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Spokane, Washington  Est. May 19, 1883

Stay abreast of latest banking, credit changes

McClatchy Tribune (McClatchy Tribune / The Spokesman-Review)
By RUSS WILES Arizona Republic

Not everything about banks these days involves bad loans and plunging profits. Here are some other recent developments affecting banking, credit and customers:

Overdraft fees rising: The Consumer Federation of America this month reported increasing fees for overdraft protection levied by the nation’s 10 largest banks.

Banks often levy tiered fees that rise with overdraft frequency and other factors. The CFA reports the highest overdrafts fees at the 10 banks now average $34.65 per transaction, up from a $30.30 average for the same 10 banks in 2005.

But the American Bankers Association contends most customers don’t trigger overdraft charges. According to an ABA survey, 80 percent of respondents said they haven’t paid an overdraft fee in the past 12 months; most of the rest reported just one or two charges.

Credit debts by state: Do people in some states abuse credit cards more than others? You might think so after viewing figures by credit bureau TransUnion that were cited by research group CFED.

In the study, Alaskans had the highest per-capita median or midpoint credit-card debts of $3,384, followed by four other states above $2,000: New Hampshire, Connecticut, Maryland and Colorado.

Residents of the other 45 states and Washington, D.C., all had median card balances between $1,000 and $2,000.

But are Alaskans the worst credit abusers? Not necessarily, because there’s a strong link between high credit balances and high income. In fact, all 10 of the top credit states have above-average personal incomes exceeding $40,000.

Conversely, residents of the 10 lowest-debt states all have below-average incomes.

Mississippi, for example, had the lowest credit-card debt, $1,098, and the lowest median income, $28,845.

Virtual safes: To the extent that you store important papers at a bank, Wells Fargo offers an intriguing new option. The bank now provides online storage of personal electronic files, including copies of tax records, wills, photographs and medical records. In a customer survey, Wells Fargo found most respondents had six or more documents they’d like to store online.

While the company still recommends keeping originals in a safe physical location, electronic copies in Wells Fargo’s vSafe can be accessed from anywhere there’s an Internet connection. The service offers multiple layers of protection and folders for medical, legal and other standard categories.

The service is available in Arizona and will be offered later this year in other states. It costs $4.95 to $14.95 a month.

Building ladders: Many buyers of bank certificates of deposit are familiar with the concept of laddering or spreading their money among CDs with different maturities. That way, you always have some money coming due fairly soon, and you get a blend of interest rates. But renewing CDs can be a hassle, which explains why some banks now offer automated laddering.

For example, T. Rowe Price Savings Bank, an FDIC-insured affiliate of the mutual fund company, offers a Smart Ladder service that lets investors split CDs into terms of one, two, three, four and five years. Whenever a CD matures, the money rolls over automatically into a new five-year term.

More scoring alternatives: One of the raps against credit scores is that they penalize people with limited credit history, even if such persons manage money responsibly. One obvious example: Retirees that have paid off their mortgages.

To address this, more firms have developed alternative scoring models that utilize nontraditional information such as bank-account records, rent payments and payday-loan usage, said Ethan Ewing, president of Bills.com. “Alternative credit scores can be a big help for those who have limited credit history,” he said.

As examples, Ewing cites the Anthem Score, the Debit Report from eFunds Corp. of Scottsdale, Ariz., and a FICO Expansion Score from Fair Isaac Corp., which developed the industry-standard FICO scores.

But not all lenders are using these alternatives out of concern that they’re untested and could extend more credit to people that can’t afford it.