As part keeping the interest rate on my emergency fund as high as possible, I’ve shared my like of rewards checking, savings bonds, and the Ally Bank 5-Year CD. Ally CDs have a small 60-day interest withdrawal penalty, so the liquidity is still quite good. As long as you hold it for 6 months, you’ll be earning more interest than the highest rate from an online savings account even after the penalty is factored in. After that, the effective rate just keeps getting better until you reach maturity at the full rate.

With no minimum balance requirements, you can also buy them in whatever size chunks you want. And I have. But I checked the rates again today, and was sad to see they’ve been dropping quite fast recently. The current Ally Bank 5-year CD rate is 1.60% APY (as of 10/25/13). I decided to compile the rate history from as far back as I’ve been tracking them.

There have been a few small rate hikes, but for the most part the rate has been gradually dropping due to market conditions. If you’ve been thinking about buying, I would buy now before rates drop even farther. When opening a CD, remember they have a “10 Day Best Rate Guarantee” in which you get the best rate they offer within 10 days of opening. You can now also find slightly better rates elsewhere, for example Alliant Credit Union has their 5-year certificate at 2.35% APY (2.45% for $25k+), but with a larger 6-month interest penalty. I’ll probably still buy a little more at 2.17%, but if the rate drops below 2% then I’m looking elsewhere.

The fees are coming! Since February, Chase Bank has been testing out a monthly fee for anyone who uses their ATM debit card for purchases in areas of Northern Wisconsin. Regions Bank and Suntrust have added fees as well. Per this CNN Money article, Wells Fargo Bank just announced that it will start charging a $3 monthly fee for debit card usage next month in Georgia, New Mexico, Nevada and Oregon. (I guess they’re afraid of messing around in California just yet.) According to this WSJ article, Wells Fargo is only announcing this fee with one of those small inserts in your monthly statements, so heads up.

I know there has been drama over debit card interchange fees, but that was just a result of two big lobbying groups – small businesses vs. big banks. It was really not about consumer rights. The result was a new law that caps debit card interchange fees at 21 cents + 0.05% of the sale amount for banks with $10 billion or more in assets. Smaller banks with debit rewards like PerkStreet (review) say that this will not affect them.

I never use my debit card for purchases, so I would not be affected by any of this. Credit cards offer more consumer protection against fraud and things like extended warranties and free insurance, on top of the ability to delay payment for 15-30 days of float. More importantly, credit card rewards are better which means more money in my pocket. However, many people do like the simplicity of debit cards for purchases. If they don’t want to pay the fees, I hope they will vote with their money and move it immediately to bank that doesn’t charge such fees. Don’t expect banks to care about your angry internet comments; affect their bottom line and they’ll listen.

Will the rate on your high-yield savings account stay high? It’s always hard to tell. Some do, and some banks seem to just give up. The NY Times Bucks blog shared a list of the top 10 banks offering high savings accounts rates over time for the 1st quarter of 2013 as compiled by MoneyRates, of which nine banks that have made the list for three quarters in a row. I’ve looked up their current APYs as well.

Per many reports from Reuters and WSJ and more, Capital One is buying online bank ING Direct. After being bailed out by the Dutch government in 2008, parent company ING Groep NV was required to sell the US bank by 2013 as part of their restructuring plan. Other major suitors included Ally Bank and General Electric.

So while a takeover was expected, many people were unhappy with the announcement that the were soon to be customers of Capital One. They were rightly afraid the stubbornly simple and straightforward bank culture would change. I personally didn’t really care, banks change all the time and I just go with whomever has the best rate and feature combo available right now. ING Direct has been content with “just good enough” rates for a while. Here’s where I keep my cash these days, I’m earning much more than 1%.

However, the NYT Times Bucks blog ran an interview with Capital One about the sale yesterday, and it was just too horrible not to make fun of. Read the original, real interview first, with more vague, lawyer-approved, corporate double-talk you could imagine. In my *parody* version below, let’s imagine what they’d say if allowed to be brutally honest.
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Q: Why are customers of ING so upset about the sale of their bank to Capital One?

ING Direct was known for simplicity, directness, and good customer service. Capital One is known mostly for credit cards that don’t properly report credit limits to bureaus so it hurts your credit scores, a surprisingly good foreign transaction fee model, and TV ads with Vikings and Alec Baldwin.

Q: What changes are you planning to make to ING Direct’s account offerings? Will subaccounts for specific savings goals remain?

Well, many good features including that one are already in place and it would be really, really stupid to mess it up. But the lawyers won’t let me commit to anything in writing or they will eat a kitten.

Q. Are you planning any new fees or minimum balance requirements?

If we think it will make us more money in the end, then hell yeah.

Q: Does the reaction suggest Capital One might need to enhance customer service? How might this be done?

Yes. No idea.

Q. Will ING Direct be operated separately or integrated into Capital One’s operations?

Look, we just saw over $80 billion in bank deposits paying out just 1% interest. Do you have any idea how much interest we’d get paid by lending that out to people with our credit cards??? Cha-ching!
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To repeat: These are a parody. I am actually a satisfied customer that has used a CapOne credit card for international purchases for several years. But hopefully they’ll realize that bland PR talk does not make more engaged, passionate customers.

PayPal announced today that you can now deposit checks in your PayPal account via photo upload from both Apple iOS [iTunes] and Android OS devices. Just sign the back of the check, take a picture of the front and back, type in the amount, and submit. (If you have a iPod Touch, iPad, or Android tablet with camera, that works too.) You are free to withdraw the funds into your linked bank account. Via MobileCrunch.

This is pretty cool, as it basically allows remote deposit of checks into any bank, not just Chase or USAA. Reading through the Terms & Conditions, you are limited to total deposits of $1,000 per day, and $3000 per month. You’re supposed to keep the check for 15 days to verify that it went through, and then destroy the check.

The only thing to consider is do you trust PayPal? Long-time readers may know that I have an uneasy relationship with PayPal. They’ve frozen my seller accounts before with no evidence and required all my personal information (SSN, credit report, driver’s license, utility bills) to release the money, and they’ve never been known for their stellar customer service. But I still use them when the alternatives are too inconvenient and the dollar amounts are small, because honestly I’m too lazy (and like I said, they already have my info). I simply operate on the principle that they can freeze my account again at any time, so I never leave more than $20 in my account. I’ll definitely try this app out the next time I get a small check to deposit, but only for small deposits that I’d be too lazy to deposit at a branch and it will be withdrawn immediately.

The Ally Bank blog recently announced that they are gradually rolling out their eCheck Deposit service, where you can use a scanner and submit your deposits over the internet without having to visit a branch or mailing anything in. This is another step towards being able to step away from the big Brick & Mortar banks and take advantage of the higher interest rates and lower fees of internet banks.

The service is currently only available by invited account holders of an Ally Interest Checking account, but you can call them at 1-877-247-2559 and ask to be added to their next rollout list. They expect to continue expanding this service throughout 2011. (Update: Ally contacted me and said that invited account holders of their online savings account and money market account are also eligible.)

This adds another feature to my Ally Bank Checking account review, which I found comparing the features to be one of the best online checking account alternatives out there. No minimums, no direct deposit required, all ATM fees refunded, 24/7 phone reps, and a decent interest rate.

My very first big boy bank account was with Bank of America, opened when I first landed at college nearly 15 years ago. I realized today that even though I have probably opened and closed nearly a hundred (yes, 100) bank accounts since then and pocketed several thousand dollars in signup bonuses (yes, a least that much) in the process since then, I have always kept that same Bank of America account open.

BofA has a bunch of different accounts across the nation, but from what I recall, the MyAccess Checking account I opened was one of the most basic and the easiest to avoid a monthly fee on. Today, I received notice that they will be raising some fees, effective for statement cycles starting on or after May 24, 2011. The monthly fee is now $12, up from $8.95. To avoid it, I’ll have to keep at least $1,500 in my account or have a direct deposit of at least $250. Previously, a direct deposit of any amount was acceptable.

Neither of changes will really affect my current banking patterns, but it does signal that fees are going up and reminds me that there are other deals out there. Am I somehow emotionally attached to a bank account after all these years? Or maybe I’m just a creature of habit.

In case you haven’t been notified, the e-mail marketing provider Epsilon Data Management got hacked and tons of email addresses and names were stolen. Clients include major companies like Chase, Capital One, Best Buy, Target, and more. While the data breach is not enough for identity theft, the fear is that they will use these emails to target phishing scams since they know what merchants you are comfortable dealing with.

While logging into my Bank of America account this weekend, I saw that they recommended me to download and install a free software program called Trusteer Rapport, which supposedly provided “online fraud protection”. Of course, as I click over, they also point out that:

Trusteer may offer a different privacy policy and level of security than Bank of America. Bank of America is not responsible for and does not endorse, guarantee or monitor content, availability, viewpoints, products or services that are offered or expressed on other websites.

So, basically, “hey, you should install this unknown software program to protect against other unknown software programs, but we don’t officially endorse it, and it’s not our fault if it doesn’t work or actually causes even more damage than doing nothing.” Huh?

First, I looked up Trusteer, a privately held computer security firm. There are numerous articles about Trusteer in various IT security magazines that I’m loosely familiar with, so that gave them some legitimacy. However, they are a new company (first mention is 2009) and unaffiliated with any other well-known security firms. Several other major banks besides Bank of America have “suggested” that people install Rapport, including Capital One 360, HSBC, and Suntrust.

How does Trusteer Rapport work? According to their FAQ:

– Rapport verifies that you are really connected to the bank’s genuine website as opposed to a fake website created by criminals. Although this sounds trivial, it’s not obvious that you reach a genuine website when you type your bank’s address into your web browser
– Once verification is complete, Rapport locks down communication between your computer and the bank’s website. This prevents criminals from hijacking your online connection with the bank
– Rapport protects your computer and internet connection by creating a tunnel for safe communication with your bank, preventing criminals from using malware to steal your log-in data and tamper with transactions

So, they try to stop things like fake websites and keyloggers. Also of interest is the fact that they work closely with the banks themselves to customize the software to each site:

Rapport’s access control policies are set by your bank. Banks that work with Trusteer build and maintain policies that define which information is sensitive and which operations on this information should be restricted.

So what’s with the non-endorsement? BofA says it’s because they already reimburse you for fraudulent losses. From the NYT Bucks Blog:

Using the Rapport software isn’t mandatory for Bank of America customers, Mr. Gordon said, in part because the bank already protects account holders from losses if their account is compromised. But it is advisable, he said, because malicious software programs can also steal sensitive nonfinancial information, which can be used in identity theft. “One of the goals of malware is to go gather information,” he said.

Some users of the of the software have noted that it slows down your system. Trusteer counters that it’s most likely due to your other security software conflicting with what Rapport is trying to do. Well, that sounds like a couple hours of fun troubleshooting. I dislike installing additional software unless necessary, so I think I’ll hold off for now. Prediction: Trusteer will be acquired by a large branded security firm in the near future.