Banking How To Choose A Local Or National Bank

By: Lawrence J. Reaves

When you choose a new bank, it's worth to put some extra time and energy into the selection process. After all, your financial well-being will be tied up with that bank to a great degree, and you'll probably be doing business with it for many years to come.

First, you should really think about your preferences. And then, before you get specific, you'll need to make a more general decision: Would you like to do business with a big national bank, or would you prefer to deal with a local bank?

What's the difference, you wonder? Each of the options has advantages and disadvantages:

First, there's the matter of how many branches and ATM machines they have, and where they are:

The local bank may have more branches where you live, but if you travel a lot, you won't have access to their ATM machines. You'll still be able to get money, of course, but you'll have to pay a premium: Chances are that you'll get charged twice. your own bank will charge you for using someone else's ATM machine, and the bank whose ATM machine you're using will charge you for the privilege of using their machine without being their customer.

There is another disadvantage: when you need to deposit money or a check, you can generally only do so at your own bank's ATM machines. And if your bank only has branches locally or in your home state, and you're frequently traveling out of state, you will have to make sure you deposit all your checks while you're home.

Of course most people don't travel that much, and so the fact that they can't deposit checks while out of state may not even occur to them as a possible inconvenience. But the extra charges they have to pay when they do travel can add up. If you have to pay an extra $5 to $7 in combined fees between the two banks, that's quite a bite out of your money, especially if you tend to withdraw small amounts, such as $40, at a time.

Larger banks will have branches and ATM machines all across the country, or at least in a number of different states.

As you make your decision, find out where they have their branches.

If you anticipate a move in the foreseeable future, that too might influence your decision. You should probably choose a bank that will have offices where you might end up moving so that when you get to your new home, you'll already have a bank.

If, on the other hand, you rarely travel and you plan on staying put for the foreseeable future, you may feel more comfortable with a local bank that is part of the community. If it also has a branch office close to where you live, and if it meets your other criteria, you may have found your perfect bank.


Choose the local Richmond Virgina Bank that offers Richmond Financial Services to all it's customers. Think www.firstmarketbank.com

Article Source: http://article-junction.com

Treasury Publishes Capital Purchase Program Term Sheet for S Corporations

By: KAREN L. GRANDSTRAND & KARLA L. REYERSON
January 16, 2009

On January 14, 2009, the U.S. Treasury released the term sheet that allows banks and bank holding companies that have elected Subchapter S tax treatment (S Corporations) to participate in the Capital Purchase Program (CPP), a program designed to infuse up to $250 billion in equity interests into U.S. financial institutions. This term sheet is the third set of terms to be released for the CPP. Publicly traded and privately held C corporations each received their own terms for participation late in 2008, which included the issuance of senior preferred stock. Mutual institutions continue to wait for their own term sheet and application deadline.

S Corporations could not participate in the CPP under the terms provided for C corporations because doing so would have caused them to lose their Subchapter S tax status. This status allows the taxable income and losses of the entity to be passed through to its shareholders. In order to maintain Subchapter S status, S Corporations must, among other requirements, have only one class of stock (meaning no preferred shares), and their shareholders may only be natural persons or certain types of trusts (not government entities).

In light of the restrictions placed on S Corporations, the Treasury will not take stock in S Corporations. Instead, the Treasury will purchase subordinated debentures. These debentures, or “Senior Securities,” have many of the same features and terms as the senior preferred shares issued by C corporations. A summary of these terms is provided below.

Eligibility

The eligibility requirements for the S Corporations are largely the same as for C corporations except, of course, that these terms apply only to entities that have made a valid Subchapter S election. The Treasury will purchase Senior Securities from successful applicants at the highest-tier holding company level for banks that have a holding company. The Treasury will invest directly in successful bank applicants that do not have a holding company.

Application Deadlines

The deadline for S Corporations to apply to participate in the CPP is 5 p.m. EST February 13, 2009. Notably, the FAQ document that the Treasury released with the term sheet indicates that those S Corporations that have already applied for CPP funds do not need to reapply.

Senior Securities

The Treasury will purchase Senior Securities totaling between 1% and 3% of the risk-weighted assets of the entity. The Treasury has indicated that it will calculate these percentages based on the most recent call report on file at closing. If the amount requested at application is no longer within the 1% to 3% range at the time of closing, the applicant will need to adjust the amount requested. Applicants may also adjust the amount requested prior to closing.

Where the Treasury invests at the holding company level, the Senior Securities will be considered Tier 1 capital. Where the Treasury invests at the bank level, the Senior Securities will be considered Tier 2 capital.

The Senior Securities will be senior to the entity’s common stock but subordinated to claims by depositors and other debt obligations of the entity unless such debt obligations are explicitly made pari passu with or subordinated to the Senior Securities. As with the C corporation programs, the Senior Securities will not be subject to any contractual restrictions on transfer. They also will not be subject to the restrictions of any stockholders’ agreement or similar arrangement that is in effect among the entity and its stockholders at the time of the Treasury’s investment or thereafter.

Cost of Senior Securities

Each note representing a Senior Security will be in the principal amount of $1,000, and the maturity for each note is 30 years. The Senior Securities will pay interest at a rate of 7.7% per annum for the first five years, after which the rate will increase to 13.8% per annum. These rates are higher than the 5% and 9% rates under the C corporation programs, but the Treasury indicated that the reason for the higher rates under the S Corporation program is that the interest paid on the Senior Securities is tax deductible, while the dividends paid on the shares issued under the C corporation programs are not. Therefore, assuming a 35% tax rate, S Corporations will pay an after-tax effective rate on the Senior Securities that is equal to the dividend rates C corporations are paying.

Any holding company that issues Senior Securities has the option of deferring interest for up to twenty quarters. However, any unpaid interest will cumulate and compound at the then effective interest rate. The holding company may not pay dividends on equity or trust preferred securities while interest is being deferred.

Redemption

Similar to the C corporation programs, the Senior Securities may not be redeemed during the first three years following the investment unless (1) the entity funds the redemption using only proceeds from a Qualified Securities Offering (meaning a sale for cash by the entity, after the date of the investment, of capital that is at least the same capital tier as the Senior Securities); and (2) the Qualified Securities Offering results in aggregate gross proceeds equal to 25% or more of the price of the Senior Securities when issued. A Qualified Securities Offering does not include sales made pursuant to agreements or arrangements entered into on or before January 15, 2009. It also does not include financing plans which were approved by the entity’s board or publicly announced prior to that date.

After three years the entity may redeem the Senior Securities at will, though all redemptions are subject to the approval of the entity’s primary federal banking regulator. After the Senior Securities have been fully redeemed, the entity may redeem the related warrants, as discussed below.

Voting Rights Related to Senior Securities

The Senior Securities will not have voting rights, except that there will be class voting on (1) the authorization or issuance of equity securities that purport to rank senior to the Senior Securities; (2) any amendment to the rights of the Senior Securities; or (3) any merger, exchange, or similar transaction which would negatively impact the rights of the Senior Securities.

The Senior Securities holders will gain the right to elect two directors after the entity has failed to pay interest in full for six periods, whether or not consecutive. The right to elect directors ends when all interest has been paid for all prior interest periods.

Restrictions on Repurchases

During the first ten years after the Treasury makes its investment, an entity must obtain the Treasury’s consent prior to repurchasing equity securities or trust preferred securities of the entity unless:

• The Senior Securities and Warrant Senior Securities (see below) have been fully redeemed;
  

• The Treasury has transferred all of the Senior Securities and Warrant Senior Securities to third parties; or
  

• The entity is repurchasing shares in connection with a benefit plan in the ordinary course of business and consistent with past practices or relevant income tax law.
  

Repurchases are also not allowed if interest payments on the Senior Securities are not current.

Restrictions on Dividends

An entity may not declare or pay dividends on shares of equity or trust preferred securities, nor may it repurchase or redeem shares of equity or trust preferred securities, until it has paid all accrued interest owed on the Senior Securities.

For the first three years after the investment is made, an entity must obtain the Treasury’s consent prior to increasing its regularly paid dividends per share unless the Senior Securities and Warrant Senior Securities have been fully redeemed or have been transferred to third parties.

After the third anniversary of the Treasury’s investment but prior to the tenth anniversary, the Treasury’s consent will be required for any increase in aggregate common dividends per share where the resulting dividend per share is greater than 103% of the prior year’s dividend rate per annum. No increase in dividends will be allowed as a result of a dividend paid in shares, a stock split or a similar transaction.

S Corporations are allowed to increase dividends without the Treasury’s consent where the increase is solely proportionate to the increase in taxable income of the entity and distributed in order to cover the income taxes the shareholders must pay on the entity’s income. The Treasury and any of its successors may challenge the amount of proposed tax distributions if they believe such distributions exceed the amount necessary for the shareholders to pay their share of the entity’s income taxes.

On or after the tenth anniversary of the Treasury’s investment, an entity may not pay any dividends or repurchase any equity securities or trust preferred securities until all of the Senior Securities and Warrant Senior Securities have been redeemed or repurchased.

Executive Compensation Restrictions

S Corporation participants must agree to the same restrictions on executive compensation during the time that the Treasury holds Senior Securities that apply to C corporation participants. These include (1) restrictions on incentives to take unnecessary and excessive risks that threaten the value of the financial institution; (2) clawbacks on paid bonuses and incentive compensation that was based on materially inaccurate earnings or other criteria; (3) restrictions on golden parachute payments; and (4) limits on tax deductions for executive compensation.

These restrictions apply to the participant’s CEO and CFO, as well as the next three most highly paid executive officers of the entity (Senior Executive Officers). (A bank holding company must look at its own executives and the executives of its bank subsidiaries to determine the next three most highly paid executive officers, other than the holding company’s CEO and CFO.)

Affiliate Transactions

While the Treasury holds Senior Securities, participants and their subsidiaries are restricted from entering into transactions with related persons unless the such transactions are on terms no less favorable to the participant and its subsidiaries than could be obtained from an unaffiliated party. In addition, the entity’s audit committee or a group of independent directors must approve such transactions. If there are no independent directors, then the board must approve the transaction and keep written documentation supporting its determination that the transaction is on such comparable terms.

Warrants for Senior Securities

The Treasury will receive warrants to purchase a number of Senior Securities in an amount equal to 5% of the amount of Senior Securities purchased on the date of investment (Warrant Senior Securities). The exercise price for the warrants will be $.01 per note representing a Warrant Senior Security. The warrants have a 10-year term and are immediately exercisable. The Treasury intends to immediately exercise the warrants.

The Warrant Senior Securities have the same rights, preferences, privileges, voting rights and other terms as the Senior Securities, except the interest on the Warrant Senior Securities will be 13.8% and the Warrant Senior Securities may not be redeemed until the Senior Securities have been redeemed.

The warrants must not be subject to any contractual restrictions on transfer or restrictions of any stockholders’ agreement or similar arrangement.

Though the term sheet does not mention any exception to the requirement for warrants for certified Community Development Financial Institutions (CDFIs), Treasury officials have indicated that the Treasury will likely decline to take Warrant Senior Securities from S Corporations that are CDFIs.

Application Procedures and Considerations

Pending Applications

The information we have received is that pending applications will begin to move forward through the application process without any reapplication or communication from the applicants. Entities with pending applications are likely to receive a phone call from their bank’s primary regulator, though it may take several days for regulators to get to everyone. In addition, those with pending applications may be required to confirm that they have read the term sheet and related documents for S Corporations located on the Treasury’s website or to submit additional information.

New Applicants

Treasury officials have indicated that S Corporations should use the same application document and process that C corporations used to apply. The application is contained within the Application Guidelines document posted on the Treasury’s website at http://www.ustreas.gov/initiatives/eesa/docs/application-guidelines.pdf.

A holding company that submits an application must send it to the Federal Reserve and the federal regulator of the largest bank it controls. A bank that does not have a holding company must submit the application to its primary federal regulator. These regulators must be contacted prior to the submission of the applications.

Each applicant is required to describe any condition, including any representation or warranty, contained in the investment agreements and related documentation it must execute, with which the applicant cannot comply. The applicant may do this on the application or may attach a one-page explanation. The applicant also must provide a description (no longer than one page) of any mergers, acquisitions, or other capital raisings that are currently pending or are under negotiation, including the expected consummation date. The CEO or an authorized designee must sign the application. Regulators may request additional information to accompany the applications.

Based on our experience in processing CPP applications, regulators, in reviewing applications, consider the viability of the entity. Therefore, in appropriate cases, entities may wish to provide information confirming viability. In addition, the incoming Obama Administration indicated in a letter to the leaders of Congress dated January 15, 2009 that healthy institutions receiving federal assistance under the Emergency Economic Stabilization Act of 2008 (EESA) will be required to increase their lending and report on their lending activity. Such institutions will also be required to implement mortgage foreclosure mitigation programs. The Administration stated that it intends to prevent EESA funds from being used to purchase healthy banks instead of to lend money. Entities may benefit from taking the Obama Administration’s expressed intentions for the use of EESA funds under consideration when submitting their applications.

Each entity should identify any information contained in the application which it desires to keep confidential and request confidentiality for such information. Instructions for requesting confidentiality are contained in the Application Guidelines.

The Treasury has indicated that applicants will be able to withdraw their applications under the CPP and that such withdrawals will not be made public. The Treasury also will not disclose any applications that are denied. The Treasury is encouraging those with applications pending that have determined not to participate to inform their regulators as soon as possible.

As additional information related to the terms of participation in the CPP continues to be released, it will be important for institutions to reevaluate whether participation in the CPP makes sense for them. For those S Corporations that have not applied yet, you have until February 13, 2009 to do so if you wish to be considered for participation.

Five things to know about online banking

Posted in: Banking, Personal Finance
By Joe Wallace
Dec 22, 2008

Online banking can be a convenient way to keep your accounts in order, pay bills and keep track of your spending. Online customers, however, need to protect themselves by safeguarding passwords, anticipating technical problems and being aware of bank policies about transaction times.

There are five main aspects to be aware of in order to fully protect your personal data and account information. Many new users seeking online banking options are already aware of one or more of these. Using the tools you are already aware of in combination with other techniques will give you a much safer and simpler online banking experience.

Understand Bank Policies For Errors or Interruptions

Many online banking systems allow you to set up automatic deposits, withdrawals, account transfers and other transactions. No two online banking systems are alike, but one factor is common for all systems—errors will occur.

Whether it's a because of a power outage, a sudden loss of your Internet connection, or a problem with the online banking servers themselves you should know your bank's policies and how complaints should be directed.

If you were in the middle of a transaction interrupted by a technical problem, your account may wrongly indicate a completed transaction when no debit or credit actually occurred. How does your bank handle such situations? Know the policies before you commit.

Password Protection is Your Responsibility

It is very important to safeguard your user name and password information. Some institutions may require you to change your password on a regular basis to prevent identity theft or fraud, and you will need to remember and protect your passwords. Use a "strong" password as recommended in the online banking advice section of your institution's website.

Strong passwords are usually combinations of letters and numbers that do not use standard "dictionary words" that can be guessed by a computer program trying out endless combinations of real words and numbers.

If you suspect that your password has been compromised or your account has been accessed without your permission, change your password immediately and call the bank's customer service hotline to file a report.

Know Your Bank's Communication Policies

Some unsuspecting online banking customers can fall victim to a scam when they get an e-mail supposedly from their bank customer service department requesting "account verification" or something else along those lines.

The message often starts with a generic "Dear Customer," and goes on to say, "In order to maintain secure online banking, you must verify your account by providing your user name and password." This online scam usually includes a link in the body of the e-mail which leads to a website that is not actually part of your online banking system.

People fall prey to this scam because they don't know their bank's actual policy for routine maintenance of secure online banking details such as your password or user ID. Chances are your bank will never contact you for a change of password request and will never contact you using the opening phrase "Dear Customer."

Official bank e-mails are often personalized and may require you to go to the main page of your online banking interface, log in as usual, and then change your password or other information once you are inside the system.

When in doubt, always call the customer service phone number and get independent verification of a request for account data such as your password or account number.

You can also protect yourself simply by refusing to click on any link sent to you in an e-mail. Access your account as you normally would, and access your account to make changes.

Know Your Bank's Transaction Waiting Period

As with most transactions, online banking transactions may be noted on your account right away, but funds may not be debited or credited for a certain amount of time. Do you know what the standard waiting time is before transactions have cleared after online activity?

You can avoid overdrafts and service charges by knowing the standard time you should wait before new activity becomes "official."

Know Your Service Charges and Transaction Fees

Some banks may charge a fee for account transfers, ACH debits or credits, automatic bill pay or other features. Know your service charges and other costs before trying to do your banking online. You can avoid accidental overdrafts by calculating your fees or surcharges per transaction and adding them into your records the same as any other check or ATM transaction.

Recent FDIC changes and how they affect you

Posted in: Banking, Personal Finance
By William Pirraglia
Dec 24, 2008

What Is FDIC Insurance and How Does It Work?

The Federal Deposit Insurance Corporation (FDIC) has been insuring deposits in U.S. banks since 1933, as part of the Glass-Steagall Act. The large number of banks that failed during the Great Depression displayed the need for some reassurance for most Americans. The Federal government examined the Commonwealth of Massachusetts' Depositors Insurance Fund (DIF). They patterned the original insurance plan after this program.

The bank failures of 1933 were not the first instance of disaster and stimulus for a workable deposit insurance program. The lesser known "Panic of 1893" originally spurred support for a federally controlled U.S. banking system. First, the Federal Reserve System was created in 1913 to coordinate and oversee the welfare of all U.S. banking institutions. The government needed some way to improve the security of deposits in U.S. banks.

Little was done to establish a workable insurance program until the financial disaster of 1933, when more than 4,000 banks failed, as consumers sparked "runs" on thousands of financial institutions. FDIC provided – and still provides – that level of comfort and security that the U.S. needed then and now.
FDIC insures accounts for almost all U.S. banks.

The National Credit Union Share Insurance Fund (NCUSIF) provides identical insurance coverage for the nation's credit unions. Both programs are well funded, as all financial institutions make annual deposits to these entities and continually build up reserve balances.

In the event a bank fails, FDIC attempts to arrange a purchase of assets and liabilities by another strong financial institution. This approach often works well and depositors in the former institution merely continue to conduct business with the new bank. In most cases, other financially strong banks offer to purchase branches, deposits, and, at least, some of the loans of the soon to be extinct institution.

Should no buyer emerge, the FDIC insurance program activates. The FDIC manages the liquidation of the failed bank and covers the entire "principal" in open savings accounts. It is important to note that, should your bank owe you some amount of interest, which was not posted prior to the failure, FDIC does not insure this amount.

For example, if you have $5,250 in your account and $125 in interest due that has yet to be posted as of the failure date, the FDIC will hand you a check for $5,250, but not the accrued interest you've earned. However, your balance up to $100,000 (see below for recent temporary changes) in most accounts, and up to $250,000 in retirement accounts is safe.

New Changes in FDIC Insurance That Affect You

The wide-ranging new regulations implemented in 2008 to stabilize the U.S. banking and financial systems include some changes in FDIC insurance coverage that may affect you. Coverage has been improved to establish greater confidence in the financial institution community in the U.S.

Major change #1: All balances in "transaction accounts" (checking accounts) that do not earn interest, either personal or business, are insured in full, regardless of the balance. Those transaction accounts that are interest bearing are still covered under the standard – and new – regulations for bank accounts. Should you have one or more typical checking accounts that earn no interest, you are now insured for all funds, regardless of the size of your balance.

Major change #2: All interest-bearing accounts are now insured up to $250,000, instead of the usual $100,000. This increase is a major positive development, both from a psychological and financial perspective. It shows that the Federal government has a strong belief and commitment in the U.S. banking system, even in a period of economic crisis.

These changes are not permanent. They apply to all insured banking institutions until December 31, 2009. After that date, insurance limits will revert to their former levels. Your regular accounts will again be insured up to $100,000 and retirement accounts will be insured up to $250,000. The modifications enacted in 2008 were a result of the economic crisis that involved sub-prime mortgages and mortgage-backed securities issues.

Along with the benefits of higher insurance limits, the commitment of the Federal government and the FDIC should instill consumer confidence in the continuing stability of U.S. banks.

FDIC insurance has been an effective, positive influence on U.S. banks and consumer confidence since the Great Depression. The FDIC examines every insured bank on a regular basis and rates their operations and stability on a variety of strict criteria. These recent changes and improvements should help continue the confidence of both the consumer and financial communities.

Money saving tips for the first time budgeter

Posted in: Personal Finance, Banking
By Bonnie Conrad
Jan 12, 2009

As the economy has continued to spiral downward, the pain caused by the economic crisis has spiraled upward. This latest economic downturn is hitting people of all income levels. Everyone, it seems, is struggling to find a way through the current difficulty, and many people are finding themselves faced with making a budget for the first time.

When times are good and the money is flowing well it can seem superfluous to create a monthly budget. But when the money gets tight, a realistic family budget is an absolute must. Planning a budget – and sticking to it – is one of the best ways to make it through the current downturn and emerge relatively unscathed on the other side.

Don't Stop Saving

When times are tough it is all too tempting to look to regular savings, like the money diverted to a 401(k) plan, mutual fund or other investment, for extra cash. It is vital to resist that temptation and to continue saving during the tough times whenever possible. The savings that you can manage to accumulate during the downturn can leave you in a much stronger position when things finally do turn around.

It is, however, a good idea to divide savings into short-term and long-term categories. A prime short-term goal should be to establish an emergency fund equal to a minimum of three to sixth months worth of living expenses. This cushion will help you sustain a sudden economic shock – like the loss of a job – without the need to dip into your longer-term savings.

Look at Your Neighbors

Affluent workers dealing with a first-time budget would do well to take a page from their friends and neighbors. Many working class people have long understood the difficulty of making ends meet, and learning their habits can help get you through even the most severe downturn.

Take a good look at some of the money-saving habits employed by the smart and frugal. Before you head out to the grocery store take the time to make a detailed shopping list. Also take the time to clip out those money saving coupons and match those coupon savings with sales at the local stores. Many smart shoppers have been trimming 50% or more from their family's food budgets for years simply by using these smart shopping techniques.

The same is true for big ticket items. Comparison shopping can save you hundreds or even thousands of dollars, as can saving up until you may be able to afford to pay cash for the things you want. The high interest rates charged by credit card issuers can become even more egregious when the economy is showing signs of a downturn.

By paying cash you avoid these potential problems and help instill the discipline you will need to live a more frugal lifestyle. If you need some motivation you may want to divert a small part of each paycheck to a dedicated savings account in anticipation of your big ticket purchase.

Watch the Big Things and the Little Things

When it comes to creating and maintaining a budget the little things can make just as much a difference as those big ticket items. Keeping track of small and seemingly insignificant expenditures – like that morning cup of coffee or that daily lunch at your favorite upscale restaurant – can free up literally hundreds of dollars a month. It may also be a good idea to take a close look at where your money is going and where you may be able to cut back.

Saving money is not always easy – especially for the first time budgeter – but it is important to persevere. The money-saving strategies you learn during the current economic slowdown will serve you well – not only now but also after the economy turns around.

Banking fact or ficiton

Posted in: Banking, Personal Finance
By William Pirraglia
Jan 15, 2009

As with many things related to personal finance, there are varying opinions when it comes to a lot of questions that deal with personal banking. These varied opinions, as well as personal beliefs can lead to the mixing of many truths and falsities.

Here are some explanations of both the myths and the facts that may affect your banking relationships and choices.

How Banking Myths Occured And Why They Can Cause Problems

For many years, there were few myths surrounding the subject of banking. The industry was actually quite simple and most people had a working understanding of the facts.

You deposited money, the bank safeguarded it, you were offered a rate of interest on your savings, and your bank loaned out their deposits to other customers for auto, home, and personal loans. The difference between the bank's loan interest rates and their savings rates was their income for expenses and profit. Simple.

It remained simple until the 1970's, when a new word changed the banking world: deregulation . Since the Great Depression of the 1930's, when over 4,000 banks failed, until around 30 years ago, banks and credit unions were heavily controlled and regulated by the Federal government, just as the nation's airlines were.

However, after serious political pressure, many former controls and prohibitions were eliminated. The process was called deregulation. Banks were now permitted to conduct business very differently and without the strict controls of the prior 40 years.

The theory was that by increasing banks' ability to offer other products and services, higher levels of competition would benefit bank customers with more choices and lower pricing. Unfortunately, the advertising and marketing of new products and services has created myths that help neither banks nor consumers.

The changing face of banking and more "new and improved" claims, similar to dishwashing detergent advertising, has caused consumers to make some poor decisions and banks to reorganize their operations to allow survival and, sometimes, prosperity.
For example, deregulation gave birth to fees. Look for the banks and credit unions with the minimum number of fees in their account agreements. Before you open a new savings account, money market account, or certificate of deposit, ask your bank or credit union about any associated fees and take the time to read your account or certificate of deposit agreement.

Some Important Fact And Fiction Issues

Myth: Internet banking and ATMs will make physical branches obsolete

In the period since deregulation, both banks and consumers have learned that this is fiction. The fact: Most bank customers want the opportunity of dealing with a bank employee face-to-face in many instances. Even those consumers that use the Internet and ATMs for the majority of their transactions want the ability to visit a local branch office and have human contact for loans, advice, product information, or just maintaining the connection they've developed with their bank or credit union.

Myth: Internet and mobile banking is not secure.

Many people still become quite nervous that using their computers or their cell phones to conduct banking transactions is dangerous for security reasons. The fact: While there may have been some good reasons for this concern years ago, the level of security offered by most banks and credit unions is greater than you enjoy when you do your banking in person at branches. The odds of losing your money or your identity are very slim.

Myth: Bank and credit union money market accounts are just like money market mutual fund accounts offered by investment firms.

Commonly confused, these two accounts are very different. The fact: A money market account in a bank or credit union is just another form of savings account, just as is a certificate of deposit. The only differences are in the interest rate and the number of transactions you're allowed to make in a given month.

The accounts offered by investment firms are short term investments in mutual funds. Unlike banks and credit unions, which give you insurance on your deposits, investment firm money market mutual fund accounts offer no insurance protection.

Separate Fact From Fiction

Separating banking fact from fiction will always give you a better opportunity to save or make money. Relying on commonly believed myths will normally bring you opposite and unwelcome results. Taking the time to learn banking facts typically results in a more rewarding, pleasant, and profitable experience with your financial institution.