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Online Savings Account and CD Rates Continue to Fall

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Online banks continue to cut rates on their savings accounts and CDs. Several banks have made large cuts since by last rate cutting post on Wednesday. In addition to cutting rates, AmTrustDirect added tiers to its e-Money Market Account. Balances under $25K now earn 3.50% APY. You'll need $50K to earn the maximum yield of 4.00% APY. Look for other online banks to start implementing tiers as they cut rates. It helps hide the full extent of their rate cuts.

Below are some of the recent savings account rate cuts since my Wednesday post. I'll have more updates with the new CD rates tomorrow.

This Bloomberg artcle mentions that future traders are expecting the Fed to cut another one percentage point. So by summer it may be difficult to find savings account and CD rates over 3%.
  Tags: savings account

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Comments
57 comments.
Comment #1 by Anonymous posted on
Anonymous
countrywide bank also dropped their local CD rate. 6-mon is 4.15%APY instead of 5%.

1
Comment #2 by Anonymous posted on
Anonymous
Countrywide also dropped their Money Market account rate (tiered from 3% to 4.25% APY). As of this minute, their SavingsLink account is still 4.75% APY, but I expect that rate will drop soon, as well.

1
Comment #3 by Anonymous posted on
Anonymous
It's looking like Rewards Checking is becoming more and more attractive every day.

Just checked, and Southland Credit Union still has 5.25% Reward Checking (I live in Orange County, CA, so I would qualify to join). Seems that there is no maximum cap, so one could put in a full $100K and be insured by NCUA. One would need to do the 10 Debits and at least 1 online Bill Pay. (I like the idea of going to a gas station and doing the 10 debits all at once. Swipe card. Stop pump at $1.00. Do this 10 times. You are done for the month. (I am not sure this trick would work, but I assume it would.)

Of course, the banks and credit unions can lower their Rewards rates, as well, but then one could simply just close the account.

Opinions welcome.

1
Comment #4 by ShraZZy (anonymous) posted on
ShraZZy
wow pure junk from Amtrust doing the rate tiers.

1
Comment #5 by Bozo (anonymous) posted on
Bozo
Call me old-fashioned, but I've never gone for these "rewards" thingees. Tied this, open that, swipe this, swipe that. I pay cash for just about everything, so all these programs aren't too enticing for me.

I've passed on those CDs that require direct deposit or other gimmicks.

Just my $.02.

Yours,

Bozo

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Comment #6 by BestRateSeeker (anonymous) posted on
BestRateSeeker
Thanks, Anonymous, for the Southland Credit Union tip. Just called Southland Credit Union. They also have a 4.75% 7-month Liquid CD. Any reviews of this Credit Union? Also, I asked Anonymous' question about if one could do the gas station trick of making 10 swipes of the debit card for say $1.00 each swipe. The rep told me that this is perfectly fine.

Note: Obviously, if one lost their Debit Card, there might be a week or more delay in getting the new card, so it would be best to get the 10 debit transactions out of the way at the beginning of each month.

Bank Guy, now that Rewards Checking is the highest rate out there, could you please post an opinion about Southland Credit Union, since it is one of the very few left that would take over $50K for the 5%+ rate? And also, would you do it? Thanks.

1
Comment #7 by Anonymous posted on
Anonymous
Bozo, your point is well-taken, but once all the CD and savings rates go into the 3% range, how can you not change your mind? How could you not consider it (as long as the Rewards Rates pay 5 or more percent? That would could equal $2,000 more per year in interest. And all one would need to do is go to agas station once per month and swipe their debit card 10 times? Then you could put the debit card away until the next month, allowing you to still pay cash for everything else.

Everybody needs to go to a gas station at least once per month, right?

You could consider it working a 10 minute job once per month to make that extra interest.

Again, how can we not seriously consider this?

Yes, if the Rewards Rates drop to 4%, one then should surely close the account.

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Comment #8 by Anonymous posted on
Anonymous
Bozo, I have the same attitude as you. I'm not one for gimicks either, which also have their own pitfalls. Just forget one debit charge or whatever for that month and see what interest rate one would earn. And I'm sure that if enough people start making $1 charges in multiples of ten, the banks will soon mandate a mimimum $$ per transaction to count towards the monthly total.

1
Comment #9 by Anonymous posted on
Anonymous
Anonymous, of course if the banks changed it to a minimum dollar amount, one could simply pull their money out. And if one made it a point to do all the 10 transactions right at the beginning of the month, there would never be a time when one forgot just one debit, as you said. People remember to pay their rent. They can remember to fill up their gas tanks at the beginning of the month and do the 10 transactions.

I don't think the banks would be quick to change the rules of the Rewards Checking, since they know people will just pull their money out.

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Comment #10 by Anonymous posted on
Anonymous
I have heard that some gas stations will put a hold of a certain dollar amounts on your card when you swipe it( they don't know how much you will pump, and it has to verify your card before you pump). Some upwards of 80 dollars, and others max out the amount of gas you can purchase at 50 dollars. In an extreme case, 10, 1 dollar swipes could tie up 800 dollars of your money until the transactions go through.

Can anyone verify this? I have been using my debit card this month trying to get into the habit, and have not noticed it happening...But, I haven't been doing multiple purchases at the same time.

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Comment #11 by Fan of Bank Deals (anonymous) posted on
Fan of Bank Deals
Uh oh! Great point. I didn't even think of that.

Obviously, though, if one put $100,000 in this Reward Checking account, an $800 hold won't really matter. Especially if one only does the 10 debit card swipes thing once per month.

But, maybe you are totally incorrect here. Maybe the gas station only puts a hold if it is a credit card transaction, which is why you are asked to select Credit or Debit before you swipe the card.

Can anyone actually place a hold on a Debit Card, since the money comes out immediately?

Any experts out there?

5.25% is so attractive right now. 10 debit card transactions is nothing. Besides ten swipes at a gas station, one could buy 10 very small items at a grocery store, one at a time. Or, what about the automated postal machine at the post office? This machine only charges once the total is known. You could easily do 10 quick stamp purchases from this machine...and use the postage, of course.

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Comment #12 by Anonymous posted on
Anonymous
The following is not related to the reward accounts.

I came across this indexed CD offering. Not sure how it would work that you are insured for the principal at the same time may capture 100% upside of the DOW.

http://www.patriotbankia.com/pages/bank/indexcd.jsp

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Comment #13 by Anonymous posted on
Anonymous
Don't do that Dow Jones Indexed CD. It is a 5-year term. Your principal never goes down, but you only make money if the Dow Jones goes up, so you might have wound up in 5 years making zero.

I think the Reward Checking at 5.25% would be a much better thing, as you can withdrawl your money at any time.

1
Comment #14 by Anonymous posted on
Anonymous
I'm with BOZO in not going for rewards or CD'S that require debit cards, direct deposits, opening checking accounts and etc. I'm also not into waiting in line behind someone who is making 10 one dollar purchases at the gas station or grocery store. Can anyone tell me what the bank gets out of a one dollar debit card transaction. I assume they get paid something since they want you to use the card. On the other side of the coin how much does the store have to pay when you use the card. Do they pay based on the amount of a transaction or the number of transactions. Now lets look at the edge of the coin which is where I'm at as I pay cash for almost everything. Whatever they have to pay if I used a card they should return to me in the form of a discount since I pay cash. I'm not looking for a discount but wanted to make a point. In the end I guess everyone will do what they need to do but for me I'm to old and fat to jump thru hoops for the banks. And that is my $.02

1
Comment #15 by Anonymous posted on
Anonymous
I'm with BOZO in not going for rewards or CD'S that require debit cards, direct deposits, opening checking accounts and etc. I'm also not into waiting in line behind someone who is making 10 one dollar purchases at the gas station or grocery store. Can anyone tell me what the bank gets out of a one dollar debit card transaction. I assume they get paid something since they want you to use the card. On the other side of the coin how much does the store have to pay when you use the card. Do they pay based on the amount of a transaction or the number of transactions. Now lets look at the edge of the coin which is where I'm at as I pay cash for almost everything. Whatever they have to pay if I used a card they should return to me in the form of a discount since I pay cash. I'm not looking for a discount but wanted to make a point. In the end I guess everyone will do what they need to do but for me I'm to old and fat to jump thru hoops for the banks. And that is my $.02

1
Comment #16 by Anonymous posted on
Anonymous
It is actually your 4 cents, since you posted it twice.

1
Comment #17 by I Hate The Fed (anonymous) posted on
I Hate The Fed
How about doing 5 at one gas station visit and 5 at another, if there are people behind you waiting at the pump?

The question is: Is it worth an extra $2,000 per year in interest (if one puts in $100,000) to have to do those 10 debit transactions per month?

If one puts in a lot less than $100,000, of course it is not worth it.

Also, what about if one used the card at home, while at an online vendor or charity site that accepts Mastercard Debit Cards as payment? Then there wouldn't be any waiting at the gas station or grocery store. Did you think about that?

1
Comment #18 by Anonymous posted on
Anonymous
another idea:

did you know there are online charity sites that will let you donate $1.00 and charge the donation to your credit/debit card?

Or how about this: Most cell phone companies now let you pay your monthly bills online with a credit/debit card. You get to designate how much you want to pay. Log into Verizon or T-Mobile and check for yourself. You can do one time payments of any amount. How about having them charge a portion of your monthly bill to your debit card several times a month? Wouldn't this work?

1
Comment #19 by SVG (anonymous) posted on
SVG
 

Anon,

    >>I'm sure that if enough people start making $1 charges in multiples of ten, the banks will soon mandate a mimimum $$ per transaction to count towards the monthly total.<<

Nope.

I don't recall where, but I've read that banks/CUs cannot do that.

Debit cards operate just like checks. Banks/CUs cannot impose any restrictions on minimum amount of check one can write (provided it is a check they are writing from their own checking - as against a check from their credit card as cash advance). Similarly they cannot impose any mandate regarding minimum amount per debit card transaction.


Another Anon,

    >>I'm also not into waiting in line behind someone who is making 10 one dollar purchases at the gas station or grocery store. <<

Well, if someone indeed is doing that right in front of you, then what are going to do about it ?

- SVG

 

1
Comment #20 by Anonymous posted on
Anonymous
It did post twice and I don;t know why. I'm not smart enough to know how to delete one of them so if anyone else can delete one please do so. Still no answer as to who pays what to whom in these earth shaking transactions.

1
Comment #21 by Anonymous posted on
Anonymous
To SVG
I guess I would just consider it an inconsiderate thing to do being done by an inconsiderate person. I would not say anything but would hope the look on my face would send that message.

1
Comment #22 by Blogger 123 (anonymous) posted on
Blogger 123
Bravo to SVG's answer.

Again, it is not necessary to do the gas station 10-transactions in a row thing. One can do these debit purchases online. This would solve the problem of holding up the person behind you in line at the gas station or grocery store.

Pay your utility bill with your Mastercard Debit Card online. Designate small amount payments so you can have multiple payments. There is no charge to the consumer to pay their utility bill online with a credit or debit card. I do it all the time.

Some Rewards Banks demand twelve transactions per month. Southland Credit Union asks for 10. Plus they insist on one online bill pay or ACH transfer.

If rates drop into the 3% range, and if Southland Credit Union keeps their 5.25% rate, I think $2,000 extra per year in interest if you put in the maximum $100,000 is worth the debit card crap.

I do not think it is worth it if one keeps a low balance or if the interest rate difference is small. This is the main point.

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Comment #23 by Possible Solution (anonymous) posted on
Possible Solution
Brilliant Idea Guys (I read it posted on fatWallet):

Send yourself $1 10 times a month through PayPal to count as your 10 check card transactions.

This solves all the problems.

And you don't have to worry about using the debit card anywhere else, where one might get your number.

This is brilliant.

Please tell me this would work.

Please post any negatives to this.

Thank you.

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Comment #24 by SVG (anonymous) posted on
SVG
 

Anon,

Right.

In fact I had touched upon this topic earlier. There are folks who like to strike-up a conversation with the cashier. They discuss the weather, the deals/discounts in the store, and whatever else. Then there are others who like to zip by the cashier as quickly as possible.

Now there are/will-be others who will ask cashier to make 2/3/4 bills for the goods they are purchasing so that they can jump over the hoops of their 'reward checking'.

It is all part of being in a society. Of course you can give such customers dirty looks but there are couple of issues there - first they may not even glance at you and all your efforts of giving dirty looks will be in vain and second even if you succeed, such customers will simply ignore you and go about their business !

I doubt if your visible irritation will achieve anything positive for yourself, except that it may/will disturb your own peace of mind.

- SVG

 

1
Comment #25 by Anonymous posted on
Anonymous
When I use paypal it doesn't count as a debit on my card...It just pulls money from my checking. My credit union doesn't consider this a debit that would count towards rewards.

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Comment #26 by Anonymous posted on
Anonymous
You could also send the PayPal money charged to your debit card to your friend or family member, and then ask that they send it back to you. PayPal will charge 3% fee both ways. So, if you send out via PayPal 10 $1.00 debit card payments and then have the receiver send it back to you, the cost to you would be just 60 cents. Better to lose this 60 cents than have to use the debit card 10 times at the gas station. Yes, problem solved.

1
Comment #27 by Anonymous posted on
Anonymous
You would need to set up a Credit Card with your PayPal account. When you do the checkout, you must change it from paying from your checking account to paying via credit card.

It defaults to wanting the money to come from your bank account. You must remember to register a credit card and then change to that payment when you are doing the PayPal checkout.

1
Comment #28 by SVG (anonymous) posted on
SVG
 

Readers,

I use another idea of making the required transactions (besides making 10 purchases at gas pump *smile*). I've added my family members as joint holders to my account and they have their own debit cards.

Making 10 debit-card transactions per month among three adults is no big deal at all.

Oh BTW ... I find the folks who are unwilling to jump over the hoops of reward checking quite okay. They have their own preferences / priorities, and we have ours.

To each his/her own.

- SVG

 

1
Comment #29 by Anonymous posted on
Anonymous
My credit union pays me a nickel everytime I select the credit card option when using my debit card. Obviously this is either because they make more money on the transactions, or it is cheaper for them.
Question: What is the difference and does it count towards a use both ways...

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Comment #30 by SVG (anonymous) posted on
SVG
 

Anon,

    >>If rates drop into the 3% range, and if Southland Credit Union keeps their 5.25% rate, I think $2,000 extra per year in interest if you put in the maximum $100,000 is worth the debit card crap.<<

Indeed. If one is able/willing to jump over the hoops then by all means he/she should. Every extra dollar earned helps.

- SVG

 

1
Comment #31 by Anonymous posted on
Anonymous
"
You would need to set up a Credit Card with your PayPal account. When you do the checkout, you must change it from paying from your checking account to paying via credit card."
We're not trying to use a credit card for paypal...We're trying to use the debit card. Setting it up to use your credit card is no help for what we are trying to accomplish.

One thing I think is getting lost in the discussion: If I have to spend money that I wouldn't ordinarily do to make sure I get my 10-12 transactions...That's kind of defeating the purpose of trying to save money, right.

Another thing...If somebody is in front of me doing 10 individual transactions at the gas pump, or express lane, you won't have to worry about seeing my "look" because my 6'3" 280lb self will make sure you know how uncourteous you are!

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Comment #32 by Anonymous posted on
Anonymous
Do you really think banks will still be paying that high of interest rates on reward accounts to amount to $2000 over CDs when the highest rates on CDs fall to 3%? I don't think so. Not for long, anyway.

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Comment #33 by SVG (anonymous) posted on
SVG
 

Readers,

Those of you who have youngsters around who purchase music from iTunes regularly ... I'm sure your youngsters will help you out very willingly each month by making 10 separate transactions ! *smile*

- SVG

 

1
Comment #34 by Anonymous posted on
Anonymous
OK. If so, then one could simply withdrawal their money without any penalties.

If the CU's and banks want to keep their Reward Checking money, they better keep the rate high.

Regarding the PayPal thing: Was that poster above saying that he/she put the PayPal payment on his Mastercard Debit Card and his Reward Checking Bank did not count the debit as an allowable debit because it was from a PayPal transaction and not a retail location?

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Comment #35 by Anonymous posted on
Anonymous
Another great idea, SVG. An itunes 99 cent purchase...10 times.

But if the PayPal trick works (I don't know if it does), one could only be out 60 cents and not the full $10.

PayPal allows purchases and money to be sent out, charged to a registered Mastercard or Visa (as long as there is no PayPal balance). Would the credit unions and banks count this charge as an allowable debit? I would think so. If yes, one could PayPal the money to either a second PayPal account of their own or that of a friend or relative. Then, at the end of the month, the friend or relative can PayPal the money back to you (in just one transaction this time, of course.)

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Comment #36 by Zenith (anonymous) posted on
Zenith
Anonymous Said:

"Do you really think banks will still be paying that high of interest rates on reward accounts to amount to $2000 over CDs when the highest rates on CDs fall to 3%? I don't think so. Not for long, anyway."

Reply: You cannot compare the two. The Southland Credit Union Rewards Checking Account is a checking account with zero restrictions when you can take out your money. You have to compare this account with either a regular or money market checking account and not a CD (where there would be lots of restrictions, such as time and the inability to withdrawal funds).

Most regular checking accounts are paying close to zero interest. Most money market checking accounts (which usually limit checks to 3 per month) are paying close to 3% now if it is an online bank. Good luck finding a local bank that is paying 3% on a checking account. Wachovia's High Performance Checking's regular rate is now 1.5%.

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Comment #37 by Anonymous posted on
Anonymous
Hate to burst your bubble, but PayPal might not work.

Your bank or credit union might specify that a Debit Transaction is one where you must enter in your PIN number. When you are at the store or gas station and you select Debit, you are asked to enter your PIN.

If you say credit, and if you have a Visa or Mastercard Debit Card, the charge is processed via Visa or Mastercard network. You enter no PIN. The charge is still deducted from your checking account, but the bank might not count this as an allowable debit.

I believe, but am not sure, that PayPal only allows you to register a credit card and not a debit card. Please verify for sure if someone knows.

So, if I am correct, you would need to go to a retail place where you'd select Debit and then enter in your PIN.

If I am wrong, please someone tell me, and then accept my apology. If I am correct, can someone please confirm.

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Comment #38 by Hope to set the record straight (anonymous) posted on
Hope to set the record straight
I just went to the Southland Credit Union Super Checking Webpage to see if I could narrow down this whole "Debit Card/Credit Card" thing, to see if a credit purchase using their Visa or Mastercard Debit Card would count.

At the bottom of the page in the fine print, it says:

"To receive 5.25% APY and up to $20 in ATM fee reimbursement, qualified accounts must have eStatements, 10 Check Card debit or credit transactions, and one ACH direct deposit, debit, or ePayment per month."

The most important thing it says: "10 Check card debit or credit transactions."

It said OR, and it included credit transactions.

This would indicate to me that using the Debit Card as a credit card (without a PIN number), such as those with PayPal transactions would count towards the 10 transactions.

Good news, if I am reading this correctly. So, the PayPal or iTunes method would work perfectly.

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Comment #39 by Anonymous posted on
Anonymous
Thanks, that clears up one of my questions. I'm still not sure you can register and pay with a debit card if you have your checking account linked to your paypal. Atleast not if the debit card/ checking account is from the same account.

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Comment #40 by Anonymous posted on
Anonymous
Yeah. iTunes for my son & debit card for my wife. Thanks SVG.

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Comment #41 by Interest Junkie (anonymous) posted on
Interest Junkie
I would think even if you used the same bank as your checking account and Visa or Mastercard, it should work fine. PayPal will process the payment as a Visa or Mastercard credit charge. PayPal would have nothing to do with it after they process the charge, so they wouldn't even know that the Visa or Mastercard account pulls its money from your linked PayPal checking account, nor would they care.

So, I disagree with you. You can have your Credit Union or Bank Rewards checking account as your confirmed PayPal checking account and your Visa or Mastercard Debit card as your confirmed credit card.

Then choose Credit Card as your payment choice when you conduct your transaction.

I checked PayPal and their site says you can register your Debit card as your credit card payment as long as the Debit Card is a Visa or Mastercard Debit Card.

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Comment #42 by Star Gazer (anonymous) posted on
Star Gazer
Just found out another good thing, if you decide to go with a Credit Union for the Rewards Checking. Most CU's belong to the Shared Branch Network. There are over 4,000 shared branch locations nationwide. So, once you have your account number, you can go into virtually any other credit union to make a deposit or withdrawal. There is a Website where you can search to see if there is a participating credit union near you:

cuservicecenter (dot) com

So, one could open up the Rewards Checking account with a small balance at first and wait to make sure they get their Debit Card in the mail in time to make the 10 transactions and the one online Bill Payment. Once sure, you could then go into any CU networked credit union branch and deposit your big money.

Sounds nice.

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Comment #43 by Star Gazer (anonymous) posted on
Star Gazer
one more thing...

The NCUA (Fed) covers your CU account up to $100,000. Southland Credit Union contracts with American Share Insurance to cover the amount over $100,000 up to an additional $250,000. So, if you put in $100K, you don't have to rush to take out your interest because you are worried about not being insured.

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Comment #44 by Dhillon (anonymous) posted on
Dhillon
Did you know that if your bank allows the creation of a POD account for your Rewards Checking, and if you put your name as owner Payable On Death (or In Trust For) two separate relatives (siblings, parents, etc.), your account will be insured up to $200,000 by the FDIC for banks and the NCUA for credit unions?

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Comment #45 by tresho (anonymous) posted on
tresho
Sometime between 2/6 & now, Zions Bank dropped their Deseret MMA rate to 4.18% APY for amounts 50000-99999.99, 4.26% APY for amounts over 99999.99, 4.08% APY for amounts from 1000 - 49999.99, 0% for amounts less than 1000.
Need to check interest rates on my various accounts daily.

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Comment #46 by tresho (anonymous) posted on
tresho
From: http://www.amtrustdirect.com/esavings/Pages/default.aspx

Note that Amtrust Direct's e-Savings account has a lower interest rate for accounts at or above 100K:
Balance ---------------Interest Rate--- APY
$1.00 - $99,999.99-----4.025%--------4.1%
$100,000.00+ ----------3.784% --------3.85%

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Comment #47 by Anonymous posted on
Anonymous
To SVG
My peace of mind is just fine thank you. However, you are probally correct that the dirty look would be ineffective since an inconsiderate person who is being inconsiderate is probally not sharp enough to know he/she is being inconsiderate. They would probally think the dirty look is for the cashier. I have no problem with people who do the reward thing. Just please do it on your time not mine. With all these posts nobody has answered my original question. Can anyone tell me what the bank receives when I make 10 one dollar purchases with my bank debit card. I think it is time for me to be considerste and not post again on this subject. Happy Rewards and many many many more to all.

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Comment #48 by Anonymous posted on
Anonymous
the bank receives the same percentage that a credit card company would receive, which I think is 3%.

But what they expect even more: It is thought that people will keep these accounts way longer than regular accounts. People will keep way more money in the bank than if it was a regular checking account. These accounts cost less than a regular account because all statements done online. Most people will do more than the minimum transaction total and most won't do just the 10 $1 thing discussed here.

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Comment #49 by Anonymous posted on
Anonymous
Here I thought the banks created those reward accounts with very attractive interests rates hoping that depositors would slip up and miss a card transanction, direct deposit, etc. and the banks then would pay the depositors less than 1% for the month. Cheap money for the banks!

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Comment #50 by Anonymous posted on
Anonymous
To clarify: I meant to say (less than 1%APY for the month).

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Comment #51 by Anonymous posted on
Anonymous
yes...I am sorry, I forgot to add that thing, as well, where the banks might be hoping people slip up and then get to pay .25% (in the case of Southland Credit Union) for the interest.

But, one would think the majority of people wouldn't slip up if they have that $100,000 or more balance.

Remember, if one puts two beneficiaries (like a POD or ITF account), one will get $200,000 Federal Insurance by the NCUA. According to the NCUA site, they will pay within 3 business days of the bank Credit Union going under. (The FDIC has a similar policy.)

And if one just uses their Visa Debit Card for a PayPal or iTunes transaction, or to pay a utility bill online in small increments, there is no way one will mess up for the month (unless one is in the hospital, of course).

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Comment #52 by Sam (anonymous) posted on
Sam
I just signed up for a rewards checking account yesterday (U of Iowa Community Credit Union) after resisting for a long time due to the debit requirement. My alternatives have just been drying up too quickly (ebank dropped my rate from 5% to 2%, even before this year's cuts, Salem Five has been slowly dropping as well, as have GMAC, Amtrust, UFB, etc.), so I figured I'd better bite the bullet.

Debit card theories:

- transaction fees: I wonder if debit cards used as credit cards incur the same merchant fees that "true" credit cards do. My CU requires that the 12 transactions be "credit" (signature-based) rather than debit (PIN-based). However, another area bank said the transactions could be either credit or debit-based. Also, as has been observed, no bank has imposed a minimum amount for these transactions. I specifically asked about the amounts, and they said a dozen small transactions were fine, and made no attempt to discourage that approach.

- overdrafts: A more sinister theory is that more debit card transactions makes overdrafts (and those expensive fees) more likely. But given how much "savings" many people invest in these accounts, overdrafts would seem unlikely.

- ubiquity: By choosing an appropriate minimum of transactions, the bank hopes that you won't count them, but use the account for all your transactions, thus making them your "main" financial institution (and one you're less likely to leave). This seems an attainable end, but I don't see how much profit it generates (if banks could incur this kind of cost to get deposits and customers, why haven't they done so before, and why have they chosen this particular program).


It has been suggested, and perhaps this is the key, that now that securitizing and selling loans is no longer as viable an option for banks, they need to attract more customer deposits in order to make loans. Maybe that's the key. In the end, I guess I don't know how banks are making money on this (while I was signing up for my 6% rewards checking, I was offered a 5.75% home equity loan, and for a moment I considered...), but at this point I'm just glad they're offering such options when every other alternative seems to be tanking so badly.

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Comment #53 by colonel (anonymous) posted on
colonel
I opened a savings account earlier today at www.centurybankdirect.com with a rate of 4.54%. Like it has been mentioned before, the rate could change anytime, but it is still one of the best rates still out there.

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Comment #54 by Anonymous posted on
Anonymous
- SVG said above -

Anon,

>>I'm sure that if enough people start making $1 charges in multiples of ten, the banks will soon mandate a mimimum $$ per transaction to count towards the monthly total.<<

Nope.

I don't recall where, but I've read that banks/CUs cannot do that.

Debit cards operate just like checks. Banks/CUs cannot impose any restrictions on minimum amount of check one can write (provided it is a check they are writing from their own checking - as against a check from their credit card as cash advance). Similarly they cannot impose any mandate regarding minimum amount per debit card transaction.


The problem in that even if SVG is correct, what this seems to be saying is that the banks cannot impose a minimum dollar amount on the debit card transaction that the customer can make. HOWEVER, that isn’t the same thing as saying that a bank cannot disallow certain debit transactions (for example, those below a certain dollaer amount) from counting towards their particular Rewards Checking requirements for that month. In other words, if I make 10 debit card transacitons below $2 the bank no doubt has to let them go through, but I don’t think any Federal regulations say that it can’t disallow those transactions from the Rewards requirements.

So far I haven’t seen any bank’s Rewards Checking rules that do this, but I think there is nothing to prevent them changing this just about as easily as they change their Rewards Checking interest rates.

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Comment #55 by Anonymous posted on
Anonymous
Bravo said above -

Bravo to SVG's answer.


Pay your utility bill with your Mastercard Debit Card online. Designate small amount payments so you can have multiple payments. There is no charge to the consumer to pay their utility bill online with a credit or debit card. I do it all the time……

It is not always true that “There is no charge to the consumer to pay their utility bill online with a credit or debit card.”. It depends on your utility, and yes, I have seen utility companies that have websites whete customers can choose to pay either from checking accounts or from credit or debit cards – and for credit or debit card payments, there is a “Convenience Fee” charged. Your mileage may vary.

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Comment #56 by Cryo (anonymous) posted on
Cryo
I did it.

I went down to the credit union and got my 5.25% Rewards Checking.

The employee said the CU had not changed the rate since last summer, even with the Fed cuts.

Of course, the rates could fall at any time, but then if the rate drop is too much, I would simply remove my money, which I can do at any time.

I discussed openly with the employee about the fact of just making 10 tiny debit transactions per month. He said of course he knows people can do that, but that the bank is banking on the fact that more people will not do that than who will.

I had strict rules before I decided to do it:

I wanted no cap. I can put as much money as I want, and I will get my 5.25%.

First month they give you full interest, even if you don't do the debit card stuff.

I didn't want the requirement of direct deposit or auto debit. Where I went the rule is one online Bill Pay or ACH debit or credit. Doesn't need to be automatic.

So far, so good.

I will try it. Might either do the PayPal thing or the iTunes thing for my debits. As long as the charge is put through as a Point of Sale Transaction, all should be OK.

These banks know that if they change the rules (requiring a minimum dollar amount with the debits) or lower the interest rates too much, a lot of people like me with the big balances will withdrawal their money.

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Comment #57 by Anonymous posted on
Anonymous
I have Verizon Wireless AND T-Mobile Cell Phones.

I log into my accounts online and pay with a credit card each month.

Never ever been charged a convenience fee by my credit card company. I have used both a Bank of America Visa and a Chase Bank Visa.

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