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How to Move Your Money

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By now, I expect, you know there’s a movement afoot to get folks to transfer their cash out of the big banking institutions whose unregulated greed helped to bring on the Great Recession (if recession, not depression, is what it is).  Armed with a powerfully emotional video, the Move Your Money advocates urge megabank customers to take their business elsewhere—to small community banks or to credit unions.

I moved my money to a credit union quite some time ago, and I’ve never regretted it. Service is infinitely better. Tellers, who are not locked in cages but seated behind open, bright counters, recognize me by name when I visit, and a telephone call reaches a live human being. With a credit union, there are no nicks, gouges, or zings entailed in going about your normal banking activities. Loans are cheaper: just now car loans with 100 percent financing can be had for 4.99 percent, and M’hijito and I nailed a 4.3 percent mortgage over a year ago. Because the credit union never involved itself in questionable lending practices, it remains eminently solvent.

Problem is, moving your money is a bit more complicated than waving a wand, hollering presto-changeo, and rapturing all your cash from Institution A to Institution B, especially if you’ve set up automatic payments for recurring bills. So, assuming you see Wells Fargo, Bank of America, J.P. Morgan Chase, and Citigroup as tentacles of the Great Satan, how do you get free without incurring a raft of unexpected bank charges, without bouncing a check, and without accidentally shorting one or more of your creditors?

In my experience, the easiest and safest way to get your money out of a given bank is through a two-pronged process: set up new accounts in the target institution and then ease your way out of the soon-to-be-former institution. This may take as long as a month.

Start at the time you ordinarily reconcile your bank accounts, so that you can easily identify  transactions that have not yet cleared the first bank (let’s call it the First Avaricious Global Bank). Then follow these steps:

1. Cancel all automatic transactions. Check to be sure the cancellations actually go through. Pay any bills that are immediately pending with checks on your First Avaricious account.

2. Go to the new credit union or community bank (we’ll call it Benign Credit Union) and open a new account.

3. Arrange to stop any automatic deposits at First Avaricious and to have those deposits made at Benign Credit Union.

♦ It may take as long as a month for these changes to take place! Your employer may decide to issue a paper paycheck in the interim. This inconvenience will require you to stay alert to all transactions that occur at First Avaricious during the transition. Check your account online at least every other day.

4. Reconcile your accounts at First Avaricious and calculate the amount needed to cover uncleared transactions and the amount of money that will remain after all outstanding EFTs and checks have cleared. Write these numbers down. Let’s say this month you have $1,000 in outstanding transactions, and after those transactions have cleared, you’ll have $500 left.

5. Leave enough cash at First Avaricious to cover the outstanding transactions ($1,000) plus an additional amount to cover any little surprises—about $100 will probably suffice. So, you’re going to leave $1,100 at First Avaricious ($1,000 to cover uncleared transactions + $100)  and move $400 to Benign.

♦ First Avaricious will find every way from Sunday to ding you as you draw down your account. Many banks charge customers for dropping below a certain balance. Leave enough cash in the account to cover these gouges; otherwise you will incur more gouges in the form of overdraft charges.

6. With your paycheck and any other regular deposits now going to Benign Credit Union, begin paying your bills from your Benign account. Do not close your First Avaricious account until all outstanding transactions have cleared.

7. As soon as the last outstanding transaction clears First Avaricious, close your account there. Again, check to be sure the closure actually happens.

8. Deposit whatever remains of the $100 you left at First Avaricious in your Benign account.

9. Now set up all your automatic deposits, payments, and funds transfers at Benign.

Voilà! You’re back in business. And business will move a lot more smoothly.

Image: First National Bank of the Republic, Salt Lake City, 1908. Public Domain

Why I moved my money to a credit union

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As Americans lose patience with the overweening greed on display at certain gargantuan banking institutions, a lot of people are talking about moving their money out of megabanks into small community banks or credit unions. I moved my money to a credit union years ago…and thereon hangs a tale.

From the moment I graduated from college, I did business with banks. I’d never heard of credit unions, and when I did get wind of their existence, I didn’t understand what they were. I imagined they had something to do with labor unions.

Throughout our twenty-year marriage, Ex-DH and I kept our checking and savings accounts at what was then a statewide bank, founded by one of Phoenix’s early movers and shakers. We had a successful and mutually beneficial relationship with this bank, whose founder’s daughter was a classmate of Ex-DH’s at Stanford. But as time passed, things slowly deteriorated.

Shortly before we divorced, I came into a $40,000 inheritance. Naive as I was about personal finance at the time, I had no idea what to do with this money. I knew it should be invested, but I didn’t know where or how. I also knew I should keep it sole and separate from the marital community.

Incredibly, when asked what I should do with the cash, our personal banker advised me to invest it in seven-day CDs.

Yes. Forty grand got stuck in extreme short-term CDs earning something less than .5 percent—make that lots less. It sat there for over a year, as events progressed.

Once I was out of the marriage and free to get a grip on my own finances, I began to understand how astonishingly stupid this arrangement was. So I made an appointment with the same personal banker, whose services followed me into singlehood, to discuss what I should do with the inheritance and also how I should handle the alimony that now was coming into my account. She advised me to invest $30,000 in a municipal bond, on the theory that it was a conservative, safe place to park the cash, with the added benefit of tax-free proceeds.

That proceeds were minimal, that this strategy could tie up 30 grand for ten years? Nevermind…

As time passed, the bank was acquired by the now-defunct First Interstate Bank. Shortly, getting through to a human being grew well-nigh impossible. My old personal banker was replaced by a crew of CSRs, none of whom knew much about anything and all of whom seemed to be trained in the high arts of stonewalling.

First Interstate began to make various small errors. Because my math leaves a lot to be desired, it would take hours of anguished puzzling to figure out what went wrong, and still more cerebration to confirm in my own mind that an error had occurred on the bank’s part and not on mine. Each time this would happen, I would have to jump through flaming hoops to reach a person and then would have to do battle to prove some transaction—often one that cost me money in the form of various gouges—was the bank’s mistake. Even going in person to the main downtown office would result in a long wait to speak to a representative and a complicated discussion to get the point across, an activity that often resulted in no action.

Meanwhile, I learned that one of Ex-DH’s ex-law partners’ ex-wives had established a practice as a financial counselor. She specialized in advising single women. When I went to her to learn more about how to handle my finances, she advised me to cash out the municipal bond and invest in a mutual fund.

Before the bank was engrossed by First Interstate, I had arranged for the bank to keep the municipal bond, since as a new divorcée my life was pretty transient and I was concerned that the bond might get lost as I moved around. (As an example, I spent three months traveling on foot through the outback of Alaska and Canada, sleeping on the ground, hiking, and hitch-hiking.) Now, when I asked to have the bond, the CSR with whom I spoke said it would be FedExed to me.

No.

They dropped it in mail.

And predictably, it disappeared. Weeks later, no bond had surfaced. When I called, I found out they had put it in the USPS and lost it!

Yes. First Interstate lost a $30,000 bond!!!

And what did they propose to do about it?

Nothing.

They informed me that it was my problem, and I would have to go to the Postal Service and try to get them to find it.

Only after I complained to the federal banking commission and threatened to call the U.S. attorney general did a bank vice-president appear at my front door with the bond in hand.

About at this time, First Interstate was agglomerated into Wells Fargo. By then I had quite enough experience with large national banks, and so I moved my money to another bank, a small local institution with a branch near my house.

Before long, this bank began to falter. It also was consumed by one of the steadily bloating national megabanks, which promptly closed the nearby branch.

SDXB (Semi-Demi-Exboyfriend) had been lobbying me for quite some time to move my accounts into a credit union. Finally I began to pay some attention. By now I was working at Arizona State University’s west campus, which housed a credit union in one of the buildings. As a university employee, I was qualified to join (so, it develops, is just about anybody…).

So I opened an account. And to my great surprise, I encountered service very similar to the service Ex-DH and I got when we did business with a quaint local institution and he was a heavy hitter at one of the most prominent law firms in the Southwest. But this service was available to everyone, not just to a few elite customers! Call on the phone, and a human being answered. The car loan the credit union offered far underpriced anything available anywhere else. They even had a broker who would help you buy a car and insulate you from the horrors of having to do battle with car salesmen. Mistakes? What are those?

That service continues to this day. Although they now have a phone tree, it’s pretty easy to break through it, and their online help is prompt and accurate. Online banking services: awesome. ATMs: available everywhere, at no charge, thanks to deals with a network of credit unions. Solvency: excellent, because credit unions refrained from issuing bizarre loans to borrowers who obviously couldn’t pay. Deposit insurance: through a separate federal agency that is in no danger of being drained dry by the current spate of bank failures. Costs: almost nil—no checking account fees, no gouges for cashing checks, no costs unless you bounce a check.

What a wonder.

I would never do business with a bank again. Credit unions are the only way to go.

Image: Elembis, An Assortment of U.S. Coins. Public domain. Wikipedia Commons.

If I Had It to Do Over: 10 money moves I’d do differently

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Ever think about what you’d do if you could turn back the clock and be 20 again? Though I wouldn’t especially want to live my life over, there are a number of money moves—and decisions that had more influence on lifelong personal finance than I could have guessed at the time—that I’d either not do at all or that, given a peek forward 40 years, I’d do differently.

For example:

• I would have taken advanced degrees in disciplines whose graduates make decent pay.

Can’t say I regret having prepared for an academic career. It has allowed me to earn an adequate (not generous) living after spending way too much time as a lady of leisure. However, I’d never recommend to a young person who wants a life in academe that she or he pursue a doctorate in the humanities. University faculty in business, engineering, and law earn more than those in other disciplines. A Ph.D. in accounting can start at the assistant-professor level with a six-figure salary, and believe you me, that is one hell of a lot more than you earn teaching history or English.

Mind-numbing major? Puh-leeze! What could be more mind-numbing than postmodern theory? Oh yah: postmodern feminist theory! Give me a bag of beans to count, any day!

Knowing what I know today, I’d still want a career in higher education. I would take an undergraduate degree in a humanities discipline that a) interested me, b) would furnish a young mind, and c) would build skills in logical thinking. But at the same time I would take lower- and upper-division courses in statistics and basic college-level math. Then I would get myself an M.B.A. and a Ph.D. in business management, a subject not too taxing for my sketchy math skills. With those credentials—which certainly demand no more work, expense, or skill than the doctorate in English that resulted in a well respected book published through a prestigious press—I’d be earning about twice what I make now.

• I would have started working in higher education early on, even though it entailed having to teach five sections a semester of freshman comp at a community college.

What I didn’t understand, in my callow youth, about that horrifying prospect is that over time community college faculty find ways to evade the most onerous courses and to wangle course release time, just as university professors do. Nor did I have any idea how much more community college faculty here earn, compared to GDU, UofA, and NAU faculty.

Without the fugues into magazine journalism, today I’d be earning a decent income, and I’d probably occupy a layoff-proof job. Or, more likely, I would have retired by now with plenty of savings to support me in the style to which I was accustomed while I was married to the corporate lawyer.

• If I were 25 again, I would insist that my husband include me in the marital finances.

It was easy to tell my women friends to get a grip on their family finances, establish credit in their own names, and know where the money was. But all the time I was dispensing that excellent advice, I wasn’t following it myself! I had no idea where all our money was going, I did not know what my husband was investing our money in or what debt he was obligating us to, and to tell the truth, I never did know exactly how much he earned. Because he deliberately entered false figures in the checkbook, I couldn’t reconcile the bank statements when I tried, and so I had no clue how much we had in our joint account. Nor did I know about the two other bank accounts he’d opened without my name on them.

• I would open my own savings and checking accounts—preferably at an institution other than the one that held our joint account—and set aside part of my paychecks, my freelance income, or (when I wasn’t working) part of the grocery money.

Being my relentlessly frugal father’s child, I was bothered when the husband refused to save for our son’s college education. But he never tried to exercise any serious control over how much I spent. In those days, I paid for everything with checks and often asked grocery-store cashiers for cash back (cash-back policies were more generous then). I could easily have creamed off $100 a month—weekly cash-backs of $25 would’ve gone unnoticed. If I’d started doing that the month my son was born, I would have stashed $21,600 for him by the time he graduated from high school.

My husband also refused to budget; his express reason was that budgeting is for poor people. Consequently I had no control over our spending and no idea whether I was spending more than we had. If I’d put aside money  for myself, I could at least have budgeted independent of his whims and felt more in control of some of our finances.

• I’d use a credit union instead of banks.

Even before banks decided to make a profitable business of fleecing their customers, credit unions were always preferable to commercial banks. Savings rates are higher, checking is free, and service is infinitely better.

• I would have learned about investing early on.

If I’d had a clue about such things as mutual funds (no joke: before I walked from the marriage, I’d never heard of them), I wouldn’t have taken my husband’s private banker’s weird advice to invest a $40,000 inheritance in (hang onto your hats, folks!) one-week CDs! Yes. Forty grand sat in one-week CDs for over a year, until after I ran away, spent three awful months sleeping on the ground in the outback of Alaska and Canada, and finally made my way back to the city.

Yup. I could’ve invested the $21,600 of grocery money in instruments that earned compounding interest, too. Hmmm. Check out this handy-dandy little calculator. Assuming we went ahead and paid for my son’s education out of his father’s capacious salary and so I just kept on investing a hundred bucks a month for him at, say, 8 percent, today he would stand to inherit another $177,395.38.   Ah, coulda shoulda woulda!

Moving on…

• I would have learned and started to use Quicken the minute it came out.

Quicken is the answer to the innumerate English major’s dreams. Not having to add and subtract (something I can’t do reliably even with a calculator) made it possible to reconcile bank statements easily, without dampening sheets of paper with sweat or with tears. Consequently the program allowed me to take firm control of my financial life, in a way that wouldn’t have been possible when every encounter with money involved a daunting episode of math torture.

• I would have learned how to use Excel.

I still don’t know it well enough to free myself from Intuit, which, despite the glories of its Quicken program, rips off customers by issuing ever-more-bloated annual updates that won’t read data in formats more than three or four years old. Excel does everything I need Quicken to do, it doesn’t go out of date, and it functions across platforms.

• I probably would have spent less on my current home’s landscaping.

I’m pleased with the yard and glad to have it, but something acceptable could have been accomplished at lower cost. Specifically, I wouldn’t install such a large front patio (or possibly any front courtyard!), and I would have planted younger, less expensive trees.

• I would have opened a Roth IRA as soon as they became available and maxed out contributions every year.

Though we can add a substantial amount to our 403(b) above and beyond our mandatory retirement contributions, the university matches only 7 percent of our paychecks. IMHO, that makes these highly restrictive investment instruments less desirable than the after-tax Roth IRA, which accrues interest and dividends tax-free and can be passed to your heirs without encumbrance.

My not building Roth savings from the get-go is a function of late-blooming investment knowledge. Which takes us back to item 6: learn about investing early on.

What would you do differently if you could start from financial scratch again?

On this subject, check out Frugal Scholar’s conversation about the most successful things she and Mr. FS did with their finances.

Dragged kicking and screaming into the 21st century

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Given a choice, we fossils would have preferred that the Cretaceous had lasted a while longer. All these little mammals running around—pesky things, and they make all sorts of nimble demands. 

Last night I went to log on to my credit union accounts and instead got a message informing me that henceforth the CU will charge a fee to deliver paper statements to customers who have online access. To get statements free, we have to agree to accept e-statements. 

Fine, I’ll figure this out later; leave me alone and let me get my chores done, thought I. 

But nay…the only way you can move forward into your accounts is to click “accept” or “decline.” There’s no “I’ll think about it” choice. When I tried to back out, up popped an error message informing me that Safari no longer will suffice to navigate the CU’s site, and that I must have a new version of IE  or (hang onto your hats, folks) Netscape.

Netscape? It went down in 2008. 

So I sent a query. This morning comes this reply:

If you are using a MAC the only browser we support is Safari, versions 1.2 and 3.0. You must use this browser in order for all the options to work properly. 

Huh? Safari 1.2?? I thought the last surviving copy resided at the Smithsonian. Safari 3.0? That came out…when? In the Mesozoic? I’m at 3.2.3, and a more recent update keeps bouncing at me like Cassie the Corgi with a ball, begging to be installed.

They say you can view your accounts with any old version of Safari, but you can’t perform the functions you may need. 

Meanwhile, nothing said about the fact that you can’t proceed to your accounts without accepting or declining their “offer.” 

Well, I guess we can say good-bye to the old-fashioned, customer-friendly service that is the specific  reason some of us prefer credit unions to banks. Sic transit gloria mundi.

FDIC Runs Low: Credit unions unaffected

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The other day Finance Junkie picked up on an AP article to the effect that the FDIC is running low on funds. This creepy little gem of news is not as drastic as it sounds at first blush: the agency still has $45.2 billion dollars on hand, plus it has a $30 billion line of credit with the Treasury. But the fact that 117 banks with assets of $78 billion were struggling in the second quarter isn’t reassuring.

One of my RAs heard this news, too, and wondered if she should take her savings out of the bank. I advised her not to do so, but suggested if she was really worried, she could move her money to the credit union, which has a branch on the campus and which accepts students in the state university system. Credit unions are federally insured, too, but by a different entity, the National Credit Union Share Insurance Fund (NCUSIF). Like the FDIC, the NCUSIF insures your deposits in a single institution up to a maximum of $100,000, andit also covers an IRA held at a credit union up to $250,000.

A friend who works as a loan officer at the Arizona State Credit Union had this to say:

I know there is a lot of uncertainty regarding banks right now. However, I have not heard of any concerns regarding the FDIC and their ability to insure funds. The credit union has been fortunate that we are not dealing with the issues and concerns that the banks are having right now. We are solid. As you may remember, we just started really bringing on mortgage products about 3 years ago and we never did any loans that were interest only ARMS, stated income or any of the other “high risk” exotic mortgages that have caused this meltdown.

Unless things get a lot worse, your money’s safe in the bank. And if it’s not…well, then we’ve got bigger things to worry about.

How do I love the credit union?

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Let me count the ways!

Just discovered that the credit union allows you to give your accounts “nicknames” in its online environment. Probably it’s ever been thus…I only tumbled to it this afternoon. So, I just spent ten minutes or so renaming all my accounts to jibe with the monikers I’ve given them in Quicken. This will much simplify making online transfers, which up to now have required me to think about what I’m doing, of all the unreasonable things.

How is the credit union better than the banks I’ve known?

  • All checking accounts are free: no charges
  • No minimum to qualify for free checking
  • Low minimums for money market accounts
  • No sneaky ways to extract extra fees from customers
  • Human beings answer the phone
  • Employees recognize regular customers
  • Office is located at my place of work
  • Another office is located 10 minutes from home
  • Plenty of tellers are on duty at all times: short or no lines
  • Loan rates are very low
  • Loan officers are on the premises
  • Online pages are easy to navigate and have many nifty amenities
  • Online help is actually helpful
  • Password is not your Social Security number (!!!)

How is the credit union maybe not as good as a vast faceless national bank?

  • Fewer brick & mortar offices
  • Fewer ATMs (but I don’t know: I don’t use ATMs)
  • Difficult to manage an ETF from Japan or Europe

By how much do the plusses outweigh the minuses?

  • By about 1,000 to 1