Getting Personal
Banking Archives
How Safe Are Money Market Funds?
Question: In the past few years of following the financial news and your program, I've come to see the Money Market fund as a stable place for short-term emergency fund money. Very limited risk of loss of principle, and the very few times it has happened, investors got out with almost all of their money anyway.
Talking with a coworker recently, she said that she had experienced a money market fund dropping in value (presumably some 25-30 years ago). Was she just one of the unlucky ones or is the mantra of "only one money market fund failing" a story limited to the last 25 years? Adrian
Answer: Money market mutual funds, despite their billing, are not risk free. These funds are on the safe side of the risk spectrum because they invest in Treasury bills, short-term U.S. government agency securities, commercial paper certificates of deposit, and other very short-term debts. The security in the fund comes from diversification and the quality of the short-term debt the fund invests in.
There's the rub. In order to attract more money, some mutual fund companies take on riskier short-term debts to boost yields. And then the industry gets roiled by the risk that a money market mutual fund will "break a buck" during a market squall like now. In other words, the promise of a money market mutual fund is that if you put a dollar into it you will at minimum get a dollar back at withdrawal. As far as I am aware, the value of no major money market mutual fund has fallen so much that withdrawals have been worth less than a buck. However, I am aware that in some cases the parent company has injected cash into the money market mutual fund to preserve its value.
That's why I like money market mutual funds attached to a major brandname financial institution with the money to shore up a fund and a reputation to protect if there is a risk that the fund will break-a-buck. I also prefer lower yielding money market mutual funds composed primarily of U.S. Treasury securities and U.S. agency debt. I just don't think the risk of a slightly higher yield is worth it.
Financial Information Over the Phone
Question: I got a personal call from my bank the other day: they lowered their interests rates and could give me a home equity loan for 7.5% ... as opposed to the 10% I have now on my line of credit with the same bank.
All they needed to know was what my home was worth, how much I had left to pay on it etc etc, a lot of questions I didn't feel like answering on the phone. But is this really a good deal (the rate can and will change, right?) and does it affect my credit report to apply for more credit? Otherwise I would be tempted. Thanks for your advice, Sabrina.
Answer: I don't answer any personal finance question that comes my way over the phone or on the Internet. Period. (This approach seems to annoy unsolicited calls from charities asking for money the most. Tough.) It's too risky in an era of identity theft to give away financial information away to strangers on the phone or the Web.
Still, it sounds like your bank may be offering you a good deal--or at least one worth investigating. I would walk over to a branch of your bank and ask to talk to a bank manager. If that's inconvenient, you should initiate the call and solicit the information you want yourself.
Monitoring Financial Institutions
Question: In tough times like these, how do I monitor the health of my insurance company and bank? Sure the bank is FDIC insured but getting money back from the government can't be easy or efficient, how do I protect myself? Thanks in advance, Tim
Answer: This is a timely question. Federal Reserve Board chairman Ben Bernanke recently testified before Congress that he expects some small banks to fail. A number of insurance companies have also reported losses from subprime mortgage investments.
As you mention, the key with banks is to make sure it is backstopped by the Federal Deposit Insurance Corporation. The FDIC website has a clear explanation of the insurance basics. The basic insurance amount is $100,000 per depositor per insured bank. However, certain retirement accounts like IRAs, are insured up to $250,000 per depositor per insured bank. Now, there are a variety of ways to increase that insurance limit depending on the type of account. But most people are well below that $100,000 and, if that's the case, the FDIC is good sleep insurance. By the way, the FDIC has a sound reputation for restoring access to your money after a bank failure. This is from their website:
It is the FDIC's goal to make deposit insurance payments within one business day of the failure of the insured institution. Typically, a bank that has failed will be closed on a Friday. The FDIC will then work the weekend to complete deposit insurance determinations for most deposits and be prepared on Monday to either transfer the insured portion of a deposit to another FDIC insured institution or provide deposit insurance payment checks.
Insurance companies are regulated by the states, and the track record of state regulation is uneven (to put it charitably). Even the information for concerned consumers isn't easy to find. For instance, if you head to the FDIC website you can get most if not all of your questions answered. Now try and do the same information at the National Association of Insurance Commissioners website, the umbrella organization for state insurance commissioners.
Anyway, property and casualty, life and health insurers are backed by various state "guaranty funds". Here is the money quote from the National Organization of Life & Health Insurance Guaranty Associations:
Insurance companies that experience severe financial difficulties are taken over by the insurance department of the state in which they are based. You should be notified by the insurance department if this occurs. Even if the company is placed under the control of the insurance department, claims will continue to be honored as long as premiums are paid or cash value exists. The claims will be covered by state guaranty associations, which will either pay them directly or transfer the policies to a financially stable insurance company.
When it comes to insurance companies you'll want an extra layer of financial comfort. I prefer blue chip companies with high credit ratings from Moodys and Standard & Poor's.
Flight to Safety
Question: My wife and I are very cautious with our money--we have only one loan (our mortgage), we pay off credit cards every month, and we have more than 6 months of living expenses saved... BUT it's in a financial firm's money market account. We also have IRAs and "deferred compensation" saved in mutual funds.
The recent near collapse of Bear Stearns echoed the bank runs of '29 and the collapse of markets. It's an uneasy time--world markets seem unstable, inflation in energy and food costs etc... Should we be worried about having money saved in non-FDIC backed instruments? Worried in Ann Arbor. Jim
Answer: It is an uneasy time, especially with the Bear Stearns meltdown and takeover. But you are in a good financial situation to ride out the storm.
The answer to your question involves shades of risk. Let's look at your money market mutual fund. Every once in awhile, during tumultuous financial periods like now, the mutual fund industry is roiled by fear that a fund will "break a buck." The promise of a money market mutual fund is that if you put a dollar into it, you will at minimum get a buck back at withdrawal. As far as I am aware, no major money market mutual fund has fallen so much that withdrawals have been worth less than a buck. However, I am aware that in some cases where the parent company has injected cash into the money market mutual fund to preserve its value.
What to do about this? I always recommend a two-fold strategy. First, investors should put their money market money into a brand-name financial institution with the resources to support a money market mutual fund if it becomes necessary. Second, I would put my money into the most conservative money market option offered by the financial institution. The fund's assets should be primarily in very high quality short-term securities, such as U.S. government short-term debt and U.S. government agency debt.
If you believe that even after these two safety screens, a money market mutual fund is too risky, I would put my money in one of two places (or both): Keep it at a bank in FDIC insured accounts, such as certificates of deposit, a savings account or a bank money market deposit account. Or buy default-free U.S. Treasury bills directly from the government. It's easy to do. Check it out at www.treasurydirect.gov.
Online Banking
Question: As much as anything is "safe" these days, is it safe to open online savings/CD accounts with such companies as "ING Direct"? Sarah, Lakeville, CT
Answer: Yes. For safety and soundness, the key is to make sure that any online bank is backed by the FDIC, and ING is insured by the FDIC.
03/18/08 by Chris FarrellMoney Market Savings Accounts
Question: Chris -- You mentioned money market mutual funds a couple times on last week's show. Are money market mutual funds the same as money market savings accounts? Can you get them at banks, or just brokerages? Are they still as liquid (make deposits, withdrawals) as money market savings accounts? Thanks -- I appreciate all of your and Tess's advice. Brian, Auburn, AL
Answer: Money market mutual funds and money market savings accounts are similar in many respects, but there are critical differences between the two. A money market savings account at a bank typically pays a higher rate of interest than a regular savings account. The account usually has a higher minimum balance requirement and limitations on the number of withdrawals a month. A money market savings is insured up to $100,000 by the Federal Deposit Insurance Corporation (FDIC). In other words, if the bank goes belly up, your money is safe (assuming you're under the insurance limit).
The same isn't true with a money market mutual fund. There is no FDIC insurance backstopping the account. In return, you'll get a slightly higher interest rate with the money market mutual fund compared to the money market savings account. Still, money market mutual funds are among the safest investment options available to individual investors. There are two simple ways to reduce risk with a money market mutual fund. First, invest with a brand-name financial institution with the resources to backstop a money market fund if it gets into financial trouble. Second, choose the most conservative fund option. It's the one that is comprised of mostly short-term U.S. Treasury securities and federal agency debt. There's no reason to chase higher yields by taking greater risks with this money. You want your principal safe and earn a decent interest rate.
Are Credit Unions Insured?
Question: With uncertainties concerning the financial soundness of some banks there has been reassuring mention in news stories of FDIC protections. I have yet to hear mention of similar reassurance to members of credit unions that belong to the National Credit Union Association. Is it in fact known that National Credit Union Share Insurance is on a par with FDIC and that invested funds are equally safe?... Roy, South Burlington, VT.
Answer: The short answer is yes. The outline of the insurance coverage is the same as FDIC, with a standard $100,000 protection that jumps to $250,000 for certain retirement accounts, such as IRAs.
You can get more information at the National Credit Union website at www.ncua.gov.
Here are highlights from their discussion of deposit insurance:
The shares in your credit union are insured by the National Credit Union Share Insurance Fund (NCUSIF), an arm of NCUA. Established by Congress in 1970 to insure member share accounts at federally insured credit unions, the NCUSIF is managed by NCUA under the direction of the three-person NCUA Board. Your share insurance is similar to the deposit insurance protection offered by the Federal Deposit Insurance Corporation (FDIC)...
Credit unions that are insured by the NCUSIF must display in their offices the official NCUA insurance sign which appears on the cover of this brochure. All federal credit unions must be insured by NCUA...
Not one penny of insured savings has ever been lost by a member of a federally insured credit union. The federal insurance fund has several programs to help insured credit unions which may be experiencing problems. Liquidations or failures are a last resort. If a federally insured credit union does fail, however, the NCUSIF will make any necessary payouts to the credit union's members. These payouts are usually done within 3 days from the time the credit union closes its doors.....
07/18/08 by Chris FarrellBank Failures
Question: I know that funds (up to the limit) are safe in an FDIC insured bank, but how much of a hassle is it if the bank fails? When my S&L failed in the 1980's I sent my mortgage payments to a new address - and then another new address. I now use direct debit and on-line billpay for many of my bills and of course I have a supply of checks and maybe some in the mail. How smooth (or bumpy) is the changeover when a bank is taken over? Mary. Vista, CA.
Answer: I haven't gone through one personally, but my sense is that there is relatively little hassle in most cases. I've been reading blogs of people who have had their bank taken over and so far all the stories are positive. The one area I would be worried about is if you have an adjustable rate mortgage. And that has less to do with a FDIC takeover and more that there is evidence that when ARMs are sold-- mistakes get made at reset time.
In recent days, doing some searching on the net, I've come across a number of blogs talking about the experience and in most cases I would say the information was that it went surprisingly smoothly.
07/30/08 by Chris FarrellCDs
Question: Lately, I've been noticing lots of ads for CDs at various rates. What advice do you have to help me (and others) make a decision? What questions should we ask the financial institutions? How safe is our money? Many thanks. Anonymous. Gaithersburg , MD
Answer: Investors are putting more of their safe money into certificates of deposit. For one thing, so long as your investment is under $100,000 you're money is backed by the FDIC. That's a real relief in these turbulent financial times. For another, CD yields are on the rise. However, compare the after-tax return or yield on a CD to owning a comparable U.S. Treasury (which also has no default risk). Put your money where you get the higher after-tax yield.
One well-known place to check out CD rates around the country online is at www.bankrate.com.. When shopping for a CD make sure you understand the terms of the contract. Only put in money you can afford to lock up until maturity--6 months, 1 year, 2 years and so on. There are penalties if you need to get the money early.
A Healthy Bank
Question: As Freddie Mac and Fannie Mae attempt to recover after a government bailout, my wife and I have become more and more interested in the health of other banks. We noticed that today Washington Mutual recently posted a huge loss of 3.3 billion dollars for the last quarter, and that this loss is part of a trend for that bank. Presumably this is still part of the home loan catastrophe the country is trying to recover from.
Our question though, is this: as banks like Washington Mutual struggle, how does a normal bank customer (not a bank "investor") know how to digest this information? We know that the FDIC was designed to assure people not to make bank panicked bank runs, but aside from that assurance, how does one know whether to stay with a bank or not? What kinds of warning signs should a customer watch for? Thanks, David, Seattle,WA
Answer: First, don't worry about the financial health of your bank so long as your accounts are covered by the FDIC. (By the way, one way to monitor the health of many banks is to watch their publically traded debt. Investors are sensitive to a banks financial condition and if the interest rate on a bank's debt is going up relative to its peers that's a signal that the market is getting nervous.)
Second, you want to evaluate your bank as a customer. Is service deteriorating? Is the bank hiking fees? Is its website easy to navigate and use? If you don't like the way your bank is treating you then I would move your money. It's much easier to judge bank service than bank finances.
Worried about financial safety
Question: My husband and I are 32 and 31. We have approximately 80K in retirement investments (SEP IRA, mutual funds) with Wells Fargo. We noticed recently that they have a disclaimer on their forms stating that investments are not FDIC insured. With the recent collapsing of investment firms and banks, and with the Lehmann Bros not being bailed out by the government, the uninsured FDIC investment makes me somewhat nervous. How do we know that our investment is "safe"? Should we consider doing something else with our money until we know Wells Fargo makes it through this time of turmoil? Renee, St. Paul, MN
Answer: I'm getting variations of your question from a number of folks. Checking, savings, money market deposit accounts, certificates of deposit, and other bank products are insured by the FDIC up to $100,000. (A CD in an IRA is insured up to $250,000.) You're absolutely right: There is no FDIC insurance when it comes to stocks, bonds, mutual funds, ETFs, commodities, and other market investments even if you bought them through a bank or a similar financial institution.
Still, there is a safety net. The biggest protection for your investments comes from the segregation of customer accounts from the finances of the bank or brokerage house. If a bank or brokerage house goes under, you still own the securities and your account will be sold or transferred to another institution. The Securities Investors Protection Corp. (SIPC) offers additional protection in case of fraud or malfeasance.
None of this investment safety net preserves the value of your money in the market. For example, if you own a stock mutual fund it's probably way down and odds are it's headed even lower. But you won't be wiped out if the financial institution you do business with fails.
That's only one aspect of financial safety. Another is taking a close look at the actual investments you're in. The key question is how well diversified are you? And, with all the turmoil in the market and no end in sight, do you feel that you have too much in stocks or some volatile asset. If the answer is yes, by all means trim back to a more conservative portfolio. .
Too big to fail?
Question: Is Bank of America too big now to fail??? Do we have to few institutions? Jeff, Arlington, IN
Answer: Yes, Bank of America is too big to fail.
I expect with the benefit of hindsight that the deal struck by BofA to buy Merrill Lynch for about 40 cents on the dollar will turn out to be shrewd move. For one thing, the bank has snapped up one of the most famous brands in the country--let alone on Wall Street--at a bargain basement price. For another, BofA has made sure after this acquisition, the purchase of Lasalle Bank, and the takeover of Countrywide Financial, that in the eyes of regulators the financial services behemoth is too critical to the U.S. financial system to fail. Indeed, management has spent $100 billion over the past 5 years on acquisitions, according to the Wall Street Journal. The buying spree puts BofA at the top of the U.S. financial services industry
To your second question, the financial sector is reorganizing and shrinking. But it was probably too large to begin with, growing at a rapid pace over the three decades or so. It has grown to a much larger share of GDP than we've seen in the past. Consolidation is long past due.
That said, when it comes to our own banking I don't see any reason to do business with the biggest. The real key is the FDIC (or its credit union peer). So long as there is FDIC insurance, and your business with the bank is covered by the government's insurance safety net, then you should feel free to bank at a community bank, a regional bank, or your local credit union. The question remains whether a bank the size of BofA can deliver good service at a low cost to its customers. The good news is that there are plenty of competitors eager for your business if it doesn't.
Credit unions
Got this nice note this morning. It's an important reminder.
For Chris: I'm a regular listener and appreciate your work. Just a reminder that when folks are looking for safe deposits, equivalent to a bank with FDIC insurance would be a credit union with NCUA (National Credit Union Administration) insurance. It has the same full faith and credit backing of the federal government, $100,000 limit per account and multiple account structure as FDIC. Virtually all credit unions have this federal coverage. Depositors can look for the blue NCUA logo in the lobby or on a website. Thanks. Bill Hampel, Chief Economist, Credit Union National Association
09/19/08 by Chris FarrellCDs and the FDIC
Question: I understand that CD's are FDIC insured, but what about the interest on them?
Are you guaranteed just the principal amount or the principal plus interest, too? Mary, Waukesha, WI
Answer: The basic insurance amount is $100,000 per depositor, per insured bank, and that includes principal and accrued interest up to a total of $100,000.
When a bank fails, here's what the FDIC has to say in more detail about the effect on accrued interest.
The FDIC's insurance coverage includes principal and interest through the date of the bank failure up to applicable insurance limit for each deposit. The accrual of interest ceases on all accounts once the bank is closed. If an open bank acquires deposits from the failed bank, the acquiring bank becomes responsible for re-establishing interest rates and beginning the accrual of interest after the date of the failure of the bank. The acquiring bank may change the interest rate on the acquired deposits, but the depositor may withdraw their insured funds without penalty if they chose to do so. If no acquiring bank is found for the deposits and the FDIC pays the depositors directly for their insured amounts, interest does not accrue past the date of failure.
The FDIC, a bank merger, and deposits
Question: Hey - Imagine that last week I had $250,000 in deposits in Wachovia and another $250,000 in Wells Fargo, all FDIC insured, all okay. Now that they are the same company, would I still be fully insured? Bill, Louisville KY
Answer: I don't think I'd go to Las Vegas with you, but as far as your insured deposits go you would be just fine. According to the Federal Deposit Insurance Corp. when two banks merge--whether it's a shotgun marriage or a voluntary union--the FDIC provides a "grace period" that protects depositors with funds at the two banks. As a general rule, the accounts would continue to be separately insured for 6 months after the merger. The idea is that 6 months gives you enough time to make any needed adjustments to your accounts to stay insured going forward.
By the way, the grace period can be longer for certificates of deposit (CD). When a CD is taken over by another bank thanks to a merger, it continues to be separately insured until the earliest maturity date after the end of the six-month period.
10/13/08 by Chris Farrell
Emergency savings
Question: This is a basic question, but with everything that is going on I am confused. I am starting a job and I want to begin setting aside an emergency fund of three to six months of living expenses. This money is only for emergencies, so my primary interest is having access to it. What are the types of accounts or institutions I should consider for this emergency money, and what can I expect in terms of fees and returns? John, Palo Alto
Answer: You're not the only one that's confused at this time, and we're all asking very basic questions about our money. They're usually the best questions. The legendary investor Benjamin Graham once wrote that when challenged "to distill the secret of sound investment into three words, we venture the motto, Margin of Safety." Very simple. Very basic. Very wise words for all seasons, but especially at an unsettled time like this.
Now, stuffing our money into a couch--however tempting--isn't a good idea. I'd do nothing more glamorous that putting the money--or at least most of it--into a bank savings account, a money market deposit account, a short-term certificate of deposit and the like in an FDIC insured institution. (Credit unions have a comparable federal insurer.) Your money is completely safe up to $250,000 even if the bank fails, and you have easy access to it if you need it.
As for fees, a number of banks are hiking fees and penalties in an attempt to shore up their crumbling finances. And I thought fees and charges were already to high. It pays to shop around, and I'd look into community banks and credit unions. Here's is an email we got over the weekend about credit unions from Dana in Federal Way, WA.
I just got finished listening to your segment on interest bearing bank accounts. Minimum balance of $3500? Nope! My account is completely free. My checking account is through a credit union.
As a general rule the trade-off for safety is a very low interest rate on savings. But so what? The money will be there if you need it.
11/17/08 by Chris FarrellSeeking yield offshore
Question: Millenium Bank, an offshore institution, is offering CD's at 5%. Is IFSA coverage comparable with FDIC? John, Los Gatos, CA
Answer: We've been getting more questions about Caribbean-based Millennium Bank and its ilk. The bank offers high interest rates on its certificates of deposit. For instance, it advertises a 6% interest rate for a 1 year CD with a $25,000 investment. Savers are hungry for yield in today's low interest rate environment. But there's nothing wrong with a low yield if your money is safe.
To be absolutely clear, I would not put any money into any offshore bank. Period.
I would not put any money into a bank that is not insured by the Federal Deposit Insurance Corporation (or its credit union equivalent.) Period.
The Millennium Bank is both offshore and its not insured by the FDIC. It's located in the tiny Caribbean country of St. Vincent and the Grenadines (SVG), with a population of 118,432 (July 2008 estimate), according to the CIA World Factbook. To be sure, the government has brought international regulatory standards to its small offshore finance sector, but the International Financial Services Authority (IFSA) isn't an FDIC or anything like it.
The bottom line: Caveat Emptor. Stick with the FDIC label.
Online savings
Question: I recently received a $25 check from ING DIRECT which I can deposit with them if I open an account in the "Orange Savings account." They claim to be members of the FDIC and they pay an interest rate of 2.75%. Re: deposits and withdrawals they say "you can move money automatically from your Orange Savings Account to your linked checking account and back." I'm nervous about doing this if this is not a legitimate company. I am 78 years old and cannot afford to make unwise financial decisions. Thanks for your help. Lois, Benzonia, MI
Answer: You're right to be cautious. Everybody should be with all the scams making the rounds.
But ING Direct is a legitimate company. (As I am writing this, the yield on the Orange Savings Account is down to 2.50% reflecting the overall decline in rates.) It's an FDIC insured online bank. ING and other online banks often offer slightly higher interest rates than their brick-and-mortar banking peers because they have less overhead. It's also a competitive strategy when many people are reluctant to do all their banking online. ING Direct is a subsidiary of ING, the Dutch multinational behemoth that is the world's 9th largest financial institution. You can learn more about the U.S. branch and its offering at its website, home.ingdirect.com.
You want to stay safe with your money, and take full advantage of the FDIC backing. . By the way, in today's low yield environment you can compare rates on other FDIC insured certificates of deposit and savings accounts (and the credit union equivalent) at a number of different places, such as www.bankrate.com.
01/06/09 by Chris FarrellBailout banks
Question: I've done a bit of searching around and have had no luck finding a comprehensive list of organizations which have taken funds from the $700B bailout. This bailout is absolutely criminal and I really want to make sure I'm not doing business with thieves. Where can I go to find out who has stolen taxpayer money through this fund? Thanks for the show and any help with this issue! Mike, West Bend, WI
Answer: No one is happy with the bailout. It's very clear that the day-old Obama Administration is burning the midnight oil--after the inaugural parties I guess--devising a broader, bolder plan to stabilize the financial system. To be clear, I'm a supporter of the government committing more money, but this time around with a much clearer strategy and less concern about bank shareholders and management.
That said, a number of our listeners and readers have said they don't want to do business with bailout companies. The best resource I've found for looking at where the bailout money is going to is run by Propublica. It's a new independent, non-profit newsroom that focuses on investigative journalism. It has a comprehensive bank bailout page at www.propublica.org/special/show-me-the-tarp-money. It has a lot of detail and a bailout map at www.propublica.org/special/bailout-map. By their calculations nearly $302 billion of public bailout money has been disbursed to 3125 financial institutions.
01/21/09 by Chris FarrellLehman Brothers Bank?
Question: Several years ago my broker at Morgan Stanley bought me a CD at 5% which would not come due until 2016. Unfortunately this CD was with Lehman Bros. . Now I'm worried about the $10,000 I have invested. It is still paying interest but don't know if it will continue. Should I sell or what? My broker refuses to answer my questions about this- I'm changing brokerage firms! Phyllis, Lacey, WA
Answer: One thing that I love about the questions we get is that I always learn something new. I had no idea there is a Lehman Brothers Bank FSB. There is, and it's headquartered in Wilmington, Delaware. It's essentially an online bank that also offers community banking services in Delaware. Here's the really critical piece of information: The bank's deposits are insured by the Federal Deposit Insurance Corporation (FDIC).
According to a Reuters story last month, the U.S. bankruptcy judge overseeing Lehman let the company hike the capital level of the bank. It needed to boost it capital levels to prevent the Office of Thrift Supervision from taking enforcement action and placing the bank under government receivership.
What does this mean for you? Your $10,000 invested in the certificate of deposit is safe since you are well under the $250,000 FDIC limit. (Although on January 1, 2010, the FDIC insurance limit returns to $100,000 for most deposit categories.) That should give you some reassurance. And that's my most important message.
The story gets more complicated after that. There is a risk that at some point the bank gets taken over by regulators. If that happens another bank would take over your account. The new owner may or may not honor the existing terms of the CD. Traditionally, banks did stick with the CD terms because they wanted to keep you as a happy customer. More recently, a number of banks, nervous about their deteriorating balance sheets, have decided to change the CD terms.
My guess is that you have what's called a "brokered" CD, i.e. one that was sold to you by your broker. Brokered CDs come with some unusual twists and turns. If you want to get out early in a brokered CD, you'll probably have to sell it in the market like any other fixed income security. The risk is that you'll sell your CD for less than you paid.
I would definitely get a new broker, and work with that person. In the meantime, your principal is safe.
Credit unions
Question: My sister and I are having differences of opinion in investing our Father's money. He is in Assisted Living, age 93. Right now, the money is in U.S. Treasuries and earning very little interest. My sister wants to take most of the money ($150,000) and put it into CDs with SchoolsFirst Federal Credit Union which would earn 2.5%. I want his money to be safe and wonder about the financial footing of this credit union. Supposedly it is sound. Any suggestions? An avid listener of Marketplace Money on Saturday mornings. Linda, Tulsa, OK
Answer: I'm not sure I want to come between you and your sister, but we do get a lot of questions about the safety of credit unions. It's impossible for outsiders like you and me to judge the financial soundness of any bank or credit union. In the jargon of Wall Street, financial institutions are "black boxes." We can't figure out what's going on inside (and it turns out even the insiders couldn't figure it out).
What we can do is make sure the financial institution is backed by the FDIC or its credit union equivalent, the NCUSIF. That stands for the National Credit Union Share Insurance Fund. It's an arm of the National Credit Union Administration or NCUA.
Enough with the acronyms. I checked online, and SchoolsFirst is a federally insured credit union. The rules are the same as the bank FDIC limits: Deposits are insured up to $250,000. So, the money your father has would be fully covered.
You can rest easy if you put the money into a federally insured credit union. What if the credit union failed? (To be clear, I'm not saying it will or is even at risk of failing.) Your money is safe. The worst that could happen to it is that you can't get access to the money for a few hours or perhaps days (and I'm spinning out the worst case scenario here). The other risk is that the terms of the CD could be changed if the credit union was seized by the regulators and sold to another institution. The principal is completely safe, of course, but sometimes the interest rate on the CD is cut.
In a sense you can't go wrong so long as you stay short and stay safe. While I was writing this I wondered if a good solution was to decide on a mix, keeping some in short-term Treasuries, and adding some short-term CDs and savings account.
A bad credit card experience
Question: I just had an extremely frustrating conversation with my credit card company (Bank of America). I wanted to get your thoughts. Larke, Washington, DC
Answer: Larke sent us a long email, a self-described "rant." It details an all too common experience with government bailout-gorged credit card issuers. His case involves Bank of America. It raised the credit cards interest rate and cut the line of credit.
A couple of personal finance points: First, Larke is doing the right thing: Paying off the card in full. The beauty of capitalism is that you don't have to do business with companies that mistreat their customers. Second, everyone with a credit card should be prepared for a similar experience. It may not happen to you, but just as mailboxes stuffed with unwanted credit card solicitations was the bane of our financial existence only a few years ago, now hiking rates and slashing lines of credit is normal business practice. Be prepared. Third, don't volunteer to your credit card issuer that you've been laid off. In their business model, you've gone from a good customer to a high risk customer. Period.
Now, over to Larke's story. It needs no further comment:
I called BOA to try and get my interest rate down on my credit card. I have made this type of call in the past when I've been comparing offers from other credit card brands/banking institutions. In this situation, I was trying to use my current unemployment situation as leverage to get my interest rate lowered (i.e., I wasn't just shopping for a lower interest rate, I really thought that there wouldn't be an issue to lower my rate by a reasonable, appropriate amount; I was still riding the mortgage rate reduction train, I suppose).
Not only did the senior credit analyst not lower my interest rate, she cut my line of credit because I was just laid off. Instead of having a cushion of $10K, I now have a cushion of $500. Twenty minutes ago, if I never made the call, my limit would have remained the exact same as it was last night. I also just heard that BOA is experiencing gains. Great. So, BOA got to be irresponsible, get a slap on the wrist and now, can't possible lower someone's credit card rate by 2% (I do understand that rates are based on prime/t-bill calculations so I know that certain rates are just unrealistic, but I don't believe my request was unrealistic).
So, I got humiliated through a job lay-off and now , in trying to be responsible, my credit card company is reducing my credit (I have excellent credit history, always made my payments, own a house, etc.).
They offered me some kind of debt reduction program (a 5 year payoff program) - but I'm pretty positive that will end up costing me more in the long run. So, I'm just going to pay the card off, asap.
Thank you so much for reading my rant - I thought the bank's were supposed to be flexible. I'm very frustrated!
Community bank
Question: I am trying to decide which lender to use to refinance my home mortgage. The small, neighborhood bank is offering the lowest rate with mortgages backed by Fannie Mae/Freddie Mac. Their closing costs are slightly less than the big name mortgage lenders in my home city. Is there anything else I should consider in this decision regarding which lender to choose? I like the personal service and convenience of the neighborhood lender, but are there any risks that I'm overlooking with using a smaller lender? How is the smaller lender able to offer lower rates? Thanks. Elsa, St. Louis Park, MN
Answer: There is no reason why you shouldn't go with your community lender so long as you've shopped around (which you have) and it's a bank insured by the FDIC. The risks are the same. There could be a number of reasons why they're offering lower closing costs, from a business strategy to compete against the big banks to having a healthier balance sheet. When the numbers line up, it's good to support neighborhood institutions.
04/02/09 by Chris Farrell
Loan payment fees
Question: You mentioned on your May 22nd show that credit card companies will no longer be allowed to make people pay for phone and online payments. I was wondering if this applies to only credit card payments or also payments on other forms of credit, like mortgages and car loans? Jargen, Minnetonka, MN
Answer: No, when it comes to loans the main focus of the new law is on credit cards. (Although a provision attached to the legislation allows visitors to carry guns into national parks. Go figure.) However, a number of banks don't charge a fee for making mortgage or auto payments by phone or online, or they have "windows" where they don't. This is a classic example of it pays to shop around, especially checking into payment policies of a local credit union or community bank.
06/03/09 by Chris FarrellFico score for free
Question: My credit union advertises a free service that provides members with their FICO score each month. Will signing up for this service negatively affect my FICO score? Is there any other reason why I should hesitate to register for this service? Jason, Indiana, PA
Answer: It will not have a negative impact on your credit score. Indeed, my guess is that you're with the Pennsylvania State Employees Credit Union which has negotiated a deal with Fair Isaac, the creator of FICO score, to offer its online checking customers free FICO scores monthly. "The Fair Isaac Scores on Statements program not only benefits our members by giving them a free view into their financial health, but it also helps PSECU by educating our members on the positive impact of responsible credit behaviors," said Gregory Smith, President and CEO of the Pennsylvania State Employees Credit Union.
The free credit score is a service other financial institutions are offering their customers, too. It looks like a new line of business expansion for Fair Isaac, and I expect it will become more commonplace with time. With this kind of program the customer of the bank or credit union not only gets their FICO score but the factors that went into the score. Customers can then see where they may need to make improvements in their credit habits to boost their score.
I don't see any downside to participating in a program like this other than my general stance that people are paying too much attention to credit scores. Simply put, being conservative with your household finances will pay off in a more secure lifestyle and a better credit score with time. I don't really see any need to look at it monthly. Not everyone agrees with me, and their personal finance advice is tailored toward manipulating credit scores higher. I don't agree. The goal should be to break the tyranny of the credit score.
Assume a mortgage
Question: I own a house in Tennessee. An investor offered to buy the house by keeping my mortgage in place in order to save him the cost of getting a new mortgage and to save me the loss of selling short. He said he would buy the house as is and would assume ownership of the house as well as responsibility for paying the mortgage that I already have. As I have never heard of this before, I want to know if this is a good opportunity for me to finally get rid of my house without loosing money or could this be a trap? Nick, Sterling, VA
Answer: I would be very wary. The investor described the idea right: Assuming your mortgage means the buyer takes over the existing payments instead of getting a new mortgage. But most lenders no longer allow for their mortgages to be assumed. It's prohibited in the mortgage documents. So, I would look at your mortgage papers first to see if it's possible. If it is an assumable mortgage, the lender will still insist (rightly) on running a credit check on the buyer.
Finally, what concerns me is that I don't really understand the advantage to the buyer who will assume the mortgage. There are two real benefits to assuming a mortgage, a lower interest rate and cheaper closing costs. In your case the closing costs would be less. But the mortgage rate? Even though interest rates have crept up recently they remain remarkably low and, if you have good credit, there is plenty of mortgage money available from lenders.
The bottom line: Check this deal out very carefully, starting with your lender. It may not even be possible depending on your mortgage contract.
CDs
Question: I am a 33 year old unemployed librarian (laid-off from part-time professional position end of March 2009) full-time doctoral student. I have about $12,000 in a CD that just came due. Rates are terrible of course, I shouldn't need the money anytime soon, and I'm trying to figure out the best, but not too risky, place to put this money, which is most of my savings. I'm leaning towards a 9-month Ally Bank CD with a 1.90% rate. Does it even matter at this point what I do with the money as long as it's safe and secure? I have a separate Roth Ira. Thanks so much. Miriam, Brooklyn, NY
Answer: Ally Bank is the old GMAC bank. The name was changed back in mid-May. I guess the GM name didn't exactly evoke warm feelings of financial security. The online bank is insured by the FDIC. You're right, the key is that your money is safe and secure. My only question is whether you want to keep some of the money easily accessible by parking it in the online savings account. This way you won't have to break the CD contract and absorb a penalty if you need some quick cash.
Automatic bill payment
Question: I understand that credit card companies take a dim view of certain credit-using behavior when deciding on your interest rate. For instance, I've read on this site that you shouldn't use credit cards at the salon, at bargain stores, or for purchasing alcohol. What about monthly bills, though? American Express offers double rewards points for setting up your monthly bills (utilities, cable, phone service) to be paid automatically with the card. I already have these bills set up to be paid automatically from my checking account each month anyway, so is there much difference in shifting them to my AmEx and gathering the extra rewards points (to transfer to frequent flyer accounts, or to help out with Christmas gifts, etc.)? And will this have a detrimental effect on my credit score? Suzanne, Rochester, NY
Answer: The biggest factor in determining your credit score is paying bills on time. (It accounts for 35% of the score.) So, it certainly doesn't hurt your credit score to pay them automatically, and it will probably boost it over time. By the way, it doesn't matter whether the bills are paid on time by check, automatic withdrawals from your checking account, or automatic bill paying through your credit card. Of course, the key to the latter method is paying the tab on your card on time.
The credit card companies are replicating the mistake of the recording industry. They are going after customers, changing the rules of the game without notice, closing accounts, raising interest rates, hiking fees, and cutting lines of credit. In trying to lower the overall risk of their credit card portfolios it looks like red flags were raised when customers shifted from shopping at premium stores to discount emporiums. The data mining into our habits and behavior is breathtaking--and disturbing.
Still, the industry would go out of business if it denied credit cards or hiked rates on everyone who on a monthly basis got a haircut, went to a liquor store, picked up household items at a bargain basement store and groceries at discount warehouse. What they're really looking for is abrupt changes in spending that might signal financial trouble. In a sense, with regular bill pay you are steadfast and you get the rewards you want. (There is another whole question about rewarding credit card companies for their behavior, but that is for another forum.) For more on credit card company behavior and your spending habits check out this terrific interview my colleague Tess Vigeland had with Charles Duhigg.
If you're responsible with money it's probably best to use a credit card with an automatic payment instead of a checking account. The reason is that so long as you are well under your credit limit you don't need to worry about overdraft fees and the like from the bank--and those fees are costly.
Debit cards safe
Question: A year ago, I made the decision to use my debit card more and credit cards less. I currently have no debt - good feeling! I recently heard a financial advisor on a radio show (maybe it was yours) say he only uses his debit card. He doesn't have a credit card and says he can use his debit card. I am aware of certain protections that come with credit cards: limitation of loss if you report a lost card promptly or refund if say you purchase tickets for a cruise that gets cancelled. Does a debit card provide all the same protection to me that a credit card does? Are there any important differences between a debit and credit card that I need to be aware of? Thank you. Char, Bainbridge Island, WA
Answer: Going debit is popular. For the first time consumers are using their debit cards more than credit cards. It's a good trend. I'd probably use my debit card 90% of the time whenever I pull a piece of plastic out of my wallet. But I'm skeptical of going all debit, at least for anyone that travels, shops online, and buys a big ticket item like a washing machine or refrigerator. In certain circumstances I prefer the greater legal protections of a credit card over a debit card. It's a judgment call.
Like you, the driving force behind the widespread shift from credit cards to debit cards is the desire to stay out of debt. A debit card is really an electronic checkbook linked to your checking or savings account. A debit card offers the convenience of plastic and merchants welcome the card. The real issue with a debit card is not to overdraw your account. Banks have learned that it's really profitable to let you overdraw your account and sock you with hefty overdraft fees.
Now, to your question about consumer protection: Credit cards have more legal protections than debit cards. But in practice Visa and Mastercard have a policy of insisting that their issuing banks voluntarily extend credit card protections to debit cards. To ensure that you get the "zero-liability" policy protections when you use your debit card press the "credit" button and sign for the transaction.
Here are the rules. By law, if your credit card is lost or stolen and you tell the card company before any unauthorized charges are posted to your account you're not on the hook at all. But if the unauthorized charges do show up on your bill--and that's how we usually find out about unauthorized charges--your liability is limited at most to first $50 of charges. It's good protection. The debit card rules offer up a tired security system. Your liability is limited to $50 if you tell the issuer within two days of finding the unauthorized charges. Between 2 and 60 days, your potential liability rises to $500. After that you could be on the hook for even more.
However, if your debit card has the Visa or MasterCard logo you don't have to report fraudulent activity within two business days. The policy of the two giants of the industry is that you won't be held liable for fraudulent transactions made over their networks. (That's why you hit credit and sign for the transaction.) But it's a policy, not the law.
In practical terms I'm comfortable with the Visa and Mastercard pledge most of the time. For everyday use around town, going to the grocery store and the dry cleaner, debit cards are safe. It's a sound habit to develop for not taking on debt and spending more than you earn. However, I prefer the deeper legal protections of a credit card when I travel. It's easier to book and protest with credit cards with rental cars, airfares, hotels, and the like. I'm a cautious with the wild west of the Internet so I'll use my credit card for shopping online. If I buy an expensive item I'd rather make sure everything is okay before paying off the bill in full.
So yes, you can go fully debit. But I recommend being a debiter most of the time, just not all the time.
A bond ladder
Question: Looking for safe place for investing which pays a higher yield than CD's. As a senior, in these uncertain times, I am a conservative investor. Miriam, San Diego, CA
Answer: Today's low yields are tough on savers, especially seniors looking to live off their savings. However, even though it appears that the recession is ending there is still a lot of risk in the economy and markets. So, I think the risk of reaching for yield is too high. I'd stick with government-backed savings, from Treasury bills to CDs.
One time-tested strategy is to create a "ladder" of CDs or U.S. Treasuries. The idea is to invest in securities with different maturities. For example, using the national CD rates published in today's Wall Street Journal you could buy a 6-month CD at 1.25%, a 9-month CD at 1.45%, a one-year CD at 1.61% and a three-year CD at 2.61%. Now, let's imagine in six months that interest rates are higher. You will have a short-term CD maturing at that time and you can reinvest the money at the higher rate. What if rates go even lower over the next six months? You're still earning a relatively better return on your longer-term higher-yielding CDs. You can also do this with Treasuries bought directly from the federal government at treasurydirect.com.
08/17/09 by Chris FarrellClosing credit card account
Question: I have a high interest credit card--24.9% with Bank of America, with a large balance $12,000. I am closing the account and Bank of America says the interest rate on paying off the balance is 5.5%. Is this ok under the new credit card law signed into affect? Dennis, San Diego, CA
Answer: My guess is that you got an offer of a lower interest rate in return for closing the account. It's common practice these days.
Although many finance experts recommend against closing an account because it will nick your credit score, I often think it's a good move on your part, especially if money is tight. It can be tough to pay off a large balance at a loan shark rate of almost 25%. A 5.5% rate of interest can make a big difference. Just doing a quick calculation, if you paid the minimum payment at 24.9% you would fork out $5,095 in interest payments alone. At 5.5% the interest charge adds up to $774. Hopefully, you can put even more than the minimum toward getting rid of the loan.
The new credit card law that comes into effect in stages basically protects cardholders from unexpected interest rate hikes and significant changes to the terms of the loan. It also bans some bad practices, such a universal default. (A "universal" default policy hidden in the fine print of a credit card agreement meant that if you were late on any payment to any creditor, the rate on your credit card could automatically jump to the default rate of 30%.) I would imagine in the future that so long as credit card issuers give their card holders sufficient, clear notice they should be able to offer a lower rate in return for closing the account.
FDIC
Question: Is it possible to lose money in 2 FDIC insured accounts if you have less than $250,000 in each FDIC insured bank but greater than $250,000 total in multiple FDIC insured banks and both banks fail? Ken, Rhododendron, OR
Answer: You won't lose a penny if you have $250,000 or less in several FDIC insured banks and they all fail. Your money is safe. The FDIC has a good summary of its rules and regulations at it's website. (The booklet on the insurance fund also explains how you can have more than $250,000 at one insured institution and still be covered; it has to do with the types of accounts the money is parked in.)
This money pledge holds even though the Federal Desposit Insurance Corporation issued today a bleak report card on the nation's banking industry. The money in the deposit insurance fund fell by 20% to $10.4 billion in the second quarter. That's its lowest level in nearly 16 years. Still, no one has lost a penny on a banking account that comes under the insurance limits since the fund was created during the depths of the Great Depression. And although many unthinkable things have happened during the Great Recession, I'm confident that the FDIC insurance is good.
08/27/09 by Chris FarrellGet rid of escrow
Question: My husband and I refinanced last year and since then our mortgage has been sold twice. We have always paid in a timely manner and we have never missed a payment. The previous banks collected escrow for the exact annual amount of our taxes and insurance. This new bank just sent me notification that they have the legal right to collect more so that the escrow balance doesn't go below zero immediately after they pay the taxes. The amount that the account went below was by $3000 but it was all recovered by the end of the year. The bank wants a cushion of $4500 which is even more than the negative balance. I asked to pay eliminate the escrow so that my husband and I can pay the taxes ourselves and not give them all that extra money and we were told that we could make this request but that they were not required to allow us to do so. Is this true? If so, why do the responsible people always get slammed? Any thoughts? Rachel, Cumberland, RI
Answer: Many people don't like escrow accounts. But it's really hard to get a bank to drop an escrow account once it's in place. It's to their benefit and lenders have little incentive to waive it. You should make the request anyway. Sometimes the lender will agree to drop escrow in return for a fee, especially if a good chunk of the mortgage has been paid off. The bank is right: They can require a savings buffer in the account. However, a partial mitigation is that Rhode Island is at least one of only 14 states that insist the lender to pay interest on the escrow funds.
Taylor Bean and Whitaker
Question: My mortgage is through Taylor Bean and Whitaker which has just been implicated in a fraud scandal, (which made headlines in August.) When no payment was deducted from my husband's bank account in September, we made a call to TBN and were told that the company has ceased to operate, but that we should send a check to the Ocala, FL address. I'm afraid to send my mortgage company now knowing that it has "Ceased to operate," but am equally afraid of missing a mortgage payment. How should we proceed? Jessica, East Waterboro, ME
Answer: You're instincts are right. Before you do anything you need to see who is now responsible for servicing the mortgage. There has been a great deal of confusion since Taylor Bean went under, but it looks like government agencies have straightened it out.
The FDIC and Federal Reserve each offer Taylor Bean and Whitaker customers a hotline to call for more information. The FDIC number is 1-877-275-3342. The Federal Reserve's hotline is 1-888-851-1920.
Basically, if the loan was insured by the Federal Housing Administration, Veterans Administration or USDA's Rural Development, it was probably securitized (turned into a product that can be sold like a bond) by Ginnie Mae. Bank of America has taken over the servicing of government-insured or guaranteed mortgages securitized by Ginnie Mae. The Ginnie Mae website offers more information, and you can get the BofA address. Other TBW loans were securitized by Freddie Mac. It has arranged for Cenlar FSB, Saxon Mortgage Services, and Ocwen Loan Servicing to assume responsibility for the loans. It's website is freddiemac.com.
So, check out where the payment should go first, and then write the check..
Closed credit card account
Question: I just received a notice from HSBC, one of two of my credit card companies, that they were going to increase my interest rate - again! (Six months ago they increased it from 9.9% to 14.9%) This increase is unrelated to any delinquency on my part nor a particularly low credit score (approx. 760+). The notice indicated that HSBC was raising my interest rate because I am part of a "class of accounts" whose interest rates are being raised as of December of 2009. They are offering me the opportunity to "opt out" of the increase. This means they will cancel my account. I know Marketplace has advised other listeners that closed credit card accounts negatively impact credit ratings - so my question is: should I keep the account open and not use the card or should I "opt out" on the presumption that it will not negatively impact my credit score? Chris, Los Angeles, CA
Answer: You have a lot of company. Yes, closing the account will have a slight negative effect on your credit score. The impact of a closed account comes from the change in your ratio of total credit balances to total credit limits. A closed credit card account lowers your overall credit limit and raises the ratio.
But so what? The nick won't really matter unless you're in the market to buy a home, a car, or some other big ticket item. If that's the case, I would swallow the increase for now. But if you aren't going to be borrowing money anytime soon I would recommend closing the account and paying off the balance at the lower rate. Why reward this company with your business considering how it is treating you? After all, the real goal is to get rid of credit card debt. And the effect on your credit score--if any--does fade with time.
One other point: Do you really need more than one credit card anyway? I can't think of a good reason why anyone wants more than one. An important exception to that rule is having one for personal use and the other for business expenses. It makes record keeping easier.
10/05/09 by Chris FarrellLow risk and high yield?
Question: Over the past year I have saved about $3,500, stashing it in online savings accounts that are yielding lower and lower interest rates. My question is, what should I do with this money? I'm wary of putting it into tumultuous stock market, but CDs and other "safe" options are yielding abysmal returns. Is there a low-risk investment that would allow me to see a better return than 1.5 percent? Thanks! Casey, Portland, Maine
Answer: The interest rates on safe savings are paltry. It's hard to get much more than a fractional rate of interest on savings accounts, certificates of deposit, savings bonds and short-term Treasury securities. Little wonder many of the questions I get involve the desire for higher yields without abandoning the security of the federal government's full faith and credit. Fact is, you're not doing bad getting 1.5%!
It's an axiom of modern finance that you can only create the prospect for higher returns by taking greater risk. You've worked hard to save $3,500--congratulations. You say you're wary of putting it into the stock market since your $3,500 could plummet in value to $2,500 or worse if the stock market lurches lower. (Of course, it could grow in value if the rally continues.) You can pick up a higher yield by buying into corporate bonds, but there is still greater risk than in an online savings account or CD.
In most cases, my advice for now is if you don't want to embrace volatility stick with safety--and low yields. Eventually interest rates will rise when the economy is healthier and you'll be able to participate in those greater yields.
Another thought: Inflation erodes the purchasing power of savings. I'm skeptical that the outcome of the Federal Reserve's unprecedented efforts to prevent a financial collapse will end in a bout of hyperinflation as some Wall Street money mavens fear. Yet even if I am right, low rates of inflation still eat away at the value of a dollar. That's why many investors are adding to their portfolios securities that safeguard against inflation. You could put some of the money into I-bonds. It's a hedge against a rise in inflation and there's no credit risk.
Cash in college savings
Question: Our oldest son is a junior in high school. We had been saving for college in a mutual fund. When the downturn hit last fall, we stopped adding to the mutual fund, and put our monthly contributions into a CD that can receive automatic monthly additions at 3.75%.
The mutual fund has recovered some ground since its low point. When should we start moving money out of the mutual fund and into something more stable? We could get a 2.5% CD at our credit union now. Thanks for your advice! Evelyn, MN
Answer: You really don't have much time before your son goes off to college. (I know this the hard way. I have a senior in high school and the time just flew by.) So, I would focus on taking advantage of market rallies to opportunistically lock in the value of your savings with FDIC insured CDs and the like (or their credit union equivalents).
You do have some time in a financial sense. It's six years between now and graduation from college. Still, I would lean on the conservative side with this money. You'll be writing tuition, room and board checks before you know it and you don't want to see your savings vaporize in another bear market.
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Chris Farrell Marketplace Money personal finance guru
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Latest Comments
- Low risk and high yield? (1)
- bruce mauser wrote: I’m surprised Chris Farrell didn’t mention credit unions. Check the internet some like Advantis are ... [read]
- Closed credit card account (3)
- Anonymous wrote: I am an advocate of a spare credit card also. Plus, if you don't carry a balance, the APR shouldn't ... [read]
- Anonymous wrote: HSBC can raise rates as high as they would like. Just dont carry a balance. On the other hand, they... [read]
- Taylor Bean and Whitaker (13)
- Lori Bodamer wrote: what about our escrow checks? lots of people- including me- were issued escrow refunds from our ove... [read]
- Patricia Marcus wrote: I spoke with someone at Taylor Bean and Whitaker she advised me all loans will be transfered that th... [read]
- Closing credit card account (1)
- Anquinette Taylor wrote: Why is that when you close a credit card after paying it off, your FICO score is hurt or drop. I ha... [read]
- Debit cards safe (4)
- Pamela Shipman wrote: So, if you use a debit card, but hit the credit button, does it charge your debit card or your credi... [read]
- Chris Farrell wrote: Your debit card.... [read]
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