ATM Fees Go Through The Roof - How To Avoid Them

ATM Fees Go Through The Roof - How To Avoid Them

Rate information contained on this page may have changed. Please find latest savings rates.

ATM fees hit a record high for the 11th year in a row, according to a recent Bankrate.com study.  According to the study, the average total cost of an out-of-network ATM withdrawal is now $4.69, up 2.6 percent from $4.57 last year.  In New York City the average ATM fee stands at $5.14, and in Pittsburgh it is still 5 cents higher.  ATM fees have now risen over 55% over the past decade.  It seems like an extraordinary burden to have placed against you for the convenience of accessing your own money.

The obvious first line of defense for avoiding ATM fees is to maintain an account with a bank or credit union that has a branch and/or ATM network that is convenient to you.  You can see a map showing all banks near you here, and all nearby credit unions here.  BestCashCow recommends keeping only the minimum amount in these accounts necessary to access the bank or credit union’s ATM and transactional network, and to put your remaining cash balances in the highest yielding accounts you can find so that your money works for you.  Often, but not always, the highest yielding accounts will be online savings accounts, and you can find a list of the highest yielding accounts here.

The obvious second line of defense for avoiding ATM fees is to use credit cards whenever possible.  Having the right card enables you to be earn reward points or cash back for your spend.

However, sometimes, it simply is impossible to find an ATM network easily when you need cash.  That’s when a strategy like going into a grocery or drug store and making a small purchase on your bank’s debit card can enable you to get cash back.  For those times when that strategy doesn’t work, you should also check out the Venmo app which enables you to quickly transfer cash to anyone.  Finally, if you really find yourself paying out-of-network ATM fees too often, you might want to consider the tried and true strategy of carrying a checkbook.

Image: Courtesy: Pexels

You Are About to Get Killed in Bonds

You Are About to Get Killed in Bonds

Rate information contained on this page may have changed. Please find latest savings rates.

Many investors, commentators and financial managers have perpetuated and subscribed to the fiction that those who want to protect themselves from an overvalued stock market should be moving to bonds.  In fact, a recent New York Times piece, described here, even mistakenly assumed described investors’ choices as being binary – stocks versus bonds.

The idea that bonds are somehow a safe investment comes from the fact that long-term bonds have appreciated dramatically over the last several years as interest rates have come down and expectations of their rising have diminished.  

With the 10-year Treasury yielding 2.10% and with the Federal Reserve guiding towards a Fed Funds rate of 3% in 2019, I would argue that the only way long-term interest rates do not rise, and rise dramatically, is if we fall into an economic depression and the yield curve becomes inverted.   Also, oil and commodity prices are currently tremendously suppressed because the monarchy’s policy of opening up reserves is causing too much supply to reach markets.  An impeachment trial will change this, causing commodity prices and inflationary pressure to rise, and driving 10-year Treasury rates to levels that those in their 20s and 30s have never seen.

The impact of a turn in interest rates on bond prices will be dramatic.   You can ask anyone who tried to sell a long-term bond in 1970’s how many pennies on the dollar they received for it.  Alternatively, you can speak to anyone who bought a long-term bond in July 2012 when the 10-year Treasury was at 1.52% how much their brokerage account valued it in August 2013 when the 10-year Treasury was at 2.90%.  Bond investors can quickly lose 30% to 50% of their principal should they need liquidity during a period of rising interest rates.

My view that another dramatic move up in 10-year Treasury yields – and dramatic fall in bond prices – is likely upon us is not unique.   It is shared by Leon Cooperman and Alan Greenspan.

Your safety is found in savings accounts and short-term CDs.


Portfolio Drift

Portfolio Drift

Rate information contained on this page may have changed. Please find latest savings rates.

While Donald Trump has certainly caused concern to some over his style and actions as President, few have been anything but jubilant over the impressive rise in the stock market since January.   Actually, if one looks back to late 2008 when the market dropped 37%, we have all since enjoyed a spectacular ride up between then and now of around 300%. 

There was a very interesting, recent article in the Business Section of the New York Times on one very important aspect of the huge rise since 2008 – portfolio drift - and the related implications for everyone in the market at this time. Obviously, one of the implications is that those of us in the market during some or all of that time have enjoyed handsome appreciation of stock assets and, by implication, feel ever more comfortable financially.  But the Times’ article points to a related and worrisome impact of the steep rise in the markets to which most of us probably have not paid as much heed as we should have.  And that is the relationship or portfolio mix between safe assets, like cash and CDs, and far more volatile stocks.   (Actually, the Times articles speaks of bonds as a safe investment which is a serious error – bonds are especially likely to decline in value as much if not more than stocks as interest rates rise.)  Most of us who own stocks balance our risk by also owning CDs and cash and, by so doing, ensuring that our investments are at least somewhat protected by the lower volatility of these reserves in the event of another large drop in the stock market.

But by now, given the huge increase in the stock market over the last eight years, the balance between stocks and cash and CDs in our portfolios, if we have not been paying attention, has shifted considerably.  As the Times points out, an allocation of 60% stocks in 2008 would be far more likely – if no cash reserves were added – to be around 75% stocks.  And this kind of allocation is risky for all but the most daring among us.  Yet, this is also likely where most of us are at this moment.

And, that is not a good place to be under the best of circumstances.  And, we are not anywhere near the best of circumstances at this moment in the nation’s history.  In fact, it is hard to imagine a more vulnerable time for the market than right now – given all that is happening in the U.S. polity.  The Times’ article is a clarion call to action, but one, I bet, few will act on.  The market has just been too good for too long, and most of us, present company included, can’t wrap our minds around how volatile things are now and how likely it is that we will have a serious decline in the market in the weeks if not days ahead. 

It is time to get our heads around the dangers ahead.  Those who do, and who at least rebalance assets in favor of cash and CDs in light of portfolio drift, will be in a far better position to weather the storm we are absolutely going to have in the very near future.

See the best 1-year CD rates here.