Having a bank is a necessity in modern-day living, but unfortunately many people are dissatisfied with the available choices.  At the start of this year Forbes listed America’s Best And Worst Banks, but it was somewhat surprising to see what they analyzed.

With Bank of America and Citigroup buoying their balance sheets and repaying billions of dollars in taxpayer bailout funds, the casual observer might assume the banking crisis is just about over. The casual observer would be wrong.  Lots of banks are going under these days. Here are the best and worst among the 100 largest.

Busted banks are still keeping the Federal Deposit Insurance Corp. busy. In the past two months, 41 went under, surpassing the total of 26 for all of 2008. What’s more, by some measures bank balance sheets are in worse shape today than they were at the height of the financial crisis.

It is of course necessary that your bank will still be there when you wish to get your money.  However that is a very minimal criterion in selecting a bank.

Unfortunately reports since then indicate that on other dimensions, banks are not doing very well. One title suggested that Customer Satisfaction With the Biggest Banks Plummets.

While customer satisfaction with banks over all remained unchanged in the fourth quarter of 2009 from the year-earlier period, customer satisfaction with some of the biggest banks has declined to the lowest fourth-quarter levels in years.  The results, from the American Consumer Satisfaction Index, back up similar findings from a Forrester Research report.  This found that customers of the biggest banks in the United States were the least likely to believe their financial institution did what was best for them as opposed to what was best for the institution’s bottom line.

A report from Reuters today shows that there is no improvement: Large bank customers  are even more dissatisfied.

Some of the largest U.S. banks were ranked very low for retail customer satisfaction.  A US marketing research company study by J.D. Power and Associates implies that as some of the biggest banks get bigger, customers may not be happy.  The three biggest U.S. retail banks — JPMorgan Chase & Co’s Chase, Citigroup’s Citibank, and Bank of America Corp’s Bank of America — consistently rank at or near the bottom for customer service in the regions they serve.

This dissatisfaction with banks and the service they provide seems to be the case wherever you look.  Here are some results from the UK on how different services rank for customer satisfaction.

According to a recent survey conducted by moneysupermarket.com, it is hairdressers and hotels that that we think provide the best service. While banks and estate agents are thought to offer the worst.  Restaurants, coffee shops, garden centres, supermarkets, clothes stores and entertainment centres such as the cinema and bowling alleys all scored highly with consumers.

Here below are the results for this year.  Compared to last year’s survey it would appear that the service provided by banks has actually got worse. Banks have dropped a place in this table.

The industries at the bottom of the table have all traditionally suffered a bad press. Most of them – banks, energy companies, estate agents – demand hefty fees of their customers and provide necessary and essential  services, rather than luxuries.

Unfortunately the attitude in many banks may be as Tom Peters said, that “we are no worse than the others”.  If you are looking for one of the best banks, hopefully you can find one that searches for banking excellence, which includes not only safeguarding your money but also delivering a high level of customer satisfaction.

Post from: Senior Money Memos

Best Banks

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Google has up till now presented free (organic) search results accompanied by sponsored results.  The credit card comparison it now offers in the UK represents a significant departure.  As is noted in the footer:

Actual rates and other information may vary. Sponsored results shown only include participating credit card issuers. When you click on a card’s “Apply Now” link, the information you entered on this page will be shared with the issuer.

This new Google initiative is drawing the inevitable adverse criticism from the competition.  Here is how Moneysupermarket.com describes the additional values it brings to such credit card comparisons:

moneysupermarket.com’s successful formula comes from helping customers find the right card for them, with the option to search the whole credit card market, whilst providing help and support, such as independent reviews, to guide the customer’s decision making process.

In this latest move Google has abandoned its successful search model which comes from showing customers a combination of whole of market results, ordered by what is most relevant, plus sponsored results based on how much the advertiser pays. In this test they are simply listing cards that are prepared to pay to advertise, regardless of whether they are a great deal for customers. We are disappointed that Google has chosen to only feature sponsored products in this solution with nothing to support customers.

As well as seeing just a fraction of the credit card market customers who use this Google tool whilst it is in trial will miss out on at least one fantastic exclusive card coming soon only to moneysupermarket.com.

Paul Carpenter has a different concern about the Google credit card comparison website:

Verticals and niches are, to me at least, all about domain expertise and experience and I rely on brand perception to tell me where to find that.  As Google races against Bing to operate in verticals like this, it will be interesting to see whether its brand will resonate outside its core function. I suspect not, and I really don’t know why the tech market is so fetishistic about this stuff. Would you buy Coke jeans, or Marlboro branded microwave meals? Brands that are malleable enough to cross boundaries are vanishingly rare – an honourable exception being Virgin, who work in everything from cruises to space travel.

Clearly this test is very different from search activities that Google has worked on in the past.  Whatever the result of this test, it has big implications for where Google will be putting its efforts.

Post from: Senior Money Memos

Google Offers Credit Card Comparisons

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Credit Card Jungle was how Mike Hogan described the situation in a Barrons article earlier in the year. Even though there are some good business credit card deals to be found, it is very much a case of Buyer Beware.

If you’re among the two-thirds of credit-card holders who carry an outstanding balance, you might have noticed that your interest rate was hiked recently, or your billing cycle shortened. Failure to navigate card providers’ labyrinthine payment terms successfully can earn you one of several consumer-unfriendly fees.  These aren’t really new gambits. But they are being pursued with such gusto lately that they’ve generated a record number of consumer complaints.

That word jungle conjures up phrases like Nature Red In Tooth And Claw or Survival of the Fittest.  You have got to keep your wits about you, if you wish to stay ahead of those claws.  Hogan was describing the situation in the US but you will find similar discontent with the credit card suppliers in the UK and in Canada.

Consumers are often riled by two key hot button issues in most cases:

1. The way the interest is calculated on their balance owing often creates lots of surprises for consumers
2. The way any money that is paid is then applied to interest-bearing amounts owed is another cause for concern

It all comes down to the small print that is added to credit card contracts and it is not surprising that many feel there are hidden ‘gotchas’ in these contracts.

There is a popular wish for action so it is not surprising that you will find that politicians are now taking up this cause not only in the US but also in the UK and in Canada.

Even if tighter regulations are instituted they will never cover all problem issues. The wise user of credit cards will always do a detailed comparison of what the different credit cards are offering and what may be in the small print.

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Credit Card Jungle

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Seniors often may feel the need for someone who can help them in standing up for their rights when dealing with large corporations. Finding who can address your concerns in a satisfactory way becomes increasingly difficult when everyone is trying to push you to their website or insists you navigate their electronic telephone system. Thankfully some corporations take their responsibilities towards their customers seriously and are providing that much needed support.

A recent case with the Royal Bank illustrates what can happen. Seniors are living longer and becoming more educated, and this is forcing bankers to sometimes think outside of the box.

For example, a man in his late 80s went into a branch and asked to take out a five-year mortgage. He was in good physical and mental health, but the bank refused to commit him to a five-year loan that had a penalty for early termination. In this case, getting the senior his rights needed the help of the RBC Ombudsman.

Yes there is such a person: Wendy Knight is the RBC ombudsman. She was able to facilitate a resolution that kept everyone happy.

Banks are a group that is often criticized for poor customer service and the cell phone companies are on the low end of the scale too. Perhaps it is not surprising then that there is a Rogers Ombudsman, who is already making a difference. The company has now appointed its first ombudsman, Donald E. Moffatt. While he is supposed to act as a court of last resort, Moffatt will intervene quickly if he sees an injustice.

As ombudsman, Moffatt says he is independent from Rogers. He has no access to company records and has to ask for authorization from customers to check their files.

To get in touch, you have to go through three earlier steps, then send an email to ombudsman@rci.rogers.com or send a fax to 416-935-3604.

One might hope that the training that customer representatives receive would eliminate the need for an ombudsman. That is clearly not the case yet. Until it is, providing an ombudsman means that you can hopefully get a hearing even if it takes some effort to achieve that.

Post from: Senior Money Memos

Seniors Often Need An Ombudsman

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It is often said that death and taxes are inevitable and cannot be avoided. It appears that bank fees can be added to the list. At least that would seem to be the case in the UK where Barclays is accused over ‘obscene’ fees for customers’ wills.

An Independent on Sunday inquiry has revealed some major high street banks, solicitors and will-writing firms advise clients to appoint them as executors on customers’ wills and levy fees of up to 4.5 per cent on the estate on death. On an estate worth £500,000, that equates to £22,500 – about four times as much as the fees that the best-buy probate firms charge.

An executor’s role is to administer the deceased’s assets and ensure they are correctly distributed between beneficiaries and the taxman.

Barclays has been criticised for using aggressive tactics to persuade customers to appoint it as executor. Barclays defended its actions, saying that it acted as executor only in a minority of cases and that its policy is to step down when asked to do so by a beneficiary.

Consumers are warned that some will-writing companies and banks insist on writing themselves in as a joint or sole executor in the first draft in the hope of getting the fees for doing the estate work.

A codicil can be added to an existing will to remove unwanted executors. However, it applies only if the person drawing up the will is still alive. As usual, it is buyer beware and you should read very carefully all the small print before signing that draft will. It may have sharp teeth.

Post from: Senior Money Memos

Bank Fees Beyond The Grave

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The majority of people appreciate the convenience, ease, and flexibility that credit cards can provide.  What they have not appreciated in the past were some of the fees that some cards carry.  However as the New York Times headline said today Card Users, Take Heart: One Penalty Is Vanishing

The noxious penalty imposed on American Express and Discover consumers who exceeded their spending limit has finally died, quashed by legislation signed in May by President Obama to ease onerous fees for cardholders.  In recent days, American Express customers began receiving notices of the fee elimination, which takes effect in October. Discover Card customers will soon get similar notifications.

Such fees are often mentioned in the small print but people often do not do their homework well enough.  Credit cards offer flexibility and convenience providing you use and repay the card sensibly and responsibly.  The important thing is to compare alternatives and read all the small print.

There are many financial situations where it is important to see as wide a variety of suppliers so that you can learn what is important and what should be avoided.  A good example of such a website in Australia is http://www.compare2save.com.au/  For a whole variety of the more serious financial decisions you have to take, you will find that Compare 2 Save has the details on a number of service suppliers.  Loans, Bank Accounts, Insurance, Broadband suppliers, Car Hire, you will find the data you need to make comparisons. 

In particular they also have details on 8 credit cards you could consider.  There are credit cards with 0 percent interest on purchases for a generous period of time or prestige credit cards with additional benefits for those that qualify. … and the list goes on.

You must carefully research and compare different credit cards to find the one that best suits your needs. Not least, read all the small print and make sure you fully understand so that you do not live to regret your choice.

Post from: Senior Money Memos

The Right Credit Card

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Many will remember that card from that much-loved Monopoly game,  which was often so welcome particularly when running the risk of landing on those high-rent properties.  Advance to go and collect $200.  What could be better?  Unfortunately it was only Monopoly money so it did not do much for you in the real world.

Perhaps even more unreal for many of us is Advance to Go, Collect $1 Million by Kirsty Dunphey.

This is the story of a young, successful business woman operating a real estate office in Tasmania. Anything is Possible is a catch phrase that accurately describes this true story showing how a young girl can pull herself and her family out of a situation that almost destroyed them financially and emotionally. From absolutely nothing to owning over $3 million dollars worth of property in under four years, Kirsty’s story shows how it can be achieved.

That is certainly inspiring but may represent too large and long-term a challenge for any senior who may be in need of a quick cash advance.

Given this ongoing recession, many who have been extremely prudent throughout their lives are now finding their resources are stretched.  If an unexpected emergency comes up, be it a medical problem or a house maintenance issue that must be fixed immediately, then there are no funds available.  In some cases money may be tied up in longer term arrangements and there may be penalties involved in withdrawing it early or delays in receiving withdrawals. 

In such cases, what is often known as a payday loan may well provide the answer.  In the US, provided one works with a domestic-based payday advance lending company and exercises extreme caution in entering into such arrangements, then this may give a very rapid solution to a cash deficiency.

This is Advance To Go with real and tangible meaning.

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Advance To Go

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If you are behind with credit card payments, then you are certainly not alone.  Equifax Canada reports that More Canadians are in arrears on credit payments.

More than half a million Canadians are more than three months behind on their credit payments.  That represents a 19 per cent rise in the average delinquency rate in the year ending May 31.

In May, a report from the Certified General Accountants Association of Canada showed Canadians are increasingly relying on credit cards and credit lines to finance day-to-day expenditures.

• Household debt is at an all-time high reaching $1.3 trillion in 2008
• Canadian households are financing consumption activity with unearned money as families increasingly reach for credit to finance day-to-day living expenses.
• The majority (58%) of survey respondents with rising debt said that day-to-day living expenses are the main cause for the increasing debt. This was higher than the 52% reported in 2007.

Undoubtedly the same situation exists in the US.  The situation is likely to get even worse since Credit Card Issuers Are Raising Rates Ahead of New Law.

Credit card companies are raising interest rates and fees seven months before new rules go into effect that will limit their ability to do so, much to the irritation of Congress and consumer advocates.  The flurry of activity, which the banks say is necessary to shore up their revenue losses, has irked members of Congress, who passed a new credit card law, which was signed by President Obama in May.

The law, among other things, would prevent card companies from raising rates on existing balances unless the borrower was at least 60 days late and would require the original rate to be restored if payments are received on time for six months. The law would also require banks to get customers’ permission before allowing them to go over their limits, for which they would have to pay a fee.

Bank executives had warned that the new law would force them to increase rates and fees because it would keep them from properly managing borrowers’ risk. The argument is that if banks can’t raise rates on riskier customers, they will have to raise rates on all.

Chase is one bank that is increasing Credit Card Payments Ahead Of The Reform.

Chase told the Huffington Post that the changes would apply to less than 1 percent of its approximately 100 million active accounts.  “Chase has recently increased the monthly minimum payment on select accounts that have carried balances. Effective August 2009, impacted cardmembers will have their minimum payment increased from 2% to 5% of the statement balance,” said Chase spokeswoman Stephanie Jacobson in a statement. “Tens of millions of Chase customers have taken advantage of our promotional low rate financing over the last five years. Most of these loans have been paid back in less than 24 months. However, there have been a small percentage of customers that have not made as much progress in paying down these loans.”

Chase is not the only lender to take action that will raise costs for consumers since Obama signed the reforms into law in May. USAToday reported Monday that Chase and Bank of America are both raising balance transfer fees, and that Capital One and Citibank have raised interest rates. The Financial Times reported Wednesday that Citi is raising rates on millions of its customers in exactly the way the new legislation is supposed to prohibit.

This in all likelihood means that even more credit card debtors will be behind with their payments.  Hopefully the recession will begin to abate in the not too distant future and that will present a light at the end of the tunnel for at least some of these debt-stressed individuals.

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Behind With Credit Card Payments

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Reverse Mortgages have been in the headlines for the past few months. Seniors are using reverse mortgages to repair diminished nest eggs, as they try to stave off the damaging effects of this major recession:

Seniors’ portfolios hammered by the stock market decline are getting a boost from reverse mortgages. Such mortgages allow seniors to get monthly payments based on the equity value in their homes – the amount that the value of the home exceeds any mortgage on the home.

Aging has its compensations, at least in figuring a reverse mortgage payout. The older the homeowner, the better, because the payout increases with the homeowner’s age on the date the mortgage begins.  For homeowners younger than 70, the payout rate usually will be unattractive. But as age increases to 70 and beyond, the payout rate rises markedly, especially for larger loan amounts.

However the headline this morning states that Reverse Mortgages Leave Seniors at Risk according to the Government Accountability Office (GAO).  Meanwhile the Department of Housing and Urban Development (HUD), which usually backs these reverse mortgages, defends such programs’ safeguards.

While these reverse mortgage loans have become more attractive to seniors as the economy has soured and housing values have dropped, reverse mortgages are complex. That is why the FHA has long required that the seniors take part in HUD-approved counseling sessions before these loans are processed. The GAO report concluded that HUD “lacks effective controls” over the counseling programs.

Seniors should therefore consider carefully the reverse mortgage rates before entering into such a loan arrangement.  They should consider all eventualities that might arise and use a reverse mortgage calculator to estimate what they might be faced with in the future.  It could also be very worthwhile to consider using the AARP HUD Reverse Mortgage Counseling services too.

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Reverse Mortgages Require Prudent Evaluation

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Any one in the US or the UK will wonder why such a post is necessary. They all automatically have their mortgage interest payments tax deductible. Not so in Canada. However with a little work, even in Canada you may find that Tax deductible mortgages are worth the hassle. According to Jonathan Chevreau, Financial Post, the Canada Revenue Agency is unlikely to challenge if they are done properly.

Why it should take such effort is unclear. It is accomplished by applying the so-called Smith Manoeuvre, popularized first in British Columbia by Fraser Smith in a book of the same name. It has now spread across the country, apart from Quebec. Smith developed and packaged a variation on the standard tax-permissible strategy of selling off non-registered securities; using the proceeds to pay off the mortgage; then reborrowing to repurchase the securities, thereby creating legally sanctioned tax-deductible debt.

A major competitor to Smith, TDMP or Tax Deductible Mortgage Plan, has been named one of Canada’s fastest-growing companies by Profit magazine. It ranked 88th on the 21st annual Profit 100 ranking.

TDMP has a $39 per month fee charged to homeowners, a fee which is itself tax deductible. For this, TDMP takes on all the back-office work and saves the homeowner the bother of having to move the money around every month in order to make their mortgage payments and purchase securities. The fee is considered a carrying charge for administration of income from investments.

Why Canada does not follow the lead of the UK and the US on tax deductible mortgages is unclear. Such an approach does help the residential housing construction market, which can create large numbers of jobs. However until it does, the TDMP approach seems a good way to proceed.

Post from: Senior Money Memos

Tax deductible mortgages

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