Yesterday, Bank of America and J.P. Morgan Chase Bank announced they were changing their policies to allow customers to opt out of overdraft protection. Wells Fargo decided to follow in their footsteps late yesterday, announcing a number of changes at this bank. The following changes also apply to Wachovia, the bank that was acquired by Wells Fargo several months ago.
Wells Fargo is eliminating overdraft fees if the account is overdrawn by less than $5 and are limiting overdrafts to only four per day. Customers will be allowed to opt out of overdraft protection, so they don’t incur fees but transactions that would bring their accounts below zero will be declined.
All of these changes are improvements, although I see no reason for a bank to charge more than one fee per day. Regardless of what a bank charges, customers have the responsibility to monitor their own accounts. Accidents and emergencies happen, but in the end we should all be aware of what we have in the bank. The best defense against excessive bank fees is to pay attention and give the banks no reason to charge them. Here are some tips for avoiding overdraft fees.
Wells Fargo Announces Changes to Overdraft Practices, September 23, 2009
This would-be acquisition is turning into a mess. First Citi agreed to buy Wachovia’s deposits with the help of the FDIC. Wachovia accepted this deal under duress, apparently. The FDIC warned Wachovia that if they did not agree to the deal, the government would seize Wachovia’s deposits. That left Wachovia little choice but to accept.
Not much later, Wells Fargo stepped in with a better offer for Wachovia. This offer called for an acquisition of the entire operations of Wachovia, not just deposits, without the help of the government, for $15.1 billion in stock.
On Saturday, the FDIC succeeded in having the New York State Supreme Court block the deal between Wells Fargo and Wachovia, but on Sunday night, the ruling was overturned on appeal. Citi will appeal this decision.
It seems that the Wells Fargo deal is better for Wachovia, Wachovia’s shareholders, and the public. Wells Fargo will keep Wachovia intact and the FDIC will not be required to use taxpayer money to cover any losses. I don’t see any reason that anyone would favor the Citi deal.
Although Wachovia was recently saved by Citi and the FDIC, Wells Fargo stepped into the picture with a better offer. In this deal, Wells Fargo would take on all of Wachovia, including deposits, brokerage, and investment management, for $15 billion. Earlier this week, Citi offered $2.2 for Wachovia’s banking operations only.
If the Wells Fargo deal goes through, and Citi will do everything in its power to attempt to stop that from happening, shareholders of Wachovia would receive about one-fifth a share in Wells Fargo for every share in Wachovia.
While Citi’s offer relied on the FDIC for financial assistance, Wells Fargo can go through with the transaction without help from the government. The FDIC, however, is in favor of the Citi’s deal.
The banking landscape continues to change.
October 3 update: Wells Fargo has stepped in and placed a better offer for Wachovia.
Wachovia is my main brick-and-mortar bank. The bank has held my primary, though small, savings and checking accounts for about fifteen years. During this time, it hasn’t always been known as Wachovia to me due to a series of mergers and acquisitions. My accounts, which haven’t moved, were held at First Union National Bank, CoreStates National Bank, and New Jersey National Bank.
Soon, my bank will be Citibank. Citibank recently announced its plans to bail out Wachovia’s banking operations.
Until now, I’ve managed to hold completely free accounts at Wachovia. While I’ve been charged fees for various reasons, perhaps mistakes on my part like allowing my savings account balance to dip below a minimum level, Wachovia has always refunded the charges. In fact, I’ve been quite happy with the bank’s customer service all around from the beginning.
If CitiBank does not offer a free option to correspond with my current Wachovia accounts once the acquisition and transition is complete, I will not hesitate to move my funds out of the bank. I have had some interesting experiences with CitiBank’s banking services — mostly on the business end — and I’m not anticipating the switch.
The new Wall Street Journal blog, The Wallet, has a couple of posts regarding the takeover that would be helpful to Wachovia customers like me, here and here. These are the major points:
- Deposits insured by FDIC won’t be lost.
- If you sell your Wachovia stock, which was at $3.50 per share as of last night, you can write off your losses against your stock gains for tax purposes.
- Wachovia mortgages and student loans will become Citi’s assets along with bank accounts after December 31.
The other day, I received a tax form (1099-INT, income from interest) in the mail. The form came from Bank of America. I was not aware of having an interest-earning account at Bank of America. My only experience with this particular financial company was when a Wachovia credit card I have (unused but held to avoid fees on my checking account) was transferred to Bank of America after Wachovia decided to get out of that business.
This credit card could not have been the source of the unknown interest, so I called the customer service phone number conveniently located on the tax form. Someone from Bank of America answered right away. After providing my account number, the customer service representative quickly had an answer for me, even before I asked the question.
The interest reported on this 1099 apparently comes from the security deposit I placed with my landlord company when I moved in last year. At first, I was disappointed that I would have to pay tax on this interest even though I have no access to the account. However, I added the interest information to my tax return in progress at TaxAct, and it resulted in no change in my tax due. Perhaps it’s just not a significant enough amount.
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