Student Checking Options
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While a free online savings account is certainly a good idea for most students, unquestionably a checking account is most important — a checking account allows students to access money at ATMs, write checks for dues and fees, buy products on a debit card, and more.
The last thing a college student wants to worry about, though, is their checking account. Unfortunately, you’re always going to be responsible for making sure that you have enough money and not overdrawing. However, there are enough checking options out there that a student should never have to worry about maintenance or service fees — not monthly account fees, not check processing and image fees, not any of it.
Some Things To Consider
In my experience, there are a couple of important questions to consider when picking the right student checking account:
- Where are the ATMs? Probably one of the most important factors; with most accounts, it costs money to use an ATM that does not belong to your bank — and those fees can add up. Pick a bank that has plenty of ATMs around where you frequent (school, home, work, etc.)
- What are the fees? Preferably, there should be as few fees as possible. Without question, if you behave yourself, you should not have to pay any fees. However, if you overdraw your account, use a non-bank ATM, etc, expect to pay regardless of where you go.
- Where are the branch locations? Besides ATMs, are there convenient branch locations if you need to deposit a check?
- Can mom and dad make deposits? Some bank accounts make it exceptionally easy for parents to transfer money into their child’s checking account — for example, if you have a Bank of America CampusEdge checking account and your parent’s have a Bank of America account, they can easily transfer money into your account. Almost all banks, however, will let a parent deposit money at the branch if they know the account information. Make it easy on them!
In reality, given that most major banks offer similiar student checking accounts, ATM/branch locations are likely to be the most important factor.
Student Checking at Major Banks
Almost all of the major banks offer some sort of checking account designed specifically for students; these accounts are nice as they are usually fee-free, low maintenance, no minimum balances, etc. — in other words, perfect for a college student. From the bank’s perspective, it is the chance to get a young customer for life (a relationship they are dying to exploit). Without a doubt, the benefit of using a checking account at a major national bank is that they have branch locations and ATMs everywhere — whether you’re at school, home, traveling, or more, it is usually not hard to find a Bank of America, Chase, Citibank, etc. ATM.
Of the major banks, Bank of America’s CampusEdge Checking account seems to be one of the best. In brief: no minimum balance, online access, plus a one-time fee refund if you overdraw the account. From the fine print:
Your account will initially be opened as CampusEdge® Checking with no monthly maintenance fee. After the first 5 years, your account will be converted to MyAccess Checking with no monthly maintenance fee. Student status will be validated upon account opening.
So unlike many other student checking accounts, they won’t convert you to a checking account with fees automatically after a few years, which is nice, as your bank account classification will likely be one of the last things on your mind when graduating.
Chase also offers their own checking account designed for both college and high school students. Standard details: no monthly service fee while a student, for up to 5 years, online access and debit card, etc. Unlike Bank of America, Chase requires you to be under 24 years old to get the checking account, and also does not spell out what happens when you reach your expected point of graduation.
Finally, Citibank offers their own Student Checking account, although it can be somewhat hard to find on their website (try going to http://www.citibank.com/campus/). Again, it is similar to Chase’s: no maintenance fees, online banking access, debit card, etc. You also get to earn ThankYou Network points for debit card purchases. Citibank is fairly explicit about what happens after your expected date of graduation: you get converted to the Citibank Account, which has fees under certain circumstances.
Other options: Local, Cyber
There are other options besides major national banks:
- Go Local - Many local banks cater to area college students by offering very attractive, simple checking accounts for students. Depending on your circumstances, these might be a good fit. However, keep in mind that it can be difficult using a local-bank checking account when you are away from the area. Do you have a future with the bank?
- Go Online - This will likely be covered more soon in a separate post, but there are several online-only checking accounts, including one offered by ING Direct called Electric Orange. These take the branch location out of the equation and often involve you depositing checks via mail. Still, with a little flexibility they can be an attractive option.
Regardless of what you go with, just make sure you choose a checking account that will not add stress to your life — money can be difficult enough to deal with in college without having to worry about the bank complicating things. Have fun!
Is that sketchy ATM safe?
You probably know the type of ATM that I am talking about — that skinny, stand alone ATM that sits outside of that neighborhood convenience store and looks like you could probably pick it up and take it with you . I walk past one of these every morning, always reaffirming my vow never to use it.
I have always wondered, however, just how safe these ATMs really are. As a general rule, I try to always use my bank’s branch ATM, but sometimes that is not the best strategy. Besides, I have been considering opening a checking account at a bank that refunds ATM fees. So are these non-branch ATMs significantly less safe?
Confirming The Obvious
As if answering my question, CNNMoney.com ran an article last month, following a breach of Citibank ATMs at 7-Eleven stores, entitled “How safe is your ATM?”, where on the issue of the safety of independent and stand-alone ATMs, they note that:
…an ATM’s safety depends on where it is. If it’s at a bank, an ATM is somewhat safer than it is in a public place, such as a ballpark, a train station or a convenience store.
“You should never use ATM machines at convenience stores if you can help it because those are much more susceptible to tampering,” added Avivah Litan, a security analyst with the Gartner research firm.
The argument being that bank ATMs are safer since they are usually better protected and are under the watchful eye of trained bank employees. Unfortunately, the CNNMoney article is short on both statistics and on suggestions for protecting yourself. The few suggestions the article offers are:
- Avoid convenience store ATMs if you can
- Report any suspicious activity
- Avoid using your PIN number as much as possible (so select “Credit” when you’re making purchases with your debit card)
- Change your PIN number regularly
- Monitor your statements carefully.
Of course, only the first three suggestions really help protect you from compromised ATMs; the other suggestions are simply meant to minimize the damage of being compromised.
The State of the Problem
It is surprisingly hard to find statistics on ATM fraud, however I was able to find this article from BankRate.com in 2003 on ATM skimming. Among the interesting facts:
- At the time of writing (2003), there were approximately 360,000 ATMs nationwide and only half of them belong to banks.
- ATMs with swipe readers are more susceptible to being compromised, as opposed to ATMs where you slide in your card.
- Their additional suggestions include: look at the ATM before using it, don’t use ATMs with unusual signage or language, and contact your bank immediately if your card is not returned
Card skimming — where thieves don’t interrupt your transaction, but rather attach a device that copies your credit card information as you slide it — is unfortunately increasingly common; in fact, the DVD Kiosk service Redbox recently warned customers about potential credit card skimming on its Redbox devices.
I used to think that I could easily identify a card skimmer attached to an ATM, but this page from the University of Texas Police Department (found on Flexo’s post on skimming over at Consumerism Commentary) surprised me with how hard it can be to identify a skimming device. I’ll have to be more careful!
Skimming
If all of this is not scary enough, here is one final story from MSNBC that should drive this all home.
The article tells the story of a Secret Service investigation into a group of thieves that purchased fifty ATMS (remember, half of those ATMs out there aren’t owned by banks!), connected them to the ATM network so that they would function properly, while at the same time storing the information on users. As a result, over 21,000 accounts at 1,400 banks were compromised resulting in losses of almost $4 million. These crooks simply set up their own ATM and let users walk right into the trap. It is such a simple idea — why hack someone else’s ATM, when you can simply put up your own?
While the MSNBC article notes that banks are taking steps to make the system safer, I think its still worth asking — can you really trust that generic looking ATM?
My Check-Up: What to do with my Savings
Continuing my financial check-up, its time to decide what to do with my savings. I think using an online savings account is almost a no-brainier — online savings accounts offer significantly higher interest rates (right now around 3.0 - 3.5% APY), are easy to open and maintain, and by-and-large are fee-free, safe, and liquid. I have been very happy with my high-yield online savings account for years, but lately I have been wondering if I should move account elsewhere in pursuit of better rates.
My Situation
Several years ago I opened up my first online savings account at Emigrant Direct, and that is where the majority of my savings has been ever since. When I opened up the account, Emigrant Direct was one of the few major online savings accounts available, and their rates were very competitive. These days, however, there are many more banks offering high-yield online savings accounts, and Emigrant Direct has consistently been about 0.5% behind the highest rates.
My thoughts on Emigrant Direct? By and large, I have been happy with them. Honestly, I have almost nothing to say about them, which is exactly they way it should be with an online savings account — the website is visually and functionally simple and easy to use. Since I try not to touch my savings often, I don’t require many fancy features. Except for a few kinks when they updated their site a year or two ago, I have had almost no problems with their website. Transfers to or from my Bank of America checking are also quick, which is nice. Currently they offer 3.0% APY.
I also have an ING Direct savings account which I opened a year ago, and while I have not moved the majority of my savings over (since they are currently offering the same 3.0% APY as Emigrant Direct), I have been impressed with how easy, responsive, and friendly the ING Direct website is — it really is a great choice for those that might be easily intimidated.
The Question: To Rate Chase or Not To Rate Chase
The difficult question with online banks, though, is whether or not it is worthwhile to constantly move your money around to chase the highest interest rate. The rates these banks offer fluctuate, especially when the Federal Reserve adjusts interest rates, and they are never guaranteed at any given level. While HSBC Direct may offer one of the highest rates today, tomorrow another online bank might. In my own experience, I have witnessed Emigrant Direct slip from being a rate-leader to a rate-follower. So should you stick with a bank that is no longer out front?
Some say you should always chase the highest interest rate. Over at Money Blue Book, Raymond described how he actively manages his bank accounts to maximize interest earnings. This is not nearly as difficult as it sounds, as most online savings accounts will transfer money for free electronically within a few days; furthermore, account aggregation services like Yodlee and Mint allow you to monitor all of your accounts in one place. Combine that with the fact that there is virtually no cost to opening as many online savings accounts as you want, and rate chasing no longer seems that crazy.
On the other hand, some suggest it is more complicated. J.D. over at Get Rich Slowly suggests that customer service and other factors are worth considering in addition to interest rates. He points to the example of a specific bank that many of his readers signed up with and later were upset with over its poor customer service. While that is certainly the exception rather than the rule, it does suggest that other considerations might be worthwhile. Again, it seems that features like customer service and account fees, etc. are critical to consider, but may not be enough to whittle down to a final choice.
Beyond other considerations, some suggest that, from a numbers perspective, the money gain is often not there. Jim over at Blueprint for Financial Prosperity stresses that the amount of money you are chasing is often just not significant enough to make it worthwhile when you stop and look at how much money you stand to gain in interest combined with any opportunity costs in the transfer. For one thing, rates are not guaranteed — they can change at any time, and different banks change by different amounts. Combine that with the fact that every time you make a transfer, you lose a day or two worth of interest, it suddenly becomes far less enticing.
Consider this: The difference between ING Direct (3.0% APY right now) and HSBC Direct (3.5% APY right now) is 0.5% APY. That means, for every $1,000 in savings, the difference between what you would earn at HSBC and ING Direct is $5. And that is before you take into account any taxes. That is a pretty small amount, even if you have thousands of dollars in your account.
My Decision
So back to my own situation. For a while now, Emigrant Direct has not been offering the highest rate, and I have to admit that it has been bothering me. But as I have sat down and evaluated the situation, the interest I am losing out on is just not that great at all – $5 for every $1,000.
As a result, I have decided not to open a new account at HSBC or FNBO Direct for now. It is just not worth the few dollars I would gain. I have, however, decided to move more of my money over to ING Direct from Emigrant Direct, which in addition to offering the same interest rate and a very intuitive webpage, also makes it incredibly easy to set up subaccounts for targeted savings. I am not going to close my Emigrant Direct account, as they have been good to me, but I am going to change my focus. However, if ING Direct falls even further behind the rate leader, I may consider moving my savings in the future.
I think with all of this discussion of rate chasing, there is really something to be said for simplicity - the simplicity of not having to constantly move money around. One of my goals for the last few weeks has been to cut out a lot of my extra bank accounts in favor of a more simplified system, and I think I am far happier as a result.
So what do you think? Do you chase interest rates?
Bookmarked: Carnivals and More - August 24
Carnival
Kevin over at No Debt Plan hosted the 165th Carnival of Personal Finance: College Football Edition, which included my post on beginning my own financial check-up. Thanks for hosting!
Bookmarked
These are some of the articles that I particularly enjoyed around the personal finance blog world lately:
- Daniel over at Young and Frugal continues his series on how to get a job, focusing most recently on honing your networking skills. I have always found networking as a general concept to be a bit intimidating, so this was a helpful list of tips for me.
- Ron at The Wisdom Journal has a very timely post on housing contracts for college students. He is absolutely right that housing contracts are serious business, and provides some great things that college students (and parents!) should keep in mind.
- Trent at The Simple Dollar came up with an impressive fifty ways you can have fun by yourself. Friends are all well and good, but sometimes you just want to be by yourself.
- MoneyUnder30 has ideas for breaking the expensive habit of eating out. I have to admit that my habit is probably more social than anything else — still trying to break it though!
As always, have a good weekend everybody!
Trying Out T.GI. Friday’s New Rewards Program
Yesterday I met up with a few friends for drinks at the local T.G.I. Fridays, and for the first time since they ended their GoldPoints program earlier this year, I was able to make use of their new loyalty program — Give Me More Stripes.
The Loyalty Program
Just like its predecessor, the Give Me More Stripes program rewards you primarily based on the amount of money you spend at T.G.I. Fridays. In a nutshell:
- Earn one point per dollar, simply presenting your card at the time of the bill.
- Get a free $8 coupon every one hundred points. Nice and simple — every time the counter passes a hundred, you get a free coupon. No limits to the number of times you can do this.
- When you earn the free $8 coupon, you will receive the coupon via email, and have to print it out and bring it. This is one area where the new program is not as nice as the old one; with the old Goldpoints program, you could simply present your card and they could deduct rewards from it.
- When you sign-up, you get two goodies: a “skip to the front of the line” certificate, and a one-time coupon for a free appetizer. Both of these perks are one-time sign-up gifts.
- You also get to choose a personalized card when you sign-up, that not only has your name on it, but also your choice from several card designs. This may seem like a silly perk, but its kind of fun to pick your own.
- Supposedly, access to other promotions and offers as they come up, although in the months since I signed up, as far as I know, I have not received any of these offers.
- Best of all, of course, it is free.
Like most customer loyalty programs, there really is little reason not to sign-up, unless you have no reason to expect you’ll ever go back.
Fair warning, though: they don’t make this particularly obvious on their website, but your points will expire if you do not have any activity for more than twelve months. Fair warning.
That being said, if you make use of the program properly, it can be pretty rewarding, since the $8 coupon effectively gives you a chance to have an 8% discount. Combine that with a credit card that earns 5% back at restaurants, and all of the sudden those T.G.I. Fridays meals are looking about 13% cheaper.
The Issue of Alcohol
Of course, T.G.I. Fridays is not simply a restaurant — they are also a bar, and you may be wondering if that large bar tab will earn you rewards as well. Here are the rules concerning alcohol:
- If your tab only contains alcohol, it cannot get credit. The FAQ makes this sound like it has to do with some laws concerning rewarding alcohol consumption. Makes sense, I suppose.
- However, If your tab contains any food, it can get credit. So if you spend $50 on mixed drinks at the bar, no points. If you spend $50 on mixed drinks and a $4 appetizer, points for everything.
- Similarly to the “alcohol only” rule for earning, you cannot use your $8 reward on alcoholic purchases. It is a little unclear as to whether or not that rule refers to purchases that include a food item, though.
All-in-all, those rules concerning alcohol seem pretty fair to me.
The Downside
The only major downside to the T.G.I. Fridays program, though, is similar to the downside with the Best Buy Rewards Zone — time limits on the rewards. When you cross 100 points, you will receive the $8 coupon via email, and you will have to use it within thirty days. The sign-up perks (cut-in-line, free appetizer) have similar time limits. One month is simply not a long time, and I can see that many people are likely to forget to use their certificates in time. I think this is a poor call on T.G.I. Friday’s part, as it almost seems like they’re designing the rules for people to fail.
At least for now, there may be a trick around this — if you do not have your card with you, you can go online at a later date and submit a request for credit (you’ll need a bunch of information on the receipt, but the one time I have done it, it was an instant credit — no manual verification required). I am not quite sure how long you have to request credit, but if you are close to 100 points but don’t want the reward yet, you may be able to hold off on crediting the points that put you over until you are ready to get the certificate.
All-in-all, for a restaurant I was likely to go to anyway, I am fairly happy with their loyalty program. Anyone else have any experiences?
Online Savings Accounts — Is Rate All That Matters?
Last month, a friend of mine was looking to move her savings, and I immediately recommended that she choose an online high-yield savings account — specifically ING Direct. Besides offering a competitive 3.0% interest rate and a $25 sign-up bonus, ING Direct also has a very intuitive, easy to use system. Seemed like a smart choice for my friend.
However, a few days later, my friend came back to me, telling me that a third mutual friend had told her that ING was not the best choice, as HSBC offered a higher interest rate, and that she should go with them. So is the interest rate the only factor to consider when opening an online savings account?
Major Online Savings Accounts
The online savings account landscape has changed dramatically over the past couple of years, and there are now numerous major players:
- A Rate Leader: HSBC Direct - http://www.hsbcdirect.com/ - offering 3.50% APY as a promotional rate.
- A Rate Leader: FNBO Direct - http://www.fnbodirect.com/ - offering 3.50% APY
- E*Trade - http://www.etrade.com/ - offering 3.30% APY
- ING Direct - http://www.ingdirect.com/ - offering 3.00% APY
- Emigrant Direct - http://www.emigrantdirect.com/ - offering 3.00% APY
* Note that these interest rates are current as of the date of this posting — these rates are almost certain to change with time!
In addition to that list of major online-only banks, many large national banks are also offering competing high-yield savings accounts, such as Citibank with the Ultimate Savings Account, although most of the accounts offered by these major national banks are not nearly as attractive as those offered by the online-=only banks listed above.
Does anything besides interest rate matter?
You might be wondering — how on earth do you pick which online savings account to go with? That is a fair question. The Savings Toolbox recently took a look at how to compare online savings accounts, suggesting you look at interest rates, amount limitations, customer service, fees, transfer limitations, ATM card access, and new account bonuses. All are definitely important things to consider, but unfortunately most of those banks I mentioned have similar fees, limitations, and more – so while you can use those factors to weed out the bad seeds, you’re likely going to find yourself with a small list of the online banks which appear largely equal except for interest rate.
Bank stability has never been very important to me. This is a hot topic right now with recent bank collapses, and there are certainly websites (like Bankrate.com) that evaluate the health of a bank. However, given that all of these accounts are FDIC insured up to limits that I come nowhere close to reaching, I rest easy. Even if my bank failed, I would only be away from my money for a day or two at most — not a big deal.
So what can you use to compare them, besides interest rates? Customer service is important, but most banks have decent customer service, and a quick search on the internet will usually identify any banks with customer service problems. Besides, you are unlikely to need to interact with customer service that often; usually, the only time I find myself calling my bank concerns fees, and most online savings accounts are largely fee-free. Given the very simple tasks that need to go with an online savings account, and that most of these accounts are associated with very reputable banks, I am not too concerned about customer service.
Personally, I think website functionality is probably the only other differentiating factor at which you can look. Some are more intuitive than others (ING Direct), while some are deceptively simple (FNBO), and some offer some pretty unique features (such as subaccounts at ING Direct — more on this later). While it is true that you are unlikely to need to interact much with your online savings accounts, minor differences in how responsive or how many clicks are necessary to perform a task can make a difference.
So go with the interest rate?
All things considered, though, interest rate should probably be a key deciding factor when you open an online savings account, if only because there is so little else to differentiate. A lot of other bloggers try to evaluate minor details of online banks, but a lot of these points often seem trivial. If one of the online banks has a feature or interface that speaks to you, you should go with what is most comfortable. Otherwise, I would follow the money. For example, many other bloggers argue that ING Direct’s simple interface and ability to open sub accounts makes it worth choosing over the slightly-higher-interest competitors. If that is a compelling argument to you, ING Direct might make sense despite its slightly lower interest rate.
The beautiful thing about online savings accounts, though, is that there is only a marginal opportunity cost to opening them (and virtually no monetary cost) – usually no minimum balances, no fees, etc. So if you do not like the bank account you go with, it usually is not a big deal to open up a new one somewhere else.
Why I Recommended ING Direct
If ING Direct has a rate that is 0.50% lower than HSBC Direct, why then did I recommend ING? First of all, I truly believe that ING has a very intuitive and friendly attitude that makes opening, using, and maintaining an online savings account easy and fun. For someone who is very comfortable banking online and moving money around, I might not recommend ING Direct. But for those who are uncomfortable or who have concerns, ING is great — there is a reason so many people applaud ING Direct on the internet.
Furthermore, to refute my friend’s interest argument, I pointed out that if you only have $1,000 in your savings account, it would take five years for the added interest from HSBC to surpass the $25 sign-up bonus at ING direct. Let’s be honest, the difference between 3.0% APY and 3.50% APY is just not that great.
That being said, it does not seem worth spending too much time trying to decide between ING Direct, Emigrant Direct, E*Trade, HSBC Direct, FNBO Direct, etc. — they are, on some level, all very similar with very similar interest rates. I spent a lot of time trying to figure out which one was best for me, when in reality any of them would have sufficed.
How did you choose your savings account? What is important to you?
Check-Up: Time To Close Some Accounts
Enough is enough — I have too many bank accounts. This has been something I have been somewhat aware of for a while, but it was not until I recently started reevaluating my personal finance choices that I decided it was time to do something about it.
So, partially inspired by Clever Dude from earlier this year, I have decided to go through and close many of the bank accounts that I am no longer actively using.
Why Close Accounts?
The rationale for closing some of my bank accounts is pretty simple:
- Too Much of a hassle — Many of these accounts require some sort of activity to remain free of maintenance service fees; while I have done a good job of staying on top of them up until now, it is inevitable I am going to slip up at some point. It has become too difficult to keep so many accounts fee-free.
- Too confusing to track – Even using a website like Yodlee or Mint, it is difficult to keep track of money spread across so many accounts. Many of my dormant bank accounts require a few hundred dollars to be kept in them, and as a result it can be difficult to know exactly where all of my money is.
- Too complicated — Finally, even setting aside any concerns over fees or tracking, it just makes things feel complicated to have so many accounts. I am hoping that closing a few of these accounts will result in some much needed finance simplification.
Any Reason Not To?
Before embarking on this task, I briefly considered whether there were any reasons to keep some of these accounts open, and two reasons came to mind. First, it is nice to have a variety of banks you can use for branch services or ATM access for free. Sometimes you need quick cash or to deposit a check, and having bank accounts open at the major national banks can help make this easier. Second, it certainly doesn’t hurt to keep a relationship with many of these major banks, as you never know when it might come in handy.
Also, as a commenter pointed out in a previous entry, it might not be a bad idea to take some of the free accounts and use them for some sort of targeted savings or spending. This is not a great solution when you are dealing with accounts that have potential fees, but is a very good idea to consider for accounts that are completely free. You already have the account, why not use it if you can?
My Situation
Those reasons notwithstanding, I think it is in my best interest to close some of these accounts. Many of the bank accounts I have active were opened for sign-up bonuses or promotions and have outlived their purpose, especially the instances where I have multiple accounts at the same bank.
Currently, I have:
- Over nine checking accounts at major national banks, including more than one checking account at two different banks. I plan on keeping my accounts open at Bank of America, Citibank, and Chase, as I like the branch access, but the rest are likely to be shut down.
- Two online savings accounts. Since these have no minimum balance, instead of closing one, I am likely to just keep a few dollars in it. While I am not a fan of rate chasing, I do not see any harm with leaving a few dollars in an account to keep it open.
- Two savings accounts at traditional banks. These were both opened for promotions, and have since outlived their usefulness; the interest offered is pitiful compared to what you get at someplace like HSBC Direct or ING Direct. No point whatsoever in having them.
Closing the Account
I am the first to admit that I am not a big fan of having to interact with customer service agents at banks, as I do not like being pressured into trying to change my decision. I guess I am a bit of a coward in that regard. Especially given that I am not in a particular rush to close these accounts, I have opted to send a written request to most of the banks.
While the letter varies depending on circumstance, I usually follow a general template. This is the letter I used when closing two of my three accounts at a particular bank.
At your earliest convenience, I request that you close the following two accounts in my name:
- Savings Account XXXX XXXX XXXXX XXXX
- Checking Account XXXX XXXX XXXXX XXXX
As part of this consolidation, please transfer any remaining funds in those two accounts to my primary checking XXXX. My debit card should remain active and attached to my primary checking. Also, please insure that the scheduled monthly transfer from my checking to savings ceases. At this time, all automated deposits into these two accounts have been halted.
Please note that I am closing these accounts simply because I no longer have a need for the extra accounts; I remain quite happy as a customer.
I appreciate your prompt attention to this matter.
In instances where I am closing my only account at a bank, and therefore can’t transfer my money anywhere in the bank, I usually transfer as much out as I can before the request, and then ask that they issue me a check or money order for the remaining account to my home address. While I realize that doing this by writing is not the most expedient way of closing accounts, it is the easiest for me and should result in it getting done within a few weeks.
A Happier Life?
My hope, then, is that by taking these steps, I will be able to stay on top of my active bank accounts much better than in the past. Less paperwork, especially around tax time, is definitely a good thing. Simplification.
So how do you handle extra bank accounts? When do you choose to close one as opposed to keeping it open?
Getting Around New York City
During my trip in New York City last weekend with friends, while it is certainly true that we used a few cabs to save time, by and large we did the frugal thing and tried to combine as much walking and subway usage as possible.
Easy Tip: Walk
I think this is perhaps one of the best pieces of advice I have when it comes to New York City — walk as much as you can! It is true that the subway can get you almost anywhere pretty quickly, and it is also true that there are going to be cases where walking is simply impossible. That being said, especially in Midtown and near Times Square, there is simply so much to see, you are going to miss out by taking the subway. Not only is it good exercise, but you get a much better feel for the city.
So before you take the subway or hail a cab, take a moment and consider whether you can walk it. If you think you might be able to, go for it! You’ll see more of the city, and you’ll likely be surprised at how quickly you can walk around.
The Subway: Pay-As-You Go or Unlimited 7-Day?
My riends were each in New York for somewhere between three to four full days, and one source of discussion was whether it was a better idea to buy an unlimited seven-day subway pass, or a pay-as-you-go card. The Subway costs a flat $2 each time you enter, while the unlimited seven-day pass is $25. I somewhat stubbornly insisted that it was a better idea for me to go with the pay-as-you-go option.
I think in hindsight, I was wrong. Even though I was only there for three days, I think I probably used the subway more than twelve times, in which case it would have been a better idea to buy the unlimited pass. If you consider that on a tourist trip to New York you are likely to use the subway at least four times a day, then a three day trip brings you awfully close to making the unlimited pass a better deal.
Finally, even outside of the money aspect, I hadn’t factored in the annoyance factor of the pay-as-you-go card with regards to keeping track of how much was on my card and having to take the time to reload it. Furthermore, the unlimited pass gives you the freedom to jump on any subway or local bus without worrying about spending $2. If you’re visiting New York as a tourist, there are certainly lots of things you will want to see, so I think its worth it to get the unlimited pass just to have plenty of flexibility.
Public Transit Directions Using HopStop
I’ll be honest, New York’s Subway system intimidated me the first time I used it — it is great once you get familiar with how it operates, but especially compared to other public transit systems around the United States and around the world, it definitely can be confusing for tourists. While all of the subway stations have maps that can help you figure out where you are going, I highly suggest that you find directions beforehand.
A website that I have found tremendously useful for public transit directions is HopStop.com, which can provide great public transportation directions in not only Manhattan, but also Washington DC, Chicago, Boston, and more. Simply enter a start point and a destination, and it will provide the best way to get there using public transportation, including helpful subway line and direction information. I printed up a bunch of directions before the weekend, but even more helpful is the fact that the website has a great mobile interface, too, so if you are lucky enough to have an Apple iPhone, BlackBerry, or similar web-enabled phone, you can pull up directions on the go.
Getting to and from the NYC airports
Frankly, none of the New York airports are really that convenient to get to from Manhattan, and so you should definitely allow plenty of time to get to or from any of the three airports — LaGuardia, JFK, and Newark.
I have some experience with the New York airports, but I am certainly no expert. Hands down, the best guide out there on transportation between Manhattan and the NYC airports is maintained over at the FlyerTalk Wiki. This incredibly helpful guide lists all of the ways you can get to or from LaGuardia, JFK, and Newark, and gives you the information you need to strike the right balance between time and speed in getting to the airport. If you are flying in or out of a NYC airport, and are at all unfamiliar with the area, I highly recommend you keep a copy on you — with the crazy air system in NYC, you never know when you might end up flying out of or in to a different airport.
Enjoy New York
One last comment — enjoy New York City! It really is a fun place to visit, and with some smart choices it can be done very frugally.
My Financial Check-Up: Introduction
I have finally gotten around to beginning something that I have been meaning to do for a while — a sort of “financial check-up”, taking a moment to re-evaluate my financial management and allocations and make sure that I am happy with the way things are going.
It is almost certainly a good idea to try to do something like this on a regular basis, perhaps annually. Much can change over the course of a year: you might have changed jobs, gotten a raise, relocated to a new area, had a major life event happen, or more. Even if your life seems the same, financial products can change, too - banks cut rates, introduce new accounts, and more.
I plan to cover my financial check-up as a series of individual posts over the course of the remainder of August, covering each issue as I research it for myself. I want to take a moment, though, to introduce some of the questions I plan to look at over the next couple of weeks.
My Primary Checking Account
Should I switch to ING Electric Orange? By and large, I have been pretty satisfied with my current checking account — I have a MyAccess Checking Account with Bank of America that is fee-free as long as I maintain direct deposit, and BoA has convenient ATM and branch locations for me.
But lately, I have been tempted by ING’s Electric Orange account, which is an online-only checking account that offers 1.75% APY for my balance range and no fees. The downside is that you give up branch access, and have to rely on their affiliate network of ATMs. I need to evaluate for what uses I really need a checking account and whether ING will meet those needs, how important branch access really is to me, and whether ING’s ATM network of affiliates will work in my case.
My Primary Savings Account
Am I with the best bank? I have been with Emigrant Direct for years now, and have had almost no complaints with the service they have offered. I’ve stuck with them lately even though they have not had the most competitive rates around (right now, ED has 3.00% APY, HSBC Direct has 3.50% APY). I am not a big fan of rate chasing - moving money around constantly in pursuit of the highest rate, but HSBC might be offering enough of an incentive to move my money over.
How much do I need in my savings? At least right now, with the exception of the small amount of money I keep in my checking account, almost all of my money ends up in my savings account. As I contemplate other factors like a Roth IRA and Emergency Fund, I need to consider how I want to balance the savings with the other accounts.
A Retirement Account
I need to open a Roth IRA. This is not so much a question as it is a statement – I have read the advice for a while, and I have finally convinced myself that it is in my best interest to open a Roth IRA even though I am still in school. Even a little bit of money for a few extra years can make a huge difference when it comes time to retire. The issue for me, however, is that I need a brokerage firm that offers a Roth IRA with low minimums and (hopefully) no fees — so which brokerage is best for me? I suspect that I will ultimately end up going with a Vanguard Roth IRA.
My Credit Cards
I am pretty happy in this regard, and suspect that my combination of Citi mtvU and Chase Freedom cards for almost all of my purchases will continue to be the best situation for me. The only real question I have is how can I best put my rewards to use? I currently have more than enough Citi ThankYou Points to start considering how best to put them to use.
My Emergency Fund
I need to create an emergency fund — how best should I go about this? I have been nurturing my savings account for a while, but I have not taken the step of creating a separate emergency fund. I have read enough posts about emergency funds from other bloggers, however, that I think I need to take the step of creating a separate emergency fund.
My Other Bank Accounts
Which bank accounts are dead weight? Especially in 2007, I frequently opened up bank accounts for the sign-up bonuses which would often be quite lucrative. Now, however, I have all of these checking and savings accounts open at over a dozen banks. Not only is it difficult to stay on top of keeping these accounts maintenance fee-free, but it is also difficult to get an adequate picture of my financial health. I plan on looking into closing some of these accounts and reporting back.
Road Ahead
As part of this process, I also plan on sitting down and taking a look at where my money has been going - I have never really created a literal budget, but I think it will be helpful for me to get a clearer sense of what I am spending my money on as I look for ways to be more fiscally sound. I also plan on both better documenting my finances for myself, creating a sort of financial “master document” that details all of my accounts, as well as improving my records system.
So, these are some of the thoughts that are going through my head as I begin my financial check-up. Stay tuned for more!
Lessons on New York City Taxis
I spent this past weekend with friends doing the “tourist experience” down in New York City, seeing many of the major landmarks in Manhattan. Since time was short, we tried to do as much as possible, which necessitated using a cab a few more times than I would have liked. It had been a while since I had used a NYC cab, and so I ended up learning a few things about NYC cabs along the way.
Hail Only Medallion Cabs
I was briefly down at a rail station and was surprised to be aggressively called after by waiting taxis that assumed I was a tourist looking for a cab. What made me uncomfortable, though, was that while I actually did want a taxi, several of these taxis calling me were not the yellow “medallion” taxicabs but rather cars in less “traditional” looking colors. I awkwardly avoided them and headed towards a yellow taxi, despite their yelling after me.
Turns out I made the right call - only the Medallion yellow cabs are licensed to pick up hails off the street. The yellow Medallion cabs are tightly regulated by the New York City Taxi and Limousine Commission, while non-yellow cabs in Manhattan are operating illegally when they pick up hails off the street. This isn’t just a legal “technicality” — a quick search on Google turned up plenty of stories of people being taken advantage by these non-Medallion cabs.
Maximum Number of Passengers
There seem to be two dominant types of Medallion taxicabs in Manhattan, one of them being the SUV-like Ford Escape. One night, my group had about five people in it, and we were looking to take a cab in Midtown. We assumed that since we had five people, we were better off looking for one of the SUV cabs, figuring that we would be able to all fit in one cab.
When we hailed one of these cabs and told him that we had five people, he told us that the rules said he could only carry four, despite the size of the car. This was somewhat surprising in itself, but what was more surprising was what he did next — he offered to take the five of us if we offered him ten dollars cash to compensate him for breaking the rules. My friends really needed to go, so they negotiated with him, trying to get him down to two or three dollars, but ultimately settled on five dollars extra. I was a little uncomfortable with this whole situation, but went along with it.
Was he scamming us? Turns out he was not lying about the maximum capacity. According to the Taxi and Limousine Commission’s website, most cabs are only licensed to carry four passengers. So keep in mind that magic number, as well as the fact that some cabbies are apparently quite willing to break this rule.
Paying By Credit
Since last winter, New York City taxi cabs are supposed to be able to accept credit card payments using the computer system in the back of taxi cabs. I was very interested in trying this out, especially given a New York Times blog post from December about difficulties their reporters had found in trying to get cabbies to accept credit card payments. Apparently, the idea of credit card payments was not particularly popular with cab drivers.
Did we run into any problems? Not at all. Paying with credit went very smoothly each time — simply slide the card in the terminal in the back seat, and then enter the tip amount on the screen. No complaints or problems from the cab driver, and I got a nice record of how much we spent on taxis.
Suggestion - Always get a Receipt
The New York City Taxi & Limousine Commission runs a great website with a very helpful Frequently Asked Questions page. One suggestion that I didn’t know about but will keep in mind for the future is that it is important to always get the receipt after the trip, regardless of how you pay. Why? The receipt contains the medallion number of the cab, and so in addition to providing you a record of the amount you spent on the cab ride, you also get a way to trace back the cab you took should you need to file a complaint or seek a lost item.
That’s excellent advice, since even careful people can every now and then make a mistake with a suitcase or a cell phone. Turns out that just last night, Barack Obama’s campaign trip director left behind a suitcase in a cab — a suitcase which unfortunately contained their birthday present for Senator Obama! They spent all day trying to find it, with no luck.
Anyway, if you’re interested in more information about New York City taxi’s, I suggest you look at the TLC’s web page, including their passenger bill of rights.
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