Interest Rates

So, like many "homeowners" I have been watching the interest rates plummet and preparing to refinance. I finally began the process of refinancing on Tuesday when 15 year fixed rate mortgages hit between 4.25% and 4.5% locally. Heather and I are on an aggressive track to pay off our house and so we had to make sure our closing costs were as low as possible. I called many companies and here is my anecdotal occurrences with each of them:

• One of my friends had luck with Citi using our employee referral program and I contacted them. I immediately had the phone answered and they took my name and number on Tuesday. On Thursday, after having not received a callback, I called again and got someone after less than one minute on hold. They quoted me nice rates, gave me their contact information, and told me they would be available Friday and Saturday morning. When i called Friday the lady's voicemail said she was on vacation.
  
  
• Two companies never returned my calls - Wells Fargo and Chase.
  
  
• The current company who holds my mortgage, HSBC, had rates 3/8 higher (4.875) than the next highest person I contacted (4.5%) and still wanted a full origination point.
  
  
• My credit union, Coastal Federal, was the only one who came through. They had low closing costs, low rates, and gave me no hassle. You can check their rates here. They charges 1/2 pt origination, no discount points, no application fee, and I locked in a 4.5% 15 year mortgage which is a substantial savings from my current 5.875%. Overall closing costs were around $2100 which in NC seems to be a great deal.
  

Also on the interest rate front, the high interest online savings accounts are rapidly dropping their interest rates in the 2.5-3% range. My credit union has a pretty cool program called "Go Green Checking". The biggest issue I have is that who wants to put your real savings, like emergency savings and long term savings for cars, in a checking account with a card you use frequently. See, you have to use this card 12 times a month, which means you have 12 chances to get your numbers stolen. Sure, Visa says it will replace your money if stolen but reports say that this can take 2-4 weeks sometimes. This is my emergency savings, I don't know if thats secure enough for me. Thoughts?

Savings Account Interest Rates keep getting slashed

Wow...this week my savings account at HSBC had its interest rate slashed once again. Here is part of the letter entitled "A Personal Message from Our Executive Vice President regarding Your HSBC Direct Account."

In these challenging times, having a savings plan is more important than ever. At HSBC Direct we are committed to helping you with your savings goals by providing the best rate we can.

As you are undoubtedly already aware, there has been a general trend of reducing interest rates in the U.S. market over recent months. These changes have been influenced by the Federal Reserve moving its target interest rate down in response to developments in the economy and financial markets. Last week the Federal Reserve again reduced this key rate, by 0.75% to 2.25%.

At HSBC Direct we review our rates regularly in the context of market conditions, the federal funds rate and the overall economic environment to ensure we are providing you a competitive rate at all times. Following a further review of all of these factors, we have reduced our Online Savings Account rate by 0.50% to 3.05% APY* effective 3/20/2008.

I wonder what makes this message "personal?" Later, Mr Kevin Martin, the supposed author of this email, states:

The good news is, you’re still getting a competitive rate — 7x the national savings average.

Well, gee Kevin...that is great news! When I signed up for HSBC Direct it was the promise of 5.05% interest rates that had me create an account. Meanwhile, I am paying 5.875% on my mortgage to your company. Since you dropped my interest rate down 2% now, can I have a 2% drop on my mortgage interest rate in the name of fairness? How about just a 1%? Since there is a "a general trend of reducing interest rates in the U.S." I think I would like to join in this trend with my debt as well :-)

Unfortunately, HSBC is still #3 on the bankrate.com list for savings account interest rates in my area. All I know is that HSBC is not gaining my customer loyalty through their continuous reaction to the market. I guess I would have been liked to been told at the beginning that the interest rate was going to track near to the fed's rate directly. That way a fed rate increase would allow me to immediately also see an increase in my savings percentage.

Write down those check numbers

As I wrote about a few weeks ago, there have been some significant changes for the rules about what documentation you must have for 2007 tax deductions to charities. Because of these rules, we have over $100 in tax deductions we will miss because we don't know the check number and we did not receive a receipt in the mail for the charity or because we know the check number but the small amount of the check does not warrant the $1 charge our bank charges per official copy of the check. Each of the amounts we did not get back were checks given to a friend raising money for a trip or for a charity. One friend's children whose father died of cancer in 2006 decided to raise money for St. Jude's. We sent them a check which was made out to St. Jude's...but did not receive a receipt and can't find the check number :-( Another friend was going on a mission trip to a foreign country through a local church. We made the check out to Providence, one of the largest churches in the area, but haven't seen a receipt from them either. There are a couple of other examples, but clearly this is our fault for not tracking check numbers early in the year. All total, we needed about 7 canceled checks but ended up only getting two of them.

While this sounds like a complaint, I did intend this to be informational for people to learn from our mistake. If your bank is like our credit union and does not make canceled checks viewable online (Bank of America makes the checks viewable online for free) or sends you canceled checks, make sure you record the check number of every contribution you make next year. If its a $250 or larger contribution, you have to have a receipt from the charity anyway. But if its smaller, write down the check number now and plan on getting that canceled check.