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A debit card is it the way to go?

According to Bankrate.com, Check cards have increased in popularity this decade because consumers like the ability to manage their money effectively in a convenient and secure way. But there are a few aspects that consumers need to be aware of so that they don't become problems.

Account overdraft
Common sense says that your spending is limited to the amount you have in your checking account. But with overdraft protection plans, you can keep spending and may not even know you've overdrawn your account.

The biggest risk of using a check card, also called a debit card, is that consumers can overdraw their checking accounts. And since most banks provide "convenience" overdraft protection -- which is basically a high-interest loan to cover the shortfall in the account -- a consumer who's trying to manage money responsibly could get hit with a fee of around $35.

"You can overdraw your checking account just as easily with a debit card as by writing a check," says Greg McBride, CFA, senior financial analyst at Bankrate. "Be sure to note all debit transactions in your check register and sign up for overdraft protection linked to your savings account to be on the safe side."

Show Me The Money

Make Your Savings Earn More For You

According to a study, Americans keep more than $1 trillion in low-interest rate savings accounts, often for convenience and a desire for easy access to their cash. 

But by shifting that money into safe, higher-yielding accounts, you could reap $30 billion to $50 billion in additional interest yearly, says the Consumer Federation of America and Providian Financial Corp. that commissioned the study. 

Low-yielding savings accounts that are earning on average 2.1 percent are widely held by consumers, no matter the age, income or education, the groups said. But Americans 65 and older may be losing out more than other age groups because they are more likely to hold accounts with $25,000 or more. 

One of the dangers is in keeping money this way is that for the things they want in life you come up short. The other danger is that, failing to see any kind of satisfying return on your money, just might not excite you about saving. In other words if you are not growing your money, then why should you save?

How can we put our money in proper places? 

Here are several options: 

1) Money market mutual funds, now paying 5.5 percent to 6.5 percent in taxable funds. They invest in Treasury bills, commercial paper and other short-term obligations, and though not FDIC insured, are widely considered safe. One can write checks, although many funds require a check to be a minimum amount.

A Different Type of Consumer Report

You’re probably familiar with check verification if you write checks at the grocery store or to local merchants. Your check is scanned through a machine or the cash register, and the routing and account numbers printed at the bottom of your check are electronically read and transmitted to a check verification company such as TeleCheck or Scan. The information is cross-checked against a database which contains not only your checkwriting history - including any bounced checks - but the checkwriting history of other consumers. Risk modeling, similar to that performed by Fair Isaac & Co., is performed on the transaction, and a numerical score is returned to the merchant indicating the check is approved for acceptance, declined based on previous negative checkwriting history, or declined due to a low risk score.

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Check Verification Companies Are Considered Specialty Consumer Reporting Agencies Under the FCRA.

Bob Johnson nation's premier minority-controlled student loan provider

Black Entertainment Television founder Bob Johnson says his new bank holding company, Urban Trust Bank Holdings, has created a student loan company he hopes will become the nation's premier minority-controlled student loan provider.

Johnson is teaming up with Goldman Sachs on the project. The business is called UTB Education Finance and will be based in Washington.
Details about the new company and the types of products it would provide were not immediately available, but an Urban Trust spokesman says the business will originate and consolidate loans.

"The size and scope of our company will allow us to create student loan products that will appeal to families and students and the financial-aid professionals that serve them," Johnson says in a statement.

Urban Trust Bank is expected to open a branch soon in the District. Johnson bought the Orlando-based thrift last year.

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Robert Johnson and Wal-Mart Team Up

Investor Robert Johnson's Urban Trust Bank has entered into an agreement to put its branches in Wal-Mart stores in the Washington area and beyond.

The Bethesda-based bank's majority owner is RLJ Cos., controlled by Johnson, the former chairman of Black Entertainment Television (BET).

Urban Trust Bank signed a master agreement to lease space in Wal-Marts up and down the Eastern seaboard. The first branches will open in the Washington area and Orlando, Fla. Atlanta is being pegged as the next market.

At this point, the number of Wal-Mart stores (NYSE: WMT) with Urban Trust branches hasn't been decided, but it will be "fairly significant," says the bank's CEO, Dwight Bush.

The bank is "committed to supporting urban consumers," Bush says, and "the demographics of Wal-Mart customers and associates fits our sweet spot."

Urban Trust plans to open the first local Wal-Mart branches by the end of the year.

 

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