How to Ditch Your Megabank (and the U.S. Dollar Too)

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Published on Thursday, 13 October 2011 07:00

Written by Justice Litle, Editor, Inside Investing Daily

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Here's a way to leave your megabank behind -- and the U.S. dollar too.
I got stiffed by an automatic teller machine (ATM) last weekend. It was a maddening experience.
The ordeal started out as normal. Drive up, swipe the card, type in the pin number. Select $100 fast cash from the primary checking account. Wait for the machine to spit out currency.
Whirr, kachunk. "Transaction complete," the screen said. "Would you like another transaction?"
Except no money came out!
I had no idea what to do. The ATM seemed to think I had my $100 in twenties. But I didn't have squat. I opened the car door and looked around on the ground, just to make sure the bills hadn't fallen.
No money on the ground either. Now what?
There was a fine-print 1-800 number on the side of the machine. Surprisingly, it was 24-hour service. I got someone in the wee hours of the morning.
"I just got ripped off by an ATM," I said. "It recorded a $100 transaction without giving me any cash!"
I expected the service person to be skeptical, or at least surprised. Surely this was a super-rare occurrence. But no -- it turned out to happen on a regular basis.
"The machine is probably out of money," she said, without batting an eyelash. "Sometimes, when it runs out, it doesn't know it runs out." What? Seriously?
It seems this happens on a routine basis. There is no "out of money" alert in the ATM circuitry. When someone calls to complain, the bank compares records as to when the ATM was last loaded with cash, versus the total number of transactions. If there is a mismatch -- more transactions than cash -- they credit the account of the person (in this case, me) who didn't get their money.
It makes you wonder about megabank technology when things like this happen. What else do they get wrong behind the scenes?
ATM glitches aside, another real problem is the onslaught of hidden fees. Last week, Bank of America (BAC:NYSE) created an uproar with a new $5 per month debit card fee.
B of A blamed the fee on Washington, claiming that a new amendment, the Durbin amendment, jeopardized the bank's revenues with limits on hidden fees in other areas.
CEO Brian Moynihan defended the new $5 per month charge, saying Bank of America has "a right to make a profit." That statement only made customers and bank critics angrier -- few moreso than Senator Dick Durbin.
"It seems that old habits die hard for Bank of America," Durbin said. "After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers... It's overt, unfair and I hope their customers have the final say."
MSNBC reports that customers are having a final say -- by voting with mouse clicks.

While thousands of Americans unleash their anger at big banks in protests around the country, many more are registering their dissatisfaction at their keyboards.

In the wake of Bank of America's announcement that it is adding a new $5 monthly fee for debit card use, online-only banks are seeing a wave of new business.

As the "Occupy Wall Street" protests reach a potential tipping point, big-bank customer flight is accelerating too. "Online only" banks have been providing high-quality service at lower cost than the big banks (no branches to maintain) for many years, gaining ground one inch at a time. And now the trend is gaining momentum.
Awakened by irritation at hidden fees, depositors are realizing that one of the biggest "drawbacks" of online banking -- the absence of a local branch -- is in many ways a positive. Forgoing local branches allows for lower costs and higher yields paid to depositors.
An excellent choice among online banks is EverBank, where your editor has held an account for years. (Insiders Strategy Group has a long-standing relationship with EverBank, because of the excellent products they offer, and may receive compensation on EverBank products.)
In addition to all the standard options on checking and savings accounts -- with higher rates of return than your average megabank -- EverBank offers the ability to diversify away from the U.S. dollar through foreign currency CDs (certificates of deposit).
One example of this is EverBank's "Ultra Resource Index CD," created at the specific request of Insiders Strategy Group (formerly Taipan). The Ultra Resource CD is a basket of six equal weighted resource-rich currencies:

• the Australian dollar
• the New Zealand dollar
• the Hong Kong dollar
• the Singapore dollar
• the Norwegian krone

From a time period of 2002 through end-of-August 2011, the Ultra Resource Index CD saw compound average annual returns of 6.83% -- far better than your standard goose-egg money market fund -- while providing USD diversification to boot.
Now is a good time to take a look... over the next decade, the dollar is likely to fall further than the last one. To find out more about EverBank, or the Ultra Resource Index