Many Consumerism Commentary readers have written in to let me know that they recently received a check for about $98 from Bank of America. This check is not a result of the Bank of America overdraft fee class action lawsuit, but it is the result of a similar lawsuit. First of all, the overdraft lawsuit has only recently entered an appeal process. It could be another year or more before customers see any benefits from this latest class action.

The check is the benefit that customers are receiving due to an earlier class action lawsuit, Closson v. Bank of America. Customers who are eligible had a Bank of America, Fleet Bank, LaSalle Bank or U.S. Trust Company debit card and paid an insufficient funds fee, overdraft fee or similar fee before December 31, 2007. In order to receive a benefit, customers would have needed to file a claim form before May 1, 2009. The deadline to receive any benefits has long since passed, so even if you fit this description, it is too late to become a member of this lawsuit.

This is one of many class action lawsuits against Bank of America, some of which pertain to companies that were purchased by the bank, like Countrywide Financial.

• Ross, et al. v. Bank of America, et al. This lawsuit pertains to the bank’s forcing of customers into mandatory binding arbitration, much like Wells Fargo is doing today. This is a new class action lawsuit.
• Closson v. Bank of America. This is the class action lawsuit I described above. Bank of America encouraged its customers to use debit cards that were designed to increase the number of fees. If you received a check in December 2011, it is likely a result of this lawsuit.
• Bank of America overdraft lawsuit. Nearly 1,000 Consumerism Commentary readers have offered their thoughts about Bank of America’s processing of customers’ debits in a certain order that ensured that they could maximize fee revenue from overdrafts. Read more here.
• Homeowner lawsuits. Class action lawsuits in several states, including California and Washington, allege that Bank of America or its related companies withheld taxpayer money designed to help homeowners facing foreclosure.
• Foreign currency conversions. Bank of America was one of many defendants (also including Visa, MasterCard, Chase, Citibank, and more) in a class action lawsuit regarding a conspiracy to set fees for foreign currency conversions, eliminating competition in this particular aspect of business.

Class action lawsuits are usually settled by the defendants, often without admitting any wrongdoing. As a result of settlement, affected customers often only receive a small award while the lawyers representing the class receive significant payments for their work and time. For example, in the overdraft fee settlement, lawyers will receive $123 million, or 30% of the settlement fund, unless the verdict is successfully appealed. At the same time, each affected customer will only receive a portion of the overdraft fees paid. That could be $35 or less per individual.

Are you included in a Bank of America class action lawsuit? Have you received a check in the mail from Bank of America and you don’t know why?

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The best online savings accounts offer high interest rates and great customer service. Savings accounts, particularly so-called “high-yield” savings accounts, are best for money you might need within a year. Any money that you don’t want to subject to the short-term risk and volatility in the stock market should be held safe in a savings account, earning as much interest as possible. Your emergency fund should primarily consist of money held in a high-yield savings account. “High-yield” is unfortunately a bit of a misnomer these days; a decade ago, interest rates were 4% and 5% among select savings accounts and money market accounts. Today, the best rates are all below 2% while a fair amount are still hovering around 1%, many rates are now dipping below the 1% mark. This trend will continue until banks need more cash from depositors.

Interest rates. Interest rates are important because money shouldn’t lose too much purchasing power. In a perfect world, interest rates offered by banks should beat inflation while preserving the balance without risk. Many banks are not now offering a savings option with interest rates high enough to meaningfully beat inflation, so if your savings is at a brick and mortar bank earning below 0.25% APY, choose one of the better options below.

Customer service. When evaluating customer service, there are two important factors to consider. The best banks offer all account maintenance and transfers through a professional, reliable, and easy-to-navigate website. Secondly, live customer service representatives should be knowledgeable, helpful, and available, although customers should have to deal with a representative infrequently if at all.

Based on my own experiences and reviews from other Consumerism Commentary readers, here are the most-recommended accounts for short-term savings. All of the listed interest rates are current as of February 2012, but they are subject to change by the banks. Although I have nine accounts listed below the table of rates, you don’t need to have accounts with that many different banks. Choose one that fits you the best.

First, here is a list of the latest interest rates. Following this table, I offer a few of my own observations and opinions about savings accounts from nine popular online banks. Read the full article →

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