banks

Taiwan banks reluctant to charge ‘account keeping fee’ – The China Post

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Most Taiwan banks have no plan to levy a “deposits account keeping fee” from customers who have only a small sum of outstanding deposits in their accounts, although some foreign banks have already taken such a move.Some foreign banks, including Standard Chartered Bank and HSBC (Hong Kong and Shanghai Banking), have started charging a monthly fee from clients with less than NT$10,000 of deposits in their accounts.

Taiwan banks reluctant to charge ‘account keeping fee’ – The China Post – this article is typical of the usual double-speak that English newspapers in Taiwan are guilty of. The story is quite simple: with limited sources of income available, banks are now resorting to charging fees on low deposits. Typically this behavior is being seen in foreign-owned banks, who have already had account minimums for quite some time (another fact that ‘escaped’ the author of this story). The real news in this story is hidden away at the end: “The move of collecting the fee needs to be discussed and approved by the bankers association, he said. The talk about the possibility that Taiwan banks may charge a “deposits account keeping fee” from customers has caused concern from legislators.”

In real speak, this means legislators and banking organizations are already considering where and how banks charge regular amounts for bank accounts with less than a minimum amount in them. With interest rates as low as they are, it’s unrealistic to expect banks to shoulder these costs in the long term. However, looking after people’s money like this will attract a lot of criticism: why? Because banks are expected to use this money to make more money, it seems unreasonable that they should then make money on ‘free money’ and charge for the privilege of looking after it.

 

A customer who’s charged such a fee will likely terminate their business with any bank that attempts to charge them such a fee. Worse, it may make it more difficult to market to these customers in the future when things get better, and everyone has more money. Customers will remember who tried to short-change them and who treated them with respect.

There’s one local bank I had to open an account with that I hated from the first day I dealt with them. They were unknowledgeable, unhelpful, unprofessional and discriminatory in their treatment of local foreigners. Oddly, enough, the credit card that I have with them through their credit arm has been the perfect opposite of that! Anyway, competition is heating up in the local banking market with local bank consolidating, and foreign players eager to get into the China market. Truly, Taiwan represents one of the few relatively untapped banking markets in Chinese Asia at the moment, still.

I’ve been consolidating and reorganizing both our personal accounts and business accounts for some time, as a result of the credit crisis. While I haven’t got that much money to move around really, I’ve tried to make sure that risk is more diversified between bank accounts. In other words, I wouldn’t want to be locked out of a supply of money due to bank run or temporary closure.

For personal finances, I’ve divided my money between one local and one international bank. For business finances, one month’s emergency cash was deposited in another branch of another local bank. The only weakness in the chain is that personal and business finances overlap in one local bank. I should really do something about that by moving some money to another local bank. Unfortunately, there aren’t many banks in our area at all: and none of the big Taipei city banks have branches here at all.

Citibank 3 – HSBC 0: Not all banks are the same

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I had been a customer of HSBC for a few years in HongKong, then in Taiwan when I transferred my account to Taipei. I thought “Great!” Finally a bank in Taiwan that understands international clients, a bank that has good service, a bank that excels in providing good products. Was I wrong? YES on 2 out of 3 counts.

hsbc

Flashy Name: Lousy Service

Their service though competent in face to face transactions really failed on indirect communications: I left email and notes in the system that we were supposed to use – they went unanswered so long I forgot about the query; I had my phone banking closed down twice because I prefer to do online banking; but the online banking service was somewhat lacking – and the occasional service had to be performed through the phone, such as opening a Term Deposit.

I tried to set up my accounts to handle electronic transfers (and was promised that it would be easy and efficient). This would have included my broker in the states, my regular payments, etc., in fact, the service NEVER worked, and I gave up trying to get HSBC to fix it; these weren’t the only problems I had. I also had office closing times that were switched just after I opened my account.

Worse, every single time I went into the office, there was a supposedly ‘new’ account manager to handle things: I never saw the same person twice. To add insult to injury, I never got my regular statements mailed to my home, and it took ages before I realized that they had carelessly written down my address so statements weren’t being mailed: this was despite asking several times and having confirmed my address several times. Wow!

In the end I closed my account. I never managed to utilize their service because there were so many problems just setting up supposedly basic services. In fact, I had planned to put all my assets in their care. But when I saw how little care they took over their clients, I eventually backed off, and left things as they are. Push came to shove, when they closed my phone banking for the SECOND time.

Rich Ironies – Perhaps we’re not rich enough

Today, to cap it all, I went in to see if I could buy traveler’s checks in British pounds. Given that they had branches in the UK, I thought this would be okay. But no. Sorry, this service is only for ‘customers’. Of course, I didn’t bite my tongue when I ‘reminded’ them that I had already closed my account because of their silly service rules.

To be fair: when I was in the UK, getting money was relatively easy with HSBC, and I did buy T/Cs before through them, though I think I had to order them. Their online security was great, too (since I do banking a number of times each month, the regular hassle just outweighed the benefits). And they did direct me to a bank that could provide me with what I needed.

Christine and I were discussing the situation tonight, and she made me realize that my accounts were just too small for them to bother with. I didn’t use their credit card, and wouldn’t run up a debt, even if I did. We didn’t use their mortgage services as they wouldn’t lend to me – the loan principal was TOO small, they said – which is a pity for them because we later remortgaged through our current provider, and will undoubtedly use a mortgage again in the future.

But, I thought: isn’t that weird? A bank doesn’t want to provide me these services so they think I’m a bad customer. In truth, I would have had the whole lot: mortgage, credit card, car loan, investments, and much more. I would have been a great customer for them, too.

Pause to Reflect: Your best friends are always underappreciated

Later I happened to call my REAL bank, Citibank to move some cash around, tidy up some deposits and get some cash for the trip to the UK next week. And they were so helpful and polite. I have never had problems with services being canceled, their interest rates tended to be better than HSBC, and whenever I’ve been to the branch, things were quickly sorted out. I’ll be testing their service in the UK to compare it with HSBC.

Many foreigners in Taiwan have bad experiences with the local banks, getting stuff done. Truthfully, I have never had any of the similar frustrations that I’ve had with HSBC with ANY of the local banks I have dealt with. Today, I went to Land Bank, one of the stodgiest of banks in Taiwan. I was served politely, accurately and quickly both times I did a transaction. It’s true: some of the local banks don’t have comfy seats, polite manners, but they usually get stuff done – with one big exception TaiHsin Bank. But then I didn’t choose to open an account there: I had to because of work. As soon as I quit, I closed it down.

There are problems with local banks, though: sometimes they have their own bureaucracy that’s hard to get through, if you are a foreigner; sometimes they charge more on international wires; they don’t always have a lot of foreign currency on hand; ATMs don’t always accept cards, and stuff. But I haven’t experienced as much frustration with any of the local banks as with HSBC.

What goes around comes around

HSBC has been in Taiwan for more than 20 years, and its focus on developing Wealth Management Services is undoubtedly a smart move. Overseas, HSBC is quite a reputable bank, and by most accounts, well worth dealing with. Unfortunately, in Taiwan, it’s getting the reputation for being a snob’s bank. That would be okay, if it was backed up by stellar service. In reality, service would barely rate 2 stars out of five. Alienating currently lower-income, lower net worth individuals now in a country with a fast-moving business environment, rising incomes, sharply rising wealth, really isn’t a smart move.

Disclaimer: This post is written by a former customer of HSBC in Taiwan and HongKong. I do not currently own shares or bonds in this company. I have no investments or any relation with this company other than outlined in this post.

What should you do when you strike it rich? – 7 ways to benefit from windfalls, bonuses, and other ‘found’ money!

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pennys from heavenTonight’s episode of Seinfeld was a rerun from the mid-90s when Jerry receives a large check (so large that Kramer is surprised) for his performance . It’s only part one of a two-parter. But it got me wondering about what most people do when they receive a windfall. Management of your new found resources can be a problem; and it’s a problem that I share with those who get annual bonuses or special rewards, prizes, unexpected windfalls, inheritances, etc..

It’s easy to start planning what you are going to do with the money and quickly you forget how hard it was to come by, or how long you had to wait. In Seinfeld, Jerry decides to go and buy a brand-new Cadillac for his father with the money; he doesn’t even think about other options because he feels ‘rich’. Isn’t it interesting how such income can totally shape your perception of being ‘rich’?

For those of you who have been following my progress this past year, you will have realized that I have begun to accumulate something of a cash position: currently about $7,139.05 worth actually. Of course, this is the gross amount and there have been a number of deductions from the amount for various expenses including taxes, fees, hosting, equipment purchases, etc.. So the total amount isn’t exactly that much. I didn’t keep an exact tracking of the costs either, though from January 1st, I already promised to do that.

To make matters more confusing, some of the earnings are in US$ while others have been paid in the local currency here. And the money resides in several different places as well: my broker accounts, paypal accounts, and several different bank accounts. Rather than splurge on dual 24″ monitors (though I drool), I’ve taken a very much wait-and-see attitude. I’ve been slowly consolidating the money in several places only, and evaluating options for generating additional revenue.

Currently I’m considering five different ways I could spend the money, and I’ll suggest some others that I have already ruled out.

1. Stashing it in the bank: if the amount isn’t large, and the outlook is uncertain (as it is here in Taiwan, with several major elections coming, rising oil/gold prices along with jumping interest rates, it can be quite a good choice to park money in the bank for the short term. The disadvantage is that the money actually loses value as governments tend to devalue currency over the long term via interest rates that don’t keep up with rising prices (and prices are rising F-A-S-T in many parts of the world for many products).

Verdict: For smallish amounts, it’s about the only thing to do other than spend it. I’ve definitely done this.

2. A Term Deposit: A typical bank account pays a pitiful amount of interest: in Taiwan it’s about 1/4% per annum for a standard bank account. This devalues your coin faster than you can say ‘Shinkansen Bullet Train’. Parking it in some fixed term CDs or ‘term deposits’ may be a better choice: rates are approximately 2% (yes, 2%) higher and edging up gradually as inflation is rising. With a choice of fixed rates vs. floating rates, it’s always wise in an rising interest rate environment to choose floating rates to benefit from rises. I noted that today in the bank the fixed rate vs. floating rate term deposits didn’t vary for periods longer than 12 months. Wonder what that means…

Verdict: For largish amounts, it may be worthwhile for longer terms, but don’t park it too long. I’ve also done this.

3. Money market accounts have similar benefits to bank accounts, and indeed, with TDAmeritrade I’ve parked some of the capital in their money market account, which accrues a smallish interest amount every month until the money is enough to do something with. Of course, you need to check WHICH money market account offers the best and most secure deals. (See what a money market account is ).

Verdict: A good way to earn interest payments from your broker, but has its limitations and some risks. I’m doing this right now.

4. Dividend Investing: For a little more risk, though, I’ve been looking at purchasing stocks with Dividends. I’ve always been attracted to these because they are an additional way to earn money from the total stock return ever since my days as a Motley Fool member. Of course, the question of tax efficiency creeps in, it may not be a good choice for everyone. But as part of a general stock portfolio: the triple whammy of capital growth, share re-purchasing, and dividend increases is QUITE attractive. There is the big danger though that you will LOSE money in the short to long term, if you take unforeseen risks or the proverbial s**t hits the fan for the companies in your portfolio.

Verdict: Definitely more potential for earning a profit, but risks are similarly higher. Not for the faint hearted! I’ve done this for quite a long time, with varying degrees of success.

5. Investing in your business: for businesses that are expanding, capital can become scarce at times. Even our business which has been around in various guises for 7 years, sometimes needs capital to furnish expansion. We’ve been lucky as our business really is a light business – it’s service-based – so most of its non-startup capital requirements were funded by its ongoing revenue. But it’s not hard to imagine us needing money for moving to larger premises or purchasing or setting up a branch school in a nearby locale.

Verdict: Much more risk than #5, but the benefits of expanding your profits from your business can be exponential. Of course, the failure rate of new business is high. Done it once or twice.

6. Lending Money: there are a variety of methods now in which small lenders can take on private loans as individuals or syndicates through Zopa (in the UK/US), Prosper, etc.. At the moment, I’m prevented by my residence status from being able to open such accounts, but if I were relocating to either of these countries, this is one avenue I would actively pursue to create additional income. Zopa has tiers of credit markets that would allow you to spread your risk over different types of loans, and perhaps earn interest above that paid by the bank for little extra risk.

Verdict: I’d love to do this, but I’m not legally able to yet. I’ve done lending on Kiva but that’s for a totally different reason. Done it privately both successfully and not .

7. Purchasing websites: There are many quality websites, blogs and forums available on different auction sites including SitePoint and Digital Forums that offer additional options for creating additional streams of revenue. Purchasing an active and reputable website with established revenue streams (from text ads, linking, etc..) could be a risky but exciting way to increase the returns on your investment. I had actively considered purchasing one website BobMeetsWorld when that came up for sale recently. While the actual revenue was under-optimized, it was a PR5 blog that was selling for a good price. Of course, with this active blog already, I’d have been hard pressed to find the time to write challenging content.

Verdict: I’ve considered this, but the risk is considerable. Many auctions are fraught with fraudulent information and listings, esp. as sellers try to justify the higher prices for their websites. It’s even more difficult to verify the reality unless you actually know the website and the website owner. I’ve never done this.

My own decisions: It’s all personal!

I am now preferring to invest whatever money I have to create revenue, whether it is from bank accounts, loans, stocks, websites, etc.. I’m very much concerned that too much of the retail investment market is focused on gains for tomorrow that may or may never appear, and too many employees are invested heavily in stocks, funds, pension schemes that are promising rates of return that are not feasible. So I’m focused on earning income from non-work activities right now so that I will have the skill, knowledge, and income to support a much bigger program of income generation.

In reality, what have I done with the extra income so far? About $2,300 is in a money market account, earning a little interest in my broker’s account. I have been planning to invest this money by buying some Dogs of the Dow stocks to get a better return. And there are some good value stocks that have been beaten down sorely by the current problems in the property market, including Citibank and JPM. The current dogs are Citigroup; Pfizer; General Motors; Altria; Verizon; AT&T; DuPont; JP Morgan Chase; General Electric; and Home Depot .

Some more money is now being turned into a ‘term deposit’ with a term of one year based on a floating rate with current interest rates of about 2.33% for 12 months. Some of the remaining 20% will be kept in a cash position to finance growth and expenses for the website: including finding opportunities to expand my online empire! I’ll let you know how I fare.

Tell me what you did with your bonuses! I haven’t got mine yet… Chinese New Year is coming soonish! Let me know what you did! I’d be delighted to know.