In the UK, children’s savings account are common. My kids have two of them there with different banks. Both came with special features designed to encourage them to save — a little plastic bank to sort their coins, for example, or a bonus on their interest. But here in the US, banks are apparently uninterested in kids. It’s been a surprisingly disappointing  experience trying to find similar accounts.

Our local big bank offers kids savings accounts, but there’s nothing special about them. No special interest rate. No waiving of minimum balances. Nada.

Our credit union has youth bank accounts, but it’s pretty much the same thing. There’s no compelling reason to enroll the kids, so that they can gain 0.10%.

Looking around online, the pickings were pretty slim. Many credit unions seem to have kids saving accounts, but no everyone is eligible to join different credit unions.

Key Bank has a bank account for kids, no minimum balance required, which looked interesting. But with no branches near us, the kids don’t get the feeling of going into a branch to deposit their money.

That got me thinking. While I remember being a kid, having a paper passbook and going into a branch to make deposits, I rarely do that these days. My deposits are usually through an ATM or electronic transfers. So am I chasing an “old fashioned” account for my children that doesn’t fit the reality of banking today?

Perhaps. So how about letting go of needing a branch near me? There are a few more options. US Bank has youth savings account, as does Sovereign Bank. But US Bank only lets you use its own ATMs, while Sovereign provides no ATM access.

The perfect account seemed offered by USAA. No monthly maintenance fees. A decent interest rate (at least as decent as they get right now). Access through any ATM, and if there’s a fee, they’ll refund it. How sweet is that?

It did seem ideal, except for being only open to those with US military ties. Or so I thought. Thanks to Twitter, Michelle Lowery told me that wasn’t so. And I looked again. Buried, you’ll discover you CAN open a financial account without a military connection.

So if you do this for your kids, don’t worry that when you get through the application process, you’ll be asked all these military connection questions that you may answer no to.

Overall, I remain surprised there aren’t better offers out there for kids. I know my main credit card remains the one I got back because Citibank stuck a little table up and caught me on my college campus with a special offer. Kids accounts I guess are a pain for banks, but a little pain early on my produce better loyalty down the line.

Joy. Citibank closed my credit card today, not because of anything I did but because of some unknown merchant problem. Aside from being an inconvenience to me, Citibank also apparently thought it was a good time to pitch me on credit monitoring. Bad idea.

Apparently, some undisclosed merchant out there had a security problem that has caused Citibank to close the accounts of some unknown number of people. How reassuring.

This is the second time this has happened to me in the past two or three years. Which merchant, I asked, when I called Citibank. They didn’t have that information. I mean, someone at Citibank has it, but their customer service people don’t have it to give out to customers who might wish to avoid that merchant in the future.

Nice.

More fun when I went to activate my new card. After activating it, I got this long sales pitch on how I could get credit monitoring for free for 90 days then $8.95 per month after that, which apparently is some special rate.

You know what? I should just get that for free. A security breach on your end is not a sales opportunity. And when I decline, don’t try to sell me a secondary monitoring service that’s slightly cheaper. And when I question why you’re pushing this on me rather than giving it to me for free? I shouldn’t get told, “We’re just the activation department — you’d have to talk to customer service about that.” Hey, if I’m calling just to activate my card, then do that. No upsell.

Just a last thing. I would so dearly love that if I punch in my credit card number into your automated system, I’m not asked for it again by the human operator. It would just make me feel like I’m wasting less of my time.

From time to time over the years, I’ve had various investment analysts want to talk to me about my thoughts on how a particular search company might do. What cracks me up is that invariably, they think I should provide such advice for free. I have peers in the search space and other areas who also are in the same situation.

My gripe isn’t about not earning money, however. Rather, it’s more about how being so cheap perhaps reflects the “quality” of the work these analysts are supposed to do. Since few of them seem to pay for quality advice, is it any wonder we get things like the financial meltdown we’re going through now?

An email I got yesterday is a wonderful case in point and got me thinking about this post. I won’t name the companies involved, but this is what I received:

I work with a private investment company in New York. We’re currently kicking the tires on a potential investment in [removed]. An important part of our research process is to speak with customers, competitors and other industry experts in order to better understand the company’s strengths and weakness and the industry dynamics. As one of the foremost experts on search. you clearly have a valuable perspective to share.

If you are willing to share your thoughts, I promise not to take up too much of your time. Also, rest assured that any conversation would be entirely confidential, with its sole purpose to help us make a smarter investment decision. We are not looking for any non-public information, nor are we seeking any investment recommendations. We are solely interested in having a high level conversation about the key issues. Simply put, we are trying to do our homework on this potential investment we’e considering.

Let me know if you can help. If so, we’d be happy to circle back with you after our exhaustive research process is complete and share with you our conclusions.

Notice there’s no mention of paying me for this time. And I promise, having done a number of these, it does take up time. Easily an hour. So what’s my incentive here, when I’ve got plenty of things to do? I’ll get the conclusions of their research [helpful if I want to invest in a search company I guess, except I don't to avoid conflicts of interest].

OK, there is value in such research reports, even if you’re not an investor. I have talked to many financial analysts freely because the exchange of information can indeed be valuable. I’ll call out one particular analyst, Mark Mahaney of Citigroup, who is always in this category with me. He does a lot of homework, gets out to trade shows (I’ll come back to this in a bit) talks to tons of people, publishes investor notes that often mention the people he’s spoken with or shows he’s attended — it’s well worth my time to talk with him. I learn back.

But bumpkiss private investment company I’ve never heard of, that it if publishes notes, I’ve never seen them? No, that’s not worth my time. So I replied that I’d be happy to talk, but that’s a service they’d have to pay for. That got me back this in return:

While many do, we typically do not pay for this type of research. In addition, since I haven’t spoken with you before, it is especially hard to know how valuable the conversation might be to gauge whether its worth paying for. I propose the following: lets set up a 45 minute chat at no cost. If I find that conversations valuable, I will be happy to pay for future conversations. In addition, I have peers that are more inclined to pay for their research and I would be happy to point them in your direction if I find the conversation productive. Lastly, I would be willing to share the conclusions of our in-depth research when we are finished. While we don’t publish our work, I would be happy to exchange it with you verbally. Let me know how that sounds…

It didn’t sound good at all. In fact, it went to undermine how much faith I thought anyone should have in this person’s research, when concluded. To detail:

• No, most firms do NOT pay for this type of research, part of the problem, I think.
• How did I go from being “one of the foremost experts on search” to “since I haven’t spoken with you before, it is especially hard to know how valuable the conversation might be to gauge whether its worth paying for.” Remember, this person came to me. I’m just sitting here minding my own business, get approached about a conversation, then get told that my time might not be valuable at all?
• A 45 minute “chat” is about how long a typical phone consultation goes.
• Yeah, tell me who your peers are that pay for research. Perhaps I’ll want their reports as being more valuable.

Bottom line, we’re not talking. So this person will do their report without an expert they originally thought it was important to include, because they don’t want to pay for advice.

I’m not saying I have the best advice in the world. I’m not saying that they can’t find others that will give them a solid report. But it’s absurd. They’re making a financial investment. Or others like them are recommending investments. Spend the money for the right advice, because if you’re not, what kind of advice are you getting?

It reminds me of a situation that happened ahead of our first SMX West search marketing conference last year (the next one happens this Feb. 10-12 in Santa Clara, by the way — check out the agenda!). We had a financial analyst request a press pass, which we denied.

Look, there’s no such thing as a “free” conference pass. Every ticket we give out, there’s like $250 or more in food costs alone associated with it. I kid you not — we provide good food at our shows, and it costs a ton. Hotels are a giant rip-off, as any conference organizer will tell you. So we have to be pretty selective with who gets passes. Places with broad circulation make the cut, because of the exposure they bring. Small trade publications often make the cut, because of the targeted audience they reach. Some live bloggers make the cut because we think it’s a valuable way to spread knowledge from the shows to people who simply cannot afford to attend.

But a financial analyst? We need to subsidize the cost of a financial analyst to attend? No offense, but shouldn’t they be able to buy a ticket?

The person came back to us saying we’d get visibility in their reports that go out to institutional investors (people unlikely to come to a show or if they do, might request free passes themselves). They added that everyone else gives them passes and then tossed in this closing part:

Please note that we will be attending your conf only if we do get free passes because we do not have budgets to pay for the industry conference (in other words you will not cannibalize your revenue by giving us free passes).

As I said, we do cannibalize our revenues by giving a “free” pass that has lots of associated costs to it. But more important, a financial analyst firm that advises institutional investors should have a conference budget – at least if they find the information at conferences to be good “feet on the ground” information about what’s happening in the trenches. If they don’t attend, because they can’t get a freebie, then aren’t they potentially missing out on key information? And isn’t that pretty cheap, for companies that influence the spending for so many others?

Of course, even gathering all the information in the world doesn’t mean anyone can predict anything. I remember going in once to talk to a large banking firm, with about 20 analysts gathered in the room (naturally, it was a free gig — but I thought it would be interesting to do). One of them was semi-hostile when after telling me about how he’d plotted out the number of ads on Google over time, he then thought he could project what their revenue was going to be. My response was you can’t predict anything about Google.

I then ran through factors he wasn’t considering. Number of ads doesn’t mean how much revenue each ad is generating. And what if Google shifted to a new payment model (as it turned out, soon after they did add CPA ads). And what if Google added more ads to the page (they did later). Or decide to take some of them away (further down the line, they did that too). Or the founders decide to do one of the unpredictable founder things and launch some new product no one is thinking of.

He was pretty frustrated, but I didn’t know what else to say. I still don’t know how anyone can project what Google’s going to do. Indeed, I remember seeing Jim Cramer for the first time on TV a few years ago. Since I lived outside the US at the time, I hadn’t really realized who he was. Here I watched a guy making predictions that sounded OK about lots of different companies, all at once. And later on at a future point, I saw him make a prediction about Google.

Woah. I pretty much eat and breathe Google, right? It’s my full-time job. Meanwhile, here’s Jim Cramer who I cannot believe knows the company much beyond its published financials, since he also has to cover a million other companies. There’s just no way he can have a high level of expertise about Google from a product level. But if you don’t know the products of a company, what do you know about a company? Financials only tell part of the story. But he can make recommendations off of that?

It’s insanity. But hey, maybe that’s just my astrological sign, Libra. You know, the scales. I rarely feel I can say something is absolutely one way or the other. I think Google’s got a bright future ahead of it, but who knows. And from an investment standpoint, I guess I wish maybe some of these recommendations were more wishy-washy, so braindead investors might wake up and do their own homework (newsflash Yahoo investors — you’re Pepsi, Microsoft is RC Cola, so when RC Cola says it wants to buy Pepsi, you’ve got a good stock until you stupidly question its own value). And I certainly think any firm that’s supposed to do research might actually pay to talk to real experts, to ensure they have good research. Not for me — I could give a toss for myself. It’s just that it’s the right thing to do.

And if you are an investor getting a report? Go ask for a list of all the experts that were considered — those that were actually consulted — who wasn’t consulted and why — and how much was spent on obtaining external research. Bet you find it surprising.

For all the concerns people have about internet search, privacy and “all that info Google knows about us,” I remain amazed at how much power credit reporting agencies have to really dick with our lives and publish incorrect information about us, with us seeming to have little ability to resolve things. And how all we seem to be are profit centers to them.

Case in point. I was declined when I tried to open a new bank account recently, because the bank couldn’t verify my identity. TransUnion, they said, didn’t have a telephone number listed for me. I’d need to contact “my” credit agency and update this.

I was kind of annoyed. It’s not “my” agency, I explained to the bank rep — it’s just some company that chooses to report my credit history without my consent or cooperation. Nevertheless, if I wanted things resolved, I had to spend time to follow up on the issue.

It’s been ages since I’ve had to deal with a credit agency, having lived outside the US for so long. I hit the TransUnion site, found a phone number and quickly got to a rep to ask what was up.

Oddly, he said TransUnion DID have a number listed for me. OK, what was it. He couldn’t tell me — that was confidential. Confidential? I mean, to get to this point, I had to give him my mailing address, my mother’s maiden name, my name, my date of birth and my social security number. Didn’t he have enough to know who I was?

Sorry, to see the actual number listed, I’d need to request a copy of my credit report, and that would be $8. Um, wait — since I’d just been to the TransUnion site, I remembered seeing something saying I get a free copy of my credit report once per year. What’s up — how come I can’t do that.

Oh, I could, it turned out. He said I’d have to call a different number. But now I was really annoyed — why didn’t he tell me from the beginning that I could have a free report. We went round and round on this, with him eventually saying — I kid you not — that he wasn’t allowed to tell me that. Hey TransUnion, if you’re reading this, the call was recorded — so go check it out, if you don’t believe me.

Not happy, I asked who I talked to if I had a complaint about how things were handled. There was no one to file complaints with, I was told. Seriously. So I asked for a supervisor, and at least there was someone like that I could talk with. The supervisor did tell me my phone number, which was correct, and was mystified that the bank couldn’t retrieve it. He also started to pitch me on a monitoring service from them. I declined.

Back to the bank. They reran the report — actually not able to get the full report because of a security block I guess I setup ages ago on it. But they were able to pull some basic info and despite what the supervisor said, they still weren’t getting my number. Advice? Call the credit agency again.

So I did. And again, I was told a number was in place. They also confirmed that a security block was on my file, but no, they couldn’t tell me what that said. That was confidential — despite having done the entire “verify who I am” thing again. And despite being confidential, there was no problem with me having it removed. Insane — I can remove a block, but I can’t be told what it was?

Back to the bank. No quick recheck this time, so I wait to see if it will go through. Meanwhile, I went back to TransUnion wondering just how easy, if at all, it was to change things online.

It turns out that by using the Dispute Item option on the home page (way below under the much more prominent pitch for a “free trial” to monitor my credit report), I actually got to see my report online.

What a mess. Look, there’s my UK address mixed with my US address as one of my previous residences. No idea how that happened. And my phone number? No area code listed, despite being given then when I was on the phone with them.

Want to update my number? No way to do that. I can delete it by putting in a dispute resolution, but I can’t just say “hey, this is wrong.” Same with previous addresses.

This is a joke. Why can’t I simply go in and easily ensure basic information about myself, where I live, where I’ve lived, how to reach me, is updated.

Much more important, by law I should have the ability to see my credit report whenever I want, not once per week, not as part of a paid credit reporting service. It’s my information that impacts my life. Let the agencies make money off the businesses that use their information, not the consumers who actually own it.

Photo By
Dominicspics, Used Under CC licence.

When I was in high school, I remember reading about how the Federal Deposit
Insurance Corporation was set up
during the Great Depression as a way to ensure people that their deposits would
be safe. FDIC
guaranteed up to $100,000 would be protected no matter if a bank failed. It
was an amazing sum to a kid earning $3.35 an hour flipping burgers. Who would
ever hit that limit?

Well, I earn more than $3.35 these days. Moreover, due to the oddities of how
the UK takes in tax payments from self-employed workers (you don’t pay for up to
a year after earning), that limit has been something I’ve had to think about
for. It actually seems low to me now.

The corresponding type of bank insurance in the UK — the
Financial
Services Compensation Scheme — is less generous. It covers about $63,000 –
and only the first $4,000 of that is fully covered. The remaining $59,000 is
only covered up to 90 percent.

The limit in the UK is getting a fresh look in the wake of the Northern Rock
bank run. This is a major UK bank that needed the Bank Of England to promise
support as it ran short of funds. That freaked depositors out,

who swooped in over the weekend and lined up to make withdrawals.

Today, I

read in the Daily Telegraph on how the limit might be raised.

Those that designed the scheme argue that the limit of £31,700 should be
ample cover for most people. According to the British Bankers Association, the
average saver has £8,500 deposited in their bank.

However, as one Treasury insider said yesterday, "we are in a whole
different territory with Northern Rock", pointing out that no one envisaged a
run on a high street bank. Most of those queueing had savings well over
£31,700, some had more than £1 million.

Hector Sants, the chief executive of the Financial Services Authority,
admitted yesterday that the scheme does have limitations, particularly with
large deposits. "It does seem reasonable to conclude that that may well have
been a contributing factor here to the loss of confidence with Northern Rock
depositors."

While 25 out of 27 European countries have lower limits than the UK, France
and Italy are more generous, with Italy promising to pay out £70,000.

In the US, 100 per cent of savers’ deposits are guaranteed up to £49,000,
with financial institutions funding an insurance fund of £29?billion. The Bank
of England has hinted that it would like to adopt a US-style approach,
guaranteeing 100 per cent of someone’s savings and raising the limit.

Raising the UK limit would be nice, but the US limit itself is low for even
average earners. Need some proof of this? Consider Emigrant Direct. This is an
online bank for the US that offers very high interest rates. That means plenty
of people want to shove money into it. So much money, in fact, that the

FAQ page talks about how to get more out of FDIC insurance:

Safe and Secure – FDIC Insured Your deposits at Emigrant Direct are FDIC
insured up to $100,000 per depositor. Keep in mind that individual and joint
accounts are insured separately, so if you have both types of accounts with us,
your total deposits can be insured up to $200,000; that’s up to $100,000 in all
of your individual accounts, and up to an additional $100,000 in all of your
joint accounts.

Heck, they’ve even made a special

chart (PDF) to guide people more. You simply don’t address this type of
question in a FAQ and with special materials unless you’re getting asked a lot
about it.

Consider also this. The limit was last set in 1980, raised from $40,000 to
$100,000. The last
reform bill
passed in 2006 kept the $100,000 level, with the next review of possibly
raising the limit not happening until 2011, and then that would be based on
inflation.

Ah, inflation. So that $100,000 of coverage set in 1980? Let’s head over
to this
conversion calculator to see how much that’s worth in today’s dollars. Turns
out, around $41,000.

Now, I came across one
argument from back
in 2002 suggesting that’s all fine:

The ABA conveniently ignores the earlier history of deposit insurance. From
1934, when coverage first took effect, to the early 1970s, the level of
insurance more or less tracked inflation. When the limit rose to $40,000 from
$20,000 in 1974, that increase was more than enough to compensate for any loss
in the dollar’s purchasing power. And when the limit increased again to
$100,000, the coverage actually outpaced inflation by $70,000. Even now,
assuming a 3% annual inflation rate, the current limit will maintain its value
until 2020.

Alan Greenspan

argued at that time that relatively few depositors hit that limit, and those
that did were good at splitting up larger amounts between banks, and that
raising the limit would just cause depositors to gamble on risky banks.

The Congressional Budget Office, in 2005, apparently also recommended not
raising the limit for some of the same reasons. This
paper has
arguments, plus this interesting chart:

That shows you the relative amount of FDIC insurance over the years. IE, when
FDIC started in 1933, it was for $2,500 — which was about $50,000 in in 2000
dollars, which the chart above is based around. That big spike is when the limit
rose from $40,000 in 1980, which was worth around $200,000 of 2000 dollars.

The argument is that even today, the rate is well above some historic limits.
Ah, economists — I guess they got me. But then again, it still feels like that
rate should come up. Perhaps a run on a US bank might change things.

When I first came to live in Britain about 10 years ago, there was a wave of
building societies being turned into banks — and cash windfalls for the
building society shareholders. Building societies are the UK name for what those
in the US call credit unions. That wave came and passed, but a mini-wave has
just hit again, giving me a windfall for the first time.

To get a windfall, you usually had to have money on deposit with a building
society for over a year and some minimum amount. My wife would have gotten a
nice windfall from the Woolwich all those years ago, but we were so broke at the
time of coming over that her account dipped below the 100 pound mark required
for a payoff.

The payoffs were so good for some that soon "carpetbaggers"
appeared, people who joined building societies only in hopes of them going
private. Some joined, then lobbied other members through elections to go
private.

Many building society reacted by adding rules requiring new members to give
up any benefits if they became a bank. A few years ago, I remember
Portman being highlighted in a newspaper
article as one of the last building societies not to have such rules at the very
end of the wave. I figured what the heck, shoved some money in my carpetbag and
opened up a savings account.

Now Portman’s
merging with Nationwide, so I’ll finally see a windfall of some amount. Nice
– plus I don’t have to feel guilty since rather than becoming a bank, it’s
happening because Portman’s joining another building society.

Meanwhile, I just received my check for another merger, Portman taking over
Lambeth. This was entirely unexpected. I put some money in a Lambeth bond — a
CD for US readers — about two years ago. The takeover meant I was due a
windfall. I think the 400 pounds paid was twice the amount of interest I
actually earned on the bond!

I love Cahoot, my main online bank
here in the UK, but I fear the days of its stingy chequebook policies have
returned. I’m back to begging for a new one, something that will sound
especially strange to American readers.

In the UK, you don’t pay for your checkbooks (I’m going with the American
spelling now). They’re free from your bank. Not only that, many banks offer free
checking without some high minimum balance. It’s pretty nice. Heck, ATM fees are
still pretty rare, too. Banks let non-customers use their ATMs generally without
charge. All this will also likely come with free overdraft protection. Actually,
not protection — a free overdraft limit period. Unlike in the US, it’s not
illegal to overdraw your checking account. Banks actively encourage you to do it
in Britain and give you a set limit that you can overspend.

In the US, of course, you’re typically going to buy your checks, unless you
get an initial order for free. You’ll get a box of like 150 checks, compared to
the single checkbook that a UK bank will send you.

Ah, a world of contrasts. The UK system is less wasteful. I just tossed out
two big boxes of checks from US accounts I no longer have. I found them buried
in one of our closets. Instead, in the UK, you order a book of 15-20 checks at a
time. Some banks automatically send you a new book, when you need it.

I joined Cahoot about five or six years ago and quickly found they were
stingy about checks. In the name of security, they only wanted to give me a
single checkbook at a time. My wife and I have a joint account, so that’s pretty
unworkable. If she’s out with the checkbook, I can’t write one if I need to.

In fact, I was pretty greedy. I wanted three checkbooks — one for me, one
for my wife and a spare in case one of us ran out. I was seriously thinking of
quitting the bank I’d just joined. Then they saw the light, and I was able to
freely order checkbooks at my own discretion.

Last week, my wife used her last check and snagged my book. No problem. I
went online and ordered a new one. Then I got a message from Cahoot. Denied!

We’ve got your request for a new cheque book. We’ve looked at your account
and can see that you already have a cheque book in use. We can only order
another book when at least 8 of the cheques from your current book have been
used.

Let’s be clear about the absurdity here. It’s a joint account. They should be
able to see that. That alone should make it possible to have two checkbooks at
any time. But let’s say you agree you should have only one. That book has 15
checks. They want half of them used before you can order a new check book, which
takes a week to arrive. We don’t write a ton of checks, but still, it’s not hard
to run out if there’s a delay.

The policy also doesn’t take voided checks into account. I’m always making a
mistake when writing a check and have to void it and start afresh. That voided
check isn’t going to be seen as "used" by Cahoot. And

over at The Times, someone notes another issue:

Try asking Cahoot for a new cheque book when you’ve used all your cheques
up to the helpful slip in the book that says "it’s time to order a new cheque
book" …

… Cahoot absolutely refuses to do so UNLESS all the previous cheques have
been cashed – as if you can do anything about when other people present their
cheques!

We’ll see if I’m going through some twice per decade challenge over
checkbooks or whether something big has changed at Cahoot. Meanwhile, I’ll
remember fondly those packs of 150 I used to get in the US.

Aside from the cheque book issue, they’ve been great. The consistently offer
very high interest on both current and savings accounts, rather than some banks
that jack of the rate only to drop it.

Years ago, my internet bank of choice was Egg.
High interest rates on savings, and then later I did an offset mortgage with
them. But Cahoot later gave much better
rates, so I moved most of my banking over there. Now my mortgage has shifted to
Intelligent Finance, so I wanted to move some
of my money in my offset account from Egg to If. But going in on Sunday morning,
I discovered none of my accounts were accessible. Well, it was the weekend and a
one-off thing, I figured. But just now I tried to access my accounts, and I
can’t log in at all. No one can:

Unfortunately, our site is temporarily unavailable. Please try again later or
select one of the options below.

Monday at 8pm, and I can’t access my accounts? That’s like prime time for
internet banking. Can’t say I’m sorry to see the back of Egg. And for my
American readers, the glory of offset mortgages will come in a future post.