Pre-loaded Cash Card Costs Money

Don’t have a bank account, but you still want to have a debit card for expenses? JP Morgan Chase just came out with a new product recently that might come in handy for a price. Their card is like a debit card, but you don’t need a bank account to get one. You just go to the bank, pay the $4.95 fee and load up the card with your own money. Then you can use it for a month anywhere you would use a Visa card in much the same way – stores, ATM’s, etc.

Many people don’t have enough money to open a no-fee bank account, so this might be a convenient alternative to carrying cash. If you want to use it for a second month, you pay the $4.95 fee again. You pay the fee every month as long as you have the card.

If you are in a situation where you need a debit card, this is an alternative as long as you have cash with which to “load” the card. All this comes at a price – $4.95 a month, and that fee adds up. Personally, I would rather save the $4.95.

My suggestion? Use something like this if you have to, but only for a month or two. Then, open up a savings account and get a regular debit card without the fee. Better yet? Don’t use a card at all. It is just too easy to spend money with one. Use cash instead, and when the cash is gone, stop spending.

Keep Track of Your Finances

One way to keep a handle on your financial situation is to make an annual balance sheet. It may sound complicated, but it is really just a list of all your financial assets and debts. If you make one every year and track your progress (or lack of progress) over the years, then you will be in a better position to understand your finances. You may be surprised by the results, and knowledge is power. After it is all done, be sure to share it with your partner so your situation is in the open.

Your assets (the things you own) should include all bank accounts, stocks, IRA’s, 401k’s, etc. Anything that has actual cash value. Do include your home equity – the value of your home minus the amount you owe on it. Don’t include physical property such as cars, clothes, collections, etc.

Liabilities are your debts. Do include credit card and consumer loans.

The only hard part is collecting all the information, and that gets easier the more you do it. The actual balance sheet can be just a list of assets with their value, a list of liabilities with their value, and your net worth (assets minus liabilities). Or you can follow the sample that I have provided here.

The numbers in parentheses are negative. This is bad. The key to having a positive net worth is getting rid of the debts. Then gradually add to the savings, and you will be on the way to wealth.



How to Avoid ATM Fees

As a followup to an earlier post about ATM fees, I’ve found that it does pay to ask. Perhaps you can find out this information if you read all the fine print when opening an account and applying for a debit card. However, I suspect that banks don’t make it a point to volunteer details which may cost them money.

Our bank has two levels of checking accounts which save you money on ATM fees. There are some basic requirements which you must meet to get this benefit. The easiest one for most people is to have a direct deposit of $2000 or more during every statement period. Another option is to maintain an average monthly balance of $1500. For this, the fees are waived at non-network banks. In addition, you are reimbursed for the fees the other bank charges you to withdraw money. There are also other rewards such as a discount on a safe deposit box and free stop payments.

The higher level checking account requires a $5000 average monthly balance in all of your checking accounts, or a $25000 average monthly balance in all of your accounts. For this, you get free wire transfers in the US along with other benefits.

In order to qualify for these savings, you need to go into your bank and sign up for a particular account. Note that you are assessed a fee every month that you don’t meet the requirements. For the lower level checking account, this fee is $10 and for the higher, it is $25. This would certainly negate any ATM fee savings, so consider carefully before signing up.

Debit Card Safety Tips

As noted in a previous blog, although debit cards are very convenient, their use is not without risks. Before you use an ATM, whether it’s the one you always frequent, or a different one, be on the lookout for skimmers. These are attachments put on an ATM which allows a thief to read the magnetic strip on your debit card. The Consumerist shows some pictures of what one might look like here: http://consumerist.com/2009/04/heres-what-a-card-skimmer-looks-like-on-an-atm.html. Unfortunately, thieves continue to improve their equipment, and it’s not always easy to spot one even if you do remember to look. Some basic safety rules to follow when using an ATM include:

  • Since a skimmer also relies on a camera to take a picture of the keypad as you enter your pin number, be sure to hold your other hand over the hand entering the pin in order to obscure it from the camera.
  • If something about the ATM doesn’t look right to you, walk away.
  • Use an ATM at a location that has video surveillance.
  • Use ATMs in heavily trafficked areas where there is less likelihood that a thief would be able to place a skimmer.
  • Use ATMs inside of banks.
  • Always keep alert to the people around you before using your card.
  • If you’re traveling, consider a prepaid card that only has a limited amount of money on it. If it’s stolen or your pin compromised, you won’t risk losing all of your savings.
  • Set up online banking so you can check your account regularly to make sure there is nothing unusual going on.

Debit Card Fees Add Up

Debit cards have become a staple in most households. When used in your home town at the bank where you have your account, there are usually no extra charges. However, if you use them at another bank, you may be assessed a fee by both your home bank and the bank whose machine you are using to get money.

When traveling internationally, they are an easy way to get cash in that country’s currency. Again, you have to be aware of the fees that banks tack on to each transaction. Not only will you be paying the fee from your home bank and the foreign bank, but you may be paying a currency conversion fee as well.

So what’s the answer, and how can you reduce these fees?

  1. First, make sure that your bank isn’t charging you a fee to use their debit card at the home or branch bank. If they are, find another bank.
  2. Ask your bank how much they charge to use their debit card at another bank. Shop around if it seems high.
  3. If you are traveling, go online and see where other branches of your bank are located. They may also have ATMs associated with them that are in places other than banks.
  4. If you are traveling internationally, ask your bank if they have an agreement with any foreign banks where fees are waived.
  5. Since you’re going to be charged the same fee no matter how much money you withdraw, taking out more at a time would be worth your while as long as you have adequate self-control.
  6. When you use your debit card at grocery or department stores, you aren’t charged a fee. Therefore, if you need money, it makes sense to ask for cash back.
  7. Watch out for the ATMs in casinos, liquor stores and others not associated with a bank or known business. Their fees are often higher.
  8. Another reason to avoid ATMs in suspect locations is that there is a greater chance of a skimmer being attached to it. This is the latest thing which thieves have been using to steal the information from your debit card.
  9. Check out this video. It has great suggestions for ways to avoid fees that you may never have thought of. http://moneywatch.bnet.com/saving-money/video/how-to-avoid-atm-fees/456904

How do I get Higher Interest Rates on My Savings Accounts?

One way to get more interest at your bank is to ask for it. Banks will often have two different rates for money market accounts or checking accounts or certificates of deposit. They have the regular rate and the promotional rate which is higher. Just go to the bank and ask if they will pay you the promotional rate. If you have a lot of money on deposit you have more influence at the bank and are more likely to get the higher rate. It doesn’t hurt to ask.

You can also ask someone to look over your accounts and see if you qualify for more interest. For example, I found out that I qualify for free checking because I keep at least $1,000 in my checking account, I’m over 50 and I have my paycheck directly deposited in my checking account. I qualify for the free checking account, monthly interest on the money in may account, free checks, free money orders and free travelers checks. All this doesn’t amount to a great sum of money, but it is better than a poke in the eye with a sharp stick.

This page may be helpful.

What is a Money Market Account?

A money market account is a type of bank account. It offers more interest than a typical passbook savings account, but also comes with more restrictions. These restrictions may include a much high minimum deposit and a limited number of withdrawals each month. Such bank accounts are insured by the FDIC. Some money market accounts come with check-writing privileges. Don’t confuse a bank money market account with a money market fund. This is entirely different