Is this the end of free checking?

Bank of America has recently announced that a 5 dollar monthly fee will be charged for their debit card holders when they make purchase(s). In the wakes of new federal regulations that are now pushing the financial institutions to find ways to compensate for loss, Chase, US Bank and Wells Fargo have also announced their plans or are testing to impose a monthly fee on their debit cards.

Ron Lieber and Ann Carrns of The New York Times wrote in their Your Money column on September 30, 2011 that "Citibank did not plan to add monthly debit card fees."

But the good news will probably come to an end. I received a notice from Citibank in mail today. Basically, it now offers me two "clear options":

For statement periods starting on or after November 10, 2011:

1. Keep $15,000 in prior calendar month combined average balances - starting with your November 2011 balances - and pay no monthly service fee or non-Citibank ATM fees...

Or

2. Pay a flat $20 monthly service fee, which is not changing, if qualifying balances are not met (non-Citibank ATM fees will also apply).

According to this letter, no matter what I choose to do, I won't pay additional fees for using my debit card for purchases or for paying bills online, which, they say, are "new types of fees that many other banks are testing or have already introduced" and they believe that by introducing an allegedly old type of "flat" fee, it will "simplify" my financial life.

Holy crap! Simplified? Really? Well, I don't see how this is going to simplify my financial life. Since I don't have that much money and would want to have that much money sitting in a low interest bank like Citibank, even if I have the crapload of money they ask for, I would probably, like many others, be forced to charge a "flat rate".

And worse still, for Citi customers who enrolled since June 10, 2011, Citibank is going to terminate ThankYou Rewards for their debit purchases starting December 9, 2011.

I have two checking accounts with Citibank. One was enrolled to ThankYou Rewards prior to June 10, 2011. The other was enrolled recently. So I believe I won't receive any points from the newer account I opened in August. In fact, opening the account was forced by a personal banker who, I assume, just want to earn a little commission.

My experience with Citibank is always hit and miss. It's now time to switch to Charles Schwab and Provident Credit Union. Paying such a steep monthly "flat rate" is the most stupid thing a person can do.

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Citibank lowered APY, now at 0.05% Where to bank?

Last week, when I logged in to my Citibank online account, I noticed that the annual percentage yield, or APY, is still at about 0.08% for those accounts holding a balance lower than 24,999 U.S. dollar. It's pathetic, however, today, when I logged in again, it's 0.05%!

For god's sake, it's called a savings account. But with such a low rate, how can you earn any significant amount of interest at all? For those with a lot of savings with Citi, things aren't looking any good. The highest interest rate they offer is a mere 0.30%. What a shame!

I have always been on the lookout for anything that has a higher rate than Citibank and the likes. I tried to apply for an ING Direct Online savings account, which offers a 1.00% APY as of today, in January but was decline because it appeared that I don't have any credit history and that has a negetive impact during the automatic approval process.

Currently, I use Charles Schwab to manage most of my money. Their current rate is 0.25% for the invest checking account and 0.35% for high yield checking account. The rate used to be a bit higher but it's not too bad for a money market product to offer these rates. Charles Schwab has pretty good and professional phone service for their customers because they don't have as many branches as Chase or Citi. Their Platinium Visa Check card is quite handy, which comes with a pledge to waive all ATM fees, domestic or international. I used it to book hotel room in Hong Kong and it worked really well for me. The only downside about this product is that when you transfer fund electronically from other financial institutions, your money will be put on hold for about three day at least in your brokerage accout, which is set up together with checking and savings for free. While your money will still accure interest, it's a sad rate and you can do nothing to the money but to watch it sitting there.

I am pretty excited today because I became a member of Provident Credit Union, which will allow me to access the credit union network in all fifty states and territories. My friends have been banking with them for awhile and I am drawn to their Palo Alto branch not only because they offer a staggering 2.26% for their Super Reward Checking account if you do what they told you to do (basically, 10 point-of-sales transactions and 1 direct deposit/1 ACH transfer per month and enroll in electronic statement), but also their support of Palo Alto Weekly and local journalism. Last but not least, I like their neat coffee machine. I'll grab a hot chocolate next time there.

I hope once my federal student loan works out. I'll need this Provident account to better manage my money. Time to be provident with my personal finance now because I have read some many scary stories of student loan default.

I am not sure if there's anyone out there who actually made or are making sound returns from their loan. Not sure if this is legal in the first place because it's supposed to be used solely for educational purposes.

Anyways, I will be happy to learn new tricks to get a higher return with my money and the ways to live as frugal as humanly possible. With a $60,000+ non-dischargeabe loan, I want to start repaying with confidence. Rather than having that much money sitting in a bank with crappy rate, I would choose one that offer a decent APY.

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