Make Sure That Credit Card Payment is Made on Time

If you are a Bank of America credit card holder, be on the lookout for a notice in the mail soon about a new penalty interest rate the bank is set to implement.  BofA has not had a penalty interest rate on their cards since 2009 but it seems like the coast is clear for them to reinstate the penalty.  Apparently most U.S. credit card lenders have already added penalty interest rates back to their accounts.

The assessment will begin on June 25th and it could be as much at 29.99% to customers who make their credit card payments late.  This new rate would only apply to new purchases after the change is applied.  Customers will receive a 45 day advance notice before receiving the penalty.  I am one to believe it is okay to penalize abusers of credit but I hope the bank has a review policy for those good clients who inadvertently make honest mistakes because those are not uncommon.

The bank’s card unit recently reported that revenues in the first quarter of 2011 dropped to $5.6 billion from $6.8 billion a year ago.  Gotta get it back up somehow. 

This is the second penalty rate BofA cardholders are seeing this year.  Earlier in the year BofA introduced an annual fee of $59 for some of its card holders.  If you are one of the unlucky ones, you will see that fee on your May statement.

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Blind can now “See” Currency Notes

Image of the EyeNote trademarked logo, an eye in a pyramid.

Blind and visually impaired people can now use a downloadable app to aid them in knowing exactly how much money they have in their hands.  The app is called EyeNote and it is designed to work with the Apple iPhone and 4G iPod Touch and iPad2 platforms.  It is available through Apple iTunes.

The app uses a mobile device’s camera to scan the front or back of the currency/note/bill and in a matter of seconds, it provides an audible or vibrating response.  It is able to identify all Federal Reserve currency notes issued since 1996.  From a handheld device and with a circular motion, the app can detect the denomination within 2-4 seconds.  Spoken output can be in English or Spanish and it can also identify the front and back to help with vending machine operation.  When discretion is required, pulses are emitted indicating the denomination:  one dollar is 1 pulse, two dollars is 2 pulses, five dollars is 3 pulses, ten dollars is 4 pulses, and so on.

Unfortunately the device cannot authenticate real notes from counterfeit notes.

This app was developed by the U.S. Bureau of Engraving and Printing (BEP).  It is free and it is available at


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Home is Not What it Used to Be

While home is still where the heart is, it is no longer where a good value is.  Yep, apparently home ownership is not all it is cracked up to be and home owners are being encouraged to look elsewhere for long-term investment returns.  According to Brian Moynihan, CEO of Bank of America, housing prices in some areas may not rebound long-term.  Low population growth in certain regions of the country along with the long-term effects of the worst financial crisis since the Great Depression will keep prices from rising.  “It’s sobering to think, but some people shouldn’t be thinking of (their home) as an asset,” Moynihan said on Tuesday, April 12th at the 2011 National Association of Attorneys General conference.  He also added “they should be thinking of it as a great place to live.”  Moynihan went on to further explain that the gains in the past were due to the explosion in the domestic population as well as the relaxation of credit standards in mortgage underwriting.  Given the swinging of the pendulum around credit standards as well as a slowing rate of population increase, the trend is not expected to continue.

Personally, I am not sure if I can accept the premise that home ownership is worth less now.  We grew up believing in the value of home ownership.  I don’t think conclusions can be drawn around how people may begin to think about their homes differently, given that they may not appreciate in value.   While you can look for higher returns on investment elsewhere, can you find a better investment if your ROI objective is sanctuary?  For me, there is no better investment.


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Bank Crime Statistics

The FBI National Press Office recently released its 2010 Bank Crime Statistics.  The 10-page report goes into extensive detail about the circumstances around bank robberies, burglaries and larcenies.  While I am encouraged these crimes were down , I am discouraged to know that a large portion of stolen funds goes unrecovered.

Total reported violations in 2010 vs. 2009 were down by 8.5% which is surprising, given tough economic times.  In 91% of the cases, loot was taken.  The total amount taken was more than $43 million and of that, approximately $8 million was recovered.  That leaves $35 million out there in the hands of the perpetrators.  I would guess a lot of that has been spent on drugs because of the persons involved who have been identified, 35% of them were determined to be users of narcotics.  17% of them were found to have been previously convicted for bank robbery, bank burglary or bank larceny.  Apparently they felt the potential payoff was worth the risk of ending up back in jail.  Firearms were used or threatened to be used 69% of the time.  Actual acts of violence were committed in just 4% of instances resulting in 106 injuries, 16 deaths, and 90 persons being taken hostage.  Of the 16 deaths, 13 were the perpetrator.

Most robberies occurred on Friday, between the hours of 3:00 p.m. and 6:00 p.m., followed closely by Tuesday between 9:00 a.m. and 11:00 a.m.   The modus operandi used most often was a demand note, followed closely by oral demand.  The Southern region of the U.S. had the most reported cases.  Males were responsible for 92% of the crimes, with the mix of white males vs. black males pretty close to even.  Robbers ended up with bait money (marked bills) in their bags in 1 out of 3 cases yet dye packs were only used 1 out of 10 times.

My interest in these statistics is  influenced by the fact that I walk into a bank building every day for work and many of my friends and colleagues are stationed in bank branches .  If you would like to know more, access the full report via the FBI’s reports and publications page.

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Options for Direct Deposit

Direct Deposit (DD) these days is a common offering among employers but it is not uncommon for me to come across small businesses that still have not made that leap.  Business owners are concerned over the cost or the process involved.  I also hear that many employees still like to get a paycheck and may not have a bank account or be bankable.  To be bankable one must be able to provide government issued identifying documents, among other things.  One must also not have a derogatory record with past bank accounts – if a bank has ever closed your account due to improper handling (mainly overdrafts and/or chargeoffs), then don’t count on having another bank roll out the welcome mat.

The challenge with “unbankables” can be solved with a payroll card which I discussed in an earlier post.  For the rest of the staff, DD is a benefit which is appreciated.  With this service, their pay is already sitting in their account at the open of business on payday.  No more having to find time to get to the bank and stand in line or sit in the drive-through.

There are many ways in which a business can offer DD.  There are two schools of thought here:  In-house or outsource.  In an outsourcing scenario, a business will contract with a payroll provider to handle all of the payroll processing which includes the compilation of hours worked, calculation of taxes, payment of withholding and other taxes, and payment to the employees.  Large companies often use national firms like ADP or Ceridian, while smaller to mid-sized businesses will often use local payroll providers.  An example would be time & pay, a national company with local ownership, which can bring the resources of a national firm but offer a very high level of service at the local level.

The in-house scenario would mean sending your electronic payments to your employees through your bank.  Your bank has access to the Fed and can receive a file from you to pass on through the Fed’s clearinghouse.  That is why it is not necessary for your employees to bank where your company banks.  They can bank anywhere because the Fed is going to route that payment to them at the bank of their choice.  There are a couple of different options if your choose to process in-house. 1) You may be using an accounting software package like Peachtree, GreatPlains, or Timberline, depending on your industry.  Each of these should have a payroll module available which will produce a file (called a NACHA file – the standard electronic payment format) that can be exported from your system and uploaded to your bank, either via a direct transmission or by uploading it into your bank’s online banking service.  2) You should be able to access your bank’s online banking portal and create a “batch” for a consistent group of payees or 3) Use your online banking portal to create “single-item templates” which provides DD via single transactions for each employee.  The latter is typically used when there are less than a handful of employees.

The Fed’s settlement system, called the ACH (Automated Clearing House) System requires two days for settlement.  Translated this means that if you want your employees’ money sitting in their accounts on Friday, you will need to send your file or create it through online banking on Wednesday.  You actually have until about 8:30 pm EST to get the file to the bank.  Weekends and holidays are not counted so you must make allowances for these times.  If Monday is a federal holiday and payday is supposed to be Tuesday the 1st of the month, then you would need to send your file by the prior Thursday evening.

The least expensive option is going to be the in-house solution, but of course this requires you as the business owner to make all the calculations and withholdings and filings.  Definitely consult with your banker to decide what makes the most sense.  Even if you choose to work with a payroll provider, your banker should be able to refer you to both a local and national provider.

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