Banking Finance

Moving away from home for the first time can be a blast. This new found freedom is even more fun when you have your money situation handled. One of your first steps is to open your bank accounts.

How you manage your bank accounts today will determine whether you’re able to live the lifestyle you desire tomorrow. That’s why it’s important to open a bank account and establish a relationship with a bank as soon as possible. Opening a bank account will help you to develop a proven track record which can give you advantages when you need a student loan, a car loan, student credit card or a mortgage.

Why open a bank account?

1. Safety – Money that is held in a FDIC insured bank is safer than holding onto cash. Your accounts are insured by the government up to $100,000 so there is not a risk of losing money.

2. Interest – Everyday you have money sitting in a checking or savings account, the bank is paying you interest. Interest rates vary depending on the bank so when choosing a bank this is an important feature to compare.

3. Organizing your budget – A checking account is the hub of your finances. Money you deposit in there can be directed to pay bill, savings and investments.

4. Simplicity – Online banking allows you to automatically pay your bills. Once you set this up once you’re done. You just need to make sure you have enough money in your account when your bills go out.

5. Tracking – Paying someone in cash can result in problems. That cash can be put into someone’s wallet instead of being applies to your debt. Paying by check, credit card or debit card will leave a paper trail that will prove you paid the bill.

6. Deposits – Direct deposits from your employers to your bank offer you a paperless way to get paid. This saves you a trip to the bank and often you’re able to access the money immediately.

7. Future services -Building a long-term relationship with a bank will benefit you more over time. As your banking needs grow you can get better terms on student loans, student credit cards, auto loans and other services the longer you have a relationship with a bank.

How to Open a Bank Account.

When you open a bank account you should be looking to build a long partnership with the financial institution. Building a long-term relationship with a bank means you will one day receive preferred treatment. The next time you need a student credit card or other type of loan, you will typically qualify easier and pay lower fees because of the relationship you have built. Think of it this way: the sooner you open your bank account, the sooner you will enjoy preferred treatment.

Find a bank that offers services you need now and may need in the future. Immediately, your needs just may be for a checking account. However think ahead to the services you will need in the future. You need a credit card, a student loan or another service the bank offers. It’s much easier to locate one financial institution that can handle all your future needs.

In order to decide which bank is right for you and your money, you need to consider your expectations and purpose for opening a bank account: is it for business, pleasure, savings, wage-depositing, eventual loans, etc.?

Check out a few banks and compare bank fees, service charges, and interest rates. Also make sure their ATM’s are convenient. If not you could rack up additional fees for using other bank’s ATM machines.

When looking for a bank to do business with, select the bank that offers online banking. Online banking simplifies your life and makes all your banking transactions available at the click of a button. This allows you to check balances from the comfort of your own home and electronically pay monthly bills without ever writing a check. It also, it gives others the impression your bills are handled by a professional accountant.

Opening a bank account is the first step in building your financial foundation. The sooner you start developing a relationship with a bank or financial institution the more benefits you will receive now and in the future.

Like all Metrics Systems, Bank Metrics are a set way for banks to quantify their performance. Bank Metrics, like Performance Metrics is to be formulated according to the banks goals as well as the standards that they set for themselves. Banks differ in Goals. Some banks may see customer turnover as basis of success as opposed to some banks that view revenue as item by which they measure their success rate. There are several categories that help banks organize their metrics system report. Below are a few categories that can be found in a bank metrics report. Knowledge of the following will help Financing Heads and Company leaders to better understand the reports that are handed to them.

General Ledger Measurements can be found in a Bank Metric Report. A General Ledger Measurements is considered to be a fundamental analysis that businesses can perform when they are on a normal operating cycle. The data gathered here is noted down on balance sheets and information on the Bank’s income statement. This type of analysis is necessary as an indicator of the overall performance of a Bank; it also gives an idea of the financial status of the organization. General Ledger Measurements presents the following data: Average Balance, Income generated from Interests, Non Interest Income and Others.

Account Measurements are also found under a Bank Metrics report. This generally includes the following data: Number of Accounts, Customers as well as the number of households that avail of the services of the Bank under scrutiny. It also includes both the Average Balance and the Ending Balance. Account Measurement, unlike General Ledger Measurements can be conducted on any given time frame. This subtype of bank metrics is also able to cross the border of all types of banks from remote branches to regional organizations.

Another Sub category that is found in a Bank Metrics Report is that of Costing Measurements. Costing measurement is an analysis of the costs of the Bank in General; this subtype gives a view of the Banks income and expenses whether they are operating or non-operating.

Risk Calculation and Measurement is also presented in a typical Bank Metrics report. This will help Bank management to know what their expected losses should be on certain areas. It also discusses general and specific market risks. The General Market risks that are presented by a Bank Metrics report will give banks the opportunity to make similar comparisons. This means that they can compare their actual and expected loss rates with other banks that function the same way as they do.

Bank Metrics and Analytics can be performed by firms that specialize in this activity. Delegating this task to firms will take a huge weight off the shoulders of a bank’s finance office. Specialized firms will formulate customized bank metrics that is designed for the needs of a specific bank. Firms also lure clients by promising a ‘quick view’ report. This means that the data they have collected is easily viewed and understood by Bank personnel that are to review the reports.

The bank foreclosure process is a several step process which is activated by a bank which owns a mortgage that is not being paid on. Typically a bank will take steps to correct the situation prior to beginning the bank foreclosure process. This is due to the fact that this foreclosure process is quite costly to the bank and under most circumstances the bank will end up losing money on the resale of the home as well making it a huge overall loss to the bank.

There are actually three common steps associated with a bank foreclosure. The first step is when the bank files for lis pendens or suit pending. Essentially this stage is when the bank files a formal document with the court system indicating that they have no received a mortgage payment for a period of time. Most banks will allow around six months of no payment before proceeding with this step.

The second step of the bank foreclosure process is when an attorney representing the bank formally requests an auction to be held on the house. The goal of this form of auction from the banks perspective is to hopefully sell the property off for more than what the mortgage is for. The opening bid always belongs to the bank and it is for the current mortgage amount. Under most circumstances no bids will be made on the property since in most cases the properties are worth less than what is owed on them.

The final stage of the bank foreclosure process is when the property transfers back to the bank. At this point the property is known as a bank owned property or real estate owned property. At this point most banks will attempt to sell the property at anywhere between ten and fifteen percent below market value since the property is considered to be a liability by the bank.

Can Buying Bank Foreclosure Properties be Profitable

The profit making potential of a bank foreclosure property varies widely based on the situation. Typically a bank foreclosure process can be bought in any of the three major stages of the entire foreclosure process. In the lis pendens stage the property owners may be allowed by the bank to perform a short sale. In some rare circumstances properties can be picked up at or below the market value. It is fairly rare to get a great deal in this stage since even if the owners try to sell at a great price the bank will usually decline the deal. Auctions on an extremely rare occasion can yield great deals. Unfortunately since most people who end up going into foreclosure fail to make any payments at all or only make one or two from the time they bought the property the mortgage value is usually equal to or greater than the actual property value. Buying bank owned properties in the right market can be extremely profitable but even these can carry potential pitfalls.

Under normal circumstances banks will list these properties at 10% to 15% below market value but they often require extensive rehab work. In some extremely weak markets bank owned properties can be found which are selling at 30% to 50% below market value. At this point these properties can become great investments.

It may sound great to have an offshore bank account guarded by razor-sharp banking secrecy, but is it all that it seems? Here we explore what bank secrecy really is, and whether countries will actually enforce it to protect your privacy.

Bank Secrecy, also referred to as banking or financial secrecy refers to a legal principle which allows banks to keep their client information confidential. This is extremely important to protect against fiscal fraud and identity theft, but while in some countries like Switzerland or Panama breaking bank secrecy could land you in jail, in other countries it is routinely broken without penalty.

Why is this? There is great potential for fraud and/or money laundering if bank information is kept entirely confidential. Governments would be powerless to stop criminal elements porting ill-gotten money around at will. The US government was one of the first to introduce legislation to combat fraud with its 1970 bank secrecy act. This required banks to report suspicious transactions over 10,000USD.

After the 9/11 attacks it introduced further legislation within the Patriot Act that required even greater reporting requirements. The US government can now track every US dollar transaction in the world, since it must pass through a US correspondent bank.

The trouble is, governments worldwide have started to treat bank secrecy itself like a crime. Using the ‘terror-tactics’ of hype and exaggeration they have campaigned against bank secrecy as if its only purpose were to protect terrorists, drug lords and dictators. They really want it extinguished to find out about (and therefore tax) every cent of your income, whether derived domestically or abroad.

Bank secrecy is being slowly eroded, even the Swiss who can claim to have created banking secrecy with the 1934 Swiss Banking Act have agreed to certain concessions. The OECD, a Paris based think tank with no official authority has drawn up a model for international financial transparency and information sharing on tax issues. Many former tax havens have ‘repented’ and made concessions on their bank secrecy in order to avoid being put on an OECD blacklist of uncooperative tax havens. These include Liechtenstein, Andorra, Switzerland and Luxembourg. Monaco, Honk Kong and Singapore have said they will think about signing up.

While many tax havens will claim to have strong bank secrecy, not all will walk the walk. At the very least all countries will provide exceptions for matters relating to terrorism, money-laundering or other serious criminal offences.

Here’s an overview of the more popular tax havens and the effectiveness of their bank secrecy laws:

Switzerland – Although it recently pledged to sign up to the OECD model it still has some of the strongest bank secrecy legislation in the world. It has agreed to share information in cases where there is concrete evidence of tax evasion, otherwise the law remains unchanged. Unless somebody knows you have an account at a particular bank and has strong evidence of wrongdoing, you are well protected.

Panama – Has very strong bank secrecy, breaking it could result in up to 2 years in jail. Panama does not respond to foreign requests for information involving tax evasion, which it does not view as a crime.

Honk Kong – Still has very strong bank secrecy because it has no tax information exchange agreements with other countries (this means that it has no legal requirement to respond to a request for tax related information from another country), except with China. It is thinking about joining the OECD model.

Cayman Islands – Although it has very strong bank secrecy laws on paper, these have been waived under US government requests for information. They are unlikely to stand up against foreign pressure if it is an individual’s account at stake.

Although bank secrecy is important when thinking about your private offshore bank account, another important thing to keep in mind is visibility. If you park your money in Switzerland during a worldwide campaign against tax havens, it’s clear that you funds will be in the spotlight. A better solution may be to keep your money in a smaller country not regarded as a tax haven, where your home government is less likely to go looking.

Many people are dread with the thought of learning bank reconciliation, but in reality, it is not really very difficult to perform. All you require is the fundamental skill to add and subtract. With a little of practice, you can turn out to be skilled at bank reconciliation and be capable to ensure that your bank account is showing the amount that it supposed to be showing. Here are the 5 easy steps to learn bank reconciliation.

Step 1

Be familiar with bank reconciliation. You record the figure of money that is going out and coming into your account, when you write and deposit checks (if you’re American) and cheques (if you’re British). Your bank also does the same. The procedure of bank reconciliation is to make sure that you and the bank are showing the same figures in your bank account.

Step 2

Understand the need of bank reconciliation. More than often people overlook to record a check that they wrote or a deposit. These can consequence in bounced checks, which is equally costly and criminally responsible in most awful case situations. By learning bank reconciliation, you can ensure that you confirm that your records match the bank’s records on a month to month basis.

Step 3

Analyze your checkbook. Begin analyzing balance shown in your checkbook. Now, subtract any bank service charges or deductions that are displayed on your bank statement but not recorded in your checkbook. Then, add all credits i.e. bank interest that are shown in your bank statement but not recorded in your checkbook. Finally, note down the final amount for your checkbook.

Step 4

Have a glance at your bank statement. Make check with the bank statement’s ending balance. Reverse the exercise that you have done on step 3. Add any deposits that are recorded in your checkbook but not displayed on your bank statement. Now, subtract any checks, ATM withdrawals or other withdrawals that are not displayed on your bank statement. Then, note down the final figure for your bank statement.

Step 5

Verify if the two figures match. If they do match, then you have successfully reconciled your bank statement, and you have learned bank reconciliation. If they do not match, find out why they don’t? You must have to do some investigation, if you have two different figures after the reconciliation procedures. Start again with the steps 1 to 5 and see whether the problem was just a match error. Get in touch with you bank for further help, if you cannot find out why you are unable to reconcile your checkbook with your bank statement.

If you have been taking a look at certificates of deposits, you will almost certainly be aware why a longer maturity rate on them will get you more cash. But you might have often wondered what it is that goes into the best CD rates; whether it is Ally bank CD rates or CD rates of any other bank for that matter. You will want to know this from Ally bank formerly know as GMAC bank and other banks too so that you get the maximum returns on your investment no matter what your method might be.

But then getting the best of just about anything needs a substantial amount of effort to be put in and it is not any different when it comes to Ally bank CD rates. You will have to take a look at all the possible CDs available before you go on to decide which ones in Ally bank will get you the highest rates. This information you might get by going online or visiting the banks or through word of mouth from friends and family who have already invested in them.

If you will be working on your investment single handed, you will probably want to keep two things in mind; the length of the period of maturity so you might want to look for those Ally bank CD rates that will last in the long term rather than those that will bring you less money in the short term. Besides, you have to bear in mind what the investment rates are like at the time you are purchasing. This will hold good whether you are investing in CDs at Ally bank, Chase bank, Bank of America, Citibank, Wachovia, Wells Fargo, U.S. bank or any other bank for that matter.

You might ask why it is better to invest in the longer maturity Ally bank CD rates. In the end it comes down to how much you invest in this. There is no doubt that you are taking on extra risks through this kind of CD rates of Ally bank and consent to keeping your money there for a long period of time, but then it is sure to pay off even better if you invest successfully.

Besides, there are other benefits of investing in these longer maturity Ally bank CD rates. The Ally bank as well as other banks normally give first preference to these choices and pay them the best in turn. Some banks require a minimum amount to be invested; in such cases you might want to take into consideration bulk purchase for your rates. You need not stick to just one bank but check out what’s going on at the other banks as well so you get a fair idea of what deals are offered by which banks.

The Central Bank of Nigeria (CBN) has announced the sack of 5 bank chiefs in the country. Those who fail to see through their nose have hastily hailed the action calling it an action in the right direction. It is typical for Nigerians to make hasty reactions usually hailing decisions from our action-packed leaders. This is one of the cases.

Although, the action of the sack of the bank chiefs is too belated to reverse, it is definitely not one with the aim of strengthening the financial base of our economic system. It is like curing a symptom but not the cause of an illness. Something is surely responsible for the ailing of the banks in the country; this is rather what the Central Bank of Nigeria and the leaders of the nation must hasten to find solution to. Take over of banks in the country will do nothing to move us forward. Soon and very soon, the Governor of Central Bank of Nigeria will take over all the banks in the country, never to return them.

While no one is making a case for the affected bank chiefs, it would have been just in place if the government had invited them to find out what was wrong, which would have given them the opportunity to defend themselves rather than play to the gallery and try to win the heart of  President Yar’Adua. Will President Yar’Adua not have inquired from the CBN Governor what was responsible for the near collapse of the banks as claimed by the CBN? The Central Bank of Nigeria played to the gallery.

What was responsible for near collapse of the banks is still living with our leaders and their cronies. Indeed anyone who has a good comprehension of the Nigerian situation will blame the nation’s situation on its leaders. As usual again, our leaders have displayed signs of exhaustion of ideas to move the nation forward. It is laughable to hear our CBN Governor tell us that many more banks may soon be taken over rather than seek a more profound solution beyond the surface of taking over banks.

Any businessman who survives the economic tide in Nigeria is an economic champion. Nigeria is a country without economic encouragement and base even the Bill Gates of America may fail to make impacts in terms of running of financial outfits. Everything is certainly wrong with the country as a place where businesses are expected to be smooth. With guaranteed constant failure in the energy sector of the country where light is not an advantage, outfits will certainly rely on constant supply of diesel or fuel where applicable to maintain the tide. Lack of security too will lead to high spending on protection of bullion vans because Armed Robbers may cart away with more monies than the bank has. Influential people anointed by the leaders of the nation constitute more than 88% of borrowers from the bank without collaterals.

In fact, many ordinary borrowers of money from the Nigerian banks often fail to meet up because of high poverty rate in the country thus only the wealthy can conveniently afford to take loans from the banks. The mere sound of obtaining loans from the banks is so scaring to the ordinarily citizens that it is like a taboo to imagine it. Microfinance banks are now daily springing up in the country where commercial and other kinds of banks are nothing to write home about. So the question needs to be asked on which one bank can genuinely claim to be healthy in the country compared to what fare in a country like South Africa. If no adequate policies other than resort to the sack of bank chiefs are deemed fit then as stated earlier, the CBN will soon take over all the banks in the country.

Today, rather than go to the banks for transactions, our banks are moving to people in local markets where tomatoes, oranges and “pure-water” are sold to come and obtain loans with high percentage of interests. What a country! What we fail to understand is that when things are good, people will naturally draw closer to our banks and only the provisions of the ordinary basics of life by our leaders will make this work but what can our leaders do for us in a country where we constantly change the colour of our currencies even as it does not affect the nation’s economic base. How do bank chiefs function in this financial environment? Ask CBN.

And now that the Bank chiefs have been sacked and newer ones installed, what is the tendency that these banks will gain good financial health? The action is certainly like a new wine in an old vessel which Jesus Christ condemned. Mr. Sanusi should look beyond dismissing Bank chiefs and installing newer ones but come up with objective policies that will guarantee their financial base. It is entirely up to the government of the nation to achieve this with good governance which is what Mrs. Hilary Clinton canvassed even as the government blamed their enemies for inviting her to run them down but the truth must be said no matter whose ox is gored. We should think of more result-oriented policies to make our banks perform.