Indeed, fees are big business for banks, since they provide a way for them to make money and fund various ventures and enterprises with very little risk. Nomi Prins writes about bank fees in The Daily Beast:

In general, not only do big banks charge higher service fees for the luxury of taking your checking deposits and using them as capital for other ventures, but the interest they provide on these, and savings accounts, are comparatively abysmal relative to smaller banks. …

Overdraft charges are administered not only to people who don’t have enough money in their accounts to pay their bills, but also to customers who may keep enough money in their savings account, but get slapped for not transferring it at the appropriate moment to their meager-interest-rate checking account.

It is no surprise, then, that there is a movement toward using smaller, more local banks and credit unions. Many of the smaller banks offer more attractive rates, and charge lower fees. They do this in order to be competitive and draw your business. And, of course, many of the smaller banks and credit unions aren’t in the habit of making risky decisions. So subprime mortgages and other risky investments don’t need to be covered to as great an extent.

If you are looking at your finances and seeing that some of your money is being leeched away by bank fees, you might consider banking elsewhere. Just like any other product or service, you should shop around for the best deal.

Image source: Wikipedia

Post from: EveryJoe

Using a Big Bank: Ripped Off by Fees

Today, TuitionU relaunched, offering expanded offering for student loan funding, and incorporating the P2P lending platform GreenNote into its program. One of the most intriguing things about the new TuitionU is that credit unions are in on the act. Credit unions have not traditionally been part of the student loan scene.

Brian Cox, the Chief Busines Development Officer on the project, told me that he is very excited about involving credit unions. “Credit unions often offer lower fees and interest rates to their members. Seeing them get into private student lending is great, since it provides a win-win.” Cox said that students who need access to better private student loans to close a funding gap win, and credit unions, who are looking for a younger customer base, have the chance to win more members.

In order to get a student loan this way, though, one has to be a member of the credit union. But TuitionU takes care of that as well. “We have a filter set up on the site,” Cox explained. “You put in your state, and then you can select available credit unions and read the membership requirements. If you qualify, you may need to put in five dollars to open an account. But then you can have access to what could be a much better loan. It’s definitely worth the small amount of extra effort.”

Cox said that some of the credit unions in the program have a very wide membership base, making it easy to join. “The NASA credit union is a good example,” he explained. “For five or 10 dollare you can join one of the NASA societies — which are open to anyone — and then you can be a credit union member.”

For those who still don’t qualify for private student loans through banks or credit unions, it is possible to use the GreenNote P2P lending platform. The student loans work, for students, just like those you get through federal programs, with lower interest rates, 10 year repayment and a six-month post-graduation grace period. TuitionU also offers college funding options through federal programs and school payment plans.

Post from: EveryJoe

TuitionU: Student Loans from Credit Unions

Local and regional banks in reasonably good shape

Most of the smaller banks claim they have no need for TARP funds. Some of the regional banks that took TARP funds earlier have already paid their obligations back. Increased regulation and limits on compensation are spurring many institutions to paying TARP funds back faster. Besides, local and regional banks and credit unions are in pretty good shape, compared to the big guys. Many believe it’s because most of the more local financial institutions did not get so heavily involved with derivatives and with subprime loans.

I suppose it’s nice that the government is recognizing Main Street, but it probably isn’t really necessary. Now, some sort of a risk fund — another proposal by Timothy Geithner — for the big banks might be worth having. Of course, the big banks would have to actually agree to help fund it for the whole thing to work.

Does your local bank or credit union need TARP money?

image source: Larry D. Moore via Wikimedia Commons

Post from: EveryJoe

Will Your Local Bank Be Getting TARP Money?