banking comparison by davem2

VIEWS: 92 PAGES: 8

									                        Banking Comparison Shopper
                               by Rod Smith

       Pay to the order of Manufacturers Hanover Trust.... $301.00.
Accord-
ing to a recent survey of banking costs in a number of cities done by
_Consumer Reports_ magazine, that's the difference in net costs between
two
New York City financial institutions for an "average-balance customer."
(The institution which came out on the other end was Bethpage Federal
Credit
Union.) Such differences are bound to make one sit up and wonder. $300
would buy a VCR, printer, or quite a few evenings at the movies. Would
you
really rather give that money to your banker? Unfortunately, computing a
reasonable estimate of your checking account's cost is tedious at best,
given the maze of creative fees and charges levied by modern banks.
(Note
that I'm using "bank" in a generic sense, including savings and loans and
credit unions, for simplicity's sake.) While a reference such as
_Consumer
Reports_ can help, it's unlikely that it can provide complete answers,
since
their samples are necessarily limited and their formulae may not
correspond
to your own financial patterns. That's where _Banking Comparison
Shopper_
comes in.
       _Banking Comparison Shopper_ will, with a bit of data entry from
you,
compute the estimated costs for as many financial institutions as you
care
to enter. The program's estimated costs take into consideration the
inter-
est rate(s) paid and some of the games played with the computation of
these
rates, as well as monthly, per-check, ATM, and other fees. I wish to
state
at the outset, however, that the program is _NOT_ perfect. It does not
consider different schemes for compounding interest, nor different useage
patterns you might adopt at different banks. Exceptionally creative
banking
rules, such as charging higher interest on months whose names begin with
"J"
are also beyond the _Banking Comparison Shopper_'s ken. Perhaps most
importantly, the program cannot estimate the banks' financial soundness,
nor
consider whether they are adequately insured. With these caveats out of
the
way, then, how does it work?

_System Requirements_
      All that's needed to run _Banking Comparison Shopper_ is an Atari
ST
with at least 512K of RAM. Extra RAM won't help much, unless you're
compar-
ing literally hundreds of accounts. You must run the program in high or
medium resolution, though; the dialog boxes it uses are rather large, and
won't fit in a low resolution screen. A parallel or serial printer might
be
useful for getting final account printouts, but this is strictly an
extra.

_Program Overview_
       When you run _Banking Comparison Shopper_, the first thing you'll
see
will be an empty GEM screen, with a menu bar containing only three
headings:
"Desk," "File," and "Costs." The "Desk" menu contains all the usual
desktop
accessories, and need not be further described here. Under the "File"
menu
fall typical file saving and retrieving options. Note that you can load
or
save two types of files: account files, which contain information on bank
accounts, and which end in an ".ACT" filename extender; and use files,
which
contain information on your account useage patterns, and which end in
".USE"
extenders. Account files could be used by different people living in the
same area, while use files need to be customized for each person.
Merging
an account file will add the contents of the to-be-merged file into the
existing account information, while loading a file will replace whatever
information exists in memory. Under the "Costs" menu heading fall
options
for entering or deleting account and use information, and for computing
the
costs of the accounts currently in memory, using current use information.
You may want to play with these options to see what they're about.
       All interaction with the program occurs through dialog boxes, and
so
you must control your urge to press <RETURN> after entering data from the
keyboard, or you'll end up entering the default values for everything.
Another important note is in order: _always enter zeroes after the
decimal
point_. If you don't, the program will get confused and divide your
entry
by 100.
       If you've looked over the program a bit, you may want some
explanation
for some of the less-obvious items, and I'll attempt to provide that....

_Account Information_
       If you select the "Enter account info." option under "Costs,"
you'll
first be presented with an alert box asking if you wish to enter a new
account or modify an old one. If you modify an old one, and account
infor-
mation actually exists in memory, you'll be presented with a dialog
allowing
you to select which account to modify. Otherwise, you'll be given a
fresh
account to enter. The first two lines of the first account entry dialog
should be reassuringly simple: bank and account names. Be sure to enter
something unique here for each account you enter, since these lines will
be
your only means of identifying a given account later on. The "monthly
fees"
line allows you to enter an amount for fees charged once every month, if
the
bank has them. In my experience, these typically range from $0.00 to
$10.00. Immediately below this line is one for a balance which will
allow
you to avoid these monthly fees. If this line is "$0.00," no monthly
fees
will be computed for the account under any circumstances. A typical pair
here might be $5.00 monthly fees on months for which the balance drops
below
$500.00. The exact wording of this last sentence brings us to the radio
buttons immediately to the right of these two monthly fees lines. Some
banks' balance requirements are stated in terms of a _minimum_ balance
which
must be maintained at all times; if the balance falls below this amount
even
one day in a month, the fees kick in. Other banks only require you to
maintain an _average_ daily balance above a certain amount. Getting this
selection right can be very important, especially if the monthly fees are
large. The per-check fees below this work in much the same way, except
that
these fees will be charged to every check written during a month in which
the balance falls below the stated minimum or average. Well, almost; you
can enter some number of checks which the bank will allow you to write
without levying a charge. Banks which charge per-check fees often
consider
ATM withdrawals as checks, and the _Banking Comparison Shopper_ can take
this into consideration when computing total per-check fees, by selecting
"Yes" for the "Apply per-check fees to ATM withdrawals?" question.
       After you click on "OK," you'll be presented with the ATM & Teller
Fee
dialog. Each entry refers to the charge levied for each of the listed
ATM
or teller charges. Believe it or not, some banks _do_, I am told, charge
you if you want to know how much of your money they have. If your bank
does
not have any bank-owned ATMs (many credit unions do not, for instance),
enter the minimum ATM useage cost on the "bank-owned ATM" line, since
that
amount _will_ be used in computing your ATM costs.
       After clicking on "OK," you'll finally see a dialog in which you'll
enter information about _earning_ money, rather than _paying_ it! Even
here, though, you'll need to enter information on various charges. Be
sure
to enter the cost of _200_ checks, not 150, if the account you're
entering
is one which "truncates" checks -- that is, doesn't return them to you,
but
requires you to use checks with carbon copies attached for your use.
(Such
checks generally come in boxes of 150.) Many banks have two or even
three
levels of interest for their accounts, and this fact is reflected in the
three lines for interest in this dialog. You need not fill out all the
entries if the account you're entering only has one or two interest
rates,
though; you can fill out only the first, and the entries will be copied
into
the other slots. If, for instance, you bank pays 4.75% interest on all
deposits, regardless of balance, enter $0.00 in the first "From" slot,
and
4.75% in the percentage blank to the right. If you click on "OK" and go
back to edit the account later, you'll find that the 4.75% interest rate
has
been copied to all the interest rate spaces. This feature only "kicks
in"
if the stated balance requirement is greater than or equal to the balance
below it. Immediately below these interest rates are two pairs of radio
buttons. The more comprehensible are labelled "Low Balance" and "Avg
Balance." This refers to whether interest is computed using the low
monthly
balance or the average monthly balance of your account, and can make
quite a
difference in the interest you earn, especially if your balance varies
much.
The less-comprehensible pair of buttons are labelled "Tiered" and
"Blended."
Most institutions use a tiered system, which means that the higher
interest
is paid on an entire balance. In a blended system, the higher interest
is
paid only on the portion of the balance which falls above the threshold.
For instance, suppose there are two accounts, each of which pay 4.75%
interest on balances up to $2000, and 5% on balances above $2000. One
account uses a tiered method, and the other a blended one. Suppose
further
that $2500 is deposited in each account. In the account with the tiered
method, 5% interest is paid on the full $2500. With a blended method,
4.75%
is paid on $2000 and 5% on $500. Finally, you can enter up to three 40-
character lines of comments. This can be useful if, for instance, the
bank
charges higher interest rates on months which have two full moons; you
can
make note of the fact and manually factor it into your computations, if
you
think it might be worth the effort.
      When you click on "OK," you'll be asked if you wish to enter
another
account. If you do, you'll be led through the procedure again, with
another
blank account. If at any point during data entry you select "Cancel,"
the
entries you have made on that account will be discarded and you'll be
sent
back to the GEM screen. After you've entered all your bank account
informa-
tion, it wouldn't be a bad idea to save the information. Be sure to
enter a
filename with an ".ACT" filename extender.

_Use Information_
      When you select "Enter use info.," you'll first be asked if you
wish
to enter balance information on a month-by-month basis, or use the same
balances for the whole year. Thus, if your balances fluctuate from month
to
month, _Banking Comparison Shopper_ can take this into consideration. If
your balances don't fluctuate much from month to month, you may wish to
save
yourself some typing and use the same balances for each month. In either
case, you'll be presented with a dialog with spaces for your low and
average
balances. These are used in computing monthly and per-check fees, as
well
as interest. It's important that you enter _accurate_ estimates here;
don't
assume that underestimating your balances will find you a bank that will
be
good to you in a worst-case scenario, since such an institution might not
offer the best deal in a more realistic analysis. Playing with these
figures can be informative; the ranking of various banks and accounts can
become completely reversed by changing the monthly balances. If you're
entering information on a month-by-month basis, you'll be presented with
twelve nearly-identical dialogs, each differing only in the month number
printed at the top. If you've chosen to use one set of balance data for
the
entire year, you'll get only one balance dialog.
      The second account use dialog you'll see is one summarizing monthly
transactions. It includes spaces for the number of checks you write, the
number of deposits, balance inquiries, and withdrawals. Note that these
are
_monthly_ transactions, and are assumed to be invariate across months,
even
if your balance varies from month to month. If this is not the case, add
up
a years' worth of transactions and divide by twelve to get the best esti-
mate. This dialog largely parallels the second bank account dialog in
the
information gathered.
      Finally, you'll be shown a dialog asking for yearly information:
the
number of bounced checks, stop payments, and certified checks you use per
year.

_All Together, Now_
       Once you've entered account and useage information, it's a simple
matter to find the monetarily best banking deal: simply select "Detail
costs" or "Summarize costs" under the "Costs" heading. Each account's
cost
or profit will be computed, and all the banks will be sorted by cost.
This
process should not take long; when I ran it with about 100 banks, it took
about four seconds. The difference between these two options comes in
their
display to you. When you "Detail costs," the best deal will be displayed
in
a summary dialog box, complete with arrow buttons for moving along the
list
of banks and an option to print this summary information. Included will
be
a breakdown of what costs are greatest for the account, and the comments
lines you entered for the account. If you select the "Print" option, you
may then send the output to the printer port or the serial port.
Selecting
"Cancel" will send you back to the GEM screen. If you choose to
"Summarize
costs," you'll be presented with a dialog presenting less information
about
more accounts. The bank name, account name, and gain will be the only
information you'll see, but you'll be able to get the "big picture" much
better by using this option. Again, you'll be able to print the output
if
you like. When printing from the summary dialog, _all_ banks from the
top
of that dialog will be printed, not just the ones on the screen.
       Just because this is a computer program with great computational
speed
and precision doesn't mean it can't be wrong, so don't shut off your
common
sense when examining the results. If _Banking Comparison Shopper_ tells
you
that you'll earn $1000 in interest from a bank, when your average monthly
balance is only $200, something's wrong. Probably you entered incorrect
information, and you should check your data. For that matter, it's not a
bad idea to check your entries for your best-deal bank even if things
don't
look absurd, just to be sure.

_Limitations_
      The program is limited in the scope of its computational power.
Most
notably, it does not consider different compounding schemes. If your
bank
applies interest on a daily, rather than a monthly, basis, and if the
interest varies according to daily balance levels, _Banking Comparison
Shopper_ will get it wrong. Fortunately, this isn't likely to result in
very large differences in end cost. Other complicated or unusual fees or
policies may also trip up the program. A credit union to which I once
belonged, for instance, computed interest using the low monthly balance
method, but excluded the first nine days of the month. You'll have to
take
the results of such policies into account by hand, unfortunately.

_Share the Knowledge_
      Much of the information I used in writing _Banking Comparison
Shopper_
came from the July, 1988 issue of _Consumer Reports_ magazine, which con-
tains the first of a three-part series on banking. For more detailed
information on the games banks play, I highly recommend that you find a
copy
of this issue and read it.
      The information in the sample .ACT file was acquired by me from the
banks in question. _I cannot guarantee the accuracy of this
information!_
The banks might have given me inaccurate information (they often do), or
I
might have slipped up when entering it. Also, it is only a sampling of
the
banks in the area; I would have spent more time entering data than
program-
ming if I'd tried to contact every one of the banks in the region (there
are
nine pages of banks listed in the Boston Yellow Pages). So if you live
in
the Boston area, don't blindly assume that the best deal computed by the
program is accurate. Double-check the information. This is good advice
for
anybody using the program, whether you've entered account information
yourself or are using somebody else's.

_Share the Savings_
       _Banking Comparison Shopper_ is _SHAREWARE_. This means that if
you
like it, you should send me some money. I suggest that if you use the
program and find a banking deal better than your current one, you send me
a
check for the amount of one month's savings between your old and new
check-
ing accounts. Send checks, along with any comments, to:

            Roderick W. Smith
            P.O. Box 44-1604
            Somerville, MA 02144

      I hope that this program helps others find happiness in baking.   :-
)

								
To top