Photo by: Mark Csabai (Stock Exchange)

In a previous post, we discussed staying out of debt and maximizing your savings by staying aware of the terms, fees, and features your bank offers and, most importantly, moving to a new one if you discover terms that suit you better. This time, we’re going to share a few more resources to help you locate those deals in your region and compare what’s available. Your bank is immensely important in your financial world, and a little part of it goes with you everywhere in the form of your debit card, so it’s worth getting the most out of it. Even if there weren’t many other options when you first started banking, there probably are now — and lots of people are hunting for the best ones.

There’s a name for this phenomenon: “Move Your Money.” Though it started among a widely dispersed group of taxpayers dissatisfied with big banks and bailouts, it has since generated a number of useful, grass-roots sources for getting and comparing information about practical banking matters. As with any “crowdsourced” movement, be sure to corroborate your data with official sources, and don’t be afraid to check several outlets before making a decision. Information is power: use it wisely and your budget will thank you!

The original home of the movement is the website MoveYourMoney. The top contributors here are opposed to the bank bailouts and make no secret of their desire to inform consumers about alternatives to big banks using taxpayer funds. They offer a variety of ways to search for smaller, community-oriented banks and credit unions by area. There’s also a network of supporters you can contact to get more information, and a helpful FAQ to give you context on why “moving your money” makes a difference in the bigger financial picture. With the latest news on Goldman Sachs just starting to make waves, don’t expect this to quiet down any time soon.

Not finding exactly what you want in your local area? All is not lost. Bargaineering has an article on Top Online Banks offering thorough comparisons of interest rates and other crucial factors at a variety of banks with complete online servicing. There are also detailed reviews of a handful of the “best” online banks with links to official information. Remember that, though the trend is toward expanded online features pretty much everywhere, not every small bank or credit union has a full suite of online services just yet. If online banking is important to you, this might provide the answer.

Last, but not least, don’t forget that a credible financial advisor can help you: not only with choosing a new bank, but a whole range of other crucial tasks, including dealing with creditors and reducing credit card balances. They may provide insight into a savings or investment strategy that will color your opinion on the best bank for you.

South African Krugerrands
Photo By Lyudmila Green

The stock market has been as volatile lately as a poker table at Las Vegas casino. Many traditionally conservative investments have seen unheard of volatility. Savers have begun asking the question, “What can I invest in to make sure I at least keep the principle of my investment?” For many investors, gold has come up on the list of options.

Before buying a boat load of gold, one should consider the reasons gold is valuable and what gold is useful for in terms of investments. Gold has industrial value, but there is frankly plenty of gold that is already mined and available for industrial purposes; so much so that you can easily find 30$ gold plated 2 foot S-Video cables at your local electronics supplier. Gold is useful either to preserve an investment, or as a hedge against falling currency. If you feel currency is unsafe, or your portfolio is overexposed to a specific currency, adding gold to your portfolio could be wise.

A wise investment rule has always been to diversify. Many investors wrongly get the impression that this means buy some tech stocks, as well as some utility stocks. A diverse investment portfolio, however, is not simply having a bunch of stocks; it is having a diverse set of investments. Gold is not a bad thing to add to that basket, which should include not simply stocks, but also real estate, material investments, proper insurances, and other assets that are not exposed to currency risk.

A mistake often made with gold is to treat it as a stock. Indeed, many who hear that gold is a great buy, run out and buy stock in a mining company or two. As mentioned above, there’s already tons of gold that’s already been mined; purchasing a mining company’s stock would really be a bet that either there is going to be a ton of gold mined, or a massive shortage of gold on the market.

So what should a gold saver purchase? Low-premium bullion gold. Bullion is a fancy word for coins, or other forms, of a metal that are only valued by the amount of the metal inside. There are coins that are made with gold that are valuable because they are old, or rare. That is not bullion. A bullion coin is one that you can set on a scale and immediately know its value based on daily spot gold prices. Anyone selling you a stock, or a certificate, isn’t really selling you gold. If you cannot hold it in your hand you’ve been sold a different type of investment.

What does low premium mean? Well, for instance, the US Government sells 1-ounce ‘American Eagle’ coins. These contain an ounce of Gold. The South African government also sells 1 ounce gold coins called krugerrands. American eagle coins contain the same gold as a krugerrand but American Eagles cost more; if you’re just looking to buy gold why pay more?

Bottom line? If you’ve decided that you are worried about a falling dollar, or worried about the risk of ‘traditionally conservative’ investments failing to preserve your investment, its time to buy gold. If you’ve determined to buy gold make sure that you buy gold you can hold in your hand, which is not more expensive because there’s a name on it.

Protect Your MoneyPhoto By Jakub Krechowicz (Stock Exchange)

Citibank is having an interesting week. First they apparently had two different employees tell a website owner his account was frozen because they found objectionable content on his web page. Now Citibank customers are concerned over a notice suggesting they may have to give a 7-day advanced noticed before withdrawing funds. In a statement hearkening to the bank runs of the Great Depression, Citibank assures customers they do not plan to exercise this right, but would like to note they have it. So what does this all mean?

Firstly, let’s look at the facts. According to Citibank representatives the notice is mundane in nature, and due to their recent deal to change how the FDIC treats some of their accounts. The FDIC is the program that backs banks with government dollars in the event of failure. Indeed the FDIC requires banks to reserve this right dating back to the 1933 crash. The rule is intended so that in the event of a bank run, it’s not simply a first come first serve free for all as to who is able to withdraw their money. Of course Citibank assures there is no chance of a bank run, and they were merely notifying their customers so as to be extra honest.

Without questioning Citibank’s motives, how possible is a bank run, or a more likely liquidity crunch that would require taking advantage of this rule? Well, a liquidity crisis is not unheard of recently. The banks that had to go to the government for loans were in many cases doing so because they didn’t have enough cash on hand to meet current obligations. As mortgage holders stopped being able to pay their mortgages banks that had planned on having those funds to pay their bills required extra cash to make ends meet.

Part of the problem is something called fractional lending. Many assume the bank cannot lend more money than it has deposited. This is not the case. Banks are able to legally lend several dollars for every dollar they have on deposit. Normally there are several checks within the financial system that help to ensure they still always have more than enough dollars to pay for withdrawals. Normally, however, most customers do not require significant amounts from their accounts at the same time.

While the idea of telling customers they cannot have the money they legally own may seem frightening, it really is designed to help customers. During the bank runs of the Great Depression those customers who got wind of a bank’s financial troubles got in quick to get their savings before the bank ran out of money. This rule was established, along with the FDIC, to help make sure that customers had a fairer chance at receiving their funds at all, as well as to help prevent potentially solvent banks from being wiped out by a sudden irrational panic. Also, Citibank’s change with the FDIC actually provides unlimited protection on some accounts. Certainly all this is in the customer’s best interest.

The curious thing though, is why Citibank would mention it. Yes, the change requires they reserve the right to ask for written notice of withdrawals 7-days in advance, but, as near as I can tell, there is no rule saying they have to make a special notice of it to their customers. In fact, many, if not most, banks that deal with the FDIC require this, and have not gone out of their way to advertise the fact. While I do not seriously believe that Citibank is planning to hold onto their customer’s funds for seven days, it is a sign.

The financial crisis made it clear that the financial industry is not nearly as solid as the huge marble columns on Wall Street might suggest. Citibank is if nothing else saying that they are not ruling out a repeat. If one of the largest banks it the world isn’t convinced there are not more troubles on the horizon it certainly means consumers shouldn’t assume so either.