Impact of Federal Regulation D on Electronic Transfers

January 30, 2012 by Slug · Leave a Comment
Filed under: All Other

A note from Slug: I'm not a big fan of guest posts. I regularly turn them down because they are almost always more work than their worth. This is not the case with the current guest post. I had been planning on writing a post on the insanity of Regulation D for 8 months. She took the idea, researched it, and wrote a good post in 8 days. Thanks Noreen!

With advances in technology, how we handle our money has evolved from a hands-on to a more hands-off experience. More Americans are managing their finances over the internet, moving funds and making banking transactions with the simple click of a computer mouse or tap on a smartphone. The changes are coming so fast that security measures are sometimes less than adequate. In an effort to help protect consumers, the Federal Reserve has enacted regulations that cover how electronic transfers are managed.

Some of these regulations are helpful. For example, consumers have been saved a great deal of grief from the passage of Regulation E. This the law limits the liability for unauthorized transactions and regulates electronic file transfers (EFTs) including ATMs, direct deposits, telephone transfers, point-of-sale terminals, pre-authorized withdrawals and other transfers. Banks are required to clearly explain their policies and federal regulations relating to EFTs and give a 21-day notice of changes, thanks to Regulation E.

But others such as Regulation D isn’t as popular and has quite a few critics. It was enacted to prevent consumers from using savings accounts and other share accounts as checking accounts. It limits automated withdrawals from non-transactional accounts. The details include:

No more than six (6) pre-authorized, phone, automatic or check withdrawals or transfers in any combination are permitted from a savings account per month. Transfers and withdrawals include overdraft protection transfers, EFT transfers/withdrawals, debit card transactions, home banking, telephone and fax transfers.
Transfers out of savings accounts to loans, transfers into savings accounts, and transfers into or out of checking accounts are unlimited.
Once you’ve reached the limit, you’ll be locked from further EFTs.
An unlimited number of withdrawals or transfers are permitted when:

Made in person at the bank
Request made by a mailed letter
Made at an ATM
The member is paying a loan they have with the bank
Made from a checking account

Impact of Regulation D on Consumers

The limit of six transactions a month was set in the 1980s when internet banking was still a new concept. It’s estimated that between 500 million and 1 billion people will use mobile technology to access financial services by 2015. So the potential for Regulation D to cause problems would seem obvious, especially when convenience is at a premium and more people are doing their banking on the fly. Here are the risks:

Returned Unpaid – If you’re not keeping track of the number of transactions you’ve made during the month and make an online payment from your savings account, you may be shocked to find that the bill wasn’t paid because your six transactions were used up. There would have been no problem, however, if the payment had been made from your checking account.
Automatic Payments – Make too many payments from your savings account and automatic payments set up to come from your savings may not be honored; you may find you’ve missed this payment, as well.

Tips to avoid Regulation D Limits:

Set up your pre-authorized payments or automatic withdrawals to be taken out of your checking account, which is not subject to Regulation D.
Set up your overdraft protection to access an overdraft line of credit or a credit card as a safety net, instead of your savings account.
Limit transfers from your savings by making planned transfers in larger amounts instead of several small transfers.
Use an ATM to transfer funds within your account.
Monitor your accounts frequently to plan your transfers and control the movement of your money.

About The Author: Noreen Ruth writes for ASAP credit card blog and several popular finance websites. She is interested in educating consumers about using credit responsibly and about legislative action that will affect their ability to borrow the money they need. She has contributed hundreds of articles to various online sites that provide content to educate consumers on credit cards, debt relief services, loans and other finance related topics.

Tags: Regulation D

MoneyPros Index Fund Challenge Leader

January 19, 2012 by Slug · Leave a Comment
Filed under: Investing

So, back in December I was invited to take part in the MoneyPros Index Fund Challenge hosted by the fun folks over at MoneyPros. The game was simple. Just choose 3 stocks that you think are going to do the best in 2012. I am by no means a stock expert, but I do trade stocks and options occasionally so I jumped right in. I chose:

INCY – Incyte Corporation (Incyte) is a drug discovery and development company, focused on developing small molecule drugs to treat serious unmet medical needs. The Company’s pipeline is focused in the areas of oncology and inflammation and includes compounds in various stages of development, ranging from preclinical to late-stage development. Its two advanced programs include janus kinase (JAK) inhibitors.

YMI - YM BioSciences Inc. (YM) is a drug development company advancing a diverse portfolio of hematology and cancer-related products. The Company is advancing three clinical-stage products: CYT387, an oral small molecule oral dual inhibitor of the JAK1/JAK2 kinase; nimotuzumab, an EGFR-targeting monoclonal antibody, and CYT997, a potent oral vascular disrupting agent (VDA).

YGE - Yingli Green Energy Holding Company Limited is a vertically integrated photovoltaic (PV), product manufacturer. The Company designs, manufactures and sells PV modules, and designs, assembles, sells and installs PV systems. Its products and services include the manufacture of polysilicon ingots and wafers, PV cells, PV modules and integrated PV systems.

I actually own the first 2 in my own portfolio. I don't own the third, and of course it's been the best performer so far. The contest only just started, but guess who was sitting atop the leader board at the first update? That's right, it was me. This prompted me to send the following note to the other participants:

Everyone,

I'm calling it now. My lead is insurmountable. There is absolutely no way I can lose at this point. Sure, it's less than 3 weeks into the new year, and I picked ridiculously speculative stocks that could tank at a moment's notice, but really there's no way I can lose….

Just wanted to say I'm happy to be here. I thought I would get all my trashtalking in now before one of my three blows up!

I certainly am glad I got my trashtalking in early because as of this post I've already been overtaken by SweatingTheBigStuff. My only solace comes from knowing he had to sell out and choose Bank of America (BAC) to get to this position! I would hope for a big mortgage scandal for them, but I can't since I own BAC in my real portfolio too. Argh.

Look for more posts on the MoneyPros Index Fund Challenge in the coming months (as long as I'm near the top of the leaderboard!).

Tags: BAC, INCY, stock, YGE, YMI

5 Good Reasons to Autopay

January 19, 2012 by Slug · 2 Comments
Filed under: Tracking

I read a lot about personal finance. Much of this is at the message boards over at Bogleheads or SavingAdvice. One debate I'm tired of seeing is the one about AutoPay so I'm here to take a stand. You should AutoPay in full anything that allows it.

There, I said it. I feel better. But, this is the internet so of course I now must defend my position. Why should you AutoPay?

You're never late with a payment. If the payment is set to automatically come out of your checking account, guess what? It does. This means you guarantee yourself no finance charges or late fees. I can almost guarantee you that I'll get a comment from someone with some very specific situation where they were autopaying but for some reason it didn't work and they got hit for a fee or interest because of it. What you're not going to see is a comment from the hundreds of thousands of other people who have been paying this way for years with no problem. Although I would welcome that!

You open up space in your brain. You don't have to remember that your mortgage is due by the 3rd of the month so you need to initiate the online transfer or that the gas card is due on the 17th, but the 17th is a Sunday so you need to get it there by the 15th and you live in NY but the processing center is in Omaha so you need to mail it on the 11th just to be sure it gets there. And, do I have stamps? Yeah, that's a waste of my brain.

You save money on stamps and checks (assuming you're one of those truly old school people that mails your payment). Do those people still exist? Should I admit this reminds of Ke$ha? Probably not.

It serves a governor on spending. Hear me out here. If you're one of those people that doesn't have a lot of float in your checking account, you're going to pay more attention to your spending habits if you know that your bill is set to autopay every month. Sure, you could turn it off, but that's another hassle. So, you'll be more mindful, and that's good.

No special calendar or spreadsheets. How many times do I hear from people who don't autopay say "I have a special calendar that has all my bills listed on it" of "I designed an Excel spreadsheet for that"? The following is an actual quote from what I believe is a real person:

"I have a system that I created. I got a pocket folder and on Word created a chart of all my bills going down and the months of the year going across. I put that on the front and then laminated the whole thing. So as I pay them, I can check them off down the list and I can easily see that the whole column for April has been paid. I used to write the amount in, instead of a check mark. Also, i took a file folder and cut it in half. I stick them inside the pocket folder (so it is like 2 file folders inside, with the tabs sticking out the top). On the tabs I have "Pay on the 1st" and "Pay on the 15th." When I receive a bill in the mail, I tear off the payment stub and stick it in the appropriate file so when I sit down to pay bills, I just grab that file and write the check."

If this is really how you want to spend your free time, then go ahead. I'll be playing LEGOs with my kid.

Next let's debunk some of the reasons people give for not Autopaying:

I like to review my bills. Yeah, and…. This has nothing to do with autopaying. You can review your account online anytime you want. Even if you get a paper bill, you have plenty of time to review all of the charges prior to payment going through. That's not an excuse not to autopay, that's just laziness.

I don't trust them to pull the money out. Um, yeah. Look I don't trust the banks or cable companies or phone companies or fitness clubs to do much of anything right, but believe me when you're willing to autopay, they extract that money every time just like they say they will. And, when they don't, they fix it. Twice I've had a Bank of America payment fall on a Sunday, and they pulled the money on the following Monday which of course results in a finance charge. I can see it all online. And, sure enough a couple of days later they reverse themselves. Again I would rather have these rare occurrences happen where I have to pay particular attention for a couple of days rather than worry about payments every month.

I only autopay fixed amount payments like a mortgage. Inevitably the follow up statement to this is something along the lines of I like to pay more attention to things like credit card bills. *SIGH* There is NOTHING of course that prevents you from already doing this online. Set it to autopay and simply review your charges.

What do I do? I autopay everything I can possibly autopay. That includes 10+ credit cards, my mortgage, my cable, my cell, my landline, and my gym. And, with all my extra time I write posts like this!

Alright everybody, what do you think? Did I convince you?

Tags: autopay, finance charges, late fees

Fidelity Investment Rewards AMEX 5% Categories Q1 2012

January 5, 2012 by Slug · 14 Comments
Filed under: Credit Cards

I've already reported on the 2012 cash back categories for Discover and Chase Freedom, and I thought I was done. I'm delighted to report I was not. Yesterday I got an email from FIA Card Services who manages the Fidelity Investment Rewards AMEX. As a reminder, this card already pays you back 2% on every purchase, and now they're offering 5% cash back on the following categories:

Gas
Groceries
Drug Stores
Restaurants

Those are some great categories, but you always have to read the fine print:

The key piece here is the UP TO $25 part. That means you're limited to $500 in spending which is consistent with when they made a similar offer back in Q2 of 2011. Additionally, the offer is not retroactive for Q1. So, if you've already made what would have been eligible purchases, those don't count. It only counts AFTER you enroll.

Even if you didn't get the offer in your email, it looks like you can work around that by clicking here and choosing "Don't have one" option at the registration area. Then, all you need is your last name, last 4 digits of your card, and your billing zip code.

Tags: AMEX, cash back, Fidelity, promotion

Quest for a Million – Net Worth – 1/2012

January 4, 2012 by Slug · 8 Comments
Filed under: Net Worth

There are 53,058 books on goal setting at Amazon, and my 2012 goal is to read none of them. It's only day 3, and I'm well on my way to succeeding. My only goal is on every page of this blog, that's one million dollars in net worth. I'm about a quarter of the way there, and if I get there in the next 10 years, I would be amazed. Every other financial decision is made with that goal in mind. Do I pick up this penny lying on the sidewalk? YES! Anyone who disrespects money enough to not pick up their dropped change should be shot. Should I max out my 401k this year? YES! If you can, you should. Whatever you do, make sure you contribute enough to get the company match. Should I take a vacation even though the opportunity costs of doing so will delay my goal a little? HELL YES!! Having a long-term goal is great, but you should not subordinate living the rest of your life well to reach it. Keep that in mind with your New Year's resolutions.

Alright enough of my proselytizing, let's take a look at how 2012 is starting out. For the family, DW's practice is picking up the pace and will easily break even this month. It would be nice to see some more cash paying clients though. She continues to pursue additional marketing paths that will hopefully deliver that kind of clientele. For me, it's work as usual. There's nothing really exciting on the job front, but that could always change quickly. For now, I just continue to be grateful for a good job and a great boss. Also, since the transition, they have changed the way I'm paid from bi-weekly with a two week lag to bi-monthly with no lag. This essentially results in me getting an extra two week paycheck in January as they eliminate the lag. Nice. That will mostly go towards funding the 2011 Roth IRA's which still need over $3k.

ASSETS

On the asset side, my home value fell (again), but this is still meaningless to me since I'm not planning to sell in the foreseeable future. The value would have to fall another 20% for me to be underwater. For savings, many bills were paid and I made a Roth contribution so there are fewer liquid assets than I would like. DW is also sitting on lots of accounts receivable from Medicaid who has yet to pay her a cent from Oct.-present. Oh, to be the government and only pay bills when you feel like it.

Investment and retirement accounts are relatively flat which is in line with the markets. This will usually be the case since a large portion of my portfolio is tied to the S&P 500.

LIABILITIES

For liabilities, it's the same ol' story. Credit cards are still getting paid off every month, variable rate student loans are still getting paid down aggressively, and 1.08333 mortgage payments are being made. Liabilities reduced by 1% again this month.