CDs allow you to earn more by locking your money away.  You might agree to leave funds at the bank for three months, one year, or 5 years.

You generally earn more by committing to a longer term CD.  But how confident are you that things won't change over 5 years?

The longer the term, the more uncertainty there is.  Unfortunately CD investors are not looking for uncertainty.

Banks have been known to close CD accounts and make changes to long term CDs, and customers are usually surprised.  The rules may allow them to change things, but most people never expect it to happen.  DepositAccounts reviews a few examples of banks closing CDs, and notes that there's very little you can do.  According to Ken:

"There have been a lot of new regulations this year to protect borrowers, but nothing for savers."

If you're going to invest in long term CDs, consider the possibility that things might change.  How would this affect you and your goals -- will it be a mild annoyance or will it knock you off track?

Further reading:

• CD Investment Basics

First it was the robo-signers.  Now automated appraisal programs are causing trouble for homeowners.

For a while, home appraisals were just a formality.  Banks wanted to know what a home was worth and be sure they weren't lending too much.  However, precision was not important when home prices rose.  Appraisals generally came in high -- at least high enough for everybody to close a deal.  Most appraisers are honest people who tried their best to arrive at a realistic value, but it was always better to come in high.

Banks got conservative during the mortgage crisis.  They wanted a "true" appraisal value instead of a number that would get the deal through.  In addition, new rules made it less likely that appraisers would grease the skids for loans to go through.

For some loans, banks have turned to computers (programmed to be conservative) to estimate a home's value.  These appraisals are now criticized for being a little too conservative.  Homeowners have had home equity lines of credit cut, and some can't refinance.  The pendulum swings back and forth, and for now it looks like everybody -- including analysts who develop appraisal software -- thinks home prices can only fall.

Further reading:

• House Appraisals Under Fire
• Appraisal Rules

In the past, free credit scores were rare.  You generally had to sign up for a "trial" service (and provide a credit card) or get scores from a cooperative lender.

Starting in 2011, new regulations require lenders to provide free credit scores under certain circumstances.  If your credit score is used against you (under a risk based pricing program, for example), lenders have to provide a notice that includes your score.  In some cases, lenders will provide free credit scores to all applicants just to keep things simple.

This is good news for people who suffer because of their credit.  While you've been able to get free credit reports for years, those reports can be overwhelming.  Scores give you the answer -- not the logic behind it.  Credit reports are still extremely important because scores are calculated with the information in your report, but a free credit score makes it easier for you to know where you stand.

[via Free credit scores, at last]

Further reading:

• Where to Get Free Credit Information

Credit unions seem just like banks, but there are a few differences.

A major difference (and a criticism that banks regularly raise) is that credit unions don't pay taxes -- they're not-for-profit organizations.  Why do they qualify for this treatment?

The Financial Brand discusses credit unions' tax-exempt status in a recent posting.  If you're curious, you can find out why credit unions get a tax break.  You'll even learn about a few misconceptions, such as the claim that credit unions get a tax break because they're "member owned."

The takeaway seems to be that credit unions have an advantage because they contribute to society in ways that Congress wants to encourage.  The tax code is not just about taking your money, it's also designed to promote and discourage certain types of behavior.

Further reading:

• Credit Union Basics
• Bank vs. Credit Union - Which One's Best?