In case you hadn’t heard, a New Zealand bank accidentally deposited $10 million in a couple’s business account. They promptly withdrew the money and are now on the run. What would you do if this happened to you? What would you do if it was $10?

A True Tale of a Bank Error Biting Back
I actually knew a guy in college who received a $7,000 deposit courtesy of a bank error. He chose to withdraw the money and spend a semester abroad. The bank found him and demanded the money, but he’d already spent it. A couple years later, he received an arrest warrant in the mail at his new address across the country. He was given an option: pay it back and have his record expunged, or go to prison. He chose to pay it back, but it took him the entire summer working round-the-clock to raise the money by the court-imposed deadline.

Would You Take the $10 Million?
I wouldn’t, but I’m honest. In addition, I know the bank would catch up with me pretty quickly, and I’m not that good at hiding. You’d have to sever contact with everyone you know and love. You’d have to change your identity. Both of those are worth more to me than money.

In fact, I had another friend who embezzled a large sum and is currently on the run. We expect never to hear from her again, and if we do we will turn her in. On the one hand, I understand her decision to avoid prison. On the other hand, I can’t fathom never speaking to my parents or sister again. I also can’t fathom spending the rest of my life looking over my shoulder.

Note: I really do have decent friends. Everyone knows a couple bad apples. Mine both just happened to involve theft!

Would You Take $10?
This is where it gets tricky. Most people would know not to take $10 million. That is clear theft. But what it’s a small amount? $10, $1, a dime? What do you do then?

I have had a bank make small errors like that on my behalf. Most of them time I left them alone because I knew the bank would eventually reverse it. I didn’t want to risk going into overdraft when they did.

I’ve also received an extra dollar or two in change at the grocery store and said nothing. I probably should have, but I didn’t.

The most recent error of the kind happened at the movie theater. We had a coupon for $6 tickets ($12 each normally), but this particular theater had a $2 surcharge. When the ticket seller ran our credit card, he only charged us for the surcharge, so our total was $4 rather than $16. We didn’t realize it until we got home, but we didn’t bother to go back and correct it. We probably should have, but we found a way to justify it to ourselves.

Where Do You Draw the Line?
So where do you draw the line? Do you always alert the bank to errors? Do you always return to the store to give back an overage? Would you take the $10 million and run?

Rebranding is not a new trick. You may recall that Philip Morris tried to rebrand itself as Altria because of all the bad press associated with cigarettes. Now GMAC bank is trying to rebrand itself as Ally Bank, an honest bank with no ties to the shiftiness of the economic collapse.

Why Ally Bank?
It’s simple: the word “ally” gives the impression that the bank is your partner, working with you to achieve your common goal of protecting your money. By using this as their name, they’re sending the message that you can trust them.

GMAC is only mentioned once on the site, then the rest is about their strong values and dedication to honesty.

New Ally Bank Features
With the launch comes a host of new offerings, including a no-penalty CD that you can withdraw from anytime, a traditional CD, a savings accounts, and a money market account. The interest rates are above the rate you’d find for a traditional brick-and-mortar bank, and about even with other online banks.

The biggest difference they tout is that they have no fees, and no minimum balances. And, in big capital letters “NO SNEAKY DISCLAIMERS.” Hmmm, why do they have to stress that so hard? Could it be because as an auto loan and mortgage corporation, they were pretty synonymous with sneakiness and miles of disclaimers?

Why Rebrand?
GMAC Financial Services only became a bank in late December of 2008, when they were on the verge of collapse and applied to become a bank so they could accept bailout funds. Following the stress tests last week, GMAC was informed that it needed $11.5 billion in additional capital, most likely from the government.

They’re now rebranding to distance themselves from the taint of both General Motors (which established GMAC as its auto financing arm, before expanding into mortgages, and from there into financial ruin) and the banking system collapse and bail-out. This is a way for GMAC to get a fresh start.

Like most banks, I found mixed reviews of their customer service, interest rates, and general practices online. I don’t think the rebranding was an attempt to hide poor customer service, but rather a response to poor public sentiment. Unlike GMAC, Ally Bank doesn’t automatically create negative impressions of bad cars and shady practices.

On the other hand, a rebrand is just a new name for an existing company. This doesn’t change their need for capital, it doesn’t change the people behind the bank, and it doesn’t change the corporate culture that resulted in financial ruin. They don’t issue mortgages, though, so at least it’s a start.

Only time will tell whether or not people buy into the brand. It really doesn’t affect your decision about whether or not to use the bank. It’s just interesting to see how a bank attempts to change its brand during one of the worst financial crises in history.

Don’t tell my husband, but I have a new love and its name is Everbank. Don’t get me wrong, I love him, too. But Everbank is something special. No, it’s not perfect for everyone. It doesn’t have some of the features you might want from an online bank, but it works for what I need.

A Bank that Sends Thank You Notes?
This has happened to me twice, both times after transferring in large deposits. I received a thank you e-card. It doesn’t take them much, but I appreciated them letting me know they appreciated my business. That’s certainly not something either of my other banks, both monstrously huge banks, have ever done. It makes me think that Everbank is willing to work a little harder to make me happy and keep me as a customer.

High Interest Rates
Everbank is a little different in that they don’t offer a traditional savings account. Instead I have a Money Market account. It is FDIC-insured, but it isn’t exactly the same as a savings account. However, that does mean they can offer a fairly high interest rate (high in relative terms. It’s still nowhere near the 5% of my childhood.) They also lock-in your rate for the first year you have the account, which is handy if rates fall after you open the account, as they did in my case.

For those of you familiar with ING Direct, the Money Market rate is about on par with their savings account rate, but since it’s a Money Market, there is a minimum balance of $1500, which ING doesn’t require. Their interest checking rate is higher than ING for low-balance account, but lower than ING for high-balance accounts.

Simple Interface
Unlike some of my online banking accounts, the site is simple. It’s not the most attractive or flashy, but it’s pretty easy to use. I do wish they had more online help, but their customer service department answers the phone quickly and has always been helpful for me.

Potential Issues
As with most online savings or Money Market accounts, there is a limit of six transactions per month. I believe this is a banking regulation not shared by brick and mortar banks, but I haven’t had a savings account in a long time. The checking account is unlimited, as most checking accounts are.

They can also be a bit slow to credit transfers. In my experience, it takes 4 days from the time I request the transfer to the time the money appears in my account. This is longer than I’ve seen with other banks, but I don’t mind horribly. It just means I have to plan ahead.

Note, I haven’t used them for anything else, so I can’t recommend them for mortgages, CDs, or checking account. I’ve only used the Money Market account and so far it’s been fabulous.

Adam commented on my post about how we save 25% of our income. “I am just in the process of getting married, and learning about the whole process of combining our finances.”

To help Adam, and any other couple, here’s a quick outline of the process. My husband and I agreed that we would set up a joint checking account after we got married. We could have set it up earlier, but we wanted to wait until after we had the piece of paper just to be safe. When combining your finances, there are a few things you must do as soon as possible after the wedding, and a few you can save for later.

Changing Names
In most states, you can change your name on the marriage license. In some situations, you must file a name change petition later. I didn’t change my name, so I didn’t have that hassle. The process is straightforward if the wife switches from First Middle Maiden to First Middle Husband’s-last or First Middle Hyphenated-name. A name change petition may become involved if you want to change to First Maiden Husband’s-last, as many women do.

Marriage Certificate
Whichever route you take, you must wait until you receive your marriage certificate to change your name on most accounts. If you change your name, order at least three extra copies of the certificate at the time you file the license. If you don’t change your name, one or two copies will do.

Driver’s License and Social Security
Your first step should be updating your driver’s license and social security file with your new name. You’ll also need to change your address with the DMV if you move after you marry. This process will take several weeks, so make sure you buy honeymoon tickets in your maiden name.

Joint Bank Accounts
Most banks don’t require you to provide a marriage certificate to set up a joint account. Simply go to the bank and tell them you want to change the names on the account. When we married, we decided to add me to his account and close my account because his account was drawn on a Southern California bank and mine was located in another part of the state.

Credit Cards
Changing the name on your credit cards may require sending them a copy of your marriage certificate, but some will accept a copy of a driver’s license as proof. Ask if you can add your spouse as a co-owner of the account. Most will fax or email you a form to sign and return. I had a better credit history, so we made my husband co-owner of two of my cards and an authorized user on the third, because they only allow one owner. He cancelled many of his own cards.

Health Insurance
If you plan to add your spouse to your plan and have employer-provided insurance, contact your HR department for the proper forms. If you have individual plans, like we did when we married, compare plans to find the new best rate for a joint health insurance account. We added my husband to my plan and chose a new deductible level. They didn’t require a marriage certificate because California recognizes domestic partnerships for all couples. Insurers in other states may have different requirements.

Life Insurance
Once you marry, your spouse is automatically your life insurance beneficiary, as required by law, but you should contact your insurer to file an updated form with current information.

Auto Insurance
We already had auto insurance from the same company, but opted to combine our policies to get the two-car discount. This was the only account that required a copy of our marriage certificate, but the process was simple. They sent us forms that we returned with a copy of the certificate and a week later we received our new cards. If you renew every six months, consider waiting until the policy is about to make the switch easier.

Investment and Retirement Accounts
You can choose to merge your investment accounts, or hold them separately. Retirement accounts remain separate. In both cases, you should file updated forms designating your spouse as the beneficiary. If you don’t, the original party listed on your account will be the beneficiary after your death, regardless of any directions included in your will.

Student Loans
By law, your student loans cannot be merged. This is for your protection because student loan debts die with you, unless there is another name on the account.

Cell Phone
Save money in a flash by switching to a family plan. You will have to go to your carrier’s local store to make the switch, but it’s easy once you get there.

If one of you owns a home, you may wish to add your new spouse to the title via a Quit Claim Deed or other title conveyance. Contact a real estate lawyer for guidance. Adding a spouse to your mortgage may require refinancing, so contact your bank for advice.

If you rent, you’ll need to add your spouse to the rental agreement. Contact your landlord to complete the process.

Be sure to add your spouse to any homeowner’s or renter’s insurance policies you have.

Miscellaneous Accounts
You can, if you wish, add your spouse to your cable, utility, and telephone accounts, but it’s not absolutely necessary. Most of these companies will speak to a spouse without having him or her on the account as long as the spouse has the account number.

This list of accounts seems like a lot of work, but it’s really not. Set aside an afternoon to make all the necessary calls, and prepare a form letter that you can customize. Some accounts should be updated immediately, but most of the rest can be tackled over the first few months of your marriage.

As part of financial literacy month, I decided to really think about the various ways my parents taught me about money. Some of them were active lessons, others were things I picked up throughout my childhood. Those lessons stuck with me and form my own attitudes and actions towards money.

My Piggy Bank
Like most kids, I started with a piggy bank. Every time I got an allowance or money as a gift, it went into the piggy bank. I learned how to count my money and then they’d take me to the store to buy small things with it. Really small – nickel candy and the like. Once I saved up enough for a Peaches & Cream Barbie doll – I still remember that doll, with her beautiful peach ball gown.

My Savings Account
When I was five, they took me to the bank to open my very own savings account. It was a very exciting day. I handed my cash over to the woman behind the desk and she gave me a passbook with my new balance stamped inside it. It was a tangible lesson about how money grew. Back then interest was around 5%, so my money really did grow. I loved that passbook – and I hope kids today have them. Looking at an online balance doesn’t seem as tangible. I was a minor and didn’t have an SSN yet (not yet legally required for all children), so my dad was the primary on the account.

My ATM Card
ATMs were available when I was in my early teens. I was able to take money in $10 increments. My parents got me the card and I learned how to withdraw money myself, but I also learned that I couldn’t withdraw all of it at once. It was a tangible lesson that money is finite.

A Shoplifting Lesson
I’m ashamed to admit it now, but I had “sticky fingers” when I was small. One particular instance I recall was when I stole a nickel candy from the box near the register. My mom saw me eat it and took me back into the store to pay for it with my own money and apologize. It was an important lesson in morals, as well as a lesson in learning to think about whether that candy was worth paying for. It cured my sticky fingers pretty fast.

Dinner Table Discussions
In addition to those physical lessons, I learned various lessons about money around the dinner table. My dad told me when I was about 15 that my generation would not be as well off as his. I scoffed, but he was right – my generation has to work harder to gain the stability his had at younger ages.

Money was never a taboo topic at the table. We discussed what things cost, what we as a family could afford, and why we couldn’t. We were never the first family to have something. We won our microwave in a Christmas raffle and we didn’t get a VCR for several years after they came out. We only had cable because there was no antenna reception in our neighborhood. When my dad was laid off, we discussed how to afford things and where we needed to cut back. My parents never shielded us from financial concerns.

My First Checkbook
When I was 16 and had my first job, I decided I wanted my first checkbook. At the time, my original bank wouldn’t give me a checking account, so I switched to the Bank of America next door and got my own fee-free checking account with ATM card and checkbook. For the first time, my dad’s SSN was not on the account.

By late high school, I’d learned most of the important lessons that I carry with me today. I have never bounced a check. I hate debt and tried to pay it off as quickly as possible when I had it. I think carefully about how to spend – maybe too carefully. My dad is frugal, and that was passed on to me. When my relatives hear about this blog, not one of them is surprised.

How did you learn about money? What were your most important lessons and experiences? Was money a taboo topic in your family?

Yesterday Citibank emailed me and asked me to share this free money opportunity with you:

Starting this month, Citibank will be offering customers up to $225 in merchant gift cards through the Thank You Network for opening a new checking, money market or credit card account.

If you’re in the market for a new bank because your old one has closed or was bought out, this is a great chance to get free money for something you needed to do anyway.

It appears that you earn points through the account activity, and those points can then be redeemed for merchant cards. If you want to learn more, go to Thank You Network.

Now that you’re confident your accounts under $100,000 are safe and you don’t need to pull your money out of the bank, you might be wondering how much money you should keep in any bank.

Keep Less than the Maximum Insured Amount
Personally, I wouldn’t keep anywhere near $100,000 in cash anywhere, unless it was part of the down payment for a house. Sums that large should be invested in order to earn a larger return than the paltry 1-3% you can earn on a savings account.

However, if you do need to keep a large amount in cash, don’t put more than $90,000 in a non-retirement account at any financial institution. If you earn interest, you could quickly go over $100,000 if you have more than that in an account. By keeping no more than $90,000 in an account, you have some room for growth.

Disperse Large Savings Between Several Banks
One of the victims of the IndyMac failure was a man who’d put his life savings of more than $200,000 in five CDs. He’d been told he could protect it by adding the names of other family members to the account. He lost nearly $30,000 in the collapse.

However, for short-terms needs, I’d put $80,000 in three different banks – note, that means different financial institutions, not different branches of one institution.

Invest Large Amounts You Don’t Need in the Short Term
Equity and most bond investments are not insured, but they offer a better return than you’d receive from CDs or cash savings. Unless you need a large amount of cash in the next three years for a home purchase or college, invest it. If you’re not sure how aggressive you should be in your investments, seek the advice of a certified financial planner who charges by the hour (rather than through commissions.)

Check Yearly to Ensure You’re Not Over the Limit
Mark a date in your calendar every year to review all of your bank balances and shuffle the money around if any one account is at or near the insured limit. That way, if something should happen, you can relax while everyone else rushes to the bank in a panic.

These suggestions are simple on the face, but they can go a long way towards ensuring that your money is fully insured or working hard for you if it’s not insured.

Bank FailureWhen IndyMac Bank closed, the news featured photos and video of crowds of people waiting outside the bank to withdraw their money. Most of them had less than $100,000 in the bank, and it reopened as a Federal bank the following Monday, so there was really no reason for the rush other than fear. So when should you pull your money out of the bank and when should you avoid the panic and the rush?

Close an Account You Tend to Forget
If you have several small accounts that go long periods without activity, it’s best to close them and move the money to a few larger accounts. States have become more aggressive at shutting down closed accounts and then using the money until you claim it. Why give them a loan?

Close Accounts at Banks in Other States
If you’ve moved permanently out of state and your bank doesn’t have branches where you live, close the account.

Withdraw Funds in Excess of $100,000
One of the main problems with the IndyMac closure was the confusion about FDIC insurance. Some people mistakenly believed they could increase the insurance limit by adding 3rd and 4th people to the accounts but not giving them the full rights to the account. Others thought that business accounts were protected for larger amounts. Still others thought they could open several accounts of the same type and have each insured up to $100,000. According to the FDIC website:

  • Single Accounts are insured up to $100,000 per depositer per bank. So, you can have a savings account and a checking account worth a total of $100,000 combined in order to be fully insured.
  • Joint Accounts are also insured up to $100,000 per depositor per bank. So, if you and your spouse have $150,000 in a joint checking account, and $70,000 in a joint saving account, then you’re only insured up to $200,000. Note, that only authorized users are insured. Account holders in name only aren’t covered.
  • Retirement Accounts (IRAs, Keoughs, and two others) are covered up to $250,000.
  • Revocable Living Trusts are insured up to $100,000 per owner and beneficiary (so a couple with two children would have their trust ensured up to $400,000 if both couples owned the trust and both children were the beneficiaries.)

If you have more than $100,000 in any single bank, withdraw the overage and deposit it in a different financial institution (not just at a different branch of the same bank.) Even if the account isn’t insurable to begin with, I’d worry about having that much cash in any one place and would spread it around to be safe.

If you have less than $100,000, your money is safe and your bank will continue to operate even if the FDIC seizes it. The FDIC typically engineers a sale to another bank quickly, and most people don’t even notice the change.

Withdraw Funds If You Keep Large Amounts in One Bank and It’s Looking Iffy
If you start to hear rumblings about your bank, and you operate a business or keep a large amount of money in the bank, you might want to withdraw it before the bank is seized. You can keep tabs on the safety of your bank with Bankrate’s Safe & Sound ratings. If it has a CAEL rating of 4 or 5, or a Bankrate star rating of 1 or 2, you might want to switch to a different bank.

You should read their full report before rushing to the bank, though. You may decide the low rating is unrelated to their ability to keep your money safe.

The quote I heard most often during the IndyMac collapse was: “I know it’s safe, but I don’t want to take a chance.” They were reacting with fear stoked by dire news warnings rather than knowledge. Two other banks closed that week and the transition was smooth. So, decide know when you should withdraw your money and then stick to it if something happens. If you want more reassurance, use this insurance tool at the FDIC to confirm that your money is safe after a collapse.

I bank with Bank of America, and have another account with Washington Mutual. There have been occasions where both banks have nearly driven me to quit them and find some new way to manage my money. In the end, they’ve both offered features that convinced me to stay. Nevertheless, I keep my list of deciding factors around in case one of them finally pushes me over the edge.

Free Online Banking

Whichever bank I choose must have completely free online banking. That means no fees for online bill paying. Why would I pay my bank a monthly fee in order to make their job easier? If the service isn’t free, I’m not using it.

Paperless Statements and Bills
Bank of America allows for completely paperless account statements and credit card bills, while Washington Mutual insists on mailing me paper statements. Since I don’t use my WaMu accounts often, I live with it, but if I was switching all my banking over to one institution, then the paperless option would be a major deciding factor.

Free Savings Account
If a bank charges me a fee for a savings account, then it’s not getting my savings. It’s as simple as that. There are too many free banks to make it worth paying someone to hold my money. With interest rates as low as they are, some fees actually cost more than anything you’d make off the account anyway.

Convenient ATMs
Numerous convenient ATMs are the primary reason I stick with WaMu and BofA. They’ve pretty much cornered the market in LA. Although there are cheaper banks, I like always being within a quarter mile of an ATM. However, BofA recently instituted a change to their ATMs that would drive me away if I frequently deposited checks or cash. The new ATMs duplicate the inconvenience of visiting a human teller without the perk of actually speaking to a human. In case you haven’t heard, the deposit envelopes are gone. Instead you stick your wad of cash into the machine for counting, and feed checks in one at a time. Not only is that hugely inconvenient, but it isn’t very safe.

Free Checking Account
I use the WaMu account for my infrequent business checking because it’s 100% free (except for the checks, which I almost never write.) My BofA account is most definitely not free, but they waive the monthly fee with direct deposit. Since most employers now provide direct deposit, the fee isn’t an issue for me. If neither my husband nor I had direct deposit, then I would be looking for a free checking account.

Helpful Customer Service
Stop laughing! It is possible to find good customer service from a bank. I’ve actually had good service from both WaMu and BofA. My best story happened about a year ago when my auto insurance company failed to process our electronic payment on time. I called the insurance company to ask why our payment had been received, but not applied to my policy. They told me they didn’t know and to send another payment. When, I refused to pay them again, they suggested that I stop payment on the original payment – a payment they’d already received!

Finally, I got the woman’s name and then called the bank. While I waited on the phone, the bank rep called the insurance rep, faxed them proof of payment and proof that they had confirmed receipt, had them reinstate the insurance, and had the late fee removed. We also discovered the problem: the insurance co. can’t accept electronic payments, so the bank has to mail a check. We pay that bill by personal check now, but the experience has left me with a warm spot for my bank and a cold spot for my insurance company.

I know many people who have had bad experiences with both of my banks, but so far I’m not one of them. If your bank routinely angers you or doesn’t provide the services that matter most to you, it’s time to get a new bank. With all the options out there, there’s no reason to stick with a bad bank.

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