Picking a Bank isn’t as Easy as it Used to Be

I was at Barret Graduate School of Banking in Memphis, TN, last week. It was a great week and I met some fantastic people and instructors from around the country. I was also reminded of something over and over again as I interacted in classrooms throughout the week: picking a bank isn’t as easy at is used to be.
I started working in the banking industry in 2002 as a front-line teller. My initial trainer–and many banking associates after that–drilled into me that banks were all the same in terms of products and services, and the only variable we could control was superior customer service. An individual could visit any bank and expect to have the same options regardless of a bank’s size and sophistication. Sure, size mattered at times because rates were typically more competitive at larger banks, but any community bank could attract customers with the occasional CD special or loan offer. And I have always been told that community banks could use size to their advantage by emphasizing local service from local people who have a vested interest in their community.
I think we’re starting to see a seismic shift in the way people do banking. And that shift is starting to–and will continue to–give community banks more substantial ways to differentiate themselves. Years ago, banks offered checking, savings, and time deposit accounts. They offered home loans, car loans, and small business loans. More recently they started offering ancillary services like insurance, investments, and trust services. But that’s nothing compared to how technology has contributed to the products a traditional bank can offer today: online banking, bill pay, and now mobile banking for smart phones. Person to Person payment (think PayPal) is available at many banks, and bigger banks (Chase, most prominently) are starting to scan checks with smart phones. By this time next year, the biggest banks–and companies like AT&T and Google–will offer consumers the capability to use their phone to make payments instead of the now traditional credit or debit card. Some of this technology will become standard at every bank (i.e. online banking). Other products will probably fade as they are replaced by other, better options (the paper check??). And it matters because banks, especially community banks, will have to determine what fits their vision and their community. Limited budgets and unique markets will force banks to prioritize what they offer and how they offer it. And that will mean you the consumer will have choices to make. You may not be able to walk into a bank and get the product you’ve seen advertised at a different bank. The bank you choose may be the optimal combination of service, product mix, and technology. And, scary as it sounds, you may come to rely on your banker as an expert on technology, at least as it relates to banking.
I’m curious to hear your thoughts. Have you seen any products or services in the marketplace that interest you? That may be coming soon to a bank near you?? Thanks for the feedback.

In Case You Hadn’t Noticed … your credit card terms are changing

As if there weren’t enough to keep track of in the world of personal finances, new rules regulating consumer credit cards took effect this past month.  The good news: these changes are beneficial to you, the consumer. 

The Federal Reserve is implementing these changes through the Truth in Lending Act, one of the more important regulations protecting consumers who borrow money.  The recent changes were approved in 2009 and were implemented in two different phases in February and August, 2010.  There are several notable changes, some of the most significant include:

Changes Implemented February 22, 2010:

• All credit card companies must include a box on your statement that discloses how long it will take you to pay your entire balance if you only make the minimum monthly payment.  The idea being that if a card company is forced to admit how long it will actually take, the gory details will motivate you to get it paid off quicker.  In addition, companies must also show the monthly payment required in order to pay the entire balance in three years.
• Your credit card company can’t raise your interest rate in the first year you have the card unless it was part of the original agreement you signed.  If they raise the rate after the first year they A) have to give you 45 days notice; B) may only charge the higher rate on new purchases; and C) must allow you to cancel the account if you don’t accept the changes.  Unfortunately, you are still responsible for the remaining card balance if you do decide to cancel.

Changes Implemented August 22, 2010:

• In most cases, you may only be assessed a $25 fee for late payments.  Before August 22, you may have been charged up to $39 for every late payment.  And, your fee can’t be more than your minimum monthly payment so keep track of this change because it may have significant benefits if you do happen to pay late on occasion.
• If your credit card company decides to increase your interest rate for any reason they must tell you why.  And if they increase the rate, they must also reevaluate your account in six months to see if you have earned the lower rate again.

There were other changes implemented on both these dates so if you want more information visit the Federal Reserve’s website and review their fact sheets:

                February 22

                August 22

And BEWARE, unscrupulous credit card companies are beginning to find ways around the new regulations by doing things like marketing business cards to consumers that are not subject to the new consumer protections.  As always, do your homework before getting a new card, and better yet, work with your local community banker to make sure you are getting a quality product that works for you.