$5 Monthly Charge for Using Your Bank of America Debit Card

I was catching up on the news this morning and came across this article in the Bangor Daily News. Bank of America has done it again. They are always thinking up new tricks to come up with new procedures and costs that affect your money and my money. Not just nickel and diming us, but dollaring away all our hard earned cash. Their latest gambit is—starting next year, when you use your debit card they will charge you $5.00 a month. Ouch!

Now that pretty much all vendors including the local hot dog vendor and ice cream truck accept debit cards, Bank of America wants us to take a step back in time and go back to the old fashioned ways—go to their atm & withdraw money before you can spend it. Highly inconvenient. I can guarantee that, despite your best efforts, you will end up using your debit card at least once a month so it might as well be at the beginning of the month rather than at the end of the month.

Alternatively you can use your card as a credit card (if you have that facility), but more and more businesses prefer debit cards (it’s cheaper for them) so they offer discounts for cash and cash equivalents e.g. debit cards. So bye, bye discounts and hello more fees. I used to be a long time Bank of America customer until a few months ago when I finally had it with them and closed my account. If I had not closed it then, I would definitely have closed it now because of this new policy.

Apparently other banks have been testing this out with both Wells and Chase charging $3.00 a month in some states. I had not heard about that until now, but since I am not (or was not) their customer I may have tuned out that news.

Let’s hope that my friendly, neighborhood credit union doesn’t get in on the action because at this rate I think am better off keeping my money under my mattress.

401K - Leaving money on the table!

I was disappointed when once again a co-worker told me that he did not participate in our 401K plan. I was not surprised though, because I have heard the same from other people. I was disappointed because these folks are leaving money on the table.

The 401K is a company sponsored benefit that is considered part of your total compensation package. When the company makes you a job offer and it includes a 401K plan, they take that into consideration when deciding your actual salary.

Most companies (at least before the economic downturn) match 50% of your individual contributions if you contribute 6% of your salary. Not participating in the 401K means you are giving up that 3%. On top of that , you reduce your immediate taxable income plus the money in the 401K is not taxed until you withdraw it. Consider it a forced savings plan with Uncle Sam’s blessings. What’s not too like?

The reasons I have heard for not participating, range from, “I have heard about it but I am not sure what it is” to “It’s too scary, what if I lose all my money Enron style” to “What’s the point, I will be dead before I can get my hands on the money”. Now, if you have a death wish to die young, then I guess you do have a point, since 401K’s are best tapped into after you are 59 ½ to avoid penalties for early withdrawal.

However, If you are like the rest of us, who currently hope and plan to live past retirement, you have to at least consider the 401K or the other plans like the 403(b). There is no excuse for not knowing what it is, how it works and of course the risks you may face.

I am not saying everyone has to have a 401K . . . I am not a financial adviser, so I can’t advise you on how to invest your money, but I urge you to consider it thoroughly before you turn it down. Make an informed decision, not one based on fear and lack of information.

Here is an excellent primer on the 401K, that will get you started:

Do you invest in a 401K?