The Most Interest

This is a review for Prosper.com – A person to person lending/borrowing broker.

With the recent downturn, then skyrocket and then immediate decline again in the stock market I decided it was time to keep diversifying as much as possible.  There is no doubt that historically the market has – overtime – given positive returns however in times like these it’s a good idea to start thinking outside the box.

So we have the usual FDIC insured banks that this website focuses on.  These are safe, secure and backed up by the Federal Reserve.  The worry is that so is 700 Billion dollars worth of bad debt.  This is no way meant to make you panic.  *Do not* go running to your local bank or request an immediate check from your online bank emptying your account.  This post is only meant to give you another option.

We have been running a test for the last 4 months with a company called Prosper.com . The main idea behind this site is much like P2P (Person to Person) sharing which is used to share software on the internet this is P2P Lending.  It is quite literally that.  You lend or borrow from real people.  Chances are if you are reading this, you want to lend to others and earn a decent return.

Prosper lets you lend up to 1 million dollars. These loans are NOT insured in any way whatsoever, except they have a built in interface for promissory notes and collection agencies in the event that a borrower defaults.  The minimum you can lend someone is $50.00 USD.  To date, we have 10 people who have borrowed from us, from AA credit to D credit and none have defaulted…yet.  We are optimistic but at the same time realistic. Our D credit borrowers are paying higher interest of course, since they are higher risk.  Currently our average return is hovering around 15% but this is most likely going to average down to *approx* 6.5% APR over 3 years.  Keep in mind, if default rates go through the roof, this will be even lower.

Yes, these loans are three year loans.  It does tie up your cash, so if liquidity is an issue you may want to think twice.  You do however receive monthly payments which include interest and principle reimbursement.  Prosper.com does take care of all the paperwork (electronically of course). You do also have to hook up a regular bank account to the Prosper.com account in order to do initial funding.

The following is a review for Charter Bank of New Mexico which is the serving bank for www.turbochecking.com.

Link(s): http://www.charterco.com/ | http://www.turbochecking.com

Signing Up:Relatively easy setup.  Straight forward, fill out the form online and information gets emailed to you.  The signature form gets mailed to you.  I was primarily attracted to this bank for its checking account which pays 6.01% 5.01% APY.  There are certain criteria you have to meet in order to earn that yield, they are listed at the bottom of this review.

Account Verification:Shortly after sending back the signature form (2-3 business days)  I got an email confirming out account.  This was nice for several reasons:

1. Although I didn’t have the debit card to use yet (in order to get the 6.01% 5.01% APY) I was able to log in to their online banking.  From here I could easily turn on e-statements and just familiarize myself with the user interface.
2. I now had my account number, I could go to the other institutions I use and set up ACH transfers to/from this account.
3. I had a way to directly contact support (if needed) about my account.

Support:I must say, I’ve had terrible support, ok support and great support from several institutions.  I have – to date – emailed Charter Bank twice and both times it took no more than two hours to get an answer.  This is impressive.  Yes, I could have picked up the phone, been on hold for a while and then received an answer sooner, however I felt my questions weren’t of such importance they couldn’t wait.  Afterall, my account was only initially funded (small $100 depost) and I still had not received my debit card.2 hours to answer an email… I am satisfied.

Website:Could be better, but it gets the job done.  Takes probably 10 minutes to find where EVERYTHING is once you are logged in.

Interest Payments:6.01% 5.01% APY – Can’t beat that with a stick.  It translates to about 4.84% APR.  Here are the stipulations:

• 6.01% 5.01% Applies only up to $25,000 – Limit 2 accounts per household.
• You must use online banking, and log in once a month online (Easy)
• You must receive e-statements as opposed to paper statements (Easy and earth friendly)
• You must have one Direct Deposit or ACH Debit once per month (Easy, you can automate this)
• You must use your TurboChecking Debit card – 10 (updated 9/30/08) 13 times a month! (This is the catch)

So, what happens after the 25K? You get a measly 1.01% APY, not worth bothering to keep more than $25,000 in this account.  I don’t know about you but I make more than 10 transactions per month, so this was no problem for me to simply use their debit card instead of my credit card.  I’ll give up some rewards points in order to make 6% on a completely liquid, FDIC insured asset.

Monthly interest has been paid to my account on a regular basis.  They send me emails letting me know exactly what criteria I filled in order to get the higher percentage rate.

This post was last updated 1/16/2009.

The following is a review for Federal National Bank of Omaha (FNBO) Direct.  The great thing about FNBO is the ACH transfers.  Have a local bank (such as Citizens, TD, Bank of America)?  Link FNBO, your local bank and you can transfer very easily, with no fees.  You can link up to 3 accounts to your FNBO Account.

Link(s):

http://www.fnbodirect.com

Signing Up:

One of the better and more user friendly interfaces to sign up.  You can also save the application and sign back in later in case you don’t have proper documentation on you while signing up.  FNBO Direct asks for the same criteria as most other banks.  Has you complete a signature card and then you can customize your account.  Individual and Joint accounts are allowed.

Support:

Have only needed this a few times mainly for checking up on balances or finding out when transfers would actually go through, and it was prompt.  24 hour turn around on emails is what seems to be the M.O.  Phone support is very courteous however hold time was approx 15 minutes.

Website:Very easy to use.  Nice user interface.  Makes transfers and all other utilities easy to access and straightforward.Interest Payments:Monthly payments at a reasonable rate.  This is not always the highest interest bearing account however it is in the top range and for the ease of use, ability to ACH to 3 other institutions and stability it’s certainly worth it.

Recently I’ve signed up for Turbochecking.com.  This is a 6% APY checking account run by Charter Co. Bank.  WOW what a find!?  Sort of.  There are some stipulations:

As of February of 2009 Charter Co (Turbochecking.com) has lowered their rate to 5.01% APY

• You must use online banking, and check in once a month online (Easy)
• You must receive e-statements as opposed to paper statements (Easy and earth friendly)
• You must have one Direct Deposit or ACH Debit once per month (Easy, you can automate this)
• You must use your TurboChecking Debit card - 10  (updated 9/30/08) 13 times a month! (This is the catch)

Now, it would be foolish to say this a no brainer as you do have to remember to use the debit card.  Let’s be honest though, this is also pretty simple.  How often do you buy Coffee at your local Starbucks?

Just make sure you use your Debit card, instead of cash or your credit card and you are all set.  Failure to meet the four criteria above gives you a measily interest rate which is not even worth mentioning.Since signing up I have used the email help feature, and within 2 hours max, a representative got back to me.  Impressive compared to other banks I’ve deal with.

A basis point is a financial unit of measurement. One basis point is equal to 1/100th of 1%, and is used to denote a change in a financial instrument. One basis point could be written as 1 basis point, or 0.01%, or .0001. Therefore, 100 basis points equals 1.0%. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

So what does a basis point have to do with merchant processing? Actually, a lot! Payment processors measure their profit margins by using basis points, and the pricing offered to merchants for credit card or check processing is often express in basis points. For instance, if a merchant is offered a retail qualified rate of 1.87% + $0.15 then the merchant is paying 187 basis points and $0.15 per transaction.

How can a merchant use this information to their advantage? That all depends on your average ticket. At $100 average ticket 1 basis point equals exactly $0.01 (0.01% x $100). If the average ticket is less than $100 then 1 basis point is less than $0.01. And if the average ticket is greater than $100 then 1 basis point is greater than $0.01. Since a merchant’s goal is to reduce their processing costs, they would be smart to minimize or negotiate the lowest possible per item rate if their average ticket is below $100. In this case, a penny is worth more than 1 basis point and a smart merchant would rather reduce his rate by $0.01 instead of 0.01%. Conversely, if the average ticket was greater than $100 then the merchant should negotiate the lowest point percentage rate. In this case, one basis point is worth more than one penny, and the merchant would be wiser to trade-off each $0.01 for each 0.01% reduction. Make sense?

Let’s see if you mastered this concept. If your average ticket is $65, which rate is lower – 1.85% + $0.20 or 1.80% + $0.25? If you answered 1.85% + $0.20 then you are correct. This rate will save you $0.052 per each transaction over the second rate.?