Personal Savings Rate Climbs to 1-Year High

From CNNMoney.com:

Americans saved a slightly larger chunk of their disposable income for a third straight month in June, pushing the personal savings rate to its highest level in a year, according to government data released Tuesday.

The Commerce Department reported that personal savings totaled $725.9 billion, or 6.4% of post-tax income, up from $713.9 billion, or 6.3%, in May. The rate was the highest since June 2009, when the reading came in at 6.7%.

"The rebound in the savings rate is encouraging," said Mark Vitner, senior economist at Wells Fargo. "It means that spending is likely to rise more in line with income whenever it grows."

In addition to lifting spending, a higher savings rate also means that households have a better cushion to pay down debt.

The report showed that personal income and spending were virtually unchanged during the month.

Open a Checking Account, Get $100

With new restrictions and customers with tighter budgets, many banks are finding it hard to pull in new customers. In an attempt to bring in new business, several banks are offering deals where you can get free cash (often ranging between $50 and $200) to new customers. However, as this article from MSNMoney.com warns, many of those banks offset the free cash by introducing new fees, minimum balance rules, direct deposit requirements, etc.

For decades, banks have been trying to get consumers to open checking accounts with freebies like toasters, George Foreman grills and even iPods and Home Depot gift cards.

Now, they're upping the ante with offers of $100, $150 or more in cold, hard cash. This month, Capital One launched a promotion offering a $200 bonus to customers who open a Rewards Checking account through Feb. 28. Bank of America offers $100 to anyone who opens a checking account through Feb. 28.

While cash incentives aren't new -- Chase has been offering cash bonuses for four or five years, according to spokesman Tom Kelly -- at a time when consumers are starting to receive their holiday shopping bills and are mindful of their budgets, such promotions may seem particularly attractive. And thanks to new credit card legislation coming into effect next month and new regulations limiting banks' ability to charge overdraft fees, banks are likely to make such offers even sweeter.

"Banks are wondering how they'll recoup some of their lost revenue, so they're focusing on generating revenue through checking accounts and debit card activity," says Ron Shevlin, a senior analyst with market research firm Aite Group. (See "Credit card rates, fees soar as new law looms.")

Yet consumers shouldn't jump at such offers without reading the fine print. "These deals sound very attractive, but they come with behavioral restrictions and requirements," says Shevlin. "It's great that you'll get $200 upfront, but will you pay $200 in ATM and safety-deposit fees?" Many banks require consumers to set up direct deposit, maintain a minimum account balance or make a certain number of debit-card purchases each month.

Continue reading at MSNMoney.com…

Fed to Curb Banks Overdraft Fees

The Federal Reserve made a surprising announcement today regarding bank overdraft fees, which have become a major source of profits for banking institutions. By October 2010, they will be required to have customers sign up for an overdraft program in order to charge them fees. According to ABCNews.com some banks have already begun changing their accounts, and the rest have less then a year to follow suit.

The Federal Reserve today announced new rules that will ban banks from charging overdraft fees on debit card and ATM transactions unless a consumer opts in to an overdraft program.

"The final overdraft rules represent an important step forward in consumer protection," Fed Chairman Ben Bernanke said in a statement. "Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service."

Overdraft fees can result in consumers being charged up to $35 for withdrawing more money than they have in their accounts. Under the Fed's rules, all consumers -- including existing account-holders -- would have the choice to sign up for overdraft services.