Tag: Banking

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Consumer Watchdog, Featured, News

Overdraft ‘Protection’ is a Lie

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Young woman taking money from ATM

You wake up the day before payday to alerts from your mobile banking app saying your account has been overdrafted. How could this be? After all, you had $50 in your account last time you checked. So you start backtracking.

Dinner was only $45, right? You should have $5 to spare. Then you check your account and realize your $30 gym membership conveniently posted to your account this morning. Rather than declining the charge due to insufficient funds, your bank allowed the transaction to post — and charged you $35 for the favor.

This is an example of how banks have turned so-called overdraft protection and insufficient fund fees into a multi-billion-dollar cash cow.

According to a new analysis by Pew Research Center, more than 40% of 50 banks studied order transactions in a way that maximizes overdraft fees. The practice is called “high to low processing,” in which the bank posts transactions from largest to smallest rather than posting them chronologically. This can make customers more susceptible to incurring multiple overdraft fees on the same day.

The fees have effectively allowed banks to profit off of some of their most financially vulnerable consumers: those who keep low account balances and are thus at higher risk of overdrafting. Only 18% of checking account holders are responsible for 91% of overdraft and insufficient funds fee (NSF) fees according to research from the Consumer Financial Protection Bureau.

Pew’s analysis found most heavy overdrafters — those who pay $100 or more in overdraft and NSF fees annually — earn less than $50,000 per year. One-quarter of these account holders pay up to a week’s worth of wages in overdraft fees each year.

In 2015, 628 banks with more than $1 billion in assets reported a total of $11.16 billion — about 8% of total net income — of revenue from consumer overdraft and NSF fees according to the Consumer Financial Protection Bureau. That’s more than two-thirds of all consumer deposit account fee revenues.

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Overdraft Protection: The Ultimate Catch-22

When you are enrolled in overdraft protection, you give the bank authority to approve charges when you don’t have enough to cover the full amount in your account. The bank will approve the transaction, then charge you a predetermined flat rate fee — typically around $32 — for allowing your purchase to go through.

That’s why overdraft protection is something of a catch-22. On the one hand, it saves you from the embarrassment of a declined card at point of sale. On the other, it is one of the most expensive ways to borrow money for what are typically small purchases.

Let’s go back to the payday example from before.

If you had not realized right away you overdrafted your account, you might have thought you still had $5 in the bank, just enough for a cup of coffee. Your debit card would have been approved for the $3 coffee thanks to overdraft protection — and you would have been hit with yet another $35 overdraft fee, twice in the same day. Effectively, you just borrowed $3 for a fee of $35 — an annual percentage rate of over 1,000%.

Here’s how the math works out (in this example, we assume the person banks with Bank of America, which carries an overdraft fee of $35):

Original balance: $50

Dinner: $50 – $45 = $5

Gym fee: $5 – $30 = -$25

Overdraft fee for gym membership: -$25 – $35 = -$60

Coffee: $-60 – $3 = -$63

Overdraft fee for coffee: $-63 – $35 = -$98

At the end of the day, you would be left with a negative balance of -$98.

Some institutions limit the number of times you can be hit with overdraft fees in a single day. Bank of America, for example, limits overdraft fees to four times a day. Some banks will allow you to link your checking account with another account to pull funds from when you overdraft, but will then charge you for an overdraft protection transfer fee, which is typically lower than a full overdraft fee. Even if your bank doesn’t approve the overdraft and your purchase is declined, you could still get charged an insufficient funds fee, which will usually be equal to the overdraft fee.

Overdraft fees can quickly spiral out of control if the person cannot afford to pay back the bank and bring their balance back in the black. If you maintain a negative account balance for about five days, you are charged on average $20 for what’s called an extended overdraft fee. More than half of the banks Pew studied said they charge an extended overdraft fee.

It’s important to make sure to take care of overdrafted accounts. Excessive overdraft fees could lead to a closed account or loss of check-writing privileges. It could also become difficult for you to open accounts with other banks if your bank reports your behavior to ChexSystems. ChexSystems keeps a record of your banking history similarly to how the credit bureaus keep track of your credit history.

In a worst-case scenario, excessive overdraft fees could damage your credit score as well. If your bank decides to write off your unpaid account and send it to collections, it can show up on your credit report. At that point, your accidental overdraft could seriously damage your credit score.

How to Avoid an Overdraft Fee

Don’t “opt in”

You can’t be charged an overdraft fee if you don’t sign up for the program, but beware: your bank can still charge you an insufficient funds fee.

Choose “no” when presented the opportunity to opt in to a debit card-based overdraft protection program. Don’t miss this step as it can be easily overlooked as part of the process. It may be in the form of a question asked by your banker or a pre-checked box when you enroll in online banking.

Link your accounts

If you are worried about getting denied at a point of sale and are okay with a fee to automatically transfer your own money, you can link your debit card checking account to another account for overdraft protection. This lets the bank pull the money from the account that you’re linked to to cover new transactions. Banks typically charge a median $5 fee for this service.

Track your balance

Keep your eye on your balance to avoid overdraft and NSF fees altogether. If your bank offers them, you can set up banking alerts so that you’ll be notified when your account goes into the negatives and balance it out before you’re charged a fee. You can use a budget-tracking app like Mint that sends you overdraft and fee notifications as well, although they may not come in time to help you.

You should also go over any automatic payments that you have set up and record and set reminders for them so that you won’t have any surprise withdrawals from your account.

Call your bank

If you don’t overdraft your bank account often, you have a better chance of getting the fee reversed. Because banks make most of their money from a small percentage of accounts that are regularly overdrafted, bank agents usually have more flexibility to reverse the charge for those who don’t overdraft as much. If you make a mistake, and don’t do it often, it’s worth a call to ask the bank to reverse the charge.

Best Banks with Low Overdraft Fees

There is no bank account that truly offers no overdraft fees. However, you can find a bank that either doesn’t allow you to overdraw your account at all or doesn’t excessively fine you for overdrawing your account.

Ally Bank is one of the better banks when it comes to overdraft penalties. So long as you link a savings account to your checking account, the bank will transfer funds from savings when you make a purchase larger than your available balance. And it doesn’t charge a fee for that transfer.

Bank of Internet’s Rewards Checking account has no overdraft or insufficient funds fee, but they will decline the charge if you don’t have enough to cover it in your account. The bank also gives you the option to link an account for overdraft protection with no fee for the transfer, or create a line of credit that can be used to cover overdrafts. If you decide to use the line of credit you will be charged interest on the overdraft balance until you pay it off, but there is no fixed overdraft fee.

MagnifyMoney has a full list of best account options for overdraft fees. In addition, you can use the checking account comparison tool to rank accounts based on overdraft fees and other options.

At the very least, opt out of overdraft protection to avoid getting hit with fees each time your card is declined.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Featured

How I Finally Ditched My Big Bank Account

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Karachi, Pakistan - November 29, 2011: A young man cutting Visa credit card to quit the credit cycle in Karachi, Pakistan.

I’ve been a Wells Fargo customer since January 2013. I opened my first credit card with the bank, my first and second set of business deposit accounts, and had my personal deposit accounts with them. In total, I had five accounts with Wells Fargo.

I started having second thoughts about my loyalty to the bank in September, when revelations of Wells Fargo’s fraudulent sales tactics came to light. From 2011 to 2015, in an effort to boost their sales figures, Wells Fargo representatives opened more than 1.5 million deposit accounts and 565,000 credit card accounts without customer authorization, according to the Consumer Financial Protection Bureau. As a result, customers were charged a total of $2 million in fees. Wells Fargo agreed to pay a whopping $185 million fine to settle those claims, which were filed by the CFPB.

The scandal left me reconsidering my decision to bank with Wells Fargo at all. This month, I made the decision to close all of my remaining accounts with Wells Fargo and open up a new account elsewhere. I don’t know yet how many more Wells Fargo customers will join me, although the company’s third quarter earnings report indicated its retail business hasn’t survived the scandal unscathed. The bank saw a 25% year-over-year decline in new checking accounts opened, and credit card applications were down 20%.

Wells Fargo began reporting monthly its retail banking update trends in an effort to increase transparency after the scandal. In the bank’s October customer activity report, it reports a 44% decline in opened consumer accounts and a 50% decline in new credit card applications compared to October 2015.

Still, the bank’s customers are known for being loyal. This year, Wells Fargo ranked second-highest in customer satisfaction, surpassed by Citibank, but outranking Bank of America, and Chase.

For me, the damage was done. It was time to switch banks.

Making the Big Switch

Moving to a new bank is hardly a painless process. That could be why so few Americans make the effort, despite a rise in onerous bank fees at large retail banks. Only 17% of account holders switched their primary financial institution in 2014, according to one study.

Here’s how to do it:

  1. Breaking up with my big bank

I quickly realized it was not going to be a clean breakup. A search on Wells Fargo’s website showed me that my account had to be empty before I could close it. That would mean either making one big cash withdrawal, or opening a new account at a different bank first and transferring the funds over.

I decided to go with option 2. I would open a new bank account and transfer my Wells Fargo balance over.

  1. Choosing a new bank

I used the MagnifyMoney checking account tool to guide me in the right direction. In the end, I chose to open an account with Ally Financial, an online-only bank. I had been considering opening an account with an online bank for a while. Online banks typically don’t charge as many fees as big banks because they have much lower overhead costs.

I opened a savings account, too. I was only earning 0.01% at Wells Fargo. Ally offers a much better yield on its personal savings accounts, which will be a big incentive for me to save more.

  1. Transferring funds to my new bank

Transferring funds to my new bank

It took me five minutes to open a checking and savings account at Ally.com. At the same time, I linked my Wells Fargo account to my Ally account, which would allow me to transfer my funds over.

  1. Closing my Wells Fargo account

Once my account was empty, I sent an email to Wells Fargo through the bank’s online portal requesting the account be closed. Within 24 hours, a representative sent me a message saying my account would be closed in four business days.

  1. Keeping my zombie account at bay

Here’s the big risk when you close a bank account: It leaves a trace of itself behind. And any type of transaction — deposit or withdrawal — can reawaken the account. (They call them “zombie accounts” for a reason.) You may not even realize your old account was opened again, and you could rack up unnecessary fees for months or years until you notice it.

It only took me a few days to mess this one up. I closed my Wells Fargo account very close to my normal payday. I didn’t update my direct deposit account quickly enough, which meant my paycheck went into my old Wells Fargo account rather than my new Ally account. Suddenly, my “closed” account was reopened again. And I had to repeat the process — withdrawing funds and closing the account all over.

  1. Erasing my banking past

I decided to shred the debit cards that were previously linked to my Wells Fargo account. I also shredded my checkbook. It’s important to take these steps to avoid identity theft. Like I said, even the smallest transaction could reawaken my old bank account.

  1. Updating all my payment accounts

I make most of my recurring subscription payments through a PayPal account, so that made life simpler. I only had to change my bank account linked to PayPal. Next, I updated Venmo, which I use frequently to pay my roommates my share of rent and utilities. I changed my Amazon account information, went ahead and updated the rideshare apps I frequently use like Uber and Lyft, and updated my automatic bill payments with T-Mobile.

You should do this with any other apps you use that are linked to your old debit card or bank accounts. When you do change the information, make sure to delete your old bank account information so there’s no chance of accidentally charging the account.

If you use any online resources or applications to manage your finances, you should update them to keep information current. This is optional, but important if you want to keep track of where your money is going. For me, that meant updating my Mint.com account.

With all of that done, the bank switch was complete. It only took about an hour execute the steps above, and my Wells Fargo accounts were all closed within four business days once I got the closing process restarted.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Eliminating Fees, Reviews

FamZoo Review: a Virtual Family Bank to Teach Kids About Money

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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FamZoo Review

When it comes to banking, most kids learn the hard way just how expensive their mistakes can be — with every sting of an overdraft fee or bounced check. Parents who would rather teach their kids how to manage their money without the risk of fees might consider FamZoo, a virtual family banking program. For a modest subscription fee, FamZoo provides the tools parents need to teach their kids about money management and banking.

Is FamZoo worth the cost?

In this review we cover:

  • What is FamZoo?
  • FamZoo Fees
  • FamZoo Benefits
  • Who Should Consider FamZoo?
  • FamZoo Drawbacks

What is FamZoo?

FamZoo is a “Virtual Family Bank” that allows parents to teach their kids about banking

FamZoo

without requiring kids to pay fees (as a parent, you will pay a monthly subscription fee).

FamZoo has two versions. The first version is a virtual IOU account that formalizes and tracks money flowing between parents and kids, but is not a bank at all. The second version gives prepaid debit cards to parents and kids that can be used anywhere that debit cards are accepted (including ATMs). Both versions cost the same amount for parents.

In addition to basic banking, FamZoo offers family oriented features. For example, family member can request reimbursements from other family members, and parents can offer loans to their kids and teach them to pay back loans in installments. With parent approval, money moves between family accounts instantaneously. FamZoo allows parents to fund allowances, and it helps kids divide their money between saving, spending, loan repayment and giving. As a parent, you can set a parent paid interest rate to encourage savings.

If you opt for prepaid debit cards, the cards will not allow your kids to overdraft, and parents and kids have access to a website to check balances, to review transaction history and more. Kids can also withdraw money fee free from in network ATMs.

FamZoo Fees

Subscription fee: Parents pay $5.99 per month (or $60 for 2 years with pre-payment) for up to four prepaid debit cards including a parent loading card. If you want more than four cards (for example to separate giving, saving and spending accounts, or if you have more kids), you pay a one-time $2 fee per card. If you lose a card, you can receive a replacement card for free.

Aside from the monthly subscription fee and the one-time extra card fee, FamZoo does not assess any fees, even if you manage to overdraft (which is possible if your transaction “settles” for an amount greater than was initially assessed).

Load fees: Depending on which financial products you use, as a parent, you may pay a fee to load your card. If you have access to Wells Fargo Sure Pay, Dwolla or PayPal, you can transfer money to your FamZoo account for free, or you can fund the account for free via direct deposit from your paycheck. Other loading options cost between $.95 and $7.00 per transaction. The institution where you initiate the transaction charges these fees, but FamZoo doesn’t add any extra fees.

ATM fees: FamZoo is part of the MoneyPass ATM network and withdraw cash at no fee. However, FamZoo warns that the other institutions usually charge a fee for out-of-network ATM use, and these fees aren’t reimbursed.

FamZoo Benefits

Parents have control: FamZoo is a stripped down bank that gives parents banking control, but it also has a few mainstream financial benefits. For example, MasterCard Zero Liability Protection backs FamZoo cards which means that they have fraud protection. Like other debit cards, they offer transparency, the ability to freeze an account if the card is lost or stolen, and the ability to track spending. And, each account has its own routing and account number so kids can get their paychecks deposited like it’s a regular bank account.

Helps teach saving and budgeting: The primary benefit of FamZoo is the way helps parents raise financially savvy kids. The software allows you to teach your kids to track expenses, set budgets, and split money into various accounts (a modern version of the envelope system). As a parent, you can add complexity (adding interest, loans, etc.) as your kids mature.

FamZoo Drawbacks

False sense of real-world banking fees: FamZoo puts guardrails in place, so kids don’t get hurt when they fail to manage their money well (they can empty out their bank account, but they won’t pay overdraft charges and they cannot go into debt except to their parents), but parents who use the software also need to teach their kids about banking fees outside of FamZoo. This will be especially important as teens set up their first checking accounts.

Who should use FamZoo?

FamZoo suits parents with kids who don’t yet have jobs or their own bank accounts who want to teach their kids financial principles. FamZoo makes teaching basic finances easy, and if your kids make mistakes, they don’t have to pay outsized fees.

Parents of early elementary through early high school will appreciate the valuable teaching opportunities that FamZoo provides, and parents with older teens and college students can advantage of transferring money with ease.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at hannah@magnifymoney.com

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Best of

The Best Ways to Get Cash When You’re Traveling Abroad

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Travel_lg

Even if you’ve got a wallet packed with credit cards, you’ll likely need cash at some point when you’re traveling abroad.

But managing cash abroad can get tricky — and downright expensive. Carry too much cash around and you might make yourself a juicy target for a pickpocket. Carry too little cash and you’ll wind up making frequent trips to the ATM, racking up a bruising trifecta of bank fees in the process.

Most banks charge foreign transaction fees (up to 3%) and fees for using your debit card at foreign ATMs (from $1 to $5 per transaction). On top of that, whichever vendor owns the ATM you’re using will probably tack on a surcharge of their own.  One of the nastiest foreign ATM fees out there is levied by Bank of America. To take out cash abroad using your BofA card, you’ll get hit with a $5 flat fee, plus 3% of the total amount you withdraw.

Fees aside, there’s another reason to worry about using your debit card abroad: fraud. If your card is stolen or you use your card at an ATM that’s been fitted with a skimmer (a device that can copy your debit card number and PIN), you’re in a very vulnerable position. By the time you realize your card info has been stolen and you’re able to get in touch with your bank, your account could already be drained, leaving you cash poor in a foreign country.

Debit cards are treated differently than credit cards by banks. You may find yourself on the hook for some of the money stolen from you, depending on how long you wait to report it.

If you need cash abroad, here are a few savvy strategies you can use to avoid fraud and fees.

The best option: Use a bank account that has low or no foreign transaction fees

If your primary bank account has foreign transaction fees, it can make sense to open a separate account that has lower or no fees. You can use this account when you travel abroad. This way if you do experience fraud or are a victim of card skimming, you’ll still have your main checking and savings accounts to fall back on.

Here are two good options for low-fee checking accounts:
Charles Schwab High Yield Investor Checking

The Schwab Bank High Yield Investor Checking account is our top pick to handle your money while abroad. It’s an online checking account with no monthly fee or account minimum. There are also no foreign exchange transaction fees. You get unlimited fee rebates from any ATM in the entire world, which means Charles Schwab will reimburse you whenever you’re charged an ATM fee overseas. The account is also FDIC insured up to $250,000.

Aspiration Summit Account

The Aspiration Summit Account has no minimum monthly balance or maintenance fees and has FDIC insurance as well. Fees from foreign ATMs are reimbursed but there is a 1.1% foreign transaction fee.

The Aspiration Summit Account is fairly new and marketed as an exclusive product. You have to “secure a spot” on a waiting list before getting approved for an account. In a recent MagnifyMoney Aspiration Summit Account review, we found the approval timeframe can take about a month. However, a recent test found an invitation was immediately sent. If you’re traveling soon, you can see if you’re immediately invited, otherwise you might need a backup.

The Drawbacks

Although signing up with one of these checking accounts separately is safer, there are a few downsides to keep in mind:

  • Opening up a new checking account that you don’t use often may not be convenient.
  • Aspiration has some fine print fees. One that stands out besides the 1.1% foreign transaction fee is the $5 per month fee charged if your account goes dormant past 12 months.
  • Checking accounts don’t have the same liability protections as credit cards. If your card gets skimmed, you need to report unauthorized purchases right away or you could be found liable for some of the loss.

For Zero Liability: Use a Credit Card Cash Advance

Credit card cash advances are typically a last resort when you’re in need of cash. If you are unable to pay your balance off before your bill comes due, you could get hit with interest rates of up to 25%. You will also likely get hit with a transaction fee, which can be up to 4% of the total cash advance amount.

But if you can use them responsibly — and pay them off right after you get your cash — they can be a decent alternative to paying a load of bank fees. The other benefit of using a credit card cash advance while traveling is that you will have all the fraud protections that come with credit card purchases. Furthermore, your bank account isn’t linked to the card so you can keep the majority of your cash safe from theft.

Again, only use a credit card cash advance if you are able to pay off the balance in full right away. And read the fine print carefully. Some credit cards will begin charging those double-digit interest fees from the first day you withdraw funds.

Check out our list of 20 credit cards that have NO cash advance fees. Here’s a deeper dive on one of our favorites, offered by PenFed Credit Union:

PenFed Credit Union Credit Cards

There are some smaller banks and credit unions that do not charge crazy high cash advance fees, such as PenFed Credit Union. Fortunately, anyone can join PenFed Credit Union. This credit union is unique because cards offered have no cash advance or foreign transaction fees. There is, however, interest to consider. PenFed credit card interest rates start as low as 10.24% for cash advances.

PenFed charges interest on the cash advance from the day it hits your account, no grace period. And if you are already carrying a balance on your credit card before you take out a cash advance, any payments you make will go toward your existing balance, not the balance from your cash advance.

There are some ways you may be able to get around the interest, however. You can make a payment on your card that would result in having a negative balance. For example, if you have a $0 balance on your card, making a payment of $500 would result in a negative balance of $500. This way, you’d be using the credit card more like a debit card and not racking up a large balance.

You can also make a payment online from your bank account as soon as you request the cash advance. Again, this will only work if you don’t have a pre-existing balance on the card. Otherwise, that payment will go to your previous charges first and cash advance last.

The Drawbacks

PenFed cash advances aren’t completely free, so we have to point out the negatives:

  • Interest applies to your cash advance if you don’t pay it off right away.
  • Applying for a PenFed card requires a hard pull on your credit report.
  • PenFed does not reimburse ATM fees.

For Convenience: Load a Prepaid Travel Card

Your next option is using a prepaid travel card. The benefit of using a prepaid travel card is you don’t need to open a new bank account or sign up for a credit card. You can also go online to add more money on the prepaid card throughout your trip.

Travelex Multi-Currency Cash Passport Prepaid MasterCard

You can load the Travelex Cash Passport with currency of the destination you’re visiting. The website says there may be a purchase fee depending on where you get the card. Expect to pay a fee if you get the card at an airport. For instance, a call into a prepaid card counter at Baltimore-Washington International Airport uncovered a $9.95 purchase fee.

You should be aware of some other fine print fees as well. If you hop to a different country and need to exchange currency, the transaction fee is 5.5%. Travelex doesn’t charge you an ATM fee internationally, but the ATM operator may have a surcharge which will not be reimbursed.

Lastly, there’s a $3 per month inactivity fee if the card goes unused over 12 months. And if you want to refund money back into the US dollar there’s a $20 fee on top of the 5.5% foreign exchange fee.

AAA Visa TravelMoney

Another option is the AAA Visa TravelMoney card. The purchase fee for the card may be up to $14.95 but varies by AAA club. The international ATM fee is $3, and that doesn’t cover the surcharge of the host ATM you use. There’s also a foreign transaction fee of 3%. If your card goes inactive for over 12 months, the fee is $1.25 per month.

The Drawbacks

These cards are heavy on the fine print. Beware of the downsides:

  • You’ll incur monthly inactivity fees if a prepaid travel card collects dust in your wallet.
  • Zero liability doesn’t cover all transactions. For the AAA Visa TravelMoney card specifically, there’s Visa zero liability, except the coverage doesn’t include foreign ATM withdrawals.
  • You can get hit hard by ATM and exchange fees.

The Old Fashioned Way: Take a Trip to Your Bank

Finally, there’s something to be said about walking into your brick-and-mortar bank and exchanging your cash for foreign currency. You can call your home bank or credit union first to compare exchange rates and then order currency. Traveling with cash will help you avoid fees and skimming scams overseas.

Traveler’s checks are decreasing in popularity, but are still an option. A traveler’s check is written out from the issuer (typically a bank or credit card company), and it’s like cash you can use to make a purchase. If you want money instead, you can take the check to a bank abroad to cash out.

If your traveler’s checks are lost or stolen the issuer can refund you. The downside is international exchange fees can apply. Some issuers charge a fee for checks as well. Lastly, finding banks and merchants that will accept your checks overseas or even know what a traveler’s check is can be a hassle.

Final Word

In the excitement to get out and travel the world, don’t forget financial aspects of the trip. Not having a money plan and getting trapped with gotcha fees or having your money stolen can put a damper on your experience, so think ahead.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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Best of, College Students and Recent Grads

Top 5 Checking Accounts for College Graduates

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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review-full1

When you open your first bank account as a kid, you’re not thinking about fees. You’re just excited to swap your piggy bank for a debit card. That first bank account may even stick with you up until college. That doesn’t mean it’s the account you should keep for the long haul.

Some checking accounts give you a break on fees while you’re a student, but after you get a diploma or turn a certain age these bank accounts get expensive. For example, Bank of America waives the $12 monthly fee on its checking account for students under 23 years old. After graduation, that’s an extra $12 per month you’ll want to keep your hands on.

If you have a checking account that will phase you out of a discount, it’s time to shop around for accounts with the lowest possible fees. Here are six checking account alternatives college graduates should consider:

1.Charles Schwab Online Checking

No Monthly Fee, ATM Fee Reimbursement Worldwide

Charles Schwab Bank
Charles Schwab has no fees or account minimums. This account comes with free checks and bill pay. You can connect your Charles Schwab online checking account to Apply Pay for purchases if you have an iPhone 6 or iPhone 6 Plus. Deposits can be handled remotely through Schwab check deposit.

Where this checking account stands out from other accounts below is it has an unlimited fee rebate for cash withdrawals at ATMs worldwide. Charles Schwab will reimburse you every time you use an ATM that charges a fee. This makes it ideal for those planning to travel frequently.

2. Ally Bank Interest Checking

No Monthly Fee, ATM Fee Reimbursement Up to $10 Per Month

Ally Bank
Ally Bank offers an online checking account without monthly maintenance fees. There’s also no minimum balance required. You’ll get charged certain fees in unique situations. For instance, an overdraft will cost you $25. To avoid an overdraft, you can set up free automatic transfers from another account. This means free overdraft protection, which isn’t the case at many banks that will charge you $10 to move your money from savings to checking.

If you’re used to walking into a bank to manage your money, you won’t get the same experience with this online account or any of the other online checking accounts on this list. But, managing your money is still easy. Ally Bank allows you to deposit money remotely using Ally eCheck. You can also transfer money between Ally bank accounts or sign up for direct deposit to put money into your account.

For withdrawals, you can use Allpoint ATMs in the U.S. for free. If you use an ATM that’s not Allpoint, Ally Bank will reimburse you ATM fees up to $10 per billing cycle.

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3. Bank of Internet USA Essential Checking

No Monthly Fee, Unlimited ATM Fee Reimbursement in the U.S.

Bank of Internet USA
The Essential Checking account offered by Bank of Internet USA has no monthly fees as well. There are no fees for overdraft or insufficient funds. If you try to make purchases without enough funds in your account, your card will simply be declined.

Withdrawing money from this checking account is convenient and cheap. You can use any ATM in the U.S. and Bank of Internet USA will reimburse the ATM fees. No need to hunt for a specific ATM to get free cash.

4. BankMobile Totally Free Checking

No Monthly Fee, ATM Fee Reimbursement With Conditions

Bankmobile
BankMobile has a checking account with no fees or a minimum balance requirement. When it says no fees, it seriously means no fees. You can use the BankMobile app to deposit checks via remote deposit and you can set up direct deposit. For withdrawals, BankMobile has a map where you can locate STAR surcharge free ATMs.

If you have at least $500 deposited into your account each statement period, you can join the BankMobile VIP program. With VIP membership, every ATM in the U.S. becomes free.

5. Capital One 360 Checking

No Monthly Fee, ability to deposit cash, Doesn’t reimburse ATM fees

Capital One
The 360 Checking account from Capital One has no fees. There’s no minimum balance required either. You have two options for overdraft protection. Connect your checking account to a savings account and have funds transferred automatically when your cash runs low. Or you can apply for an overdraft line of credit. Of course, with a line of credit interest will apply to your balance.

Deposits can be easily made through the mobile app, direct deposit or by sending a check. You get access to free cash withdrawals from 38,000 Allpoint ATMs and Capital One ATMs. If you use an ATM out of the network you may get charged by the bank you withdraw money from and these charges are not reimbursed.

A unique feature of the Capital One 360 Checking account is the ability to deposit cash at many ATMs. Not many Internet-only banks offer the ability to deposit cash. Before signing up for this account purely for this reason, you should guarantee an ATM near you allows you to deposit cash.

Which is the right checking account for you?

All of these accounts are insured by the FDIC up to $250,000. But, if banking online only still makes you a little nervous, the 360 Checking account is a good pick. With this account you can visit a Capital One branch for some account services like disputing transactions and changing your account information. Otherwise, Charles Schwab and Bank of Internet USA have the potential to save you the most money if you routinely frequent ATMs.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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News

4 Personal Finance Apps a Former Banker Uses

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Overdraft_lg_mobile vs trad

Gone are the days of doing all of our banking at a brick-and-mortar building. Sure, sometimes we still stop by our local bank branch to get a cashier’s check when we need one, but for the most part, our banking these days is done online.

The world of online banking is growing, and if you’re more than a little confused by all the different banking apps you can find in iTunes, we’re right there with you. Lucky for you (and us), Nick Clements, MagnifyMoney’s co-founder, spent years working for banks before launching his own business, so he knows a thing or two about the better products out there. The following are the personal finance apps he recommends trying out.

1. LevelMoney

Cost: Free on iTunes and Android
What it does: For staying on budget, Clements likes the way LevelMoney helps him track his cash flow. “I don’t like making a plan by expense category,” he said. “Instead, I like knowing how much I can afford to spend each day to ensure that my discretionary spending remains on target and within budget.” The LevelMoney app helps him accomplish this by calculating a daily “spendable” amount to help him stay on track. “So, if I spend a bit more than I should one weekend,” Clements explained, “my daily spendable allowance goes down.”

2. CreditKarma

Cost: Free on iTunes and Android
What it does: Whether you’re trying to grow your credit score or not, it’s a good idea to keep your eye on it, and the CreditKarma app gives you free access to your VantageScore, which is calculated using TransUnion and Experian credit reports. “It also gives me access to a summary version of my credit reports from those two bureaus, updated regularly,” says Clements. “This helps me ensure my identity hasn’t been stolen.”

3. Ally Bank

Cost: Free on iTunes and Android
What it does: While Clements admits that the app itself could use some upgrades, it’s the perks of sticking with Ally Bank that have him continuing to use it. “I’m with Ally because of the great rates,” said Clements. “So I primarily do all of my banking and paying bills with the app.” (Check out what’s great about the online bank right here … hello checking accounts with interest!)

4. Betterment

Cost: Free on iTunes and Android
What it does: While it’s a nice idea to combine all of your retirement accounts into one system where you can quickly glance at the overall balance, try not to fall into the trap of checking them too often. “I have rolled over my old 401(k) accounts to Betterment, and I have the app on my iPhone, but I try to ignore it,” said Clements. “I don’t expect to use these funds until the year 2045, so daily stock movements are not that important to me.” However, when curiosity gets the best of you and you do take a peak, at least Betterment has a great user interface to help you out.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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Eliminating Fees, Life Events

The Downsides of Having Joint Bank Accounts

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Joint Banking

Although I am a big supporter of having joint accounts with your spouse, I won’t deny there are downsides. Currently, my husband and I use Charles Schwab for most of our banking and investment needs.

We opened that account when we moved out of the country because Charles Schwab charges no foreign transaction fees and refunds all ATM fees. They also have excellent customer service and were able to help me with getting my paycheck deposited and a laundry list of other issues as we tried to navigate the tricky waters of international banking.

Although joint bank accounts inspire teamwork and openness in marriage, my husband and I definitely had some tense moments over the last five years of banking together. 

1. Analyzing Each Other’s Purchases

One of the most common reasons men and women want their own bank accounts in a marriage is because they want the autonomy to spend as they please. Early in our marriage, before we had regular money dates or discussed our financial goals, I frequently went through our online accounts pointing to various charges and asking my husband why he made them. After several months of this, he was scared to make a purchase at all, not knowing if I’d point it out or not. Over the years, we’ve remedied this problem by having our own cash spending money and also starting a rule that you only have to ask the other one about a purchase if it’s over $50.00. That way, I overlook all the little Starbucks charges and he overlooks all the small updates I make to my business.

So, depending on your upbringing or the personality of your spouse, having this oversight can be difficult on a marriage, which is one of the reasons I’m counting it as a downside of having joint accounts.

2. Difficulty in Gift Giving

A week before Mother’s Day this year, my husband told me to look out for any packages addressed to him. He didn’t want me to see the return address because it was a Mother’s Day present. I asked, “Is it from an Etsy seller?” and he was so disappointed.

Technology and our joint banking accounts ruined a little of his surprise. My Mint App (one of many financial tools I use) already told me he spent money at Etsy. I assured him that Etsy was a pretty big range and that I wasn’t disappointed at all, but it was more about the principle of the matter.

This has happened several times in our relationship, to the point where we tell the other one around Christmas time to not look at our account for a few days, which isn’t good either. Many people have suggested that we simply buy gifts with cash, and although that works at times, we both prefer the convenience of online shopping.

3. All Your Eggs in One Basket

In 2005 my family’s life completely changed after Hurricane Katrina blew its way through our town. It was so hectic after the storm. Banks were closed, ATMs weren’t working, and it was difficult to do anything that required using local banks. Everything was underwater. My mom was able to call an open branch of her bank and stop the large check she just wrote for my student housing expenses at my college (which was by then totally closed because of the storm.) I remember how stressed they both were.

Having a joint checking account and putting all your eggs in one basket can be detrimental in an emergency or if your bank has a breech or some other security issue. Spreading out your accounts and your money in different banks and different accounts provides a layer of security that you can’t get with just having one main joint account.

My husband and I feel comfortable banking with Schwab because it’s such a large company but for an extra layer of security, we do have separate accounts in Smarty Pig, an online high yield savings account, which does not allow joint accounts. So, if you do like having joint accounts, you should know that some banks are better about allowing joint accounts than others.

It’s All About Communication

Really, when it comes to joining finances with your spouse (or not), it all comes down to communication and trust. I know many couples that are happily married with joint accounts because they have to work together on all of their money decisions. I also know other couples that are equally as happy with their separate accounts because they trust each other to make wise financial choices and feel like they have a sense of independence.

Whichever path you choose, just remember to have regular financial check-ins to see the status of your combined net worth so you know how far you have to go before you can reach financial goals and ultimately retire.

Find the best accounts for your joint banking needs by using our comparison table. 

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Cat Alford
Cat Alford |

Cat Alford is a writer at MagnifyMoney. You can email Catherine at cat@magnifymoney.com

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Eliminating Fees

Best Bank Accounts for Foreign Travel & Expats

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Best Bank Accounts for Foreign Travel & Expats

My sister is studying abroad in New Zealand this semester, and yes, I am totally jealous. A few weeks before she left, our entire family was running around like chickens with their heads cut off trying to make sure everything was in place for her departure- passport, visa, international phone, and my responsibility- appropriate bank accounts and financial tools for her time away.

Not only do I write about money for a living, I’ve spent my fair share of time traveling and working around the world- most notably on a cruise ship around South America and prior to that, touring through Asia for seven months. If only I’d known then what I know now about accessing basic financial services internationally, I’d have saved myself a whole lot of cash on simple things like accessing my own money.

My sister is lucky enough to have the benefit of my experience (and mistakes) to avoid any unnecessary headaches that could potentially arise from minor financial details, allowing her to enjoy her international journey without stressing over mundane money realities.

Banking abroad can be simple and affordable if you know before you go and prepare properly with these steps.

Use the Right Bank

Some checking accounts and debit cards are better suited toward international travel than others. The best way to get your hands on local currency abroad is not through currency exchange companies- that while convenient, charge huge transaction fees and inflated exchange rates- but through ATMs.

While ATMs are known for giving the best exchange rates, they can also come with hefty fees if you don’t use the right bank. Chase for example, charges a $5 withdrawal fee at ATMs outside the U.S. That’s a high price to pay for accessing your own money.

Some alternatives allow you to avoid international ATM fees, regardless of which ATM you use.

The Global ATM Alliance also provides an affordable cash access alternative. The alliance is a group of major international banks that allows customers to use their debit card at another bank within the alliance with no international withdrawal fees. Members include:

  • Bank of America (USA)
  • Barclays (UK)
  • BNP Paribas (France)
  • BNL (Italy)
  • UkrSibbank (Ukraine)
  • TEB (Turkey)
  • Scotiabank (Canada, Peru, Chile, and the Caribbean)
  • Deutsche Bank (Germany and Spain)
  • Westpac (Australia and New Zealand)

Other fees- like an international transaction or currency exchange fees- might still apply though.

Research your options and put appropriate accounts in place before leaving. Again, you’ll want to notify your bank of all your travel dates and locales prior to departure.

Set Up Online Access

Before leaving, make sure you’ve set up online access to whatever accounts and bills you’ll need to maintain or access abroad. You don’t want to hassle over basic set up or linking appropriate accounts when you’re already on the road. Have systems in place so that payments can be made quickly, easily, and hassle-free. Designating a trusted parent or sibling equipped with your passwords to serve as a back up stateside financial monitor can give you additional piece of mind should secure internet access prove more difficult than originally anticipated during your travels.

Get the Right Credit Card

I know a lot of college students are being introduced to credit for the first time, and throwing traveling abroad into the mix can make things even more complicated. Credit cards are a great resource to have though- not only for day-to-day purchases, but also as valuable “in case of emergency” tools and added layers of fraud protection when making purchases.

While roughly 90 percent of credit cards charge foreign transaction fees there are some fee free alternatives. Not having to pay an additional two to four percent per purchase can save you quite a bit over the course of a semester. Notable fee free options include:

As soon as you’ve committed to dates for your semester abroad, start researching credit options. If, as a student, your credit profile is thin or your score is low, you may have trouble qualifying for cards that carry perks like free foreign transactions. I added my sister as an authorized user on my credit card so that she could enjoy the benefits of my good credit history during her time abroad. Don’t worry, I laid out the ground rules before she left and I can monitor all her purchases should spending start getting out of control.

Regardless of what card you choose, be sure to notify your credit card company of the locations and dates of your travel. You don’t want your card to be flagged and deactivated, leaving you financially stranded.

Exchange Emergency Currency Prior to Departure

Banks don’t always have the best exchange rates, but changing over some money at your local branch prior to your international departure can be helpful in case of an emergency situation or snafu upon arrival in your host country.

When I traveled to Germany last year, I went directly to the airport ATM to withdraw some Euros. The ATM wasn’t accepting my debit card so I had to use my credit card to take out a cash advance. It cost me $35 in fees just to get enough cash out for a cab ride to another ATM outside the airport. Save yourself from last minute financial stress and fees by having local currency already on your person when you land.

Dealing with a different form of currency, ever changing exchange rates, and long lists of potential fees can be a bit overwhelming at first. Do your research well in advance of your departure to make sure your money is easily accessible in the country of your study while minimizing any fees from the banks and credit card companies. If you can set up all the appropriate accounts before your trip, you can enjoy the life of the Kiwis or the history of Europe or the culture of South America without stressing over banal money needs- like how you’re going to pay for your newly assigned textbook or that skydive you’ve been talking about with your new international friends.

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Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Stefanie O
Stefanie O'Connell |

Stefanie O'Connell is a writer at MagnifyMoney. You can email Stefanie at stefani@magnifymoney.com

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