I recently received a pamphlet about the “improvements” that Bank of America is making on several of their checking accounts. But after reading through it, all I see are a bunch of small fee increases.

For example, many people have the MyAccess checking with no minimum balance requirement and no direct deposit requirement. Now, the monthly fee is either $8.95 or you need a direct deposit. And you can now be dinged by the $35 overdraft fee up to 10 times in one day. I guess they aren’t scared of another class action lawsuit. You can see all the pricing changes outlined here.

I guess they need to drum up some more money somehow, and most of the fees are still avoidable. But given that around 27% of their revenue comes from fees, and that there were $36.7 billion of overdraft charges by banks last year, I really think this is another reason banks are pushing their debit cards so much. Not only do they earn transaction fees, it makes it that much more likely that people rack up more overdraft fees. Imagine this: You lose track of your balance once, but make 5 small purchases over two days before realizing. That’ll be $175, please!

Be careful out there… those “free” checking accounts have to be paid for somehow.

If you have your cash spread out across several bank accounts, whether it’s to help with chasing higher interest rates, paranoia, or saving for different goals, it can become quite a hassle to transfer money between accounts. I get asked all the time about how I juggle them all.

Part of my solution is to utilize the E-Trade Complete Savings account to connect them all together. This is basically E-Trade’s version of the online savings account which I’ve had for years. From my experience, the interest rate goes up and down (it is currently a so-so 1.20% APY), but it works very well for me as my bank “transfer hub”.

What are some important things to look for in such an account?

Basics and Cost
To start off, you’ll want a bank that offers a very low minimum balance and no monthly fees. A decent interest rate would be good, but a top interest rate isn’t critical since this isn’t where you’ll be keeping the bulk of your funds. You might want to keep a little bit of cash here in case you need to transfer some out quickly, and also to keep your bank from closing out an empty account.

Transfer System
Just about all banks allow ACH (automated clearing house) transactions, but you have one party initiate such transactions, and many “old-school” banks don’t do this. Accordingly, you’ll want your hub account to have the ability to “push” or “pull” funds in and out of multiple external bank accounts, with no transfer fee. Some banks only let you link one or two accounts, while others charge you to initiate transfers. For example, Bank of America allows you to move money to BofA for free, but charges if you move money from BofA using their system.

The E-Trade Complete Savings account has no minimum balance and no monthly fees, you can link an unlimited number of accounts, and there are no transfer fees.

Transfer Speed and Interest Crediting Policy
Of course, you’ll want fast transfer times. Some banks take 3 business days to move money in either direction, with your money in limbo and not earning interest anywhere. However, E-Trade is much faster, with transfer times of only 1 business day (which is how long it should take…). Also, if you schedule a funds transfer from an external account to E-Trade before the end of the business day at 4pm EST, they will actually credit your account the same day, even before they withdraw the money (although to prevent fraud you can only withdraw after 3 business days). However, you will start to earn interest starting that day, even before the money actually get debited from your source account!

Here is a sample screenshot:

In fact, if you initiate a transfer on Friday, you can earn interest at both accounts over the weekend. Here is a sample timeline:

• Friday: You schedule a transfer of $1,000 from Bank A to E-Trade. You start earning interest at E-Trade on Friday. Nothing has happened at Bank A.
• Monday: $1,000 is withdrawn from Bank A.
• Thursday: $1,000 is now available to withdraw from E-Trade. You schedule a transfer to Bank B. $1,000 is debited from your account at E-Trade.
• Friday: $1,000 arrives at Bank B.

Yes, it will take you a week to move the money, but you’ll be earning interest the entire time due to the double-interest over the weekend. Compare this to other accounts where the money is in limbo for 3-5 total days (3 business day + weekends/holidays) and you’re earning zero interest during that time.

For these reasons, I think the E-Trade Complete Savings account is very useful for the ability to connect any two bank accounts and move money relatively quickly with minimal interest loss. If you already trade stocks with them, it’s basically a no-brainer given the horrible yields on money market funds right now.

I have also heard good things about the transfer speed at GMAC Bank, but I don’t know if it’s quite this good as I don’t have any personal experience with them. I’m also concerned about how GMAC Bank will be around… if they get bought or sold to another bank, the website may disappear as well. I’m already going to miss my WaMu interface when I get forced over to Chase next month.

I haven’t been much of a interest rate-chaser recently, and it feels like it’s been a while since I’ve opened up a new bank account. For one, I already have a lot of my cash tied up in CDs and I-Bonds. Also, most of my recent cashflow has been going into 401k and IRA contributions.

Now that I have a bit more free time, I decided to open up a new “Rewards Checking” account at Evantage Bank. It offers 5.25% APY on the first $10,000 in balances, and 2.25% APY for anything over that if you meet their requirements of electronic statements and 10 debit card purchases per month. I liked it because it was available nationwide, there were no minimum balance requirements, and didn’t have a direct deposit requirement.

In addition, they have a “Mega Money Market” savings account that is currently paying 3.10% APY on balances to $35,000. (No debit requirements.) So you could keep a total of $45,000 parked at Evantage at a combined interest rate of 3.58%. Not too shabby in this current environment. Alternatively, you could open a second Rewards Checking account and get another $10k at 5.25% (but also with another 10-purchase commitment).

So far, the account application was run by CashEdge, with the usual informational requests and ID verification using questions based on your credit report. The process was completely online, with both online signature cards and an ACH transfer option for initial deposit. I’ll provide a better update once I get started.

I’ve written about rewards checking accounts in the past. They are a gamble and you can earn very little interest if you don’t pay attention to the requirements. In addition, the rates can drop quickly. Look at your own habits, and hopefully these rates will stay competitive for a while.

Evantage is one of identical triplet banks, along with Redneck Bank and AmericaNetBank, which are all owned by the Huckabay family of Oklahoma. The three banks reportedly have different gimmicks to attract publicity – supposedly the redneck, patriot, and high-tech crowd? Apparently it worked, because Redneck Bank isn’t even taking new applications as of yesterday.

Well, it was about time. The SEC released a press release yesterday stating that they have frozen the assets of the offshore Millennium Bank and its parent, United Trust of Switzerland S.A.

If you don’t recall, Millennium Bank offered certificates of deposit paying insanely high rate north of 8% APY for the last several years. I stopped short of calling it a scam, but pointed out that common sense would state that such increased return could not exist without significant added risk. From the press release:

Washington, D.C., March 26, 2009 — The Securities and Exchange Commission has obtained an emergency court order halting a $68 million Ponzi scheme involving the sale of fictitious high-yield certificates of deposit (CDs) by Caribbean-based Millennium Bank.

The SEC alleges that the scheme targeted U.S. investors and misled them into believing they were putting their money in supposedly safe and secure CDs that purportedly offered returns that were up to 321 percent higher than legitimate bank-issued CDs.

The bank was supposedly based in the Caribbean nation of St. Vincent and the Grenadines (SVG), which had access to high-yielding, safe investments. In reality, the SEC managed to trace the money sent by gullible investors from the offshore back to a US bank account in Napa Valley, CA, where the defendants “misappropriated a vast majority of the investor funds to enrich themselves and pay personal expenses, while making relatively small Ponzi payments to investors.”

According to the SEC’s complaint, the $68 million was raised from more than 375 investors since July 2004. I wonder how much is left. Another case of greed blinding people…

Please don’t confuse this bank with the legitimate and FDIC-insured Millennium Bank of Illinois.

Last week, I heard a co-worker complain about being denied when trying to open a new checking account. I told her to check her ChexSystems report. ChexSystems is a consumer information database that contains information about your banking history, similar to credit bureaus and your credit history. Turns out she forgot about an account and actually owed some other bank some money (probably just piling on inactivity fees…).

For the same reason, you have the right to a free ChexSystems report once a year, just like the annual credit reports. In addition, you can request one whenever you get declined for a bank account where ChexSystems was used.

I decided to get my own as well, and surprisingly it came via snail mail within a week or so. I say surprisingly because last time I tried to order a couple of years ago, I don’t think I ever got it. (I have never had trouble opening a bank account, so I figured nothing bad was on it.)

They have a sample ChexSystems report online, which looks exactly like what I have, and explains all the items they have recorded:

Reported Information
“Reported Information refers to reports of accounts that have been mishandled, reported for cause, and/or outstanding debts. Reported Information is submitted directly to ChexSystems by members of our service, which consists mainly of financial institutions. Our current practice is to retain this information for a period of five years.”

This includes account closed due to repeated bounced checks, or overdraft debts that were never paid. If you have one of these in error, you’ll definitely want to clear it up.

Inquiries Initiated By Consumer Action
“Inquiries Initiated By Consumer Action refers to inquiries resulting from a transaction initiated by you. These include applying for a credit card or completing an application at a financial institution. Please note that the inquiries are part of your credit history and may be included in our reports to others. These inquiries can be viewed for ninety days up to three years. ”

Basically, a list of all banks that applied for within the last 3 years that used ChexSystems to verify me. They included KeyBank, E-Trade, FNBO Direct, WaMu, DollarSavingsDirect, and WT Direct. Banks that I know that I applied for recently that weren’t on the list include EverBank, which makes sense since they used the Equifax ID check service during my application process.

Inquiries Not Initiated By Consumer Action
“Inquiries Not Initiated By Consumer Action refers to inquiries resulting from transactions you may not have initiated, so you may not recognize the source. Members of our service with a permissible purpose include current creditors, pre-approval creditors, and potential investors trying to assess risks. We report these requests only to you as a record of activities, and we do not include any of these requests on credit reports to others.”

The only bank listed here was Washington Mutual. For some reason, they made three inquiries in one day back in 2006. Weird.

Retail Information
“Retail Information refers to returned checks written on an account and certain collection accounts. Retailers and other businesses report this information to Shared Check Authorization Network (SCAN). ChexSystems receives this information directly from SCAN and is not involved in the collection of these items.”

Nothing here, I believe it counts bounced checks reported by merchants.

History Of Checks Ordered
“History of Checks Ordered refers to a record of check orders placed within the past three years.”

Nothing here, either. Probably because I would never order from Deluxe Corp. (which owns ChexSystems) since they are horribly overpriced. I barely make it past the starter checks usually, but if I do need checks I buy them from Costco.

Social Security Number Validation
“Social Security Number Validation indicates the year and state that a particular sequence of digits first became available for issuance. This information does not include the name of the individual to whom the number was issued.”

It says my SSN became available for issuance in 1987. This is interesting, considering I was born nine years before then…

Drivers License Validation, Drivers License Verification
“Drivers License Number Validation indicates whether or not the format of the drivers license number provided matches the requirements set by the state of issuance. Drivers License Number Verification is information provided to ChexSystems by the state that issued the drivers license number. This information, which is limited to certain states, identifies the name and date of birth of the individual to whom the drivers license was issued.”

Added: A smaller competitor to ChexSystems is TeleCheck. To get your free annual report from them, you must call 1-800-366-2425. I called them on 1/11, and they stated that they had no negative information me, so there was nothing to send me.

My wife recently applied for an EverBank Yield Pledge Money Market account for their introductory rate. Everbank also “pledges” to stay amongst the top 5% of competitive banks, and I have seen that rate has indeed stayed competitive to other online banks for the last couple of years. (WaMu is now down to 2.25% APY, ahem…)

Currently, the promo rate is 1.10% for 6 months, and the standard rate after that is 0.86% APY. (1.10% guaranteed for 6 months is still better than any 6-month CD out there.) The application process is a lot different now than when I applied for myself a year or so ago, so I’ll start with reviewing that.

Background and Promotion Rules
Everbank always offers a 6-month introductory promo rate to both their FreeNet Checking and Yield Pledge Money Market accounts. The rule for these promotions is that you can only get one 6-month bonus period per person (Social Security number), and that you can get them at the same time, but not one after the other. As you might have guessed, one way around this is for couples to open separate accounts at least 6 months apart.

So if you opened both the FreeNet Checking and Yield Pledge Savings account on November 1st, you can get the promo rate for both ($100,000 total balance) for 3 months. If you open up the Yield Pledge a month later, you’ll only get the promo rate on that account for 2 months.

Step 1: Personal Information
The standard info is requested on the first part of the application – address, SSN, and also employer info.

Step 2: Identity Verification – No Hard Pull
In the past, Everbank has done a hard credit check when taking applications. However, it appears that they no longer do this. For one, my wife did it and she has a credit monitoring service which alerts her of such activity – no alerts from Everbank.

The website itself is a bit confusing on the subject, stating the following:

What kind of inquiry does EverBank obtain and how will it affect my credit score?
EverBank obtains a credit inquiry for the purposes of opening an account. While such an inquiry will show on your credit report, it’s coded differently than an inquiry for a loan and would have less of an impact on your credit score.

I personally interpreted this as a soft pull, but I also called to confirm. The customer service rep stated that they no longer do a “full credit check” but only confirm ID.

This is finally supported by the fact that they now ask the real-time Equifax ID Check questions during your application, which are based on data from your credit report. Things like names of streets you’ve lived at, where you hold mortgages, and previous employers. Noneof the banks that I’ve had do this have done a hard pull.

Step 3: Funding
Finally, we arrive at the funding ($1,500 minimum). In the past, you had to wait for a welcome package and send in a physical check along with a physical signature and other paperwork. Now, as long as your initial deposit is under $25,000 you can fund online using routing and account numbers. From the website:

ACH funding is available for personal Checking, Money Market, and Asset Manager Service cash management accounts. You can fund just the minimum opening deposit or any amount up to a total of $25,000 per day. For funding more than $25,000, you’ll want to open now with $25,000 and send a check or wire for the additional amount.

For the ACH funding source account, you can use any account that supports check writing. You can verify ownership of your source account in 3 days through a small deposit and withdrawal.

You can also choose to activate the Checkwriting option here (3 per month).

After you enter these details you can go ahead an log into the Everbank website and poke around, although it takes a few days for the initial deposit to arrive. All in all, the application process is much improved by being completely online with no paperwork, with apparently no hard pull.

I went ahead and opened an account at DollarSavingsDirect and their attractive 4.0% APY. WaMu had dropped their savings rate to 2.5% APY, and DollarSavingsDirect still seems to be in their “new bank customer accumulation” stage, which means keep the rates high as long as possible. Might as well take advantage of loss leaders…

People have called EmigrantDirect and DollarSavingsDirect clones of each other. I mean, your money is at the same bank – Emigrant Bank, FDIC Certificate #12054 and the home pages look very similar. But man, they truly did a cut-n-paste job. Check out the identical internal interfaces, down to the color scheme:

The application was straightforward and efficient – completely online, no paperwork to sign or print out, and your deposit is done using only routing and account numbers. Took less than a week to get up and running. I would pick your funding account carefully, because adding additional bank relationships does require paperwork.

As noted, the major difference is that with DollarSavings you need to maintain a $1,000 minimum balance to get the 4.0% APY, unlike Emgirant with no minimum. Good news is that there are no fees at DSD if you drop below $1,000 though, just a lower 1.0% APY.