Banking UP

Many in the payment industry have complained that fees for payment cards or for checking accounts are difficult to figure out.  So much so that respectable institutions like Bretton Woods and Consumers Union have published contradictory conclusions about which products are the least or the most expensive, while looking at pretty much the same set of products.

I have been arguing that fees are usually fairly explicit and can be found on websites or on paper agreements sent by mail to account holders. Evidently, the current action by the State of Florida against a number of prepaid card providers shows that there is still some improvement to be made in the quality of disclosures. Nevertheless, the most important factor in the impact of fees tends to be forgotten: how will people actually use the product?

That’s why we have introduced recently an interactive fee calculator on the iBankUP website. The calculator allows people to specify how they intend to use our payment  service.

We ask 7 questions to our visitors:

1- how much $$ will you direct-deposit to the card every month?

2- how many cash deposits will you make per year (using a Green Dot MoneyPak)?

3- How many cash withdrawals will you make from ATMs every month?,

4- How many bills will you pay (i.e. by writing checks) per month?

5- How many PIN-based purchase transactions are you likely to do every month?

6- Are you accident-prone? How many times per year will you attempt to spend more than you have?

7- How often do you think you will need to call customer support and speak with an agent?

Once a visitor to the site has answered the seven questions, a simple press on the “Calculate” button will produce the total sum of fees that the user would incur during an entire year. Of course, we also show how much fees some of our competitors would have charged based on the same behavior.

You can try the calculator by clicking here.

We also explain the math behind the calculator in an accompanying document.

We sure hope that others in the industry will  do the same and publish their own calculators for all to see.

Banks deserve to be protected… Banks are consumers: they consume our life-spendings when we don’t read the fine-print.

Stephen Colbert interviewing Barney Frank

The Colbert Report Mon – Thurs 11:30pm / 10:30c Consumer Protection Agency – Barney Frank

Here is my own contribution to the eagerly awaited Restoring American Financial Stability Act.

None of the current provisions in the bill seems to address the crucial problem of “Fat Fingers”. On Thursday May 6, Wall Street may have gotten pretty  close to total collapse because some trader supposedly placed an order to sell billions of shares of Procter and Gamble instead of millions.

With 30% of Americans being now considered overweight, the dangerous proximity of the “B” and “M” keys on computer keyboards has been a ticking bomb for quite some time.

Go ahead, check your own keyboard right now: the letter “N” is the only line of defense protecting the financial world from certain failure.
Can we keep counting on this single-letter levee to avoid future disasters?

Worse! Extend your keyboard inspection to the vicinity of the letter B and be very afraid…

A fat finger still greasy from a lunch of hamburger and fries quickly swallowed at the trader’s desk to save time and keep those bonuses up, could result in Trillions, not to mention Gazillions, of shares or dollars being ordered to change hands.

It is not a question of if, but when Armageddon will strike.

Unless we take some serious and immediate action.

This is where my suggested Fat Finger Amendment comes in:

Keycaps shall immediately be re-arranged with the four letters M, B, T and G relegated to each of the far corners of all computer keyboards.

Steve Jobs, please order your software engineers to patch the virtual keyboard software of iPads and iPhones right away.

Frankly, I was quite taken aback when I saw all the media buzz around “Kwedit” in the otherwise serious financial and payments trade press a few weeks ago.

While many of us are busy devising new products and services that allow people to be more responsible with their money, Kwedit essentially encourages young users to buy virtual goods with money they don’t have yet.

This is introduced the exact same month when the CARD Act finally starts making credit cards less accessible to users less than 21 year old with the hope of curbing student debt and reducing the abuse of young users by big card companies.

Given the pedigree of the founders and investors, there is no doubt that Kwedit will execute nicely on a product that is not only useless, but is pro-actively contributing to the disastrous level of financial illiteracy in this country.

So, I was delighted to hear that Stephen Colbert devoted his “The Word” segment to Kwedit.

Here its is: “Kid Owe”

The Daily Show’s Wyatt Cenac examines Bank of America’s hidden credit card fees with a former employee and a mafia loan shark.