Wednesday, May 31, 2006

Discover Card: Not Your Drunk College Kid's Credit Card Anymore

Look here and you will see that Discover Card offers 0% on purchases and balance transfers for a year, as well as a decent cash back situation.

What I got in the mail today suggests however that Discover will only give me a 0% rate on purchases until January of '07, or roughly six months. On the other hand, they'll give me a 0% on BTs until August of 2007, roughly 14 months. They'll also throw in $20 after my first purchase, which I don't believe I can snag online. In addition, I'll get their best rate, which I richly deserve.

I'm not going to do it, partly because if I was going to, I think I'd go for the Discover Gas Card instead.

I haven't actually had a Discover Card since college, when that was the only card I could get, and strangely enough I think their willingness to take me when I was in college has actually biased me against them as I've moved up the economic ladder. It's as though because they were my lifeline when I was an immature student who couldn't pay the balance but wanted to go on Spring Break, I've seen other cards as more "adult" and I've not gone with Discover in a long time.

I'm going to take another look at Discover, although today's card offer is not what I'm looking for. I don't carry balances to transfer, but I do use zero percent introductory offers every so often, but only if they are for a full year. Keep 'em coming, Discover, I'm going to consider you again.

Obvious Advice: Save Money, Be a Very Good Investor and Get Rich

Via Lifehacker I found this article from Motley Fool. Basically it's an article that tells you to pay yourself first, start saving for retirement early, and you'll earn enough over the years to live comfortably when you're old.

The hook to the article is that instead of just being comfortable, you could also be rich. How to get rich? Be a good investor, be a student of Warren Buffett and any other big name, buy what your research tells you has real value instead of what seems to be hot, etc.

This is fine advice, sure. But easier said than done, bub. If everyone had the skill to beat the markets convincingly year after year, we'd all be rich. Warren Buffett would just be a face in the crowd.

I'm not saying the author is wrong. Undoubtedly you will be much richer if you are a top-notch stock picker and you can keep your blinders on when others are panicking. But by putting this out there as advice, it seems to encourage people who don't have the combination of time, talent and an iron stomach to get out there and start investing in individual stocks.

I'm all for people investing, but the truth is that most people will do worse than the market, not better, and they could end up sitting in retirement cursing the day they started putting all their money in individual stock picks.

Sure, you could get rich, but you could also go broke. Fund your retirement and don't play as an individual stock investor unless you're playing with extra money that you are fully prepared to lose.

Monday, May 22, 2006

Today's Mail 5/22/06

Some credit card offers and other sundries in the mail today.

First off, Advanta wants me to get their Advanta Platinum BusinessCard with a 7.99% APR and 0% APR for 15 months, plus 5% off gas, office supplies, cell phone, computer equipment and Internet services and 1% cash back everywhere else. No annual fee.

This is a pretty awesome card; I don't know how difficult it is to get approved, but that's a pretty good package of stuff. The mail offer I got isn't any better than they're already offering online, but, still, that's quite a bit of stuff. I might do this, even though my business technically no longer exists. I'll bet I could get approved.

American Express sent a promo flyer for their My Wishlist thing going on from June 6th to June 16th. Basically My Wishlist offers certain items at big discounts, like a Saab convertible for $5000. As you might imagine quantities are very limited.

I let myself get sucked into this promo last time they did it, and wasted a lot of time trying to get something for nothing. This time they seem to have made more items available at more moderate discounts, so I'll at least take a look, but I don't know if I'll try to get anything. Maybe the walk-on role on that show Entourage--it could be my big break. Probably no one else will be going after that, right?

Chase also sent me something about improvements to their Flexible Rewards program. Seems they've lowered redemption levels for Continental and British Airways flights and added United Mileage Plus, too. That's decent, but I don't really use that card much--not sure that this will change that fact.

I also got a piece of mail from my online broker, reminding me that I purchased quite a few stocks the day before the market went into the toilet. Thanks, guys.

PF Bloggers Profiled in Chicago Tribune

Several personal finance bloggers got some props in the Chicago Tribune this weekend.

Noting that more and more twentysomethings (and a few older people, too) are opening up their books for the world to see, financial writer Carolyn Bigda gave shoutouts to The Road to Rich, Make Love, Not Debt, Young and Broke, and My Money Blog.

Congrats to these bloggers, who have not increased their net worths with the attention, but who nevertheless feel a little more important today and a little less like one of the sheep. That's worth a few pennies in the pocketbook, yes?

Friday, May 19, 2006

Alternative credit scoring systems could solve Credit Catch 22

USA Today had an interesting story earlier this week about the potential for new credt scoring agencies that would take into account payment histories of things such as rent, utilities, etc. in determining a credit score instead of only relying on credit card payments and installment loans (auto, mortgage, etc.) as most do now.

As I've mentioned, the current system often puts consumers in a Catch 22--you can't get credit at decent rates until you have a credit history, but you can't build a credit history unless someone give you credit.

According to the USA Today article, the moves are in part to gain more of the Hispanic market. Also, consumer advocates want to steer more people away from payday lenders and toward banks. Right now, people who can't get credit often go to payday lenders for a short-term loan with sky-high interest rates--get $500 today and pay $550 in two weeks, or a 10% payment for just two weeks, which calculates to over 250% if stretched over a full year as most interest rates are calculated.

It seems there is a long way to go to actually make payments other than credit and installment loans a significant part of the credit score, but at least some companies are now trying to serve that market, which could eventually mean better credit rates for everyone.

Wednesday, May 17, 2006

Sell Your Stocks for the Summer?

According to Newsweek, right about now is about the worst time for stock performance.

First off, the article shows that, at least since 1990, stocks perform much worse in the summer. Even worse, the second and third quarters of the second year of a president's term are usually the worst time for stocks (why I can't tell you).

On the other hand, if you believe in buy low and sell high, and have some money to invest, right now might be the very best time to buy stocks. Or not. Who knows? My stock buying record is spotty at best.

Tuesday, May 16, 2006

Credit Counseling Firms Lose Tax-Exempt Status

Ever get a call from a credit counseling firm telling you they can virtually eliminate your debt through some magic process, along with implying that their non-profit status should make you feel secure in their trustworthiness? Well, it took a while for the IRS to figure out what most of us pretty much already figured out, but now they've pulled the tax-exempt status from 41 credit counseling firms--or every single one of the firms they investigated.

Why? Because it was obvious that these non-profits were looking for profits, and waving their tax-exempt status around as a way to convince people of their legitimacy.

Oh, yeah--21 of the firms are also now under criminal investigation as well.

Serves 'em right.

Monday, May 15, 2006

Germany Forcing Credit Card Use in Cigarette Machines

Because I cover the credit card industry, I often come across news stories that include information about credit cards, but in which the cards themselves are only tangential to the story. This story is one of those.

Starting next year, Germany is forcing all cigarette machines to accept credit cards only, so that underage smokers will not be able to use the machines (because they can't get credit cards, of course).

I don't know what's available in Germany, so I don't know if they have debit and/or prepaid cards. If they do, I'm not sure how this would stop kids from getting the cigarettes, because I don't think a machine can tell the difference between a credit card and a debit card. But maybe Germany doesn't do debit & prepaid, not sure. Either way, this isn't a solution, but it's at least another roadblock to keep kids from smoking, which is always a good idea.

Wednesday, May 10, 2006

Bankrupt Woman Wins $350K from MasterCard

The winner of a national MasterCard sweepstakes giving $350,000 to the winner is a bankrupt woman who doesn't plan on using her credit cards anymore.

Lucy Backman, from the Milwaukee area, won MasterCard's "A Home for the Holidays" sweepstakes, which she was automatically entered into when she used her MasterCard debit card to pay for Weight Watchers.

It was a far cry from the bad luck that brought her into bankruptcy in the first place, when an uninsured drunk driver smashed into her car and crushed her foot. Backman makes her living as a bus driver, so the months of recovery led to bills piling up that she paid with her credit cards, which eventually resulted in her going bankrupt.

MasterCard might not like hearing that she'll be swearing off her credit cards for a while, but it's a pretty nice story to see that kind of money fall into the lap of someone who really needs it.

Tuesday, May 09, 2006

Verizon Reporting Payment History to Credit Agencies

If you're a young person without much of a credit history, you'll be happy to find out that Verizon is now reporting its customers' payment histories to the major credit reporting agencies.

Why is that good, or even a little bit interesting? Because many people, especially young people, get caught in a vicious cycle when trying to build a credit history--they can't get credit because they have no credit history, and they can't prove they can handle credit unless someone gives it to them. These same people may already have a history of paying rent on time, paying utilities, paying cell phone bills, etc., but the credit reporting agencies generally only use credit cards, auto loans, and mortgage loans when calculating a person's credit score.

If utility bill payment, cell phone payment, rent, etc. could be factored in to the credit score, more people could gain credit under more favorable conditions--they wouldn't be treated as high risk and have higher interest rates just because of a lack of "credit" history. By reporting to the credit reporting agencies, Verizon is helping its regular-paying customers to boost their credit scores. (Or decrease their scores if they're not paying their Verizon bills.)

Will more utilities and service providers follow Verizon's lead? It could be a good thing for both the companies that do the reporting and the customers who pay their bills.

Monday, May 08, 2006

Gay Personal Finance

Gay people get plenty of ink in the media these days, but generally it's only within stories specifically about gay people. Today's USA Today, however, picked a gay couple in Massachusetts to profile for a personal finance makeover, if you'd like to call it that.

There's nothing particularly noteworthy about the two men's financial situation, other than their 28 count em 28 mutual funds, and the fact that their marriage in Massachusetts is not recognized as a marriage by the Federal government for tax purposes, inheritance purposes, etc. I just found it interesting that this is the first time I can remember coming across one of these types of personal finance profiles where the couple in question was gay. Usually it's "how the Conwells are doing on their retirement planning" or "Jim thinks Kathy spends too much," but it's rarely "Simon and Patrick have 28 mutual funds and 20 credit cards" as it is today.

Whether you think that's a good thing or not I suppose depends on your feelings about gay people, but it was interesting to see something a little different in one of these PF columns.

Revolutionary Wealth Book Review Posted

My boss Justin just posted his review of the new Alvin Toffler book Revolutionary Wealth here at Index Credit Cards. Toffler is the futurist who wrote the famous book Future Shock back in 1970 (which might be before you were born).

Justin usually only posts personal finance-related reviews on Index Credit Cards, and it's kind of a stretch to call Revolutionary Wealth a personal finance book, but it's a book that deals with potential world economics and how we might all be affected by them in the future, so the powers-that-be decided it made the grade to be included on the site.

Justin's a big reader, and he posts his non-personal finance reviews over at He's slogging through a book about Ben Franklin right now. He's sort of obsessed with Ben Franklin if you ask me.

I've been neglecting the blog but I'm going to be better.