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Q&A: An online bank didn’t want this reader’s deposit. Now what?

September 26, 2022 By Liz Weston

Dear Liz: I recently tried to open a high-yield, one-year certificate of deposit at an online bank. I already have one CD with this bank, but when I went to submit the form for the new account, I got a message on the screen that the bank had denied my request. I called the bank’s customer service line, but the rep said she could not give me any reasons as to why they denied my application.

I checked my three credit reports and everything is in order. The only thing I can think of was that I recently had a balance on one credit card that went slightly over 30% of my credit availability, but I paid that off in full. I did some research online and another reason might be that withdrawals from other bank accounts are appearing on my credit report. I have made some regular withdrawals recently from one of my money market accounts.

Why would a bank deny a customer giving them a large amount of money, so they could loan it out at the higher interest rates and make money? If I knew the reason for the denial, I could fix it. Is there a federal banking rights organization where I can dispute this denial?

Answer: You can file a complaint with the Consumer Financial Protection Bureau, which promises to work with your bank to resolve your issue. You also could file a complaint with the bank’s regulator, but there’s no guarantee you’ll get a response.

The denial probably wasn’t due to the information in your credit reports. A bank may check your credit before allowing you to open a new account, but you wouldn’t be denied because you used more than 30% of your credit limit. Bank transactions typically aren’t recorded in your credit reports, so that wouldn’t be a reason for denial, either.

The bank is required to send you an “adverse action” notice if it used your credit report or another consumer database to deny your application. That notice should explain the reason why, and the database it used.

It’s possible you encountered a technical glitch, or were trying to deposit more than the bank allowed for that account. Another possibility is that there were typos or errors in your online application. Whatever the case, the CFPB complaint should prompt a clearer response from the bank about what happened and what you can do to resolve the problem.

Filed Under: Banking, Q&A Tagged With: online banking

Q&A: Saving at online banks

July 25, 2022 By Liz Weston

Dear Liz: My wife keeps over $60,000 in her checking account at a brick-and-mortar bank. I think that is a bad idea. Too easy for possible fraud. I have tried to convince her the safest place to keep the bulk of her cash is in a savings account, preferably in an online bank, which I believe provides added protection against fraud as long as we maintain good computer health. What do you think?

Answer: Many people have the opposite conviction, which is that online banks are somehow less safe than brick-and-mortar versions. In reality, both types offer encryption and other safety measures to deter fraud. Accounts are insured by the Federal Deposit Insurance Corp. and covered by federal banking regulations designed to protect consumers against fraud.

Your wife’s money wouldn’t necessarily be safer in a savings account, but she’d earn a little more interest. Many online banks currently offer rates of about 1% on savings accounts. If she moved all but $10,000 out of the checking account, she could earn about $500 a year in interest and perhaps more if the Federal Reserve continues to raise rates.

Filed Under: Banking, Q&A Tagged With: banking, online banking, q&a

Friday’s need-to-know money news

January 8, 2021 By Liz Weston

Today’s top story: How to nail a no-spend month. Also in the news: New credit card benefits we’d love to see for 2021, the popular online banking service Simple is shutting down, and TurboTax customers will still get their stimulus payment.

How to Nail a No-Spend Month
Recover from the holidays.

New Credit Card Benefits We’d Love to See for 2021
The pandemic forced credit card issuers to revamp their travel card benefits. Why stop there?

Simple, the Popular Banking Service, Is Shutting Down
What to do if you have an account.

TurboTax Customers Will Still Get Their Stimulus Payments
Understanding the glitch.

Filed Under: Liz's Blog Tagged With: credit card benefits, no-spend month, online banking, SIMPLE, stimulus payment, tips, TurboTax

Monday’s need-to-know money news

September 21, 2020 By Liz Weston

Today’s top story: A new episode of the SmartMoney podcast featuring Drag Race All-Star winner Shea Couleé talking about the drag economy. Also in the news: Online banking FAQs, how to invest in the S&P 500, and how to plan for interest rates staying low through 2023.

Smart Money Podcast: Used Cars in Short Supply, and Shea Couleé Talks About Money
The winner of season 5 of RuPaul’s Drag Race All Stars discusses their plan for their $100K winnings.

‘When Can I Shred This Check?’ and Other Online Banking FAQ
What to keep and what to toss.

How to Invest in the S&P 500
The S&P 500 is an index comprised of 500 leading U.S. companies, and it powers some popular index funds.

How to Plan for Interest Rates Staying Low Through 2023
The impact rock-bottom rates could have on you.

Filed Under: Liz's Blog Tagged With: Drag Race All Stars, low interest rates, online banking, S&P 500, Shea Coulee, SmartMoney podcast

Wednesday’s need-to-know money news

March 18, 2020 By Liz Weston

Today’s top story: IRS tax payments are now due in July. Here’s what that means for you. Also in the news: Taking your banking online during social distancing, why a used EV should be your teen’s first car, and what to do about your rewards travel plans.

IRS Tax Payments Are Now Due in July. Here’s What It Means for You
You still need to file by April 15th.

Social Distancing During the Coronavirus? Take Your Banking Online
It’s both convenient and safe.

Your Teen’s First Car: A Low-Cost, Low-Upkeep Used EV
A combination of factors make it an ideal choice.

What to Do About Your Rewards Travel Plans
Sorting through the confusion.

Filed Under: Liz's Blog Tagged With: first car suggestions, IRS, online banking, reward travel plans, tax payments, teens and driving

Wednesday’s need-to-know money news

September 27, 2017 By Liz Weston

Today’s top story: How to boostrap your credit for free or cheap. Also in the news: 3 ways to get your business up and selling on Amazon, three things to do for the best online banking, and how to save at the start of your career.

How to Bootstrap Your Credit for Free — or Cheap
Slow and steady.

3 Ways to Get Your Business Up and Selling on Amazon
Start making money.

For the Best Online Banking, Do These 3 Things
Easy steps.

How to save at the start of your career
The earlier the better.

Filed Under: Liz's Blog Tagged With: Amazon, Credit, Credit Score, millennials, online banking, saving, selling

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