Monday, January 28, 2008

ATM Fee Hikes On Horizon


As consumer banks look to juice returns during a down period for new loans and mortgages be on the watch for rising ATM fees. In certain areas of the country JP Morgan, Bank of America and Wachovia have started charging $3 for non-account holders. Add that to the $1 or more that many banks like Chase already charge consumers themselves for the use of ATM’s not natively owned by the bank and consumers are getting a raw deal. You may be getting charged up to 20% of your withdrawal if you are making a withdrawal of $20 for example.

The average ATM fee today is $1.78, but five years ago it was about $1 at a bank where you didn’t have an account. My response, switch to a bank that refunds ATM fees that other institutions charge…. or if that isn’t a practical option for you use a point of sale cash back option – there are Walgreens and Wal-marts everywhere and a pack of gum costs a lot less than a $4 ATM fee.

If you are in the market for a checking account that has ATM refunds, some possibilities with decent interest are

Schwab High Yield Checking: 3.21% APY Variable with no min.

E*Trade: 3.60% APY Variable with $5,000 min.

Readers, do you have other suggestions? Comments?

Link to story @ ABC News

Image: wrestlingentropy @ Flickr

Monday, January 21, 2008

Schwab Offers High Yield Checking Account


Schwab has thrown its hat into the high interest checking ring recently. For those of you with Schwab brokerage accounts their "Schwab Bank High Yield Investor Checking" may be a convenient addition to your portfolio. A quick look at the account's stats show the following:

Rate: 4% variable APY.
Min: No account minimum.
Fees: No service charges or fees.
ATM: Unlimited ATM fee reimbursement.
FDIC: FDIC insurance up to $100,000.

I think it looks like the high-yield checking is a solid offering from Schwab. For starters, it beats the Electric Orange account from ING in terms of interest rates and features. Additionally, the Schwab money market is paying 4.32% (7-day avg as of 1-20-08), which means that if you give up .32% interest you can gain FDIC insurance and no minimum. A checking account isn't a great place to stash money in terms of investment opportunities, but if you have short term cash or carry a larger than average checking account balance it might be a good thing to look into.

Does a high yield checking account have a place in your portfolio, do you use a money market account with check writing, or just a plain old checking account?

Image: liewcf @ Flickr

Sunday, January 20, 2008

Making Reward Credit Cards Work for You

I’ve been burned in the past by credit cards that offer a great deal initially only to scale back rewards or raise interest rate so that the products become less attractive. Fortunately, I don’t carry a balance and I pay my statement in full each month, so the later issue doesn’t affect me (note: if you carry a credit card balance you should worry about the interest rate you are being charged and not the 1-3% you are getting in cash back). However, I am admittedly a “reward whore” and try to reap as much cash back bonus from my credit cards that I can.

So the goal is three fold, 1) to get the greatest amount of rewards possible, 2) do so only holding a few cards and, 3) try to pick cards that won’t drop their rewards six months down the road. I attempt to hold only two credit cards at a time and not open and close accounts if I can avoid it (due to the adverse consequences it has on a credit report and the hassles associated with it).

Here are the cards that my wife and I currently hold and some others that I think are worthy additions if you are reconsidering the cards in your wallet or in the market for a new one. We try to have one card that we use for gas and one for other purchases, but there are other good cards out there that give rewards for gas, groceries and pharmacy purchases (Citi started this trend with their Dividend card and have since slashed rewards).

A GAS CARD

My current favorite is thea BP gas card that offers 5% cash back on purchases at BP locations nationwide. There is no cap to the amount of rewards you earn yearly, which is good considering the price of gas these days. If you don’t have many BP’s in your area do a Google search for the most popular station followed by credit card. In my experience most of the major companies offer similar products so it’s worth a look.

AN EVERYDAY CARD

Since the majority of reward cards offer either a) a higher cash back percentage on certain types of purchases or b) a lower cash back percentage that applies to all types of purchases – if you are looking to maximize your cash back its good to get a card that will give you more than 1% back without a cap on all other purchases.

If you have a brokerage account with them, or are looking to open one in the future the Fidelity Visa card if my current favorite. While the reward rate isn’t the highest that’s offered, I like the 1.5% cash back on all purchases with no ceiling. Every time that you accumulate 5,000 reward points (the equivalent of charging $5,000), you receive a $75 credit for your Fidelity brokerage account. (* Note: Fidelity also has a Visa card offering 2% cash back with no limit into a 529 plan for those of you who are looking to save for a child's college education).

OTHER OPTIONS

Credit card issuers are fighting tooth and nail over new clients so there are new products popping up every day. Some good resources to start your research are creditcards.com and bankrate.com. Here are some other cards that might be good fits if you are searching for a new one.

Chase Freedom Visa: This card gives you $50 when you make your first purchase. Additionally, you receive 3% cash back in your top three spending categories (ie: grocery, gas, etc.) which re-adjusts each month. All purchases that are not in your top three spending categories earn 1% cash back. An added bonus for this card is that you receive an extra $50 each time you earn $200 in rewards. (* Note: that the fine print for this card says that you can’t receive 3% cash back on warehouse and discount club purchases).

Blue Cash American Express: This card gives you up to 5% cash back on “everyday purchases” (including gas, groceries, and pharmacy purchases) as well as up to 1.5% cash back on other purchases with unlimited cash back rewards. However, this card is probably only particularly attractive if you charge a large volume on your credit card. [* for each calendar year, from $0-$6,500 you receive 1% cash back for “everyday purchases” and .5% on all other purchases, over $6,500 you receive 5% cash back on “everyday purchases” and 1.5% cash back on all other purchases).

The Nest American Express: This card is another that is potentially attractive if you charge a substantial amount on your credit cards. You receive 5,000 reward points when you make your first purchase (equal to $50). Then you receive 1 point for each dollar charged on the card (1%). If you charge $15,000 in a calendar year then you earn an extra 10,000 points (equal to $100 cash back), on top of the 1% you normally ear. The card is targeted toward newlyweds and couples who need a hand so new sign-ups also receive a binder and materials to help you plan a budget.

So do you have a favorite card that has stood the test of time? Let us know.

Image: szlea @ Flickr

Thursday, January 10, 2008

Save Money on Phone Calls When Traveling

GSM cell phone services (ie. AT&T and T-Mobile) are great because they use the same standard many European carriers use. This means you can take your cell phone with you abroad and you can make calls -- although you will pay for them through the nose. I was reading recently about people traveling abroad with iPhones running on the AT&T network who received emails and other data transfer and had obscene bills (see here).

When I was traveling abroad last year I went old school and purchased a phone card to use at a pay phone. This year I decided to do some research, and although its not the cheapest option in the world and regular old phone cards might still be more effective another option to look into is prepaid sims like those offered by MAXroam. These companies allow you to buy a sim chip (those of you with AT&T or T-Mobile should be familiar with sims) that you can pop into your cell phone and will give you a local number wherever you are traveling. That means you can use your phone more easily abroad and get WAY cheaper calling and roaming rates.

Unfortunately these services aren't available to many people in the US for two reasons. First, most of us have a carrier other than AT&T or T-Mobile -- thus, our phones don't run on a GSM based network. Second, to use a prepaid sim service you need to own an unlocked phone. U.S. carriers sell almost exclusively phones locked or tethered to their cell phone service. To unlock your handset you need to either convince your carrier to do so or purchase/find an unlock code online. If you place a different carrier's sim in your locked phone you won't be able to make outgoing calls.

Lets get down to the dollars and cents... how much can you save? A roaming call when I was traveling abroad in Spain ran over $2 USD / min. Based on the MAXRoam website the cost of a sim is $29.99 (Euros) and that includes a 5 euro calling credit. Incoming calls run just .25 euro / min and outgoing calls .38 euro / min. That savings is substantial if you plan on placing a fair number of calls while traveling - or if you just want to have a way for people to contact you while traveling.

If you have used a similar sim service let us know which one and what kind of rates you paid.

Image: KB35 @ Flickr

Wednesday, January 9, 2008

Why Tax Refund Loans Make Bad Financial Sense

It's getting to be tax season which means a slew of tax preparation companies will spring into action and in the process begin to push tax refund loans on consumers. Reports state that nearly 12 million Americans take companies up on these offers -- and fatten the bottom lines for return preparation companies in the process.

There are a few factors at work here. The first is that people love receiving tax refunds. However, say you receive a $2,150 refund. The important thing to remember is the government is really just returning the excess money you paid over what you owe. It's not free money -- its your money that you just gave to the government interest free for a year. Second, what the tax preparation companies tend not to advertise is that these loans are similar to payday loans and charge APR's often in excess of 100%. A $100 finance charge on an average refund of $2,150 has an APR of 178%.

If you are receiving a large refund you've already given the IRS a good deal, don't give the tax preparation firm an even better deal. If you use a tax refund as a way to force yourself to save money open an online savings account (ING, HSBC, and E*Trade all are easy to use and allow you to link multiple accounts). Take the amount of taxes you owed the previous year, divide by 12, and set up an automatic savings plan with the online savings account to regularly deduct a portion of that amount out of your checking monthly, weekly, or bi-weekly. This way you don't make an interest free loan to Uncle Sam and you are able to actually earn some interest yourself in an FDIC insured account.

Read more about Refund Anticipation Loans @ Wikipedia

Image: RBereig @ Flickr

Tuesday, January 8, 2008

Sharebuilder $50 Free Offer

ING has started to market the Sharebuilder service that it acquired. This isn't terribly exciting new, but ING is currently offering a special deal where you can receive a $50 credit to your account by entering the code SHARE50 -- hey a free $50 is a free $50. As with any deal there is fine print. It looks as though you need to purchase a security and the credit will post within 4 weeks of the transaction.

For those of you not familiar with ShareBuilder, the company allows you to purchase fractional shares of securities. You can set up an automatic savings plan and have the company purchase $35 of stock each month and you will receive the applicable fraction of shares that the $35 will buy you at that time.

The company advertises that they have buy fees as low as $4, but that is for people who have an automatic savings plan set up. A full fee schedule can be found here.

Direct Link to Offer at ShareBuilder

Photo: goat_girl_photos @ Flickr

How Healthy Is Your Bank

I stumbled across an interesting page on Bankrate.com today. Using what they call their "Safe & Sound" system you can look up your bank and see generally how its financial stability is compared to its peers. If you have your money in an insured account such as a FDIC savings account or SIPC brokerage account and are under the insured limits you don't have much to worry about -- however, it's still interesting to see how your bank fares.

Ratings are broken down as follows:

Safe & Sound CAEL rating system

Safe & Sound CAEL rating Definition Star rating
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Image by: PixelJones @ Flickr