Fine Print Alert: August 22, 2014

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Updated on Friday, August 22, 2014


In our weekly Fine Print Alert newsletter we call out good news from the financial community and shine a spotlight on any sneaky changes or less than favorable strategies employed by financial institutions.  We also wrap up MagnifyMoney news and share our favorite reads from the week.

Fine Print Alert

Fines, Fines, Fines

Bank of America will be paying nearly $17 billion – yes, billion with a ‘B’ – to settle the investigations into their crisis-era mortgage business. This is a landmark settlement, higher than any other if its kind. So, how does this settlement impact consumers? Several states will be receiving a portion of the fine money and some have directed the money to refunding public pensions that suffered losses on mortgage securities. Other states have decided to put the funds towards consumer relief or the state’s general budget.

First Investors, an auto loan company, will pay $2,75 million in CFPB fines as a result of knowingly reporting inaccurate information to the three credit bureaus: TransUnion, Equifax and Experian. First Investors were charged with reporting misinformation about wrong payments and overdue amounts, distorted dates and inflated delinquencies.

Thank You No More

At MagnifyMoney, we don’t believe you should be looking to make money from checking accounts. Your goal is to keep as little money in a checking account as possible, and to make your checking account and ATM usage completely free. To entice you to keep too much money in a checking account, banks often offer rewards. At Citibank, this was the Thank You program. If you had direct deposit and used bill pay, you could earn Thank You points. They are changing that. From December 16, only Private Bank, Citigold and Citibank Account Packages can earn Thank You points. We won’t talk about Private Bank and Citigold (those are big balance accounts). To have an Account Packages checking account, you need to keep at least $15,000 in the account. If you have a direct deposit and bill pay along with your account, you will earn 650 Thank You points. That is $65 of value. If you put that money into an online savings account, you would earn over $140 of interest. Basic, Access and Student accounts will no longer earn Thank You points. Even more reason to avoid traditional bank checking accounts!

Special Shout-out: FeeX

I [Nick] pride myself on low-cost investing. For example, I rolled over my 401k into an IRA. The IRA is exclusively populated with Vanguard index funds and Fidelity Spartan Index Funds. I was feeling good about myself, and then I read about I decided to let their program crawl my IRA, and I was shocked about what I found. For every one of my holdings, they were able to find an alternative mutual fund or ETF with a dramatically lower cost. For example, I am invested in a Vanguard Mid Cap Index Fund. The expense ratio is 0.24%. But, Schwab offers a US Mid-Cap ETF with a  fee of 0.07%. In the last 90 days, FeeX  found $28 worth of fees that I had paid. If I switched to their recommendations, the cost would have found $11 worth of savings. That may not sound like a lot, but you need to think about compounding interest. Over the next 30 years, I could save $10,619 in fees by taking their recommendations. This was a really cool service, and I highly recommend doing a check-up. Compounding interest is great when it is on your side, and terrifying when it isn’t. At MagnifyMoney, we want to get people to slash the cost of their credit card debt. But, we are equally passionate about getting people to pay less for their investment products. And hats off to FeeX, for creating a great tool that helps with investments. And, if you are like the majority of Americans without assets sitting at Vanguard, you will find that the absolute savings will be even more shocking. Give it a try!

MagnifyMoney around the web

Our favorite personal finance stories this week

Should I Contribute To A 401k, Roth IRA, Or Health Savings Account? – “While, ideally, we’d max out all those accounts every year, realistically, many people have to choose where to put their money. All of that depends on your age, tax bracket, and how much you have to invest.” Analyze where to put your money with Kim on Eyes on the Dollar.

Why Saving for Our Kids’ Education Is Not Our Top Priority – “What tugs on parents’ heartstrings is the nagging feeling that prioritizing retirement saving ahead of saving for a child’s college education equates to loving your children less than yourself. I understand that feeling, on one level, but it shows a misplaced priority, in my opinion. There are loans and scholarships for college. Nobody is going to give you a scholarship for retirement.” Read John of Frugal Rules full argument over on DailyFinance.

Steps To Get out of MASSIVE Credit Card Debt Due to Lifestyle Inflation – “It’s embarrassing to admit, but I tell this tale as a warning to all people like me who are on the bandwagon of lifestyle inflation, “I deserve” and family struggles that may cause you to take your eyes off the ball and wake up one day to say “How did I get here?” … The grand total was $393,500. I was 52 years old and my husband was 59. It was a personal debt disaster story. “ Find out how Debs is working her way out of debt in her guest post on Financial Samurai.

How I Graduated College With $100k…. in Savings – “At age 21 I graduated college with $100,000 sitting in the bank. Scratch that – most of it was invested elsewhere… but you get the point. I’m not writing this post because I think I’m cool (beatboxing skills, aside ;)). I didn’t earn $100k before even getting a “real job” because I’m special – I was just intentional.” By Will of First Quarter Finance on Budgets Are $exy.

Stylist gives free haircuts to the homeless – A heart warming story which proves you don’t need a lot of cash in order to help others. By Blake Ellis on CNN Money

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