Consolidating Your Banking May be a good Idea

We understand why consolidated banking is a good idea from the financial institution’s point of view; they maximize the profit from that particular customer and no longer have to expend any effort in trying to capture their other banking/lending/investments. But, why is it a good idea for the client?

Financial institutions concentrate their sales efforts on bringing in a larger share of the customer’s wallet. This can also work to the customer’s advantage. As a customer, you may be able to receive benefits such as better interest rates and reduced or no fees for bringing in their loans, retirement savings and other investments. Free checking accounts, free safe deposit boxes, very low cost overdraft protection, personal document shredding, free coin counters, preferred rates on credit cards and auto loans are some of the advantages of having your finances in one place. Another good reason for combining your accounts is relationship pricing on loans and savings products. This means that, depending on the size of your overall relationship, you may be able to get higher rates on your time deposits and lower rates or reduced rates on your borrowing. With many institutions, you will see increased benefits as their deposits and relationships increase in size. Often these are tiered benefits that kick in at $10K, $25K, and $50K.

If you have a particularly large relationship; one that includes your investments and home and business loans, you may find yourself in a unique position. Your financial institution may make some very significant concessions should you decide to look elsewhere for your banking services. Are you refinancing your mortgage? Your manager will likely do their best to meet or beat any competitor’s quote!

But it’s not just financial savings. There are some real convenience issues here too! Combined statements are very convenient; being able to see all your accounts in one statement saves a lot of time. When you enter your online banking, all of your accounts can be accessed at once for transfers and other business.

You can have a better, often more personal relationship with your financial institution. As a manager myself not too many years ago, I had always assigned my best bankers to my top clients. I have always believed bank managers should treat his or her best and most profitable clients like royalty. They should assign an employee to them as their “Personal Banker.” Now, if the manager is not in, the customer has an assigned representative to support their financial needs.

Finally, when you die, if all your accounts are in one place, you have made things much easier for the executor of your estate. They don’t need to go to multiple financial institutions to settle the estate. This saves your family time and effort. 

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It is Homebuying Weekend June 7th and 8th at the Meriwest Credit Union's Sunnyvale Financial Center on El Camino at Fair Oaks. Friday the 7th is Mortgage Day. Loan Agent Bruno Gonzalez will be present all day to answer your home purchase and refinance questions.  

On Saturday, June 8th, we will be presenting "Homebuying Strategies for the Current Bay Area Housing market."

Presented by Michael Mendenhall of Keller Williams Realty, with Bruno Gonzalez of Meriwest Mortgage. 

You will learn:

• The truth about foreclosures, short sales and other sources of housing inventory.
• Purchasing real estate in today's changing housing market
• Possible problems when purchasing a short sale home, flipped or bank-owned property.
• Defining your homeownership goals and creating a step-by-step strategy to achieve them.
• What you need to have in place to start looking for a home.
• The benefits of homeownership in the bay area.
• How to view homes and make offers that get accepted, at the best price with the most favorable terms.
• Understanding your financing choices when purchasing a home.
• Acquainting yourself with the required real estate documents.

 I hope you can join us June 7th and 8th in Sunnyvale!

Seven Lessons on How to Pay More Bank Fees

Do you want to pay more in bank fees on your checking account? Follow my advice you will spend more than intended on bank fees!

1. Ignore your account between paychecks.

• Lots of people only look at their account on payday when they make a deposit. “I’m in a negative balance. Why?” They don’t keep a running total on their check register nor use online or mobile banking to track their usage. This can result in multiple overdrafts costing at least $35 for each occurrence.

2. Ignore financial institution correspondence that comes with your statement.

• Financial Institutions can make changes to their accountholder agreements. Often these changes affect the fee schedule of the institution. If one ignores the changes by failing to read the statement enclosures, they may fail to heed a warning that their minimum balance has increased and start paying a monthly fee or miss out on some other change that will result in higher fees.

3. Ignoring minimum balance or direct deposit requirements

• To maintain a free checking account, many financial institutions require that an accountholder maintain a specified minimum or have their paycheck directly deposited to their account. Drawing funds so the account balance falls below the required minimum or changing employers and forgetting to set up direct deposit can result in a member paying higher fees.

4. Skip Overdraft Protection

• Yeah, you probably won’t make any mistakes with your account so Overdraft Protection is probably unnecessary. But, of course, if you do make a mistake, you will pay $35 or more per occurrence. Good overdraft protection provides you with a line of credit or a transfer from your savings account that is paid to your checking account if an item is presented for payment and there are insufficient funds. Your fee for the transfer may be free or as little as $5. That is a lot less than an overdraft or Non Sufficient Funds charge.

5. Move to another financial institution and ignore your old account.

• You moved to a new bank or credit union and left a few bucks in the old account in case something comes in. After a while, you forget about the old account. Does your accountholder agreement have built in fees for inactivity? Some institutions enforce inactivity fees of $5 or more per month should you stop using your account and allow it to become inactive or dormant. Remember to close old accounts when you change institutions. Not only can you lose money with inactivity fees, your account could just get old and after three years of inactivity, it may go dormant. Allowing your account to go dormant means that any money remaining in the account at the end of three years of inactivity can be sent to the State of California’s Controller’s Office. The money can be redeemed by the accountholder but it takes time to go through the bureaucratic process.

6. Using money orders to pay for items that require guaranteed funds.

• A financial institution will charge $5 or more to issue a money order or cashier’s check. Did you know that if you send a check through your online banking it is a guaranteed check and it is free?

7. Use ATM’s indiscriminately

• If you are not using the ATM’s that are authorized by your financial institution you will likely be charged for each instance of usage. Those fees are not just from your bank, they are charged by the foreign financial institution’s ATM for non-customer usage. Costs: usually $5 -$7 per instance. You could be charged $2-3 by your institution and as much as $5 by the company that owns the ATM. 

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What is the difference between banks and credit unions? Some teenagers in Alberta, Canada came up with an ingenious video to describe the differences. It is linked here. I hope you enjoy it! 

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