1. Capital One 360 and P2P Payments

    Many moons ago, I penned a personal review of the Capital One 360 Checking Account. Actually, I’d opened the account when it was still managed by ING Direct, but then Capital One came along and bought ING Direct’s U.S. assets, and so one of my most beloved bank accounts fell into the hands of a Nearly Too Big To Fail bank … and one for which I’ve never really cared all that much.

    I still have my Capital One 360 accounts (savings and checking), and I use them more than any other non-credit-card accounts I have, save one. To date, Capital One has given me no reason to look elsewhere for similar, online-only accounts.

    However, an email from reader “K” hit my inbox yesterday which other readers might find interesting:

    Greetings,

    I just finished reading your review of your Capital One 360 account. Although I’m sure it’s wonderful for the account holder, there’s a little problem with outside account holders.

    I have an issue with all the online “toys” my husband insists on signing up for, mainly because I’m getting very much aware of how much “ME” is out there and available, and I’m trying to avoid volunteering more information if I can.

    Enter “Person2Person” transfers! Hubby owed me some money; nothing major, but since we’re in the same household, mere feet from one another, I kinda would have preferred he just cut me a check. “I just wanna try it.” Okay, fine, ignore my request and play with your internet crappola, because “…they only need the last 4 digits.” Yea, okay.

    So you already know how THAT went; they need the whole account number and routing number, I’d rather they did NOT have access to my checking account, but since he already used that one, that’s the one I have to give them. Fine. I tell him, he apologizes, whatever honey, they already have my information now, thanks.

    Oh, but it gets better, and here’s the part I’m guessing you were unaware of — the credit inquiry! A day or two after the transfer just happened to be the day I receive my monthly credit update from Experian. It shows me any changes in the last month, such as negative information, new accounts, closed account … and credit inquiries! There was one new inquiry: Capital One.

    I am anxiously awaiting their reply of my angry Nasty-Gram. I did NOT ask them for a line of credit, I did NOT open an account with them, and there were more than sufficient funds in my husband’s account. They had NO BUSINESS sticking their noses into MY credit rating! Pretty much everyone is aware that, of all the things that can lower your credit score, top of the list is “Credit Inquiries,” not so much as how MUCH it dings your score as the fact that it can happen a LOT and most people were unaware for a very long time. I am VERY aware, and they did NOT have authorization to do so by me.

    Just thought you’d appreciate the additional information. Thanks for listening to my rant.

    — K.

    Now, for my part, I’ve used the Person-2-Person transfers mentioned by “K” precisely one time, and that was a test transfer to my wife (whose account info ING Direct/Capital One already had). So if slinging out credit inquiries is a matter of course for Capital One in these transactions, they’d have had no reason to do it in my case.

    If this is what they do for new not-really-a-customer customers, well, it fairly sucks. I haven’t utilized the P2P transfer feature for anything more than a test, and won’t be doing so now, either.

    UPDATE: It Wasn’t a Capital One Inquiry.

    Turns out that upon closer inspection, the credit inquiry which K. saw on her report was from HSBC, not Capital One. The fellow from Capital One who’d responded to K.’s “Nasty Gram” had told her as much — that Capital One did not perform credit inquiries on the accounts related to P2P transfers.

    When K. traced the phone number associated with the inquiry, it pointed to HSBC. Their inquiry (for an unrelated card) just happened to coincide with the timing of the P2P transfer at the center of this here blog post.

    So Capital One 360 customers and P2P transfer users can rest easy. No willy-nilly credit inquiries here!




     

     

  2. Redux: About Half Have 3 Months’ Expenses Saved

    We just keep coming back to the same dismal stats on savings, over and over again. This time, the 2014 Scorecard from the Corporation for Enterprise Development (CFED) informs us that, among other tidbits, 44 percent of us have less than three months’ worth of savings tucked away.

    CFED: 2014 Assets and Opportunity Scorecard

    The figures aren’t far off from those released in June of 2013 in a similar report from U.S. News. We hit the same savings ballpark in an Allstate survey, too.

    From a summary article:

    Nearly half (44%) of households in the United States are “liquid asset poor,” meaning they have less than three months’ worth of savings — conservatively measured as $5,887 for a family of four, or three times monthly income at the poverty level.

    I’m not sure what world these folks live in, but $5,887 doesn’t seem to be anywhere close to a reasonable measurement for a three-month cushion for a family of four. Which suggests to me that the figures are, in fact, really worse than what’s reported here.

    CFED also says that one quarter (25%) of middle class households (those earning $56,113 to $91,356 annually) have less than three months of savings. In a related note, they divulge, about 56 percent of us have subprime credit scores. Also, in 2012, the average college debt level for graduates was $29,400.

    You can grab a PDF copy of the 2014 report — chock full of fancy graphs, graphics, and (of course) admonitions for government-policy intervention — right here.




     

     

  3. Annual Holiday Missive

    It’s that time of year again — the time where I wish my readers a great holiday season, and suggest that those who aren’t already doing it should make Christmas gift-giving a regular monthly bill. In other words, save up for it throughout the entire year.

    Now, we save up for gifts (all of them — not just Christmas) every month inside our regular Freedom Account saving. We save up for gift-giving the same way we save up for our six-month car-insurance payments. I know about how much we spend each year on gifts, so I just take that amount, divide by 12, and set aside that much each month … same as we do for every other non-monthly, recurring bill.

    For me personally, I cannot emphasize enough how much less stressful it’s made holiday budgeting and spending.




     

     

  4. Wee Little Status Update

    For those three or four folks who may be wondering what’s happened at this here money blog, well, the answer is: Not much.

    If I had any gripping tales of financial abandon to tell, I’d do it. I scan the news every couple of days to see what’s going on in the world of personal finance; certainly nothing life-changing has popped up. (Well, ObamaCare is about to kick in. That ought to be good for a few million laughs. Or tears.)

    The Federal Reserve is still doing its best to ensure that “saving” remains a four-letter word, savers must be well and duly punished, and stock markets cannot be allowed to drop more than a few percent at a clip. Nothing new there. It’s what happens when you have an economy that “grows” only when debt expands and risk-asset prices rise. No “growth” if people/entities/governments don’t keep taking on more and more debt and risk. What could possibly go wrong?

    On the personal front, our family savings got about $20k lighter in September. That’s what getting a new roof, new siding and windows throughout, and gutter installation will do to you. Until this month, the largest check I’d ever written was for our home central A/C system back in 2007. I can tell you that the A/C payment felt like a sneeze compared to the exterior repairs. However, we had well more than enough liquid savings to cover it, and I’m mighty thankful for that. (‘Tis also nice to pull up in your driveway each day after work and NOT cringe at the outward appearance of your home. The old homestead looks pretty nice now, if I do say so myself.)

    And that’s my little roundup, for now. Back to your regularly-scheduled nap, kids!




     

     

  5. Bank Account Blacklist

    Fun little article over at the New York Times:

    Dealbook: Many Denied Bank Accounts for Past Errors

    Just when you thought that $40 overdraft fee couldn’t be any more out-of-line, well, your friendly neighborhood Too Big To Fail bank went and added you to a “Bad customer!” database, too. Or more specifically, a blacklist. Now you can’t get another bank account for years. At any bank.

    Ah, well. Your mattress is probably safer anyway.




     

     

  6. Less Than Half Have 3 Months’ Expenses Saved

    Fresh off the press, a couple of articles emphasizing Americans’ strong penchant for saving precisely squat:

    US News: More Than 1/4 Have No E-Fund

    And a related article:

    Bankrate: Short on Savings, Americans Still Feeling Positive

    No surprises here for followers of this blog: When you punish people for saving, you’re going to get less saving. When you reward people for blowing through every penny that hits the door, and then some, you’re going to have a nation of broke people.

    But hey — as Bankrate tells us, “Americans are feeling very secure about their personal finances.” This, even though “… nearly half of those surveyed have less than three months’ worth of expenses, or nothing at all, in emergency savings.”

    I’m not sure what sort of “security” these folks are aiming for, but it’s apparently one I’ve always tried to avoid.




     

     

  7. Surprise: TBTF Banks Will Screw You

    Way back in 2007, I penned a post in which I voiced my displeasure with folks who whine about overdraft fees. In the comments, I was called lots of names … “bank apologist” among the nicest of these.

    Thanks to the fine, upstanding management team at Bank of America, I now have the opportunity to make something crystal clear: The Too Big To Fail Banks (TBTF) banks will screw you any chance they get. This is not a new opinion for me; I’ve felt this way since long before I started this here money blog. I’m just reiterating it here, for those who aren’t paying attention.

    I absolutely felt this way when I wrote the overdraft-whiners post, too. The way I see it, the fact that these banks will hose you at every opportunity is a given. Thus, we as consumers and bank-users must do everything we can to NOT give them that opportunity. That includes knowing how much is in your checking account at any given time, and not executing transactions above that amount, and not giving the bank any reason at all to slap you with a $50 service fee. If you DO give the bank a reason to FeeSmack™ you, then don’t whine about it.

    It’s plain as day: The TBTF banks are in charge. Our government and our economic system require this, because debt is money, and debt underpins EVERYTHING. TBTF banks hold, service, issue, and securitize debt in enormous amounts, so they make the rules. You and I simply have to play by those rules.

    Now allow me, if you will, the opportunity to show just how far TBTF banks (Bank of America, in this case) will go to (1) bend their customers over a counter, and (2) make a buck:

    JDSupra Law News: BOA Senior Admits to Being Told to Lie

    If you have dealings not only with Bank of America, but with pretty much any bank that’s “regional or larger” in size, you really should take a moment to read the article. I’d say that Simone Gordan’s affidavit is a staggering admission, but really, it isn’t. Of course BOA reps were told to lie to customers. BOA was woefully unprepared for the various mortgage- and loan-modification programs which U.S. FedGov thrust upon them, and besides, by lying to customers, there was cash to be made.

    From the affidavit, as stated by Bank of America senior loan collector Gordan:

    Using the Bank of America computer systems I saw that hundreds of customers had made their required trial payments, sent the documents requested of them, but had not received permanent modifications. I also saw records showing that Bank of America employees have told people that documents had not been received when, in fact, the computer system showed that Bank of America had received the documents. This was consistent with the instructions my colleagues and I were given. We were told to lie to customers and claim that Bank of America had not received documents it had requested, and that it had not received trial payments (when in fact it had). We were told that admitting that the bank received documents would “open a can of worms” since the bank was required to underwrite a loan modification within 30 days of receiving those documents and it did not have sufficient underwriting staff to complete the underwriting in that time…. Site leaders regularly told us that the more we delayed the HAMP modification process, the more fees Bank of America would collect.

    Nice, huh? If you or I tried crap like this in our business dealings, we’d go to jail. But a TBTF bank does it, and they get paid.

    Are we clear on how this works yet?

    You must carry on your financial lives as if you are, well, prey.

    Because with TBTF banks, that is absolutely what you are.




     

     

  8. Darn Those Student Loans, Anyway

    If ever you wanted to know just how deep is the belief in consumption and big-ticket buying in this country, you need look no further:

    USA Today: Student Loan Loads Block Home, Car Purchases

    Amidst all the hand-ringing and “Someone must help our debt-ridden children be able to get more debt!” chants, you’ll run into this laser-sharp social commentary … emphasis mine:

    One interesting fact: The high cost of student debt is stopping many young consumers from buying big items, such as new cars, homes and furniture.

    Nearly 30,000 Americans commented to the federal consumer watchdog agency on the student debt issue, and many discussed day-to-day struggles.

    One borrower, Debra, told the CFPB, “I can’t buy a house because of my student loan. I have to rent.” Another borrower, Daria, said: “These loans are stunting my growth as a citizen. No car. No home.”

    Oh, the misery, the suffering, the ANGST these poor young souls must endure! They can’t go out and be Good Little Consumers straight out of college! All because of those big mean nasty student loans which they were forced to take on!

    (And, I might add, over a year later, yet again media voices are lamenting how student loans are keeping a lid on house prices.)




     

     

  9. And Now For An Important Message

    No, not really. I got nuthin’.




     

     

  10. Employers Turn Small Loans Into Savings

    Now here’s a PBS video which I think illustrates at once a horrific concept, and a fabulous one:

    PBS: Savings and Loans: Employer Plans Encourage Saving (~12 minutes)

    What’s horrific? People borrowing money from their employers. Now, if your employer’s a bank, then hey, fine, whatever; it’s what they do. When all hell blows up on them, taxpayers pick up the tab, and no one much gives a crap after a year or so. (Especially if the stock market is tagging record highs.)

    Outside of that, if your employer isn’t a bank or similar, then they shouldn’t be in the business of making loans. Just my opinion. That’s what banks, credit unions, pawn shops, check-advancers, and your neighborhood loan shark are for. Though of course it’s the employers’ money, and they can do with it what they want. (In the video, the employer is more “facilitating” the loans than they are “making” them. The loans are actually made by local credit unions, with interest rates in the 17 percent range.)

    In my modest personal experience, watching how these sorts of employer-as-lender policies are treated in workplaces, I’ve found that even when these loans turn out well, they tend to be used by the same folks again, and again, and again. Maybe I’m wrong, but I don’t think that’s the goal.

    The Part I Applaud

    In the video, we’re told that the employers in question made an interesting policy tweak: Loan payments are withheld directly from employees’ paychecks over time, and once the loans are paid back, the default option is for employees to continue having those same amounts withheld, but deposited into savings accounts so that they begin building savings. Employees can opt out of this “forced” Baby Step #1, of course, but most (we’re told) do not.

    This part of the plan, I adore.

    By the time the loan is paid back, I’d imagine that you as employee would have at least a decent chance of realizing that you really COULD live without that small chunk of your paycheck. It wasn’t so hard, was it? Lo and behold, the saving you thought you could NEVER EVER do turns out to be achievable — cold, hard cash in a bank account. When the next little emergency pops up, perhaps you’ve got it covered.

    (Though I’d argue that the peace of mind savings provides is probably worth as much as the actual money itself. And the less someone has experienced actual “saving,” the more important that peace of mind is.)

    Given the context that’s presented in the PBS video, I might be willing to revisit my “Employers shouldn’t be making loans” stance. I could see where both parties really could benefit from such an arrangement.