Savers often come across a bank or credit union that penalizes them for account inactivity. A reader just emailed me about his experience with his TIAA Direct savings account. One day he found that he was not able to transfer funds into or out of his account. When he called, the TIAA Direct rep told him that the account had been locked after six months of inactivity. Fortunately, they did not charge him any inactive fees. So if you have a TIAA Direct account that is no longer active, you should either close the account or make sure you keep it active. One way to keep it active is to initiate transfers into or out of the account at least once every six months.
Freezing accounts when they’re inactive isn’t just done by banks. As I described last November, my share savings account at one of my credit unions was labeled as inactive and was frozen by the credit union. I found out about this when I tried to establish a link to the account from my Discover Bank account. I was planning to use this link to initiate ACH withdrawals when my credit union CD matured. The linking process failed due to the account being frozen. To re-activate my credit union savings account, I had to send the credit union a service request form and a copy of my driver's license. Once it became active again, I tried to redo the Discover Bank link process, but that failed. Discover Bank then required written proof of my ownership of the credit union account.
For both this credit union example and the example with TIAA Direct, an inactive account can create a lot of hassles even when you aren’t hit by fees. In the past, I have been hit by monthly fees that started when the accounts became labeled as inactive. Both cases were at credit unions, and the fees started after one year with no member-initiated transactions to the accounts.
Each time you open a bank or credit union account, you should make sure you know the answers to the following questions. If you have multiple accounts at one institution, don’t assume that activity in one account will meet activity requirements in another.When is an account considered inactive? 3 months? 6 months? 1 year? What happens when the account becomes inactive? monthly fees? account freeze? What is considered an activity? Does an ACH transfer count? What is the escheatment period? This is when the bank turns over the account to the state. The period can depend on state laws.
You should also be aware that these policies can change, and you may not be sent a change notice. DA member me1004 described the problems that can happen when a credit union changes its account inactivity policy.
To prevent account inactivity fees and having your account frozen, it’s a good idea to regularly review the latest rules. Unfortunately, this isn’t always easy. Last year I investigated the account inactivity policies at PenFed. The policies were not clearly described in PenFed’s online disclosures, and I didn’t get clear answers from a PenFed CSR. I had to get help from my PenFed contact.
One useful rule of thumb to avoid account inactivity is to make sure you initiate some account activity (such as initiating a transfer) at least once for every six months. You should also consider closing the account. That’s one easy way to avoid having to worry about changing policies and inactivity fees. Just be aware of the possibility of account closure fees.
"EyeVerify, a maker of identity management software for mobile banking, is rolling out its service to the financial industry. The Kansas City-based company said Monday that banks, payments providers and other businesses can use its EyePrint system to secure accounts, authenticate transactions and restrict access to systems. EyePrint renders the optical equivalent of a fingerprint by matching blood vessels in the whites of people's eyes to verify their identity automatically."
Mobile Banking Explodes and Keynote Announces Who Does It Best – One Billion Mobile Banking Consumers Expected by 2017
"Keynote® (KEYN), the global leader in Internet and mobile cloud testing and monitoring, today announced the results of the Spring 2013 edition of the Keynote Mobile Banking Scorecard, first launched in 2011 and the standard in benchmarking consumer mobile banking offerings."
Citi sets sights on international markets to cement mobile banking focus
"Financial institution Citi is rolling out its iPad application internationally to reach new groups of consumers and show them how mobile banking works. Citi has rolled out the iPad app to Russia and Hong Kong as part of a bigger marketing strategy to expand its global footprint this year. Mobile has played a key role for Citi over the past few years to help clients manage their accounts from their handsets."
APWG Report: Mobile Device Crimeware Evolves into Global Criminal Marketplace in Response to Mobile Payment and Banking Expansion
"The sprawling mobile devices marketplace has spawned an industrialized mobile financial fraud plexus that today drives increasingly sophisticated criminal technical innovation to exploit the mobile devices explosion. And it is funded by increasing revenues derived from potent new developments in mobile malware, a new APWG report released concludes. In a “post-PC” era, mobile devices increasingly present an attractive, practical and economical alternative to traditional desktops. In the coming years, global mobile payments are predicted to exceed $1.3 trillion, moreover, presenting a mother load of opportunity for cybercrime gangs who appreciate the vulnerabilities of these peripatetic communications and computing platforms, the APWG’s analysis reports."
Refundo Launches Mobile Banking App at FinovateSpring 2013
"Refundo, a national provider of financial services to the underserved, launched its widely-anticipated mobile banking app today at FinovateSpring 2013, which is now available for free download on the App Store. FinovateSpring is a demo-based conference for innovative startups and established companies in the fields of banking and financial technology, and is held today at the Design Concourse Exhibition Center in San Francisco."
Chase Tops Keynote's Mobile Banking Scorecard for Third Time in a Row
"Chase took top honors in the Keynote Mobile Banking Scorecard for overall mobile web experience in Q1 2013. This is Chase's third consecutive win in Keynote's ranking of mobile offerings among the 15 largest U.S. banks. In the latest Keynote Scorecard, Chase ranked #1 in two of four categories - Functionality and Ease of Use - to take the top spot overall."
Be smart about mobile banking
"Mobile banking represents a huge leap forward in the area of banking convenience. It also represents a huge risk to your personal information. Here’s how to minimize the risk and enjoy the convenience. Getting up-to-the-minute account information and having immediate access to funds via a mobile device is one of the great technical accomplishments of banking. The problem is that without adequate security precaution, this ease of access can be available to people who have no right to it. To protect yourself, a person does well to do two things:"
For the parents of a child with special needs, concerns about their child's health, well-being and future financial security are magnified, especially if the child may need continued special care and support well into adulthood. It is essential that parents engage in a planning process so that the needs of the child and other family members are met.
A carefully structured Special Needs Trust (also called a Supplemental Needs Trust) is an important cornerstone in special needs planning.
Here's what you need to know.
Over the last decade, estate planning techniques have changed, based on emerging, federal and state legislation, and shifting threshold levels of taxation and net worth. “It is imperative that parents of a child who has special needs have a plan in place, regardless of the size or value of their estate,” says Dan Cornwell, president of Cambridge Consulting Group.
While parents are typically the primary caregivers of a child with special needs, what if one or both parents die or become disabled? Other family members may be thrust into the role of primary caregiver, whether they're ready or not. If something happens to the parents, who will become the new primary caregiver? Is that person prepared to provide emotional support and actual physical care? Are there financial resources or financial assistance. These are just some of the questions to be considered, says Cornwell.
Why a Special Needs Trust is critical
A Special Needs Trust permits distributions to a child with special needs to supplement, but not replace, monies available through government assistance. If any trust other than a Special Needs Trust was utilized, under the laws of most, if not all states, the child would be ineligible for Medicaid and Supplemental Security Income (SSI), says Lori Wolf, a member of the law firm Cole Schotz, who specializes in estate planning and special needs planning. The trust is also important to ensure that a trustee selected by family is named to invest trust assets and make trust distributions in the best interests of the child.
“A disabled person can have assets/and or income set aside to pay for any expenses over and above what public benefits will cover without jeopardizing his or her eligibility for public benefits. Also, assets are managed by a trustee and not the disabled person,” says Ronald Fatoullah, an attorney with Ronald Fatoullah & Associates, which specializes in elder law, explaining a Special Needs Trusts' chief benefits.
As vital as Special Needs Trusts are, there are challenges. For example, when a self-settled trust is used for a disabled person under the age of 65, a parent, grandparent, guardian or a court must establish the trust for the disabled person to avoid certain Medicaid issues. Therefore, if the disabled person does not have a parent, grandparent or guardian, the court must be involved, points out Fatoullah. “Sometimes, it is difficult to find a reliable trustee,” he adds.
There is no shortage of caveats. While the trust can own a house where the child lives, however the child must then pay rent for use of the home to ensure that the trust is not funding the child's housing needs, says Wolf.
Another example is if the child moves, the trust will need to be re-evaluated. “A Special Needs Trust should be reviewed with an attorney of the other state to be sure that it will be acceptable in that state as well,” says Fatoullah. Although Medicaid and SSI are federal programs, they are administered by states and each state has its own set of requirements of what must be included in a Special Needs Trust, says Wolf.
Know too, that there are two kinds of Special Needs Trusts. A third party trust is funded by assets gifted to or bequeathed to the trust for the benefit of the child. The other, a first party trust is funded with the child's own assets, including assets in the child's name or assets paid for the child through a medical malpractice claim or other such claim. A first party trust has many more onerous requirements than a third party trust, says Wolf. One example, she says, is that there must be a reimbursement for many of the government benefits provided to the child with assets that remain in the trust at the child's death. Assets gifted or bequeathed for a a child should not be contributed to a first party trust and the child's own assets should not be contributed to a third party trust.
Make no assumptions. Some families choose to disinherit a child with special needs to ensure that they are not disqualified from receiving benefits. Bad idea says Wolf. “I strongly discourage that. The parents assume that their other children will care for the child with special needs. There are many reasons they may fail to adequately protect the child with special needs,” warns Wolf.
Do not keep the trust secret. Let the extended family know of its existence to ensure they coordinate gifts and provisions in their will for the benefit of the child to leave anything passing to the child to the child's Special Needs Trust.
In the event of a divorce, child support to a child with special needs after age 18 should pass to a Special Needs Trust to preserve the child's eligibility for government assistance.
Be sure that retirement plan assets and life insurance are coordinated with the Special Needs Trust. “I often see that families prepared the right form of trust, but neglected to change the designated beneficiaries of retirement plan accounts and life insurance to ensure that the share of the child with special needs is allocated to his or her trust,” says Wolf.
Trustees of Special Needs Trusts must be careful about what is paid from the trust. The trust will document acceptable payments to be made for the benefit of the disabled person. Trustees are fiduciaries, and must act in accordance with the trust agreement and in the best interests of the beneficiaries, says Fatoullah.
What should top your to-do list though, is to consult an attorney who has expertise in Special Needs Trusts to be sure that the trust is drafted properly in conformity with state law.
Day before Yesterday
In economic news this week, the Labor Department released April Consumer Price Index (CPI) numbers. According to the report, this was another month of lower inflation, primarily due to falling gas prices. CPI fell 0.4% for April, and over the last year, CPI is only up by 1.1%. Even with the slight decrease in gas prices in April, it sure seems like we have seen more inflation over the last year. I know many of my grocery staples have increased in price (or the package sizes have shrunk).
Unfortunately, only these government-reported inflation numbers matter in determining monetary policy. And this data gives the Fed justification to keep its easy money policies. According to this CNNMoney.com article:
"With inflation dropping to a two-and-a-half year low and labor markets still soft, the Fed is well-positioned to keep the monetary spigots open in support of the economy," said Jim Baird, partner and chief investment officer for Plante Moran Financial Advisors, in a note.
However, not all news this week pointed to a never-ending zero interest rate policy. According to this Bloomberg article:
Treasuries fell in the longest losing streak this year as the economy showed more signs of strength, prompting speculation the Federal Reserve may start to slow the pace of its monetary stimulus.
The article had another description of the economic news as "modestly better data", and this Reuters article warns of "fresh signs of slower growth in the second quarter." In summary, I wouldn't get my hopes up for higher deposit rates any time soon.
- 6-month: 0.08% same as last week
- 2--year: 0.26% same as last week
- 5--year: 0.84% up from 0.82% last week
- 10-year: 1.95% up from 1.90% last week
- 30-year: 3.17% up from 3.10% last week
Fed funds futures' probability of rate hike by:
- Jan 2015: 32% up from 28% last week
- Sep 2015: 65% down from 67% last week
There was a rare Tuesday bank failure this week. The total number of bank failures for the year is now 13. At this time last year there had already been 24 bank failures, and at this time in 2011, there had been 43 bank failures.
Savings & Checking Account Rates
Two rate leaders had rate cuts this week. Incredible Bank cut its money market rate by 5 bps and its checking account rate by 10 bps. The money market account yield is now 0.91% for balances up to $250K. The last cut was in early April when the money market yield fell from 1.01% to 0.96%.
The other rate cut came from Barclays. Its online savings account yield fell from 1.00% to 0.90%. This is the first cut since Barclays started offering this account in March 2012. Let's hope that rate cuts at Barclays remain rare.
We now have only two savings and money market accounts with yields of at least 1.00%. This is when you exclude accounts that are promotions (like EverBank), that have small balance caps (like Evantage Bank and SmartyPig) and have checking requirements (like Connexus Credit Union). Those two remaining accounts are at MyBankingDirect which has a 1.05% APY money market account and CIT Bank which has savings account with a 1.00% APY for balances of at least $25K.
Reward Checking Accounts
No reward checking accounts on my list of nationally available accounts had rate cuts or balance cap cuts this week. However, we are still seeing cuts for the local reward checking accounts, and you can view the latest in the reward checking subforum.
To find the highest reward checking rates and balance caps in your state or nationwide, please refer to our reward checking rate table. If you're new to these tables, my rate table guide should be useful. If you're new to reward checking, please refer to my blog post, 10 Common Traits of High-Yield Reward Checking.
Rate/Balance Cap Cuts:
- Incredible Bank MMA - 0.91% [was 0.96%]
- Barclays Savings Account - 0.90% [was 1.00%]
- ableBanking MMA - 0.80% [was 0.85%]
- Incredible Bank Checking - 0.71% [was 0.81%]
Certificate of Deposit Rates
My recap of CD rate changes and the list of CD deals will now be in my survey of the best CD rates. This recap will now focus on banking news of the week and liquid accounts.
Recap for the Week - Links to This Week's PostsBanking News/Resources
- Barclays Online Savings Account Rate Falls After More Than a Year at 1.00%
- Incredible Bank Makes It Easier To Avoid New Monthly Maintenance Fee
- Survey of the Best CD Rates for May 17, 2013
- Higher CD Rates at GE Capital Retail Bank
- Barclays Now Allows Interest Disbursement On CDs
- $100 Checking Account Bonus at Western State Bank in AZ and ND
- $150 Checking Account Bonus (with Caveats) at KeyBank in Certain States Only
- Free Checking Account Bonus at Widget Financial Credit Union in PA
The rates listed below are based on Annual Percentage Yield (APY). No minimum balances are required unless noted. MMA next to the rates indicate a money market account. Most MMAs have check writing and ATM cards. Online savings accounts usually lack both of these. Previous weekly summaries are available at this page.
Checking/Savings/Money Market Accounts:
- Best Savings Account Rates (Nationwide & by State)
- Best Money Market Rates (Nationwide & by State)
- Best Checking Account Rates (Nationwide & by State)
- Noteworthy Accounts Available Nationwide:
- EverBank - 1.25% MMA/Checking (6mo intro rate) 0.76% ongoing rate, account review
- Connexus Credit Union - 1.15% ($100K) 1.00% ($50K) 0.75% ($20K) active chk required
- Redneck Bank - 1.10% MMA (up to $35K) 0.50% (over $35K)
- AmericaNet Bank - 1.10% MMA (up to $35K) 0.50% (over $35K)
- Evantage Bank - 1.10% MMA (up to $35K) 0.50% (over $35K)
- MyBankingDirect - 1.05% (min $5K)
- CIT Bank - 1.00% ($25K) 0.90% ($100) Savings, account review
- SmartyPig - 1.00% ($50K max), account review
- SFGI Direct - 0.94% account review
- Incredible Bank - 0.91% MMA ($2.5K min) account review
- Sallie Mae Bank - 0.90% MMA account review
- Union Federal Savings Bank - 0.90% MMA (min $2.5K) account review
- Salem Five Direct - 0.90% savings, for new customers only
- Barclays - 0.90% Savings account review
- American Express Bank - 0.85%, account review
- Colorado Federal Savings Bank - 0.85% ($2.5K min) account review
- Capital One 360 - 0.85% ($100K) 0.80% ($50K) 360 Checking
- FNBO Direct - 0.85% Savings
- GE Capital Retail Bank (formerly MetLife) - 0.85% ($25K) 0.80% ($10K) Savings
- Sallie Mae Bank - 0.85% Savings account review
- AloStar Bank of Commerce - 0.85% ($50K) 0.50% ($0) MMA Advantage
- Mutual of Omaha Bank - 0.85% Savings (min $25) account review
- Ally Bank - 0.84% MMA/savings
- Clear Sky Accounts - 0.80% (max $250K) account review
- Discover Bank - 0.80% Savings (min $500) account review
- ableBanking - 0.80% MMA (min $1K)
- TIAA Direct - 0.76% MMA/Savings (not accepting new customers) account review
- Nationwide Bank - 0.76% MMA (min $1K)
- Bank of Internet USA - 0.75% MMA
- Capital One 360 - 0.75% 360 Savings
- Incredible Bank - 0.71% Checking ($1K min) account review
- Alliant Credit Union - 0.70% (min $100) Savings account review
- Alliant Credit Union - 0.65% Checking (req's elec. dep & e-stmts) account review
Reward Checking Accounts:
- Best Reward Checking Account Rates for a $10,000 Balance - Nationally Available
- Best Reward Checking Account Rates for a $25,000 Balance - Nationally Available
- Noteworthy Accounts Available Nationwide:
- Great Lakes Credit Union - 4.00% (up to $10K) 0.05% ($10K+) Ultimate Checking
- Belvoir FCU - 3.25% (up to $15K) 0.05% ($15K+) CUXcel Checking
- Consumers Credit Union - 3.09% (up to $5K) 0.20% ($5K-$25K) 0.10% ($25K+)
- Money One Federal Credit Union - 3.01% (up to $10K) 0.51% ($10K+)
- Lake Michigan Credit Union - 3.00% (up to $15K) 0.00% ($15K+)
- Capital Educators Federal Credit Union - 2.50% (up to $10K) 0.20% ($10K+)
- ABCO Federal Credit Union - 2.02% (up to $25K) 0.20% ($25K+)
- American Savings Bank, fsb - 2.00% (up to $15K) 0.25% ($15K+) Kasasa Cash
- Redneck Bank - 2.00% (up to $10K) 0.50% (over $10K)
- AmericaNet Bank - 2.00% (up to $10K) 0.50% (over $10K)
- Evantage Bank - 2.00% (up to $10K) 0.50% (over $10K)
- INOVA Federal Credit Union - 2.00% (up to $20K) 0.15% ($20K+)
- Provident Credit Union - 1.76% (up to $25K) 0.11% ($25K+)
- Connexus Credit Union - 1.75% (up to $25K) 0.31% ($25K+) Xtraordinary Checking
- Community Bank of Raymore - 1.75% (up to $10K) 0.35% ($10K+)
- Community Bank of Pleasant Hill - 1.75% (up to $10K) 0.35% ($10K+)
- Pacific Resource Credit Union - 1.75% (up to $15K) 0.50% ($15K+)
- First Tech Federal Credit Union - 1.58% (up to $10K) 0.16% ($10K+)
- BofI Federal Bank (affinity groups) - 1.50% (up to $150K) 0.00% ($150K+)
- Avidia Bank - 1.36% (up to $25K) 0.05% ($25K+)
- West Texas National Bank - 1.26% (up to $25K) 0.25% ($25K+)
- Heritage Bank - 1.26% (up to $25K) 0.05% ($25K+)
- First New England Federal Credit Union - 1.25% (up to $15K) 0.10% ($15K+) (extra 1% w/relationship)
- Bank of Blue Valley - 1.25% (up to $15K) 0.10% ($15K+), $1K/month debit card req (account review)
- Bank of Internet USA - 1.25% (up to $150K) 0.00% ($150K+)
- BankFirst Financial Services - 1.24% (up to $50K) 0.15% ($50K+)
- Legence Bank - 1.05% (up to $25K) 0.25% ($25K+)
- North Country Savings Bank - 1.05% (up to $25K) 0.75% ($25K+)
- State Bank of Toledo - 1.00% (up to $25K) 0.15% ($25K+)
Certificates of Deposit:
- Survey of the Best CD Rates for May 17, 2013 (Nationwide & Local)
Various Deposit Account Deals
- Bank Promotions
- Best IRA CD rates, local and nationwide deals
- Latest CD and Savings Account Deals with No Major Deposit Limitiations
Bank Account Alternatives - NOT FDIC Insured
- Duke Energy PremierNotes - 1.50% rate for $50K+, Duke Energy PremierNotes review
- Ally Financial Demand Notes - 1.50%, Ally Demand Notes review
- Ford Interest Advantage - 1.10% rate for $50k+, Ford Interest Advantage review
- GE Interest Plus - 1.10% rate for $50k+
- Vanguard Tax-Exempt Money Market Fund - 0.04% 7-day yield
- Vanguard Prime Money Market Fund - 0.01% 7-day yield
- Fidelity Money Market Fund - 0.01% 7-day yield (reviews on Fatwallet)
- Fidelity Municipal Money Market Fund - 0.01% 7-day yield
- TIAA-CREF Money Market Fund - 0.00% 7-day yield
- PayPal Money Market Fund has ended effective 7/29/11
- FW Thread on Treasury Bills
- Series I Savings Bond Purchases from May to October 2013, I Bond Article, I Bonds as CD Alternatives