January 5, 2017: With Americans paying more than $11 billion in overdraft checking fees in 2016, Secretary of Banking and Securities Robin L. Wiessmann is advising consumers on ways they can save money and avoid overdraft fees, which can cost $20-$45 per transaction.

“An overdraft is when the amount of money in your bank or credit union checking account goes below zero,” said Secretary Wiessmann, who provides overall leadership to the Department of Banking and Securities in Pennsylvania, USA. “With the introduction of debit cards, automatic payment plans and other tools, personal finance has become more convenient, but also more complicated. However, following simple, common-sense rules can help keep more money in your checking account.”

Wiessmann’s top five tips to avoid overdraft fees:

1. Sign up for automatic funds transfer: Instruct your bank or credit union to automatically transfer money from your savings or other accounts to your checking account to cover any shortages. Note: you may have to pay a fee for this service.
2. Sign up for low-balance notices: Sign up for text or email notices from your bank or credit union if your checking account balance drops below a certain amount.
3. Make sure funds are available: Make sure deposits into your checking account are actually available for your use before you spend that money. Note: review your bank or credit union’s ‘funds availability’ policy.
4. Take advantage of technology: Frequently check your account balances online, by phone, or nearby ATM machine.
5. Check all transactions on your statements: Carefully review your monthly account statements, looking for fraudulent transactions as well as taking into account any checks written and deposits made that may not appear until next month’s statement.

“Frequent overdrafts can also cost consumers more than money,” Wiessmann said. “You could lose your checking account and have trouble opening checking accounts in the future.”

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IFM Correspondent

November 11, 2016: In a move that came as a shock, the Indian government banned currency notes of 500 and 1000 denomination rendering them worthless at November 8 midnight. The measure was taken to control fake currency notes and unaccounted money accumulated by avoiding taxes. Another goal is to change the nature of India’s economy, which is primarily cash based.

The ban has removed 80% of the money — by value — in circulation and forced people to reduce cash transactions. The full impact of the ban will unfold in the coming days.

But this is not a unique move: many other countries have either demonetised their currency notes for various reasons.

In 1996, Australia became the first country to demonetise its currency during the process of replacing paper-based notes with ones made of polymer. When the government of Australia come to know about the counterfeit money in circulation, the central bank decided to replace the paper-based currency with polymer currency. The polymer paper currency offered better security against counterfeiting.

In 2008, Zimbabwe went through hyperinflation and consequently its currency lost value. The Reserve Bank of Zimbabwe took the bold move of abandoning the Zimbabwean dollar as the official currency. In 2015, the African nation demonetised its currency and adopted a multiple currency system. As a result, the South African rand, Botswana pula, pound sterling, Indian rupee, euro, Japanese yen, Australian dollar and the United States dollar are now used for transactions in Zimbabwe.

Pakistan has decided to demonetise its currency. The State Bank of Pakistan has announced that the old notes in circulation will cease to be legal tender with effect from December this year. The intent is to issue a new series of notes, which are of better quality.

The post India demonetises currency to move away from cash appeared first on International Finance.

IFM Correspondent

November 9, 2016: Most of India is confused and in a state of panic after Prime Minister Narendra Modi announced on November 8 that 500 and 1000 rupee notes will no longer be accepted as legal tender. They will be replaced by new currency of Rs 500 and Rs 2,000 denominations.

The move is a bold initiative by the government to fight corruption, counterfeit currency and unaccounted money.

The Reserve Bank of India (RBI) cited the abnormal rise in fake currencies of higher denominations and also high denominations facilitating black money circulation as the reasons for the move. India is cash based economy and this measure needed to be taken to control the rising incidence of fake notes and unaccounted money.

RBI governor Urjit Patel assured Indians that there has been no breach in security of the existing notes, but the fake notes in circulation look similar and could be difficult to identify by untrained eyes.

The announcement took India by surprise. However, the RBI had six months to prepare for this task. The information was kept highly confidential with only the finance minister and four senior officers aware of what was to come.

The implications of this announcement are huge. The people who will be affected the most are those who have hoarded money avoiding taxes and terrorists who are circulating fake currency. But even the general public will have to suffer on account of this move as they might not be able to meet their immediate needs.

Demonetisation of 500 and 1,000 rupee notes will compel people into using legal channels and consequently increase the amount of taxes in the hands of the government.

Arundhati Bhattacharya, chairman of the country’s largest lender State Bank of India, said demonetisation of high value notes won’t be a problem as the bank has done it before. “We have just now been advised of the government move to demonetise the current series of Rs 1,000 and Rs 500 notes. We have handled demonetisation earlier and will do so again,” she stated.

As a result of this ban, there has been a rise in the use of plastic money and a surge in demand for gold. Venkatesh Babu, owner of Venkateshwara Jewellery explains, “Many people now have more confidence in gold, which is driving up the demand of the precious commodity. People will start buying gold ornaments.”

The general consensus among businesses and bankers is that this measure will be beneficial to the economy in the long run, but might cause inconvenience to Indians in the next few days.

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