Wednesday, March 07, 2007

Courtesy Pay?

How long ago was it I was ragging on financial institutions for their service charges on bounced checks? Was it this year or last year?

Well, more proof that not only does anyone who's anyone in Humboldt visit this blog, decision makers in the financial institutions visit this blog for ideas and commentary as well:

I received in the mail yesterday something from my credit union, Provident Central Credit Union, notice of a new program they've started. It's called Courtesy Pay. This seems to be a replacement for getting dinged $20.00 or more from each bank involved when someone bounces a check.

My complaint wasn't just the service charges but the fact they didn't even cover the check. Courtesy Pay seems to do away with that although you still pay the big bucks. Thing is, they cover the check and charge you $20.00 for covering it. Then you have to pay up as soon as possible.

All of this depends, the mailer says, on you keeping your account active and managed responsibly. In other words, if you're one of those that's constantly bouncing checks and has an average balance of $10.00 in your checking account, you don't get to use Courtesy Pay.

For some reason I had to think for a second as to whether this was a good or bad deal. Sounds to me like it is an improvement if only because the credit union actually covers your check thus letting you avoid being responsible for the overdraft charges the receiver of your check has to pay. Still, $20 is pretty high interest.

All that said, I don't think I need to worry about it as I have overdraft protection which ends up being much cheaper than paying $20.00 for one check. Those of you that don't have such protection might check and see about it, or see if your bank or credit union offers some sort of Courtesy Pay program.

I'm wondering if this will be an industry wide change or just Provident Credit Union's?

24 Comments:

At 11:01 AM, Anonymous Anonymous said...

Coast Central offers it, and dings you $22.00 per item you bounce. They also hold the smallest items and run them through later, so you bounce more.

We had a problem last year where we screwed up in our account and the smaller items should have already gone through, but did not. So they charged us for 4 bounced items. They were all under $10.00 and they added the $22.00 per item to it. So we were only 35.00 overdrawn, but with the wonderful courtesy pay it out us $88.00 in the hole on top of the $35.00.

Courtesy pay sucks. Don't sign up for it or ever need it. Even for emergencies it isn't worth it, unless you manage to bounce one large item that is more than the charge.

 
At 11:13 AM, Blogger Fred said...

Ouch! That's what sucks about these penalties. You're already hurting and then the fees add up and really add insult to injury.

Still, seems to me the Courtesy Pay is still better than the old system for those that don't have some other form of overdraft protection.

If you'd gone through the same situation without Courtesy Pay, and done it the old way, not only would your credit union charge you $80, you'd also be liable to whoever you wrote the checks to since their bank is also going to charge them a penalty. You might well have paid double the penalty (your banks penatly plus the other banks) under the old system.

At least by covering your checks they leave the other bank out of the equation.

 
At 11:36 AM, Blogger Anon.R.mous said...

Sign up for an ING account, they now have a checking account that has a $250 free overdraft/line of credit.

You don't get a check book, but you can do all your banking on-line and they'll mail checks off for you.

 
At 11:36 AM, Blogger Derchoadus said...

How about having enough money in your account so that checks don't bounce. Works for me.

 
At 12:10 PM, Blogger Anon.R.mous said...

Sometimes I want that pretty little dress or earrings before next payday, and ING is there to cover me.

 
At 12:11 PM, Blogger Anon.R.mous said...

This comment has been removed by the author.

 
At 3:49 PM, Anonymous Anonymous said...

Get a WAMU free checking account with overdraft coverage. They even give you printed checks for free. They have branches in SF so you can get cash there to enjoy civilization without paying an ATM fee.

Go with a regional bank and stay away from the local ones who put their hand in your pocket and then tell you how civic minded you are for supporting them.

 
At 4:07 PM, Blogger Anon.R.mous said...

Oh yeah, ING has a 4.5% rate on anything pretty much in their accounts.

I knew I forgot something. Plus they have free atms all over the place.

 
At 5:52 PM, Anonymous Anonymous said...

I bank at WAMU and have no real complaints. Very good bank, good service, on-line banking is excellent. The one problem I had was someone wrote me a personal check and I deposited it, and it bounced no big deal I had not spent the $$$. But WAMU charged me $6.00 for that bounced check and I didn't even bounce it!! I was slightly peaved but got over it quick enough because it is free checking and free on-line banking. So there you go...they try to get you somehow.

 
At 7:11 PM, Blogger provident said...

Fred,

Thanks for writing about Provident.

We are offering Courtesy Pay as an additional safety net, for when you don't have enough in your other Provident accounts for Overdraft Protection to help. Overdraft Protection is free with most of our checking accounts.

The per-item fee for Courtesy Pay is currently the same as what the NSF fee would have been. So the money you save is what the merchant or biller would have charged you for the returned check. Some of those fees are much higher than ours, especially when you get late fees and such.

The Provident Credit Union Web site has just added some new pages regarding Courtesy Pay and Overdraft Protection. Be sure to check out our Courtesy Pay and Overdraft Protection FAQ.

 
At 9:20 PM, Blogger Anon.R.mous said...

Or just go with ING, much better rates then Provident, and NO FEES AT ALL.

 
At 10:50 PM, Anonymous Anonymous said...

ING has a checking? I opened a savings account with them a month ago. I may have to look into a checking account.

Do they have any ATMS up here?

 
At 1:52 AM, Blogger Anon.R.mous said...

ING has new Electric Orange checking. And yeah, there are ATMs up here that you can use for free, Costco has one, TJ's does as well. Heck even Target as well as others. Allpoint ATM says that there is 19 within 50 miles and 90 ATM within 100 miles of Arcata.

 
At 8:06 AM, Anonymous Anonymous said...

I went and looked it up. Instead of courtesy pay you have a line of credit you tap into when you go below zero. With interest, just like any credit card. So that sound better if you pay it off sooner instead of getting nailed with the crappy fees from our lovely credit unions.

I think I am going to switch to their checking account very soon and quit using my Coast Central Account entirely.

I checked the allpoint site and there is even ATMs in Redway and Garberville (where I am). Nice. Thanks for the heads us AnonR.

 
At 11:11 AM, Blogger provident said...

Not trying to spam the blog, but just to set the record straight: Provident Credit Union also offers credit cards and lines of credit that can be used as a source of funds for overdraft protection. As such, there is no fee other than the interest you pay on the credit balance. So in that regard ING and Provident Credit Union offer comparable overdraft protection.

The difference is that with Provident, you can also use your Provident savings accounts and/or checking accounts to fund the overdrafts (no fee AND no interest). Provident ALSO offers Courtesy Pay for those without the credit, or other accounts to fund the overdrafts.

Provident is also part of the COOP network of ATMs, with over 25,000 ATMs worldwide (12 within 10 miles of central Eureka, or to use the Arcata example, 18 within 50 miles of Arcata). Plus it is part of a shared branch network called CU Service Centers, with over 300 locations in California and over 2000 in the US, where you can walk in and use the branch as though it was also a Provident branch for most services.

 
At 12:03 PM, Blogger Anon.R.mous said...

ING uses Allpoint with over 32,000 places to use for free ATM.

Free overdraft with a low 12%, non credit checking overdraft.

You earn 4.5% on all your money in their accounts.

24/7 access to your accounts

free online billpay, can be set up to do it automatic.

They will mail out checks for you for free.

 
At 12:39 PM, Blogger Fred said...

Provident has all that too, I believe.

That free online bill pay is something else. I figured they probably transfered money to pay your bills automatically. I guess not. I asked about it at the Eureka Provident and one of the gals told me they just mail checks.

Yipes! How can they afford to do that?

 
At 1:24 PM, Blogger provident said...

12% is comparable to Provident's credit rates, for our Visa Platinum or VIP line of credit for instance.

Fred, in terms of the mailed checks thing, it all depends on the biller. If the biller has the capability to receive quick electronic payments, then the payment will go that way. But you could also set up an individual person as a payee, if you like, in which case it will most likely be sent as a paper check through snail-mail. I've tested this by setting myself up as a Biller, and sending a payment of $1 to myself. It came a few days later in the mail as a check made out to me.

When you put in the dollar amount, the date will automatically fill in with the earliest date that it can be delivered: for paper checks it includes some time to allow for USPS delivery (but much sooner for electronic means). You can then change the date to whatever you like.

"How can they afford to do that?" Well, first off paper checks are not the majority of the payments. But there is a cost to us regardless, and we consider it a reasonable cost of doing business, as those who actively use our bill pay services are less likely to stop and leave the credit union. It is important to us to try to do things to keep our members happy, and keep them banking with us, and this is one of those things.

Some of the fees mentioned above, such as the NSF fees or Courtesy Pay fee or the interest charges on credit lines are what help enable us to offer good services like full Bill Presentment and Bill Pay, real branches, paper check processing, live people in our Call Center, and automated telephone banking (in additional to the electronic services we have in common with ING).

 
At 2:48 PM, Blogger Anon.R.mous said...

Funny, I called and talked to a live person at ING as well.

Now can you match ING rates? Live person or not?

 
At 9:40 AM, Blogger Brad said...

Some of ING's rates are better than Provident's and some of Provident's are better than ING's. For instance, according to their respective Web sites, most of the ING CD rates for 18 months or less are hovering around 5% APY (5.00, 5.05, 5.10, and 5.0). That is higher than the APYs of similar term certificates at Provident. However, all of ING's longer term CDs are at 4.75%, but Provident Certificates for the same terms are currently at 5% APY. So for shorter terms ING has better rates, but for longer terms (24-60 months) Provident has better rates.

If you want more liquidity, then you might be interested in ING's Orange Savings account, which has a 4.5% APY regardless of how much you have on deposit. On balances over $25,000, Provident's Premier Money Market Savings account matches the ING rate, with 3 tiers that go as high as 5.5% (for balances of $125,000 or more).

In terms of the rates on the interest you pay for overdrafts, ING's is variable rate (12.25% as of 06/29/06 according to their site), with no option to use another account as your source of funds instead. Provident has an interest rate only if you use your Visa or other line of credit as the source of funds (rate varies depending on card or line of credit). For instance, if you had an equity line of credit with Provident, the APR could be as low as 4.99%. Unlike ING, Provident charges no interest on overdrafts if you use a savings account or second checking account as the source of funds. Plus, as was already mentioned, Provident offers Courtesy Pay as an additional back-up plan if you don't have the funds or credit for overdraft protection.

So here is the scorecard as I see it, if you are looking at nothing but rates (which you probably would not do):
• CDs/Certificates 6-18 months: ING
• CDs/Certificates 24-60 months: Provident
• Savings (fully liquid), under $25,000: ING
• Savings (fully liquid), over $25,000: Provident
• Overdraft Protection: Provident
• Equity line of credit (4.99% vs. 8.25%): Provident
• Credit Card (not offered by ING): Provident

 
At 11:34 AM, Blogger Anon.R.mous said...

It's funny that you use a 24 month split, brad, just because that seems to be the best place to split for Provident.

Overdraft will have to go back to ING though, a friend of mine laughed and said that they have a $1000 free overdraft protection (at 12.99%) So that kinda of rules out Provident, which runs a credit check. What score do you have to have to get on the top shelf again?

Let's talk about that "savings account" You use the premier money market account, which means you have to drop in $1000 a month into that account in order to get the 4.5% rate. ING gives you that on a nickel and a couple of pennies. I don't have $1000 a month to inject into a savings account.

So yeah, if you have $1000 a month in inject into a savings account, it looks like the Premier Money Market account is worth it, at $75,000!! Poor folk, need not to apply.

Oh yeah, ING does alot more then you says it does brad.

http://home.ingdirect.com/products/products.asp#

It's nice to see a bank/credit union come out and try and use smoke and mirrors to scare people into using their stuff, but come on "brad" let's not try and blow smoke up people's skirts.



• CDs/Certificates 6-18 months: ING
• CDs/Certificates 24-60 months: Provident
• Savings (fully liquid), under $25,000: ING
• Savings (fully liquid), over $25,000: ING
• Overdraft Protection: ING
• Equity line of credit (4.99% vs. 8.25%): Provident
• Credit Card (not offered by ING): Provident

Checking accounts? Why earn less then 1% with Provident until you have $10000 in the checking account, when you can earn 4% with ING on anything?

It's all about the % sign brad, and for too long banks (and to a lesser degree) credit unions have been taking too much and giving back too little.

 
At 11:56 AM, Anonymous Anonymous said...

I picked ING over the banks. I am also going to be closing my Coast Central account once I get everything transferred to ING checking for direct deposit.

I am sick of being screwed by the bank fees that keep adding up.

 
At 1:24 PM, Blogger Anon.R.mous said...

I'd keep a local bank account (like savings) for no other reason just to have one....in case I need a roll of quaters for the video arcade!

 
At 1:46 PM, Blogger Fred said...

Might be a good idea. I don't know if this happens often around here anymore but, many years ago, when Provident Central Credit Union first opened up shop in Eureka, they issued their checks with the credit union's Burlingame address on it. Back then I bought my checks through the bank.

I went in to Circle K (or was it 7-11?) on Humboldt Hill and wrote a check. The guy working there kinda knew me and said if he didn't know me he wouldn't of accepted the check since it had an out of town bank address and, thus, looked like it wasn't a local check.

Next time I bought checks, I made sure I got them with the Credit Union's Eureka address.

 

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