their rates as they find it necessary to attract additional deposits.
There is no federal law or regulation that requires national banks to cash checks for noncustomers. Most banks have policies that allow check cashing services only for customers who have an account with them in order to protect both themselves and their customers from forgeries. Once a national bank cashes a check that has been forged by a noncustomer, they may lose money if they cannot collect from the person who cashed the check. Also, if a national bank agrees to cash a check for a noncustomer, it may legally charge the presenter a fee.
Federal law prohibits this information from being made public. The OCC cannot release any information relating to any supervisory actions or whether a violation of law or regulation occurred in connection with your complaint.
Some longer term high yielding CDs have “call” features, meaning that the issuing bank may choose to terminate or call the CD after a fixed period of time. Only the issuing bank may call a CD and not the investor. For example, a bank might decide to call its high-yield CDs if interest rates fall. But if you’ve invested in a long term CD and interest rates subsequently rise, you’ll be locked in at the lower rate.
Annual percentage yield (APY) is the yield you earn on a deposit over the course of a year; it is a standardized way of comparing investments. The APY is important because it takes into account the assumed compounding of your interest. Compounding is simply a method of making earnings on your earnings. The APY shows you how much you’re actually earning on your money. Other ways of quoting a rate don’t necessarily show you the full picture.
Some investors use the word CD and money market interchangeably. There are differences between CD and money market. First of all A CD or certificate of deposit is not a marketable security which means that if a certificate of deposit holder wants out of his or her certificate of deposit or wants to redeem his or her certificate of deposit, he or she will have to contact the bank that issued the certificate of deposit and redeem the certificate of deposit with them. Usually, if the certificate of deposit holder wants out of the certificate of deposit before the maturity, he or she will have to pay some redemption penalty. In another word, unlike the stock market, there is no market of ready buyers of certificate of deposits.
Money market, however, is a marketable security. If a holder of a money market wants to cash out and redeem all his or her money from the money market, he or she can do so immediately without having to go back to the original issuer of the money market. There is a market for the money market. Redemption of money market is fast and pain free.
A certificate of deposit is an IOU in that there is a promise to pay back the interest and principal at maturity to the holder of the certificate of deposit. But, a certificate of deposit is not a marketable instrument. In another word, if the holder of the certificate of deposit needs the funds or money tied up in the certificate of deposit before the maturity of the certificate of deposit, then there is no market of buyers of certificates of deposit.
Cashier’s checks or Money Orders are certified checks because you must have cash to purchase these negotiable items, and these items are often insured by the issuing bank. Personal checks are not certified funds.
Yes both parties will be responsible.
No, a checking account is not correlated to your credit score. The only reason why you have to give your social security # is to prove that you have no outstanding debt with any other banks and proof of identification.
Short term savings should be liquid, which means they should be easily turned into cash. Short-term savings should be secure and not be subject to the loss of principal. To meet these requirements the best products are FDIC insured bank products such as money market deposit accounts, short term CDS, and savings accounts as well as money market mutual funds.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
“Breaking the buck” occurs when a money market fund is unable to repay its $1.00 NAV per share. Since Rule 2a-7 was adopted in 1983, only once has a money market fund failed to repay the full principal amount of its shareholders’ investments. In that case, a small institutional money market fund in 1994 “broke the buck,” paying investors $0.96 per share.
Money market funds are strictly regulated by the U.S. Securities and Exchange Commission (SEC) pursuant to Rule 2a-7 under the Investment Company Act of 1940. Rule 2a-7 was established to establish numerous conditions intended to stabilize a fund’s $1.00 NAV. These conditions limit risk in a money market fund’s portfolio by governing the credit quality, diversification, and maturity of money market fund investments.
The term money market refers to the market for short-term debt instruments with maturities typically of one year or less.
Under the discount method of interest calculations, the interest that will be due on an investment is calculated and withheld from the borrower when the loan or investment is made. For example, someone who borrows $1,000 for a year at a 10% interest rate would actually receive just $900 ($1,000 minus 10% of $1,000, or $100), and then pay back $1,000 a year later. The effective interest rate would thus exceed 11%, $100 divided by the $900 that the borrower had the use of during the year.
Identity fraud includes all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain. Identity theft is one type of identity fraud and is probably the most recognized form. Although identity theft is defined in many different ways, fundamentally, it is the misuse of another individual’s personal information to commit fraud. Identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission to commit a crime. Identity fraud can take many forms, ranging from the use of someone’s good credit to obtain a loan to a complete takeover of another person’s identity to complete transactions to open new accounts, borrow funds, take control of an account including a credit card and withdraw funds.
Inflation is a major factor determining the level of interest rates. The longer the duration of the loan, the greater the risk that inflation can accelerate, reducing the purchasing power of the loan repayment. So, rates generally are higher on long-term loans than on short-term loans, because people who lend for longer periods have to be compensated for the risk that inflation might accelerate during the longer periods.
Yes. In addition, you’re protected by the Electronic Fund Transfer Act, which governs consumer rights involving errors in the handling of electronic deposits, payments or withdrawals, and limits on consumer liability for unauthorized transfers.
Yes, FDIC insures each account holders deposits separately from any deposits at another FDIC insured bank. If the bank is a branch or an internet division of the same banking institution, the accounts are considered insured at the one bank and the deposits are not insured separately.
Total return measures what an investor earns on an investment during a certain time period in the past. It includes interest, dividends and capital gain. Yield is measures the current income an investment is paying relative to the cost of the investment. A $100.00 CD or bond that pays interest of $10.00 every year has a 10% yield. Yield is often used to measure bonds, CDs, bank accounts. Often these investments due not fluctuate in value and the most significant measure of there income potential is yield. Investments such as stocks may in fact also pay a dividend that can be measured by the yield of that stock, however these investments are general chosen for the appreciation potential that can not be measured by yield.
An indicator is anything that can be used to predict future financial or economic trends. A variety of public and economic statistics published by accredited sources such as U.S. government departments are indicators. Popular indicators include unemployment rates, housing starts, inflationary indexes and consumer confidence. Leading indicators are obviously types of indicators used to try and signal future events. Consumer debt delinquency is considered a leading indicator of future sales.
A basis point is a unit of measure in finance to describe the small percentage change in the interest rates of financial securities. One basis point is equivalent to 0.01% or 1/100th of a percent. If your local bank raises the interest rate on its one year CD by 25 basis points it means that rates have risen by 0.25% percentage points. If the rate on the one-year CD was at 3.25%, and that bank raised them by 0.25%, or 25 basis points, the new interest rate on the one year CD would be 3.50%.
Many factors affect the rate paid on different maturity CDs. One significant factor is inflation. Inflation expectations generally result in longer interest rates being higher than shorter-term interest rates. Creditors want to be compensated for the use of their funds plus a sufficient return to compensate for the erosion of their purchasing power by inflation. The greater the level of inflation or inflationary expectations, the greater the spread between short term and long-term rates. The interest received on the CD is the return to the creditor or depositor for providing the money to the bank. The longer a bank has contractual use of the funds, the more interest it must pay to attract this type of money from depositors. The longer the term of the CD, the higher the interest rate paid to the depositor.
The rule of 72 is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself. For example, the rule of 72 states that $1000.00 invested at 8% would take 9 years, 72/8 = 9, to double in value or turn into $2000.00.
For many consumers online banking makes sticking to their budget easier. Online bank management makes it effortless to sort through the bills you have and the amount you have paid on them during any time period. Frequently online bank customers are more conscientious as to how much money is available in their core checking accounts, where the maximum rate of return is in other investment accounts and how to appropriately balance their spending and income to maximize return and reduce expenses. The ability to easily move money in and out of a checking account, make transfers from banking to investment accounts and sort bills paid by categories is the primary advantage for budgeting with through online banking.
Gross domestic product is the measure of the total dollar value of all goods and services produced over a specific time period. GDP is measured in absolute dollar values and is expressed as a comparison to the previous quarter or year. Taken as a whole, economic production has a large impact on nearly every aspect of the economy. When GDP is increasing and the economy is strong, there is usually low unemployment and wage increases as businesses demand labor to meet the growing economy. A measurable move in GDP, whether it is up or down, can have a significant effect on employment, income, the stock market and the level of interest rates.
A credit crunch occurs when there is either a lack of available in the credit market or lending institutions such as banks, thrifts and credit unions are reluctant to extend credit. At the present time, lending institutions have suffered losses from previous loans, and they are generally unwilling to take significant additional risks or are incapable of measurable amounts of lending while they shore up their capital position. In our current predicament, the biggest underlying cause is borrowers defaulting on existing loans and the properties underlying a defaulted loan are declining in value.
All depository institutions, commercial banks, savings institutions, credit unions, and foreign banking entities, are required to hold reserves against certain types of deposits that they report as liabilities on their balance sheets.
In 1987, Congress passed the Expedited Funds Availability Act, which limits the length of time that a financial institution may hold the funds from a deposited check. The law balances the risks that a financial institution faces from an uncollected check with the needs of customers and depositors. Regulation CC implements the Expedited Funds Availability Act (EFA) and governs the availability of funds and the collection and return of checks. This regulation establishes the availability schedules, as provided in the EFA, under which depository institutions must make funds deposited into transaction accounts available for withdrawal. The regulation also provides that depository institutions must disclose their funds availability policies to their customers.
The Federal Reserve is the central banking system for the United States.
The Federal Reserve has three main functions. First, it provides the nations banks, thrifts and credit unions with certain services such as check processing and electronic funds transfers. Second, it is the bank for the U.S government and holds the government accounts for collections and disbursements. As part of this function it acts as the Treasury’s agent when it sells securities and bonds. Thirdly, the Federal Reserve is responsible for governing the policies of money and credit that is available in the U.S. economy.
Interest income from CDs, money market accounts and savings accounts is considered regular income. It’s taxed at the same rate as any other income you receive that year. Your bank or savings institution will send you a 1099-INT form stating the amount of interest that your CDs or other accounts earned by the end of the tax year.
A money market account provides excellent principal preservation via FDIC insurance and liquidity with easy access to your funds. Money market accounts are also very competitively priced and can provide a very desirable rate of return when you compare the top money market account rates.
Yes. The bank where you have your CD should have sent you Form 1099-INT stating how much interest you earned last year. A duplicate will have been sent to the IRS so the government knows about your interest earnings. If you didn’t receive one give the bank a call.
The Treasury Department offers a couple of options on its TreasuryDirect Web site.
The simplest is its savings bond calculator. It will provide redemption values for Series E, EE and I bonds. The second alternative is also found on the treasury’s site and is the savings bond wizard. This program must be downloaded onto your computer, but it allows you to catalog and follow the value of your bonds automatically.
The easiest way is to use our CD calculator, which will do all the work for you.
The basic insurance amount is $100,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $100,000. The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.
Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank.
Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured. For more information on deposit insurance coverage, see the FDIC’s brochure “Your Insured Deposits” which can be accessed at www.fdic.gov/deposit/deposits/insured
FDIC insurance covers deposits received at an insured bank. Types of deposit products include checking, NOW, and savings accounts, money market deposit accounts or MMDAs, and time deposits such as certificates of deposit or CDs.
The FDIC’s deposit insurance fund consists of premiums already paid by insured banks and interest earnings on its investment portfolio of U.S. Treasury securities. No federal or state tax revenues are involved.
The FDIC notifies each depositor in writing using the depositor’s address on record with the bank. This notification is mailed immediately after the bank closes.
When the failed bank is acquired by another bank; the assuming bank also notifies the depositors. This notification usually is mailed with the first bank statement after the assumption. A great deal of effort is made to inform the public through the news media, town meetings, and notices posted at the bank.
Yes. You may stop payment of a preauthorized withdrawal, recurring monthly payments or a one time scheduled funds transfer. You can do this by notifying the bank within 3 business days before the transfer is scheduled to be made. You can notify the bank orally or in writing. However, if you notify the bank orally, the bank may require that you then provide written confirmation within 14 days. If you fail to provide written notice by the deadline, the oral stop payment order will no longer be effective.
The bank is not required to notify you when a check bounces. You are responsible for keeping a current and accurate check/transaction register. By balancing it with your monthly statement, you will know your account balance and prevent overdrafts.
State laws generally provide that it is illegal to write a check, knowingly or negligently, without having sufficient funds to cover the check on the day you write it.
Many transactions are processed overnight. These transactions may not be reflected in an available balance. On checking accounts, banks generally post deposits before withdrawals. However, there are no laws requiring national banks to do this. In addition, banks may establish a cutoff time for deposits made at a branch or through an ATM. Deposits made after that time may be treated as having been made on the following business day. For example, a deposit made after the Friday afternoon cutoff time would be treated as if it were made on the following Monday. So any items with next-day availability would then be available the next day (Tuesday).
National banks can either return the check unpaid or advance sufficient funds to your account to pay the check or debit item. In either case, your bank can assess an insufficient funds fee against your account.
Yes. Banks are allowed to charge fees for returned checks and overdrawn balances. The assessment of account fees is governed by the terms of your deposit account agreement, which you should have received when you opened the account.
Yes. Many transactions are processed overnight. These transactions may not be reflected in an available balance. On checking accounts, banks generally post deposits before withdrawals. However, the law does not require this. In addition, banks may establish a cutoff time for deposits made at a branch or through an ATM. Deposits made after that time may be treated as having been made on the following business day. For example, a deposit made after the Friday afternoon cutoff time would be treated as if it were made on the following Monday. So any items with next-day availability would then be available the next day (Tuesday).
Many bank transactions are processed overnight. These transactions may not be reflected in an available balance in real time, such as an ATM balance, that you see during the day. On checking accounts, national banks generally post deposits before withdrawals. However, banks aren’t required by law to do this. In addition, banks may establish a cutoff time for deposits made at a branch or through an ATM. Deposits made after the cutoff time may be treated as having been made on the following business day. For example, a deposit made after the Friday afternoon cutoff time would be treated as if it were made on the following Monday. So any items with next-day availability would be available on Tuesday.
Generally, a national bank will redeposit the check twice. However, there are no laws that determine how many times a check has to be resubmitted or may be resubmitted.
Your deposit account agreement states that it’s your responsibility to review your periodic statement and advise the bank of any errors. Generally, you have 30 days from the statement date to find the error and notify the bank.
If the loss occurred from a fraudulent endorsement with a check, State statutes typically allow up to one year from the statement date to provide notification. However, your deposit account agreement should provide the notification timeframes for this type of loss.
If the loss occurred from an electronic transaction, you should notify the bank as soon as possible, as there are separate laws that address this type of transaction. Generally, you have 60 days from the statement date to notify the bank of an error involving an electronic transaction.
If you closed the account before the bank credited accrued interest, generally that interest is not paid out, this is known as forfeiture of interest. However, the bank must disclose this policy in the account agreement you received when you opened the account. Review your account agreement to verify your banks policy.
Three types of accounts—money market accounts, passbook accounts or statement savings accounts—are limited to no more than six transfers and withdrawals per calendar month or per statement cycle. No more than three of the six transfers may be made by check, draft, or debit card. The other transfers can be made by pre-authorized or automatic transfer, telephonic agreement, order, or instruction. The bank must prevent either withdrawals or transfers of funds that are in excess of these limits. If you exceed the prescribed limits on more than an occasional basis, the bank must do one of three things: close the account, place the funds in another account (one that does not limit the number of transactions and may or may not earn interest) or take away the transfer and draft capabilities of the account.
Under escheatment laws, when a bank account has been dormant for a certain period of time, the money reverts to the State treasurer. Generally, an account is considered dormant when it has had no activity, deposits or withdrawals, for 5 to 7 years. The length of time necessary to declare an account dormant is defined by State statute. Most States require that the bank send notice of the impending transfer of funds to the account holder. The notice is sent to the last address of record on the bank’s books.
Generally, an account is considered dormant when no activity, deposits or withdrawal, has occurred for a period of 5 to 7 years. The length of time necessary to declare an account dormant is defined by State statute. Once an account is declared dormant, the bank may be required to transfer the funds to the State treasurer or unclaimed property office. Most States require that the bank send notice of the impending transfer of funds to the account holder. The notice is sent to the last address of record on the bank’s books. If you wish to find out if funds from your account were sent to the State treasurer, contact your applicable State treasurer/unclaimed property office. You can start your search by visiting www.unclaimed.org.
Yes. Most banks use fingerprinting as a security measure and a way to combat fraud. Federal banking laws and regulations do not prohibit national banks from requesting that you provide a fingerprint to cash a check.
Financial institutions are required by law to have a Customer Identification Program for the creation of new accounts. A new account may include, but is not limited to, a deposit account, an extension of credit, or the rental of a safe deposit box. The minimum information that a bank must obtain when opening a new account includes: name, date of birth (for an individual), address, and identification number (for U.S. citizens, a taxpayer identification number is defined as the individual’s Social Security number or employer identification number). The bank must then verify the accuracy of the information via a review of documents such as a driver’s license or passport. Or it can verify the information by comparing the information you provided with information from a credit-reporting agency or by checking prior bank references.
Yes. The bank can require two forms of picture identification. Federal banking laws or regulations does not prohibit national banks from asking customers for additional identification.
Yes. A national bank is required to obtain an identification number for several kinds of transactions: when opening a new account, when making monetary (deposit and loan) transactions such as deposits and loans and when reporting the interest earned on deposit accounts to the IRS. For a U.S. citizen, a taxpayer identification number is defined as the individual’s Social Security number or employer identification number.
Yes. Federal banking laws and regulations do not address the closing of deposit accounts by banks. Therefore, a national bank can close an account at any time and for any reason. Generally, a bank would close your account for your protection—to prevent more fraudulent withdrawals. This area is governed by the deposit account agreement that you received when you opened your account.
Yes. National banks may require the beneficiary to provide a social security number for monetary transactions. In addition, bank employees are required to ask for the customer’s social security number when opening an account. This requirement also ensures that funds are distributed to the correct designated individual when a will, trust, insurance policy, retirement plan, annuity, or other contract is negotiated.
Never provide any personal or financial information in response to an e-mail or telephone call. If you have done so, consider closing any accounts that may be at risk. You may also want to contact one of the three major credit bureaus to fraud alert notification on your reports.
The regulation provides six exceptions that allow banks to exceed the maximum hold periods in the availability schedules. The exceptions are considered safeguards against the risk associated with each. These are the exceptions: checks deposited to new accounts, large deposits ($5,000 or more in checks), redeposited checks, deposits made by check to accounts that are repeatedly overdrawn, deposits of checks for which the bank doubts collectability, deposits made under certain emergency conditions.
In the case of exceptions, the regulation provides that banks may extend the availability schedule by a reasonable period of time. For instance; an extension of one business day for next-day availability items, an extension of up to five business days for local checks,
an extension of up to six business days for non-local checks.
The bank may use an exception hold on a check that was previously deposited but was returned unpaid for insufficient funds. This allows the bank to lessen the risk associated with this transaction.
An exception hold may not be applied to any check (including an “official type” check) that has been returned unpaid and re-deposited if the reason for the return was a missing endorsement or a post date and that reason no longer exists.
A local check that had an exception hold would have seventh business day availability. A nonlocal check that had an exception hold would have eleventh business day availability.
National banks must make funds available for withdrawal on the “payment date.” This is the date on which the funds are actually payable, not the date on which the bank received the deposit.
For deposits in excess of $5,000, banking laws and regulations allow for exceptions to the availability of funds. Exception holds include deposits over $5,000 which may be applied to any deposit of checks (including official checks) to any and all account(s) where the aggregate amount of the checks deposited on a banking day exceeds $5,000.
The hold may be placed only on the amount deposited in excess of $5,000; thus, the first $5,000 must be made available consistent with the bank’s normal availability schedule.
When the large deposit exception is applied, the bank may extend the time periods established under the availability schedule by a reasonable period of time. According to the banking regulations, reasonable periods of time include an extension of up to five business days for local checks and six business days for non-local checks. However, under certain circumstances, a longer extension may be reasonable.
National banks may establish different cut-off hours for different types of deposits, as well as for deposits made at different locations.
When funds become available for withdrawal depends primarily on the type of deposit. A local check (drawn on banks located in the same check-processing region as the bank in which you made the deposit) has second business day availability. Generally, a national bank must make the first $100 from the deposit available, for either cash withdrawal or check-writing purposes, at the start of the next business day.
Yes. Your bank may still hold the funds per its funds availability policy. Or it may have placed an exception hold on the deposit. In many cases, if you know that the funds have been released by the paying bank, give this information to your bank and request an early release of your funds.
Generally, a national bank will make funds deposited into an account by a government check available for withdrawal not later than the business day after the banking day on which the funds are deposited into an account held by the payee of the check and in person to an employee of the bank.
Yes. When funds become available for withdrawal primarily depends on the type of deposit. While all national banks are subject to the same maximum hold periods established by law, each bank may make deposits available sooner. A bank can make the deposit available immediately or delay availability up to the maximum prescribed by law.
Yes, generally a national bank shall make funds deposited by cash available for withdrawal by the next day, or not later than the business day after the banking day on which the cash is deposited.
A business day is a calendar day other than a Saturday, Sunday, or a Federal holiday.
A banking day is a business day during which an office of a bank is open to the public for substantially all of its banking functions.
Generally, cashier’s checks must be made available by the next business day. However, because of the number of fraudulent and counterfeit checks now being passed, banks are beginning to place an extended hold on cashier’s checks.
A bank can only place a hold on the amount of the check deposited in excess of $5,000. And the first $5,000 must be made available in accordance with the bank’s normal availability schedule.
However, always remember that funds may become available to you before the bank has been able to verify the check. You may end up withdrawing the funds before the bank knows that the cashier’s check is fraudulent.
If the cashier’s check is fraudulent, the bank may charge the cashier’s check back against your account or obtain a refund from you. In addition, you may want to review the account agreement you received when you opened the account, as it explains the availability process.
The bank is following the rules established by the Expedited Funds Availability Act. When the bank is dealing with a new customer, it can hold onto the deposits longer.
In this scenario, an account is considered new for the first 30 calendar days after it was created. The account would not be defined as new if any of the customers on it had another established account at the same bank for at least 30 calendar days.
Different financial institutions have different availability schedules.
You may want to review your the account agreement you received when you opened the account. It should contain details on the availability process.
Because you are not the maker or the endorser, this is considered a third party check.
A national bank sets its own policy to accept or reject third-party checks. If the bank accepts the check, the bank can require the payee to be present to verify the signature.
There is no law that requires a bank to accept third-party checks.
There is no federal law or regulation that requires national banks to cash checks for noncustomers. Most banks have policies that allow check cashing services only for customers who have an account with them in order to protect both themselves and their customers from forgeries. If a national bank cashes a check that has been forged by a noncustomer, they may lose money if they cannot collect from the person who cashed the check.
Yes. National banks are permitted to pay checks even though payment occurs prior to the date of the check. A check is a negotiable instrument—the payee, the person to whom the check is written, may negotiate it through the banking system at any time.
If you have incurred damages because a check has been negotiated before its date, you should directly pursue the payee for restitution.
There is no federal law or regulation that requires national banks to cash checks for noncustomers. Most banks have policies that allow check cashing services only for customers who have an account with them in order to protect both themselves and their customers from forgeries.
Once a national bank cashes a check that has been forged by a noncustomer, they may lose money if they cannot collect from the person who cashed the check. Also, if a national bank agrees to cash a check for a noncustomer, it may legally charge the presenter a fee.
Generally, if a national bank does not return cancelled checks to its customers, the bank must either retain the cancelled checks—or maintain the capacity to provide legible copies of the checks—for seven years.
The bank must provide you with a copy of any cancelled check within a reasonable period of time from your request. The bank may charge a fee for this service.
Federal law stipulates that all time certificates of deposit (CDs) that are cashed out early are subject to a minimum penalty. If you withdraw an amount within the first six days after deposit, the penalty consists of at least seven days’ simple interest. Other than that minimum requirement, national banks can set their own penalties; there is no maximum.
Generally, a national bank can change the terms of a business checking account as long as the bank notifies account holders at least 30 days before implementing a change to the bank’s availability policy. Exception: Any change that expedites (speeds up) the availability of funds, a positive impact for the consumer, may be disclosed not later than 30 days after implementation.
A NOW account is an interest-earning bank account with which the customer is permitted to write drafts against money held on deposit. Entities organized or operated to make a profit (e.g., corporations, partnerships, associations, business trusts) may not maintain NOW accounts. However, an individual doing business as (DBA) a sole proprietor or under a trade name (e.g., Joe Smith doing business as “Smith Enterprises”) can maintain a NOW account. The account would have to be in the individual’s name or in the DBA name.
Yes. Federal law allows banks to charge non-interest charges and fees, including deposit account service charges. All fees should be determined on a competitive basis within the market. Each bank should make the decision on the type, amount, and method of calculation based on sound banking judgment and safe and sound banking principles.
National banks must disclose any fees associated with a deposit account when it is established; therefore, you may want to review your account agreement as well as any current fee schedule.
Yes. Federal law allows banks to charge non-interest charges and fees, including deposit account service charges. All fees should be determined on a competitive basis within the market. Each bank should make the decision on the type, amount, and method of calculation based on sound banking judgment and safe and sound banking principles.
National banks are required to disclose any fees associated with their deposit accounts to you when the account is established. So you may want to review your account agreement with the bank as well as any current fee schedule.
Yes. Federal law allows banks to charge non-interest charges and fees, including deposit account service charges. All fees should be determined on a competitive basis within the market. Each bank should make the decision on the type, amount, and method of calculation based on sound banking judgment and safe and sound banking principles.
When you open an account with a national bank, it is required to disclose any fees associated with its deposit accounts. Be sure to read your Account Agreement as well as any current fee schedule.
Yes. The bank makes these decisions; in some instances, State law prescribes them. Federal law does not establish the services for which fees may be imposed. Neither does Federal law establish the maximum amount of fees that national banks can charge for an IRA transfer. National banks are required to disclose any fees when the deposit account is established. Therefore, you may want to review your account agreement with the bank as well as any current fee schedule.
If a national bank agrees to cash a check for a noncustomer, it may legally charge the presenter a fee. There are no limitations on the fee amount. If you think the fee is excessive, you may want to open an account with the bank, or cash your check at another institution with a lower fee.
Encoding errors are generally handled by adjustments sent between banks. You should notify your bank so they can investigate the error. Generally, national banks require you to notify them of any error(s) within 30 days after the statement date. However, the time period for this prompt notification may vary by bank and State.
Your deposit account agreement specifies your bank’s specific time requirement. Take a look at that agreement and contact the bank directly regarding any alleged error.
Unfortunately no. State statutes govern contracts that cover the payment on checks and they indicate that when dealing with negotiable instruments, words prevail over numbers.
No. This appears to be a check posting error. The bank must correct it. You should notify your bank so it can investigate the error. The bank may require you to complete an affidavit. The time period for this prompt notification may vary by bank and State. deposit account agreement specifies your bank’s specific time requirement. Review that agreement, then contact the bank directly regarding any alleged error.
No. If the funds are credited to your account in error, the bank doesn’t need your permission to remove funds. The bank may correct the error by exercising its legal right of off-set. This right allows a national bank to charge your account for a debt owed to the bank. To correct this error, the bank must remove the funds from your account and deposit them into the correct account.
Yes. The bank may freeze the account to ensure that no funds are withdrawn before the error is corrected. Or the bank may place a hold on the deposit.
Before you open an account, banks must provide you with certain disclosures regarding their deposit products. This enables you to make meaningful comparisons among banks. The disclosures must be in writing and in a form you can take home. The bank must disclose information about the following: interest rates, crediting and compounding policies, service fees, balance computation method, minimum balance requirements, transaction limitations, and time requirements if applicable.
You should notify the bank within two business days after learning of the loss or theft of your ATM and or debit card. If you do, your liability will be the lesser of the following: $50 or the amount of unauthorized transfers that occur before the financial institution receives notice. However, if you fail to notify the bank within two business days, your liability could be as high as $500.
A cashier’s check is a check issued by a bank and payable to a specific person. Because a bank issues a cashier’s check, itself, the cashier’s check is paid by funds of the bank and not the depositor. Therefore, if an item is genuine, there is very little risk that the instrument will be returned.
Sometimes, however, a cashier’s check is not genuine, and, if you unknowingly accept a fraudulent cashier’s check in exchange for goods or services, you will likely be the one who suffers the financial loss.
It can be very difficult for either you or your bank to tell. Your bank also may not be able to determine that the check is fraudulent when you deposit it. Rather, your bank may learn of the problem only when the check is returned unpaid by the other bank – which may take a couple weeks or more. Scammers try to make the item look genuine, which will delay discovery of the fraud. Once the item has been returned unpaid, your bank, generally, will be able to reverse the deposit to your account and collect the amount of the deposit from you.
The funds can invest only in the highest-quality securities, so they can’t buy subprime debt. Some funds have bought commercial paper [short-term debt] from structured investment vehicles [SIVs] that hold subprime mortgages. What is making people jittery is that another batch of SIVs is on watch for a credit downgrade. So, while a money fund can’t buy lower-quality debt, what it has can deteriorate.
It’s hard to figure out, but the chances your money market fund owns any securities like subprime mortgage debts are minimal. The subprime crisis has been going on for three months, while a money fund portfolio turns over, on average, every 30 days. The vast majority of securities that held any kind of threat are long gone. And we’ve seen some fund advisers purchase troubled securities from funds or say they will back them up.
Retail money market mutual funds are not rated by rating agencies. All of the underlying securities these funds invest in are rated by credit-rating agencies, but only institutional portfolios tend to be rated.
No. Unlike bank money-market funds, which tend to have lower yields, money-market mutual funds do not carry FDIC insurance.
It’s an accounting fiction. Money-market funds are just short-term bond funds. Although the target price for each share is $1, a bond might be at 0.998 cents on the dollar while another is at 1.00123 cents, and it all balances out to $1 per share.
Breaking the buck occurs when a money market fund is unable to repay its $1.00 NAV per share. There have been several incidents this year in which a manager bought securities to prevent a fund from possibly dropping below a $1.00 net asset value or breaking the buck. The only example where a fund’s net asset value fell below $1 was in 1994 when the $82million Community Bankers U.S. Government Money Market Fund was liquidated and investors got 96 cents on the dollar. It was an institutional fund, so no individual investors lost money.
A money market fund is a type of mutual fund that invests in high-quality, short-term securities that present minimal credit risk. These funds also pay dividends that generally reflect short-term interest rates. Although the net asset value per share of a traditional mutual fund changes daily in response to market factors, money market funds are structured to avoid these changes by seeking to maintain a stable net asset value of $1.00 per share.
Investors use money market funds for a variety of reasons. Like other mutual funds, money market fund shares can be bought or sold at any time. Money market funds also often provide check-writing privileges for shareholders. Some investors use money market funds as short term storage for cash between investments because money fund yields are typically competitive with those of most savings accounts.
Taxable money market fund investments include U.S. Treasury securities, federal agency notes, certificates of deposit, and commercial paper. Typically, tax-exempt money market funds, which seek to pay dividends that are exempt from federal income tax and/or state income tax, invest in instruments issued by state and local governments or what are called municipal securities. Some of these securities may employ credit enhancements such as bond insurance.
Money market funds are stringently regulated by the U.S. Securities and Exchange Commission (SEC) pursuant to Rule 2a-7 under the Investment Company Act of 1940. Rule 2a-7 includes several conditions intended to stabilize a fund’s $1.00 NAV. These conditions limit risk in a money market fund’s portfolio by governing the credit quality, diversification, and maturity of money market fund investments.
A money market fund’s board of directors is primarily responsible for ensuring that the fund complies with the SEC’s conditions to limit risk in the fund’s portfolio. The board establishes written guidelines and procedures reasonably designed to stabilize the fund’s $1.00 NAV. The board also must exercise adequate oversight through periodic reviews of fund investments to ensure that those guidelines and procedures are being followed.
The board may be required to take action in the event that a security in a money market fund’s portfolio is downgraded or defaults. If a security defaults, the fund must dispose of the security as quickly as possible, unless the fund’s board determines that to do so would not be in the fund’s best interests.
No, an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Institutional funds are held primarily by businesses, governments, institutional investors, and high-net worth households. Institutional funds hold 60 percent of all money market fund assets.
Retail funds are money market mutual funds that are offered primarily to individuals. Retail money market funds hold around 60 percent of all money market fund assets.
An enhanced cash product is a general term that refers to funds that are typically not registered with the SEC and that seek yields slightly higher than those of money market funds. In seeking those yields, however, enhanced cash products can exceed the SEC rule restrictions imposed on money market funds governing the credit quality, diversification, and maturity of investments. These products are typically offered to institutions as private placements, separate accounts, or certain types of trusts. They also may be referred to as “money market-plus” funds, “money market-like” funds or “enhanced yield” funds.
Issuers of securities use credit enhancements to raise the credit rating of a security by backing it with the credit of a third party. Credit enhancements, which may include, bond insurance and bank letters of credit, can help lower the risk of default, improve liquidity, and reduce the interest rate that issuers must pay.
Bond insurance, for example, unconditionally guarantees the payment of principal and interest on the bond if the issuer of the bond defaults. Generally, this guarantee improves the credit rating of the bond, because insured bonds typically are rated based on the credit of the insurer rather than the underlying credit of the issuer.
Tax-exempt money market funds often hold municipal securities insured by a bond insurance company. If a bond insurer is downgraded, it does not necessarily mean that the security is ineligible to be held in the money market fund. However, if the bond insurer is downgraded to the point where neither the insurer’s rating nor the bond issuer’s rating meets the standards for money market fund holdings, a money market fund must promptly determine whether it may continue to hold these securities.
One big difference is a money market account is an interest earned savings account that is offered by a FDIC insured financial institution. The FDIC insures up to $100,000. Whereas the money market mutual fund is based on a seven day average yield rather than an annual yield. However, the effective rate is comparable to the money market account offered by a bank. The money market mutual fund is not insured by the FDIC. This means, if for some reason that mutual fund collapsed, you would be out of luck in collecting what you thought was a safe holding for your money.
A bank failure is the closing of a bank by a federal or state banking regulatory agency. A bank is generally closed when it is unable to meet its obligations to depositors and others. When an FDIC insured bank fails, the FDIC becomes receiver of the bank and operates the bank by managing the existing assets and creditors which includes the claims of the depositors.
In the event of a bank failure, the FDIC acts in two capacities. First, as the insurer of the bank’s deposits, the FDIC pays insurance to the depositors up to the insurance limit. Second, the FDIC, as the receiver of the failed bank, assumes the task of selling and or collecting the assets of the failed bank and settling its debts, including claims for deposits in excess of the insured limit.
The FDIC protects depositors’ funds in the unlikely event of the financial failure of their bank or savings institution. FDIC deposit insurance covers the balance of each depositor’s account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank’s closing.
Fake checks can look so real that even bank tellers may be fooled. Some are counterfeit money orders, some are phony cashier’s checks, and others look like they are from legitimate business accounts. The companies whose names appear may be real and the routing number and account number may appear to be real, but someone has dummied up the checks without their knowledge.
You are responsible for the checks and money orders you deposit. That’s because you are in the best position to determine how risky the transaction is, you are the one dealing directly with the person who is arranging for the payment to be sent to you. When a check or money order bounces, you owe your bank the money you withdrew should that deposited check be returned. The bank may be able to take it from your accounts or sue you to recover it.
Fake check scammers scan newspapers and online advertisements for people listing items for sale, and check postings on online job sites from people seeking employment. They place their own ads with phone numbers or email addresses for people to contact them. And they call or send emails, letters, or faxes to people randomly, knowing that some will take the bait.
Most fake scams work only when the recipient is required to send money back to the scam artist. There is no legitimate reason for someone who is giving you money to ask you to wire money back and that’s a clear sign that it’s a scam. If you think someone is trying to pull a fake check scam, don’t deposit it, report it! Contact the National Consumers League’s Fraud Center, www.fraud.org. For more information about fake check scams and how you can avoid them, go to www.fakechecks.org.
There are a number of cash-management vehicles available that don’t meet the strict standards for money market funds and that, typically, are not SEC-regulated products. These are often referred to in the press as “similar to money market funds” or “money market-like funds.” However, these vehicles are not subject to the same risk limiting provisions as true money market funds.
If a prospective account holder has had a bad credit history pertaining to bank accounts this may prevent you from opening a new account. Mishandling bank accounts is the primary reason one may be denied a new bank account. Most banks check the background of new account holders to see if they had problems with bounced checks and unpaid bank charges in the past
The FDIC does not publish that list. Although the FDIC periodically announces the number of banks they have on the watch list, they do not believe it would be prudent to relesease the names of the banks to the public. The obvious conclusion is that the FDIC is trying to bring these banks back to a healthier financial position and an announcement of their potential precarious finances may lead to a significant amount of depositors withdrawing their funds and only hastening that banks demise.
Banks generally do not charge for replacing ATM cards that are lost, stolen or otherwise inoperable. You may want to look at the fee schedule on your account agreement to verify any possible charges.
You can open as many accounts as you like with your bank. There is no legal limit to the number of checking accounts, money market accounts or CDs you can hold at any one institution.
If you have more than 50% of its total area, the bank will replace the bill with a new one. They do this to prevent someone from splitting the bill right in half and doubling their value. Only the portion with a higher than 50% of its total area will be replaceable.
Banking Regulation E requires the bank to tell you a summary of your rights and the procedures necessary to affect certain stop payment requests. You can find that requirement under §205.7(b)(7). If your dispute
If you deposit a check that has bounced by the bank on which it’s drawn, your bank will charge that check back to your account. Your bank may also impose a returned deposited check fee on your account. You may also want to make sure you have not used those funds and subsequently cause your own account to be overdrawn. Check your deposit account agreement and the bank’s fee schedule to determine the amount of these charges.
There is no law that prohibits the issuance of a post-dated check. There are laws against issuing checks when the partying delivering this check knows that they don’t have funds to cover it. Using postdated checks in general is never a good business, since it is perfectly acceptable for the bank to pay a check even when it’s postdated.
The proper way to make the check that is currently payable to you, payable to someone else, is to apply what is called a restrictive endorsement. You should sign the back of the check and write, “Pay to the order of … ” filling the persons name you wish to have the check paid to. This will make the check payable to the person you designate and that person will then need to endorse it or deposit it into their account.
The frequency of interest payments, or the level of compounding interest, on any bank account is determined by the bank and the type of account you have. Truth in savings regulation makes it so the bank has to inform that account holder what the APY is on the account. The APY is the annual rate of interest paid on the account by factoring in how often the interest is paid or compounded on the account. Some banks pay interest daily, others monthly, and some certificates of deposit pay interest only when the certificate matures.
A bank is required to file a report with the Internal Revenue Service on any transaction or transactions in currency, by or on behalf of the same person on the same business day, if the amount in currency of those transactions exceeds $10,000.00.
There is no requirement on who has to be the person who has the authority to do transactions on behalf of the child or the custodian under the Uniform Transfers to Minors Act in effect in most states. You will need your nephews Security number.
The Texas ratio is a measure of a bank’s financial strength and standing by evaluating the ratio of non-performing loans to its equity position. The ratio measures loans in default against the present capital base taking into consideration loan loss allowances.
A money market deposit account at an FDIC insured bank is not the same as a money market mutual fund. A money market deposit account at an insured bank has the same FDIC insurance coverage limits as a checking, savings and CDs does. Money market mutual funds do in fact have some exposure to investments risk and the principal on those accounts can be at risk, albeit very little risk. Therefore, the only reduction to the balance in your money market deposit account is through funds reduction when you access and spend money or bank charges assessed for normal account use. The balance is not at risk due to the bank’s investment performance.
Regarding consumer accounts such as checking, savings and CDs, there is no legal regulation that would allow one bank from preventing a customer from opening an account with another bank. If a bank customer has had credit problems at a bank and this bank has reported the issues to a credit reporting company this may indirectly prevent someone form opening another account. But, even when banks review a potential customers credit profile, there is no automatic approval or disapproval system in place. Each bank that reviews someone’s past banking credit problems and makes an independent decision on whether to allow that person to open an account.
Yes. The beneficiary has authorization on an account only at the time of the account holder’s death. Prior to that time, the beneficiary has no rights to the account and therefore the bank is not at liberty to discuss who the beneficiary is on an account unless the bank is speaking with the authorized account holder. Keep in mind; the account holder can change the beneficiary during their lifetime.
There is no regulation governing how much money is required to open a new account, regardless of whether that account is a checking, savings or certificate of deposit. The minimum amount needed to open a new account is at the discretion of the individual financial institutions. They will be able to identify the amount needed per account type as well as minimum balance requirements and account fees.
The difference between a zero coupon bond or CD and a regular bond or CD is that a zero-coupon bond does not pay coupons, or interest payments, to the bondholder or CD holder while a typical bond and CD does make these interest payments. The holder of a zero-coupon bond or CD only receives the face value of the bond or CD at maturity. The holder of a coupon paying bond or CD receives the face value of the bond at maturity but is also paid coupons or interest over the life of the bond.
The income received form the zero-coupon bond or CD is the gain on the difference between what they pay for the bond and the amount they will receive at maturity. Zero-coupon bonds and CDs are purchased at a large discount, known as deep discount, to the face value of the bond or CD. In other words, a zero-coupon bond or CD gains from the difference between the purchase price and the face value, while the coupon bond or regular CD gains from the regular distribution of interest.
A temporary check is a check issued by a bank that has your typed information on it generally dispensed when you first open an account so you can quick access to account use. Banks do not normally charge for temporary checks. In order to receive a larger quantity of checks the bank will either charge for the service or you can use a check printing company to have it done for you.
As long as there are no unpaid fees on the account, closing a bank account has no negative ramifications for your credit report. Banks will voluntarily report to some credit bureaus information on customers who frequently mishandle their accounts or voluntarily or perhaps involuntarily close an account with a debt remaining open.
There are no Federal regulations that would prevent you from either depositing cash into your checking or savings accounts or opening a CD with a cash deposit. Federal regulations simply make it mandatory that banks fill out a disclosure form when there is a transaction involving cash in excess of $10,000.00. Banks are also required to disclose cash transactions that are suspicious in nature. In either case, it does not stop a customer from making the transaction even if the amount exceeds $10,000.00.
When your bank states it compounds the interest daily on a CD but it pays out that interest monthly, it is engaging in a fairly standard process. The bank calculates your interest each day on the CD and simply processes that amount as a computer entry without actually paying that interest out. The next day, the bank calculates the interest earned on the CD along with the interest already accrued and calculates a new balance of accrued interest. At the end of each interest month, the bank takes the amount accrued and actually adds it to the balance in your account.
For the most part a certificate of deposit isn’t really a certificate anymore. Most banks issue receipts, rather than actual certificates of deposit and the account is primarily a computer entry. All the owner normally needs to claim the deposit is proper identification to prove they are the owners of the CD account. If your bank did still issue an actual certificate or passbook for the CD they will have a procedure to claim the CD if the documents have been lost. The CD is not an instrument of value by itself.
There is no right answer to this question. Generally, a CD will pay a higher interest rate than a savings account. CDs have penalties for early withdrawal, which restricts access to your money. A high yield savings account will limit the amount of withdrawals that can be made each month; however, any withdrawal can be used to transfer all of your funds to either a higher yielding account or for your expenditures. If the liquidity of your funds is of greater value than the increased rate you may obtain from a longer term CD, than a savings account is the right product. If the highest rate is your main goal, more often than not, this will be found with CD. A general guide is that the longer you agree to leave a CD deposit, the higher the yield will be. Check the best CD rates with various terms to see which one may meet your goals. Whether you choose to invest in a savings account or a CD is an individual decision best made considering your need for access to the funds and the rate of return you are looking for.
Yes. You can open individual and joint CD accounts with different banks. If the accounts do not exceed the FDIC insurance coverage, you can open CDs under individual names and joint names in the same bank as well. FDIC insurance will not preclude you from having multiple CDs or any other accounts with same bank; it is simply sound investing to make sure your accounts have complete FDIC insurance coverage.
The Christmas club account is one such account that you are describing. These savings accounts were designed by banks to allow deposits throughout most of the year and then the account can be withdrawn for holiday spending. Unfortunately, most bank instruments generally do not have features for unlimited deposits and very restrictive withdrawals. CDs will of course prevent early withdrawals by imposing the early withdrawal penalty, but very few offer the option to increase the amount of the CD before its maturity.
You are mostly correct about the rationale for using a cashier’s check. Normally, cashier’s check provides next day access to the funds for the party you had sent the check to. However, exceptions to hold policies do exist. One exception could be if the check is over $5,000.00. In addition, holds can be placed on check because the bank is suspicious and doubts collectibility or your friend opened a new account with the money. With the increased level of fraudulent cashiers check perhaps a question of authenticity has arisen. For any of these cases, the bank at which your friend deposited the funds must provide an explanation for any excessive delays in access to the funds.
You should have no problem depositing the check to your joint account just as you would any other check that is written to either yourself or the other party on your joint account.
Banks are required to report all cash transactions in excess of $10,000.00. However, they are also responsible for reporting suspicious activity. If someone is cashing a significant amount of checks, the bank may very well report the activity to the IRS. Of course, if this does not happen, should the company be selected for an IRS audit, explaining why they cash so many checks may be a problem.
If the account has a standard POD or pay on death beneficiary assignment, the beneficiary has no liability for bounced checks. The designation of the beneficiary isn’t final until the death of the owner. A beneficiary has no ownership interest in the account until the owner dies. Therefore, the beneficiary isn’t responsible for an overdraft in the account.
My son has a small savings account that was opened a few years ago. When I recently checked the balance it was close to zero. It appears the bank has been assessing fees on the balance bringing it to almost nothing. Can they do that on his account?
There is no Federal regulation that would stop a bank from continual assessing account fees as long as these fees were disclosed in advance to your son. The bank should have disclosed its fees to your son either at the time of account opening or at a later date if the fees were initiated or changed after the account was opened. The bank doesn’t have to place a floor on the balance on which they will assess the fees.
A tiered money market account is a bank account that pays different interest rates depending on the balance in the account. Typically, the higher the balance in the account the greater the interest rate that is earned on the account.