10 things your bank won't tell you
Do you assume that your bank serves your best interests? That a big bank's products are better? That your online account information is accurate? Don't believe any of it. By, SmartMoney
1. "Our branches are there to sell you, not serve you."
In the late 1990s, bank branches were considered outmoded relics soon to be replaced by ATMs and Internet banking. But just the opposite happened. In 1998, there were 89,000 bank branches in the U.S., and by 2007, there were 97,000.
Why? The industry realized that consumer banking is profitable and that despite the predictions of Silicon Valley wonks, the main criterion consumers use in choosing a bank is proximity, SNL Financial analyst Jennifer Payne says.
But branches aren't just about convenience; they're a bank's primary sales floor. Brochures for services as varied as retirement accounts and home loans are on display, and everyone from the teller on up is trained to make a sale. That's because in the current low-interest-rate climate, it's harder to generate revenue from interest alone.
Many players in the industry have been trying to boost fee- and service-based income, so if a teller sees you have a mortgage, he might suggest you meet with a loan officer to discuss a home-equity loan. Greg McBride, a senior financial analyst at Bankrate.com, says, "The more products a customer has with a bank, the more likely he is to stay with that bank."
2. "Our fees will only go up."
With the economy slowing and big losses looming in the mortgage market, banks are looking for reliable revenue streams. Hence punitive fees -- for overdrawing your account, say, or using a competitor's ATM -- are increasing. The average ATM service charge doubled between 1998 and 2007, and overdraft fees brought in $17.5 billion in revenue in 2006, up from $10.3 billion in 2004, according to the Center for Responsible Lending.
Rubecca Hegarty, a married mother of three in Woodridge, Ill., says she often pays upward of $100 a month in overdraft fees to JPMorgan Chase because, like most banks, it changes the order of purchases so that large debts get paid first, increasing the likelihood that customers will incur fees on smaller purchases. Chase says it does this because big payments like a mortgage are more important to consumers and so get priority. Revenue from penalties can be addictive for banks, Harvard Business School professor Gail McGovern says, but "they're going to face problems from angry customers, which leads to big call-center bills, employee dissatisfaction and turnover."
3. "We change our interest rates all the time."
Regardless of what your credit card agreement says, you can never be sure how much interest banks will charge you. For example, nearly all cards have a default rate -- as high as 30% -- which banks apply when you've done something wrong, usually after two late payments in 12 months. But some banks have cut that to one late payment, says Curtis Arnold, the founder of CardRatings.com.
Banks can also change the terms of your agreement, raising rates when they like (though you can opt out and pay off the balance at the old rate as long as you never use the card again). Bank of America did that recently, upping many cardholders' rates from 10% or 12% to 27% or more, even though they'd done nothing wrong. "There's no clarity on what criteria can lead a bank to raise interest rates," says Robert Manning, the director of the Center for Consumer Financial Services at the Rochester Institute of Technology. "It's a black box."
A Bank of America representative says the company periodically reviews the credit risk of its accounts and adjusts rates accordingly, adding that in the past year 94% have had no increase.
4. "College campuses are gold mines for us."
Students are the customers of the future, and banks are increasingly courting them, sometimes right on campus. More than 120 universities have cut deals with banks to issue student ID cards that are also ATM and check cards. Schools can make millions from these deals, sometimes even taking a small cut of individual purchases.
Students are also a hot market for credit card issuers, and banks will make private deals with alumni associations to get contact information for students, parents and even people buying tickets to university athletic events. Card companies cut deals to set up booths on campus, and Chase even inked a deal with Facebook to display ads and set up a Chase group on its Web site.
The problem? Mounting credit card debt among college kids, for one.
"Universities don't negotiate on behalf of students," Manning says. "They're negotiating the best deal for the university."
A representative for the National Association of Independent Colleges and Universities says not to blame schools, as banks would market to students anyway, and universities at least try to get the best rates they can for students.
5. "In debt? The courts won't help."
Since the late 1990s, banks have been including mandatory-arbitration agreements in their contracts for many of their products, including auto loans, checking accounts, home-equity loans and credit cards. Such agreements prohibit you from suing and instead require you to use an arbitrator -- someone picked by the arbitration firm named in your card contract to hear the dispute and decide the outcome.
Though these clauses were originally designed to thwart class-action suits, the banks have also been using them for debt collection, says Paul Bland, an attorney with consumer-advocacy group Public Justice. There are even times when consumers, often victims of identity theft and unaware of the debt, aren't present when awards are handed down against them.
A recent suit against an arbitration firm brought by the San Francisco city attorney noted that arbitrators ruled in favor of banks in 100% of the 18,045 California cases brought against consumers from January 2003 through March 2007. "From the consumer perspective, it's a nightmare," Bland says. If a bank brings arbitration against you, hire a lawyer and request a hearing in person.
6. "We're excited about your trip to Europe, too!"
It's bad enough that the dollar is hovering near historical lows against most major currencies, but when you travel overseas, every transaction comes with big fees attached. Take out cash from an ATM in London, and you'll get hit with a foreign-transaction fee, plus a fee for using a competitor's ATM. All told, it can cost up to $7 just to withdraw $200. Credit card purchases aren't much better. Visa and MasterCard charge 1% of the purchase price for converting currency. And the issuing banks may take another cut, which can bring the total to 3% of your purchase price, says CardRatings.com's Arnold. "If people don't travel overseas very often, they just don't think about it," he says.
The best thing to do is determine which of your cards charges the lowest overseas-transaction fee. For people who travel a lot, Arnold recommends a Capital One credit card, which charges no overseas-transaction fees (and even declines to pass on Visa and MasterCard's 1% fee to customers).
Also, ask your bank about partnerships with foreign banks. Bank of America, for example, partners with Barclays Bank, saving its customers $5 per withdrawal from Barclays' ATMs in the United Kingdom.
7. "For all the fine print, we don't disclose very much."
Bank documents come loaded with small type detailing terms and conditions. But good luck finding out exactly what you're signing up for when you open an account.
Last year, the Government Accountability Office sent investigators to see how well banks explained their fees and other conditions to potential customers. Though banks are required by law to make this information available, the GAO said one-third of the branches it surveyed didn't provide the required information. Worse, more than half didn't have any fee information on their Web sites.
Nessa Feddis, a senior counsel at the American Bankers Association, questions the report's methods -- banks failed the test if investigators waited more than 10 minutes for the information -- and defends the lack of data online. Banks are afraid of leaving old, inaccurate information on their sites if terms change, she says. But without details on fees, consumers can't make informed choices.
"Banks are not complying with the law," says Ed Mierzwinski, the consumer program director with the U.S. Public Interest Research Group. "People need more information so they can shop around for the best deal."
Continued: A better place for your money?
8. "Your money might be better off elsewhere."
Banks offer lots of ways to earn interest on your money. Among them are simple savings accounts, certificates of deposit, money market accounts and individual retirement accounts. But they don't always yield the best return. The average savings account, for example, pays about 0.5% interest. But even in this low-interest-rate climate, you can do better -- 3% or more -- if you shop around.
"It pays to be a free agent," says Bankrate.com's McBride. "There is tremendous disparity in the returns available."
Banks have been expanding into other financial services for a decade or more, including comprehensive wealth management and financial planning, brokerage services and even insurance. The well-off who use these services are a bank's most profitable customers, as they keep the highest balances and are least sensitive to fees, says Maryann Johnson, the senior vice president of wealth market management at the bankers association.
That's something to remember when you talk to a bank's investment advisers: Many are paid a commission on investment products, says certified financial planner Craig DuVarney, meaning they often go for the easy sales.
"They don't have the harder discussion about estate planning, tax bracket and liquidity," DuVarney says.
Johnson sees it differently. She says that banks take a more holistic approach and that their wealth managers serve much the same purpose as financial advisers, with bonuses not only for sales but also for dollars invested, new clients and even customer retention.
9. "When it comes to banks, smaller is sometimes better."
Banks have been consolidating like crazy over the past decade. In 1990, the top 10 banks controlled 25% of the market; now they have half. This gives customers of large banks vast networks of free ATMs and branches across the country.
But it hasn't been entirely good for consumers, says Arthur E. Wilmarth Jr., a professor at George Washington University Law School. Though big banks offer many conveniences, they can come at a price: high fees. In 2006, the 10 largest banks generated 54% of revenue from fees and service charges. By contrast, the 10 smallest banks generated just 28% from those sources. Not only do big banks bring in more fee income, but they also pay out less interest. According to Federal Deposit Insurance Corp. data, smaller banks generally pay higher interest on savings accounts and other products. For example, in 2006, the 10 largest banks paid an average 1.87% in interest for savings accounts, while the smallest banks paid 4.37%.
"The largest banks are no longer worried about being undercut on price," Wilmarth says.
10. "Your online account information isn't necessarily accurate."
Online banking has changed the way people handle their finances. They can pay bills online, transfer funds, track payments and get a more detailed view of their bank accounts than ever before. Unfortunately, it may not always show the proper balance.
With electronic transactions, ATMs, check cards and direct deposits, banking has gotten more complicated. ATMs and online bank statements will show deposits available before the money is actually in your account. Using your debit card at a gas station or to reserve a hotel room, for example, can put a hold on funds. Some merchants may be slow to send in charges. And banks can sit on deposits, so an out-of-state check may take up to five days to clear.
Add to that the constant reordering of debits, and your account balance can quickly become a moving target that's hard to track accurately day to day.
"Banks use different algorithms to process payments than what you see online," Harvard's McGovern says. "It gives you a false sense of security."
This article was reported and written by Jim Rendon for SmartMoney.
Published Aug. 26, 2008
Source: http://articles.moneycentral.msn.com/Banking/BetterBanking/10ThingsYourBankWontTellYou.aspx
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Pesonal Notes For Above Article By, Jennifer Korol SESS
I put this up, because most of those in this industry and working for any financial institution really need to step up their game on genuine customer service if they want the business to make it. Point? Quit trying to sell people for the sake of your ends and pay more attention to how you can help them secure theirs. I think one of the ethics of business that needs more focus is not just the all-generic customer satisfaction ethic, but the ethic of honesty. If you expect your customers to be honest with you so that your's and their data are organized and they truly get the best banking experience with you, give the same due honesty in return.
One good example would be to stop being so "happy for them" and provide full data and analysis of their financial plans (no matter the size, classification, or relevance) with no extra charge. That level of honesty helps customers to understand their finances more than they do already (and not just on a need-to-know basis) so that you can "take vacations" yourself. I will explain that in the next paragraph. The point of mentioning this, especially, is the falsehood of stating you're happy for your customers when they decide to splurge on a vacation. People generally know that is not true. Especially when its expressed with the vigor and enthusiasm of a relative and not a representative. Do you see where I'm going with this? Anyone who can point this out, knows you're really happy about the commission you're making from your customer in that particular situation and not for them.
Onto explaining the importance of honesty with customers and how it can be associated with vacations. Too many customers of Provident Bank alone had reported stolen money out of their accounts on numerous occasions. What happened to that money? It was reported in the local news, New Jersey's Star Ledger, that Provident Bank's employees would slip the money into their pockets to go on vacation with it. This is just one example of a large bank's big scandals. Now, granted, this happened back in 2005, but that wasn't too far away and neither are more big mistakes or scandals large banks try to pull off. I would almost want to create a classification that already exists for this faux par and that would be committing felony. Instead of imagining a criminal pulling off a heist at a bank, try visualizing the bank pulling off a heist on you, but without entering your place of business or residence. Smooth you would think, but the local law is investigating these crimes and are working to create the right kind of litigation to deliver justice for customers of large financial institutions who have been robbed blind.
Thank you for reading,
Jennifer Korol - Selfemployment Solution Center & Creating Wealth On A Budget
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Dealing With Bounce Rates And HIPPOS
About the Author: Jason Lee Miller is a WebProNews editor and writer covering business and technology.
Tuesday, August 26, 2008
Generally when hippos enter the conversation there are only a few directions the conversation can go; none of these directions tend to lead to well-heeled executives. Avinash Kaushik, author of Web Analytics: An Hour a Day, follows no such arbitrary narrative rules.
Editor's Note: Kaushik and Crosby have their "pet" metrics like geographic information or keyword positioning. Do you have any sweet spots when it comes to metrics? How do those particular metrics help? Do tell in the comments section.
In his case, and in the case of others at a, well, former employer, HIPPO is an acronym meaning the highest paid person's opinion. Sometimes this opinion, wafting its effluvial way between totems of silk and the finest wools, just plain stinks.
"Most website designs stink because HIPPOs create them," said Kaushik, alongside Google Analytics group manager Brett Crosby, in a video interview with WebProNews's Mike McDonald. They stink (websites, not the men in the video) because the HIPPO's idea is very "disconnected from reality," Kaushik continued as Crosby adjusted the lapels of his sports jacket.
Previously in the conversation, the three were chatting up the finer points of web analytics to address things like bounce rates and conversions. Kaushik and Crosby were in general agreement that proper use of Web analytics was key in identifying problems with conversions.
"Gotta have goals and funnels," said the self-described suit (self-described by the aforementioned gesticulation upon Kaushik's synonymy of HIPPOs and suits), who also described himself as one suit straddling the line between marketers who prefer spreadsheets and marketers who don't. As for spreadsheets, Crosby deems them pretty important, if they involve analytics, especially Google Analytics. "If you don't have analytics in place of some sort," he said, "you're just throwing money around."
Convert visitors with Google Analytics - free
Those analytics, for example, can help identify why visitors "bounce" when they land on a page via search. Technically, a "bounce" is defined as a single page view session where the visitor bounces off to another website afterward. Kaushik, more colorfully again, characterized it more paratactically on behalf of the visitor as "I came, I puked, I left."
"No need to get all technical," said Mike.
Kaushik identified bounce rate as one of the simplest areas of analytics a webmaster can optimize. If a particular page has a high bounce rate, then something is wrong. What that something is could be many things, but Crosby suggests it might be either the landing page itself or the PPC keywords leading customers to the landing page. The wrong keywords optimized means visitors aren't finding what they're looking for once they reach the landing page.
"If you use the keywords position report, it shows you how the ads perform," suggested Kaushik. This report will show how many visitors each keyword position yielded, and it shows the conversion rate. Crosby suggested comparing both paid and unpaid keywords to get an even better idea. Unpaid keywords will show which keywords bring visitors to a site most often, which can be compared against the bounce rate to show which keywords convert most.
This was when Kaushik brought up HIPPOs. So how does one deal with a HIPPO? Easy. One deals with a HIPPO in the same way one deals with a rhinoceros: Let him charge, step out of the way, let him get his nose stuck in a tree trunk. In other words, right when the HIPPO's idea fails, present him or her with an alternative.
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SES SanAbout the Author:
Jose: Igniting Viral
Jason Lee Miller | Staff Writer
Know your audience, know yourself
At SES San Jose, two themes emerged from a panel of experts
discussing how small and medium-sized businesses can make the most
of their viral marketing campaigns: understanding one's audience
and good old fashioned perseverance.
(Coverage of the SES San Jose conference will continue through
its end. Keep an eye on WebProNews for more notes and video from
the event this week.)
It's important to know, once you've crafted your message or content,
where to put it. Digg.com, for example, likely isn't interested in
content related to ageing women, unless the predominantly young,
male, and pasty are currently concerned about their mothers.
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SES: Don't Disregard Vertical Search
Doug Caverly | Staff Writer
Big fish-little pond scenario not bad
Not too long ago, Google talked about having indexed one trillion
unique URLs, and competing within that pile is a tall order.
Vertical search engines deserve a special mention, then, and an
SES session called "Getting Vertical Search Right" gave them
just that.
(Coverage of the SES San Jose conference will continue through its
end. Keep an eye on WebProNews for more notes and videos from the
event this week.)
Source of articles: Web Pro News http://www.webpronews.com/
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Make Failure Your Friend
There is no question that we have entered a period of economic uncertainty. And, especially as individuals and companies begin to tighten their financial belts, fear of failure might make you less inclined to implement innovative business and marketing strategies.
But in a post at Marketing Safari, Hjörtur Smárason argues that failure is not only an acceptable risk, it's just as important as success.
"Mistakes are a necessary part of learning, development and innovation," he says. "There's a lot you don't understand until you try it on yourself. And if you let the fear of failure stop you from trying something new, you'll face nothing but stagnation." In other words, bunting is safe, but you'll never hit a home run if you don't take a swing once in a while.
So instead of focusing on the negative aspects of past failures, zero in on the insight they provide. "One mistake doesn't mean that the next attempt is more likely to fail," says Smárason. "Actually, it should be the contrary. It should be more likely to succeed as that person hopefully learned something from the mistakes." And if you approach future plans with this rational pragmatism, you can innovate fearlessly as your reach for the greatest payoff.
The Po!nt: Don't be afraid to take calculated risks, and don't get discouraged if a few projects or ventures don't work out. "The more mistakes you make," says Smárason, "the better the chances for one of those risky decisions to be your big success."
Source: Marketing Safari. Provided By, Marketing Profs "Get To The Point" Newsletter.
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Through with Buzz(words)
In a post at her blog, Christina Kerley—known informally as CK—recounts a question she received during a conference Q&A session: "Can you tell me the buzzwords that marketers should avoid using with our audiences and in our communications?" You've likely asked yourself the same thing, and you might be surprised by CK's rather interesting response.
Instead of rattling off a list of egregious offenders, CK flipped the question around, suggesting a sure way to learn what customers want to hear: It's as simple as reading what they write. Thanks to social media, you now have instant and unparalleled access to their style, tone and vocabulary.
"[R]ead the comments and conversations of consumers and prospective customers at many blogs that are relevant to your business and target audiences," she says. "See what they’re talking about, and what’s meaningful to them. But mainly look at how they say things." Take the guesswork out of word selection by using customer forums and comment sections as a barometer—study the language they use and choose yours accordingly.
The Po!nt: "[S]ocial media gives us a surefire way to avoid using all those words that are confusing, over-hyped or just so overused they’ve been rendered meaningless," says CK. "[P]eople don’t speak in buzzwords. Marketers do."
Source: CK's Blog. Click here for the full post.
Vol. 2, No. 96 August 15, 2008
Full Article - Because people don't speak in buzzwords. Marketers do.
During my panel presentation at Sun's Startup Camp last May, I was asked a very important question during the Q&A. It's an exchange that has stuck with me and I tell it a good deal off-line to colleagues and clients.
You see, it's a lesson that I encourage. But it's also a lesson that I constantly have to remind myself of in my messaging work--because I have been plenty guilty of it! So I wanted to share the sum and substance of the conversation:
Attendee: "Can you tell me the buzzwords that marketers should avoid using with our audiences and in our communications?"
CK: "Oh dear, I'm sorry but given we only have 5 minutes before this session ends and since this entire conference is only two days long, we don't have enough time to rundown all the buzzwords we marketers abuse...because there are so many."
(Hey, I needed to be honest!)
"But the good news is that social media gives us a surefire way to avoid using all those words that are confusing, over-hyped or just so overused they've been rendered meaningless: read the comments and conversations of consumers and prospective customers at many blogs that are relevant to your business and target audiences. See what they're talking about, and what's meaningful to them. But mainly look at how they say things. Because now you're afforded to actually "see how they speak". And let that be your barometer.
Because people don't speak in buzzwords. Marketers do."
(so we've found yet another reason why listening is so helpful)
At the same conference, I sat in on a great "cloud computing" panel and learned so much "techie" stuff. But there were so many buzzwords and acronyms that even the moderator apologized. Afterward I went up to congratulate him on a great presentation--and made sure to thank him for also noticing the buzzwords. I told him it made me feel so much better knowing that we marketers weren't the only ones that play Buzzword Bingo ;-)
And on that note, here is a great 30-second commercial; it's all sorts of fun, and true. RSS and email subscribers, please click through to the blog to view.