Wells Fargo Financial, the one division of the bank being facing closure, was a service that supplied mortgages, credit cards and auto loans to lower-income Americans. The bank will close 638 locations.

“The economics of a separate Wells Fargo Financial channel are no longer viable,” said David Kvamme, president of Wells Fargo.

Wells Fargo to Keep Some Lending Operations

Wells Fargo may be cutting a large number of its mortgage-lending locations, but the bank will continue to offer thousands of storefronts across the U.S. The Wells Fargo-Wachovia merger of 2008, which added a good number of stores to the Wells Fargo brand, enabled the bank to make this move. Wells Fargo has 2,200 Wells Fargo Home Mortgage locations along with 6,600 standard banking branches.

Wells Fargo “expects the consolidation to result in increased operating efficiency, streamlined processes and controls, and a more consistent experience for customers,” according to a release. Fewer than 2% of Wells Fargo-issued mortgages went through Wells Fargo Financial branches.

Wells Fargo Employees Impacted

The branch cuts are resulting in some layoffs and quite a bit of restructuring. Approximately 2,800 positions will be eliminated completely in the next year. About 11,000 other Wells Fargo employees will be sent to work at other Wells Fargo businesses.

This is the second big story surrounding the bank in the past few weeks: Wells Fargo recently announced its decision to no longer provide free checking for new members.

To read a news release on the restructuring, click here.

Wells Fargo will stop offering their current free checking offers but will continue to honor current customers’ free checking plans, according to The Winston-Salem Journal.

Details on Wells Fargo Move

Free checking might not be available at Wells Fargo, but customers will be able to waive certain checking fees by performing certain actions and meeting monthly requirements. In the same way that many high-interest checking accounts operate today, Wells Fargo checking will be more appealing for those willing to subscribe to direct deposit service and maintain a minimum account balance.

Wachovia, which is owned by Wells Fargo, will continue to offer free checking until its branches are officially converted to the Wells Fargo brand in 2011.

Banking Industry Reconsidering Strategies

Recently agreed-upon financial reform from the U.S. House and Senate will reduce the amount of money banks can bring in from sources such as debit card interchange fees and overdraft protection fees. In light of those regulations, which also make it tougher for banks to earn money from investment banking and other outside sources, institutions are looking for ways to recoup funds.

In lieu of taking away free checking, Bank of America is instead exploring the idea of making free checking an incentive-based program which customers can earn by using Online banking or regularly shopping with debit or credit cards.

Even if big banks such as Wells Fargo and Bank of America make it tougher to get free checking, smaller banks with less overhead and user-owned credit unions will probably still offer the accounts.

Wells Fargo 25K promotion

Ten customers will win $2,500 each and one winner will receive the grand prize of $25,000.

Terms

The contest is open to legal residents of the U.S. who are Wells Fargo or Wachovia customers and 18 years of age or older as of April 11.

One sweepstakes entry will be automatically given to the primary account holder for each eligible personal or business online-only statement which is signed up for during the promo period. Your odds of winning depend upon the total number of automatic and mailed entries received.

Here are the results:

Wachovia came in last due to a $50 minimum balance requirement, against $25 for other banks

Bank of America came in third, because while they do offer freebies like the others, they don’t seem to have the same level of customer care.

Citibank won second place, because we really liked their Student Advice Center.

And the winner is…

The gold medal goes to Chase, not only because they had the most free services, but also because of their massive network of ATMs, making access to money without charges much easier.

For more money saving tips and promotions, visit mybanktracker.com Bank Rates and Bank Deals section. It really pays to do your homework!

Referrer: A Wachovia Gift Card in the amount of $25 will be mailed to your primary checking statement address within four weeks of your referral opening a new Free Checking account. The referring customer can receive up to 20 awards for referrals per calendar year.

Referee: You must open and fund a new Free Checking account. Within eight weeks of opening your new account, a Wachovia Gift Card in the amount of $25 will be mailed to your checking statement address. You are not eligible for this offer if you were a signer on a Wachovia Checking account that was closed within three months before the date of new account opening.

To learn more about the deal please click here.

Update: To follow banks on twitter, check out: Bank Twitter

For the few of those who may have not been kept up-to-date on the latest big thing to hit the Web 2.0, Twitter is basically a micro-blogging site. A person on Twitter sends out “tweets” of 140 characters or less, telling others what he is up to, and at the same time pointing to an URL in the internet using tinyurls. A simple concept yet truly powerful.
But if you think that Twitter is just good for personal updates, and has no place in the financial and business industries, you’d be in for a neat surprise. Politicians, business executives, big companies, yes, even banks, are now making their presence felt in Twitter.

Data from Online Banking Report dated March 13, 2009 shows that as of that time, there were 15 US banks and 22 credit unions actively using Twitter. And that’s not counting the rest of the banks who may have set up their own Twitter feeds within the past couple of months.

Among the big banks which have joined the foray into Twitter are:

Banks on twitter

A quick check of these banks’ Twitter sites show that some of them are using their Twitter accounts purely to promote bank products and announce updates on the latest bank deals, and some are also actively using the social networking site as a way of keeping in touch with and responding to customers’ concerns.

While many bank customers still have to get used to the idea of “twittering” with their bank representatives, the few who do may actually find the service helpful. Wachovia, Bank of America, and Wells Fargo, which are using the micro-blogging media as an extended customer service platform, are enjoying larger numbers of followers.

Wachovia (now owned by Wells Fargo) was the first among these banks to use Twitter as a customer support channel (August 2008) and now enjoys a following of more than 3,000. Bank of America and Wells Fargo have over 1,000 followers each. Chase and Citibank on the other hand, which utilize the site purely for marketing purposes, just have a few hundred following their Twitter updates.

Due to the limited number of characters allowed however, solving customers’ problems sometimes require more than just shooting tweets back and forth. Some of the customer service interaction will involve the client giving out his contact info to the bank representative, and then waiting for that call. Not as quick a response as others may want but then again, that still beats listening to elevator music while being put on hold.

Talks of a possible economic recovery in the near future however, have boosted stock prices, with even some of the country’s big but troubled banks showing marked improvements in investor confidence.

But what do all these mean for the average depositor? For one, the supposed recovery in sight has not sent the government raising interest rates, and we don’t see that happening anytime soon, so don’t expect a boost in your savings or CD rates as well.

On the upside, as the Fed rates have gone bottom low, we have not seen as many rate cuts in the past few weeks. And if you look closely enough, you may find some better deals than what you might currently be getting from your banks.

Of the banks that we are covering, here are best APY rates as of April 21st 2009 of the lot.

Best CD Rates (12-month):

GMAC Bank  –  2.75% APY, $500 minimum

Runners-up:

• Corus Bank – 2.74% APY, $10,000 minimum
• Umbrella Bank – 2.65% APY, $1,000 minimum

Best CD Rates (60-month):

FNBO Direct  - 4.00% APY, $500 minimum

Runners-up:

• Intervest National Bank – 3.66% APY, $2,500 minimum
• First National Bank – 3.51% APY, $500 minimum

Best Savings Rate:

Wachovia (Way to Save) – 5% APY, $1 minimum

Runners-Up:

• Centennial Bank (Variable Savings) – 2.28% to 3.30% APY, $500 to $100K minimum
• FlagStar Bank (Express Money Market Promo) – 2.30%, $1 minimum

Best Interest Checking Rate:

Corus Bank (Ultimate Interest Checking) – 2.18% APY, $100,000 minimum

Runners-up:

• Presidential Online Bank (Checking Plus) – 2% APY, $1,500 minimum
• ING Direct (Electric Orange) – 1.65% APY, $100,000 minimum

This Information is provided ‘as is’ and solely for informational purposes, not for advice and may be out of date. Please check My Bank Tracker bank profiles to get the latest rates.

Here’s the latest recap of the best account alternatives this week based primarily on interest rates and minimum balances that should be deposited or maintained.

Savings Account Rate

Top pick: Wachiova

• Why: APY of 5.00% (as of April 6th 2009) for $1 minimum deposit with free online transfers and no monthly fees

Checking Account Rate

Top pick: Presidential Online Bank

• Why: APY of 2.00% (as of April 6th 2009) for a minimum balance of $1,500. FREE online billpayer, first 25 checks, and nationwide ATM access

CD Rate

Top pick: Umbrella Bank

• Why: APY of 2.67% (as of April 6th 2009) for a 12-month CD minimum of $1,000

Money Market Rate

Top pick: ADB Bank (Direct Wealth Money Market)

• Why: APY of 2.50% (as of April 6th 2009) for $0 minimum balance. Free online banking, online billpay, and first order of checkbooks.

Aside from the current bank rates, we have also gathered other top-rated banks in different categories based on bank reviews, customer surveys, and industry experts.

Bank in Mobile Banking Service

Top pick: Wells Fargo (CEO Mobile SM)

• Why: Aside from the usual services offered by most mobile banking apps such as balance inquiry, account history, bills payment, and funds transfer, Wells Fargo is the first and only bank to have created a unique mobile banking service for businessmen who need to make decisions while on the go.
• Runners-up: Bank of America Mobile Banking, Citi Mobile, Chase Mobile

Bankruptcies plagued banks and investment houses, and many industries, most notable of which are the finance and auto industries, were now pinning their hopes of surviving more on the bailouts that the government was handing out like candy, than on the likelihood that the economy would put itself right in the near future.

Aside from the election of the country’s 44th and first African-American president Barack Obama, the grim economic conditions that the US now faces, and the financial events that were part and parcel of these times, made for some staple and at times panic-inspiring headlines.

The End of the Bear Stearns Era, JP Morgan Chase Buys at Fire-Sale Price – March 17, 2008

No one could have predicted that Fortune’s “Most Admired” securities firm in its survey of “America’s Most Admired Companies” for 2 years in 2005-2007, would be the first to succumb to the effects of the subprime mortgage crisis. And yet fold it did, ending its 85 years in the investment market after having survived a dozen recessions and even the Depression.
The Federal Reserve, after failing to save it despite the provision of an emergency loan, instead brokered its sale to JP Morgan Chase. The original price agreed upon was a rock-bottom $2 per share which angered many investors, and rightly so, considering that the company once enjoyed a 52-week high of $133 per share before the crisis.

JP Morgan later raised the offer to $1.1 billion or $10 per share and this was the price settled on when the acquisition was finalized in May.
FDIC Closes IndyMac Bank – July 13, 2008

After Bear Stearns closed its doors, another jarring indicator of tougher times ahead was the failure of IndyMac Bank of Pasadena, California.
Like most financial institutions, IndyMac was also reeling from the mortgage crisis, and it showed in the massive layoffs and the temporary halt to its lending arm, just before the closure. Because of these moves, the bank lost depositors’ confidence causing massive withdrawals and sending its share price plummeting to just 28 cents from more than $28 a year earlier and $50 in 2006.

In the end, the Feds intervened and took control of the bank’s assets, in what would become the fourth biggest bank failure in US history.

Lehman Brothers Files for Bankruptcy – September 14, 2008

It was in the third quarter that things went from bad to worse pretty fast.
After failing to find a buyer or securing a rescue package from the government, Lehman Brothers, a prominent securities firm, filed for Chapter 11 bankruptcy protection.

With its collapse, the company’s 25,000 employees were left scrambling to find work at a time where even the once so-envied white collar jobs at Wall Street were apparently not invulnerable to the ballooning crisis.
Only a week earlier, government seized control of troubled mortgage finance companies, Fannie Mae and Freddie Mac, making investors jittery about the state of other financial institutions.

Bank of America Acquires Merrill Lynch – September 14, 2008

September 14 would turn out to be a “black-letter” day for the finance industry. In a seemingly surreal turn of events, another industry giant, Merrill Lynch, also nears the brink of failure before agreeing to sell itself to Bank of America for $50 billion in an all-stock transaction.
The deal was valued at $29 per share, putting a considerable premium on Merrill’s stocks, which had closed the previous business day at $17 per share.
Federal Reserve Rescues American Insurance Group (AIG) – September 16, 2008

Wary of the repercussions of the possible failure of one of the world’s largest insurance companies, the Feds took no time in stepping in and injecting some $85 billion into AIG, when it showed signs of trouble too. This was later followed by another $37.8 billion infusion in October.

Some changes in the bailout package in November however, had the government replacing the previous two loans with a $150 million aid package, which already included a $40 billion from the government’s bailout fund.
JP Morgan Chase Takes Over WaMu – September 25, 2008

The slew of bank failures this year will unfortunately include Washington Mutual, the biggest savings and loans bank in the country, putting it at the top of the largest bank failures ever seen.

Not being one to pass up an opportunity to further strengthen its dominance in the banking industry, JP Morgan was quick to set a deal in motion to buy WaMu’s operations for $1.9 billion, an excellent deal given the fact that at that time, WaMu still boasted of assets totaling to $307 billion and a network of 2,239 branches, catapulting JP Morgan to first place in deposit base.

Congress Approves $700 Billion Bailout Plan – October 3, 2008

The country watched and waited while an undecided House of Representatives and Senate debated, voted, amended and then debated some more over Secretary Henry Paulson’s Troubled Assets Relief Program (TARP) before finally giving the green light to its implementation.

Passed as the Emergency Economic Stabilization Act of 2008, now more commonly known as the $700 billion bailout money for the US financial industry, the rescue package authorizes the US Treasury to make capital injections into banks and purchase troubled mortgage-backed securities.

To date, a good number of banks, a few insurance companies, a couple of automakers and even some US cities have applied and been given slices of the bailout money.

In hopes of getting credit moving again and stimulating consumer spending, the government made sure that the first to benefit from the bailout package were the 9 top Wall Street banks. The following month, more banks and other financial groups were given access to the funds but the positive ripple effect that is supposed to be felt in consumer activity and the economy in general, is yet to be seen.

Wachovia in Danger of Failure, Wells Fargo Triumphs over Citigroup in Closing a Deal – October 3, 2008

Following JP Morgan’s takeover of Washington Mutual, Wachovia’s plunging stock prices, its troubled mortgage portfolio, and a staggering $5 billion worth of withdrawals on a single day (Sept.26) made the bank a likely candidate for the next big bank failure.

While the Citigroup was first to get into talks with Wachovia for an acquisition bid with the endorsement of the FDIC, Wells Fargo’s higher $15.4 billion offer would not wipe out Wachovia’s shareholders, prompting the ailing bank to accept Wells Fargo’s bid, amid legal protests from Citigroup.
The Wachovia acquisition beefs up Wells Fargo as the country’s 2nd largest bank in deposits, while Citigroup’s shares have been taking a beating since then.

FDIC Increases Insurance Limit to $250,000 – October 10, 2008

In an effort to soothe the banking public’s jittery nerves, the FDIC formally gives the go signal to implement the new insurance limit of $250,000. The move was also made to prevent massive withdrawals from banks, as what contributed to the failures of IndyMac Bank and Washington Mutual.
While this is temporary and will last only until the end of 2009, it has also included provisions for the increase in limits for joint accounts, upping it up to $200,000 per co-owner of the account from the current $100,000 cap.
More Bailout Money Saves Ailing Citigroup – November 23, 2008

In a startling reversal of fortunes, the once-mighty Citigroup is now in need of more bailout money infusion from the government.

What started out as a failed Wachovia bid has caused a steady decline in Citigroup’s shares, prompting some concern as to how these circumstances might spook depositors and cause a bout of substantial withdrawals which could further erode the bank’s stability.

In response to this crisis, the government made available an additional $20 billion cash infusion into the bank (on top of the $25b initially released following the passage of the $700b bailout package) and guaranteed $306 billion worth of the bank’s potential toxic assets.

$50 Billion Allegedly Lost in Madoff Fraud – December 15, 2008

The alleged case of massive fraud by veteran fund manager and former NASDAQ stock exchange head Bernard Madoff could indeed go down in the books as the largest Ponzi scheme ever to have been operated.

If investigations find any truth to the perpetration of a $50 billion scam confessed by Madoff himself through his Madoff Investment Securities, he would have defrauded a long list of clients including banks, financial institutions, charitable foundations, and a host of private individuals who entrusted him with millions of their money.

Federal Reserve Cuts Rate to Lowest Rate Ever – December 17, 2008

When the Fed slashes key rates to near zero, or 0 to 0.25% to be exact, it is giving out the message that the government is indeed serious in its effort to do what it takes to get the near-frozen credit markets moving again.
The move brought some much-needed boost to trading, sending stocks soaring and bringing the Dow Jones industrial average up by 4.2%. While some economists criticize the Fed’s daring in implementing a risky decision as this, many also see it as the economic stimulus that may get businesses and consumers up and about again.

Government Finally Gives Automakers $17.4 Billion in Bailout Loans – December 19, 2008

The long-awaited and much-needed rescue package for two of Detroit’s Big Three, General Motors and Chrysler, has finally been given the nod by President Bush.
Taken out of the $700 billion bailout fund for the financial industry, $13.4 billion will be given out to the automakers sometime in mid-January, while the $4 billion will be added in February. Both companies however, only have until March 31 to come up with a long-term viability plan, including concessions from the unions, creditors, and suppliers to assure the government that sustainable growth and profitability is still possible for them.

Wachovia, now owned by Wells Fargo, has the Way2Save promotion. Way2Save transfers $1 from your checking account to savings each time you make a purchase with your check card, pay a bill online, or set up automatic debits from your checking account. You can also set up an automatic transfer of up to $100 a month from checking to savings. This is a handy way to save if you have your pay direct deposited into your checking account. The program pays a 5% bonus on your savings for the first year, and a 2% bonus on the amount you add each year for the next two years. The program also pays 5% interest on your savings for the first year, and 2% for the next two years. Compare this to earning 2.75% on their money market account, which requires $1,000 to open. 

If you don’t want to lock up your money for a long time but want it to earn a high interest rate, you can put it in a money market account. Consider these offers: 

HSBC Bank, an online bank, is offering 3% APY interest on their savings account, with only $1 required to open the account. 

National City Bank offers 3.25%, guaranteed for 180 days, on their money market account. $5,000 is required to open an account at National City. 

Ever Bank is offering 4% for the first 3 months on the first $50,000 you deposit. The yearly rate is 3.16% after that, the combined rate works out to 3.42% APY.