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10 Top Deposit Account News Stories of 2011

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This year will likely not be remembered fondly by conservative investors who depend on interest they earn from their bank accounts. Let's hope we see improvements in 2012. If the economy improves, perhaps we will at least see the end of falling rates. Even though you might want to forget 2011, there was a little bit of good news. Several banks launched new services that will make banking more convenient.

Hopefully, you haven't grown tired yet of all the reviews of 2011 that are blanketing the media this week. I thought I would jump in with my own review of 2011 with a focus on banking and deposit accounts. Below are my 10 top deposit account news stories of 2011:

  1. Deposit Rates Continue to Fall - I had hoped many times in 2011 that we were near the bottom, but unfortunately, rates continued to fall. Two examples include the 5-year CDs at Ally Bank and USAA Bank. Ally's APY fell from 2.40% to 1.79%. USAA Bank had similar rate cuts. Its APY fell from 2.40% to 1.80% (standard CD). Rates didn't fall quite as much at some credit unions. At Melrose Credit Union, the 5-year CD APY fell from 2.93% to 2.68%, and at Alliant Credit Union, the 49-to-60-month CD APY fell from 2.30% to 2.00% ($25K minimum).
  2. Fed's Mid-2013 Pledge - Hopes for rate hikes were dashed at the Fed's August meeting when they announced their pledge to keep rates near zero until mid-2013. The exact quote was "exceptionally low levels for the federal funds rate at least through mid-2013."
  3. Durbin Amendment Takes Effect - One part of the 2010 financial reform legislation was the Durbin Amendment which required the Federal Reserve to implement caps on debit card interchange fees. Even though these caps would only apply to financial institutions with at least $10 billion in assets, small and large banks pushed Congress to pass a bill to delay this regulation. The bill failed, and the caps took effect on October 1st.
  4. Debit Card Fees Come and Go - Banks thought they could justify new debit card usage fees due to the Durbin Amendment. Several large banks introduced new debit card fees, but none received the notoriety that Bank of America received. The protests and bad publicity finally caused Bank of America and other banks to drop their debit card fee plans.
  5. Bank Transfer Day - The new fees and general anger at the big banks spurred by the Occupy Wall Street movement lead to the grassroots Facebook-driven campaign to move money from the large banks to credit unions and community banks. Initial results of Bank Transfer Day may have been a little too optimistic.
  6. Treasury Announces End of Paper Savings Bonds - This didn't directly involve banks, but it affects many CD investors who also like the safety of savings bonds. In July the Treasury announced that paper savings bonds will no longer be sold at banks and credit unions starting in 2012. One important consequence of this change is that it cuts in half the amount of savings bonds you can buy per year. The only way to purchase paper savings bonds in 2012 will be from your income tax refund.
  7. CD Early Withdrawal Penalty Changes - Some banks and credit unions realized one consequence of their low CD rates: early withdrawal penalties (EWP) would be too small. That resulted in several of them to increase the EWPs. Bank of America increased its EWP for CDs with terms of 1 year and longer to be equal to 3% of the principal plus $25. PenFed increased its EWP on 5-year CDs from 6 months to 12 months of dividends. These larger penalties at both BofA and PenFed only affected new CDs. However, there was one credit union that decided its new EWP would apply to both new and existing CDs. Fort Knox FCU increased the EWP on CD terms over 2 years from 90 days to 180 days of dividends. In March I confirmed it applied to existing CDs, and we learned in September that the NCUA didn't find a problem with this change.
  8. Capital One to Acquire ING Direct - Capital One and ING Direct announced this acquisition in June. It has been known since October 2009 that ING Direct would be leaving its parent, ING Groep, due to a European restructuring requirement. Before June there had been rumors of several other banks acquiring ING Direct. One of those banks, GE Capital Financial, didn't stop looking for an internet bank after it failed to acquire ING Direct. This week GE announced its plans to acquire MetLife Bank.
  9. ING Direct Offers Paper Checks - The largest internet bank realized that too many people need the ability to write a paper check at least once in a while. So in August ING Direct started to allow paper checks. However, only its own special paper checks can be used, and those checks cost $5 for a book of 50.
  10. Online Check Deposit - Internet banks like Ally Bank and Bank of Internet released remote deposit capture this year. This allows customers to scan checks at home and deposit them online without mailing in the checks. It took a while at Ally Bank. A limited roll-out began in April. It was finally released to all customers in October. Back in March I was told by an ING Direct rep that remote deposit service was in the works. I just called today, and I was told the same thing. Perhaps ING Direct's acquisition by Capital One is slowing their efforts on this.

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Comments
6 comments.
Comment #1 by Aaron (anonymous) posted on
Aaron
Have you tried using Ally's online deposit? I love my Ally accounts and how they're not huge douches like the rest of the banking industry but their online deposit system/software is abominable. It simply just doesn't work and has such annoying little errors. I tried it the other day and cannot tell you how many times I rescanned my check or tried to crop it differently. The site just kept saying the size was wrong and it was either too tall or narrow/wide. I gave up since I didn't feel like spending more than 20 mintues on this fruitless endevor.

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Comment #2 by KenBDG posted on
KenBDG
I did get one error when I tried out Ally's online deposit system. I described my experience in this post. One reader who tried it out in June thought Chase's QuickDeposit was much easier to use.

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Comment #3 by Anonymous posted on
Anonymous
PenFed has also introduced an online deposit system and it works reasonably well, though not perfectly.  Often it takes a second try to get the check to successfully scan, and very occasionally (I think it has happened twice over dozens of deposits) a check actually has to be mailed in.  But it is still such an improvement over having to mail in all the checks.  For me, this was just a wonderful, unexpected enhancement in a share account I'd opened only to get access to PenFed's CDs.  It is now my deposit conduit almost all of the time.  

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Comment #4 by Apache posted on
Apache
Does PenFed have Shared branches where one can open the usual savings account and get the check to PenFed through the Shared account?  This is the way I did it with the other credit union and it is not as much as a hassle. Thanks for any info.

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Comment #5 by Anonymous posted on
Anonymous
I have used Ally's eDeposit three times now.  The first time in late October, it worked fine.  The second time I had a lot of difficulty getting the scans to be accepts correctly, but it worked.  The last time was almost 3 weeks ago.  Here is the details.

I sold my truck and failed to note the daily/monthly deposit limits.  So after I had endorsed the check as required and continued with the process, I was not allowed to continue.  Now I had a check that could only be deposited into my Ally account.  A phone call to them, with a short period on hold to find what to do, I was told to mail the check to them.  I was going to use Ally's prepaid envelopes but was told I needed to mail it to different address.  So I put check in the mail mid December.  A week later still no money in my account.  I called Ally to find out what was going on.  They said most likely they hadn't received it yet.  I called the company I sold it to see if they could tell me anything and found out the draft had been fund several days earlier. 

I waited a couple more days and still no funds in my account, so another phone call to Ally resulted in a ticket getting opened with their Bank Operations.  A few days later they called my home number, even though I had given them my cell phone, as I was out of down the holidays, when they asked for a contact number for the ticket.  I later found out they had asked for a copy of the draft.  So another call to the company that purchased my truck.  They said the corporate office would have to look into the matter and they were closed until after the first of the year. 

So now it appears Ally has a nice chuck of change somewhere, which was endorsed to my account as per their eDeposit requirements, and I don't have access to it, let alone the lost interest or if I will ever see the money.  So if I had taken the draft to my local bank, I wouldn't be sitting in limbo right now!

 

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Comment #6 by Anonymous posted on
Anonymous
Alliant Credit Union savings rate dropped to 0.95% (1% APY) on Jan 1, 2012.

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