Finance Without Borders

When my younger, college-aged brother’s birthday swung around this year, I decided to get him a practical gift that would also teach him something about financial responsibility. Being something of an Austrian economics buff (a flavor of economic thought favoring hard money) I decided a small piece of bullion would be an appropriate gift.

After poking around a bit online, I opted to go with a silver coin. So, I looked up a respectable local coin shop (using the ever-useful urban tool Yelp!), researched the fair value of a 1 oz. silver coin (which turns out to be just a bit more than the current price of silver for common coins), and headed over to the shop, a quaint little place in Chicago’s financial district. Though I had originally entered intending to buy a Silver Eagle coin, I ended up leaving with a Chinese Silver Panda — which seemed appropriate as I had just returned from a year in China.

My brother loved the gift, and it gave me a chance to explain a few financial principles to him — such as how the coin was worth at least its melt value, the value of the metal in it, and not it’s face value, the denomination stamped on it. Best of all, instead of just being a “disposable gift” that will collect dust or get thrown away, it is something that will last forever — or be able to be cashed in later at the drop of a hat.

Now, I’m scheming up new gifts to give to loved ones to help set them on the right financial course. And I must say, the feeling of being able to make someone happy with a gift — while also helping them — is a good one.

Every bank account can be said to have a financial cost – either the fees paid from the use of the account or the opportunity cost from not putting the money somewhere with a higher return.

However, I believe that different bank accounts also have different emotional costs – specifically the worry that should something go wrong, you will have to pay for it in dollars, either as a fee or some other loss.

For online banking (which I use exclusively), I feel that the design and information present in a bank’s website is the biggest determiner of the emotional costs of banking. Though my online money market account with Capital One is a good overall product, the cluttered, humorless feel of their website keeps a small worry in the back of my mind that a minor slipup on my part could see me slapped with a fee.

By comparison, the fun, streamlined feel of the ING Direct website is much more calming to me. Though the actual terms of my accounts with them don’t differ much from Capital One, I feel that I worry much less about something going wrong there than I do with Capital One. There’s isn’t much rational reason for this – ING’s website just seems to convey the sense that they’re not trying to trick me into making a mistake for the sake of hitting me with a fee.

Though I don’t have accounts with them, I’ve also been impressed by some parts of both Ally Bank and Schwab Banking’s websites. Ally Bank’s very fun-looking, web 2.0 homepage goes out of the way to point out that they have “no sneaky disclaimers,” and their individual product pages make most of the terms fairly clear. Over at Schwab, I was impressed to see that the FAQs for their online checking account have a “What’s the catch?” item that lays out the terms quite well. Though not a banking service, the peer-to-peer lending service Lending Club also offer a very low stress user experience.

What I’d really like to see from a bank, however, is a prominent list of “All possible account fees.” It’s rarely obvious from the documentation included with these accounts what happens if you make a transfer for more than the balance of an account or commit some other minor snafu. Having a list of every possible fee one could receive – as well as the situations that will never result in a fee – would contribute enormously to dispelling the emotional cost of an account and contributing to peace of mind.

I hope some banking decision maker somewhere is reading this, because I’ll be first in line to endorse whichever bank adds this kind of feature to an already solid banking product.

Does anyone else out there in personal finance land feel this way as well?