Archives for October 2006

Quick Guide to Black Friday Sales

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Since it’s November, it’s time to talk about Black Friday AKA the day after Thanksgiving. Somehow, this has turned into the #1 shopping day of the year with stores offer deep discounts like $200 laptops to get people in the door. In turn, these deep discounts have led to special websites which leak the upcoming deals way ahead of time.

Why? So people can game the system by doing one of the following:

Rebuy. If you know that, for example, the Xbox 360 is going to be on sale for $50 on Black Friday, you go and buy it a week or two beforehand for retail price. Then, on Black Friday, you strut past all the hordes, march up to the customer service desk, asking for a pricematch to the new price. In essence, you are (1) returning the item for full price and the (2) buying it back right away for the sale price. Thus the term “rebuy”. Worst case scenario, they refuse and you simply return the item.
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Is 0% APR On Purchases Better Than Cashback?

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Back in my post Why You Shouldn?t Settle For a 1% Cashback Credit Card, commenter TW raised a good question:

Isn?t the best ?return? on credit card use found using a 0% on purchases card and put the money you would use to pay it off in an interest account (5.5% E-Loan account, etc.) instead of trying to use the best rewards bonus card where you?d need to pay off the monthly balance to avoid fees?

On one side, we have the interest earned off of “borrowing” at 0%. On the other side, you have plain cashback rebates. Which is better? This is a question I asked myself a couple of years ago, but due to the low interest rates back then it definitely wasn’t worth it. Now that ELoan Savings is offering 5.5% APY and other banks are close to that, I think I need to run the numbers again.

Calculations For Using 0% APR Purchases Card
First of all, you’ll need to find a new credit card with an introductory rate of 0% APR on purchases. To get an average picture, let’s say you spend an even $1,000 every month on it, or $12,000 annually (although this example would work for any dollar amount). Instead of paying the balance in full at the end of the month, you put it into an interest-bearing account. Let’s use 5.50% APY, although rates may rise (or fall) in the coming year.

Instead of nitpicking with grace periods and minimum payments, let’s say the bank interest earned is the same as taking the average, $6,000, for 12 months at 5.50% APY. This will give you a rough estimate of ~$330 in interest at the end of the year. Now, you have to pay taxes. Let’s use a 25% marginal rate.

$330 x 75% = $247.50

$247.50 earned on $12,000 of spending is 2.06% cash back.

Ok, 2%, not bad. If you spend more early on you’ll do better, if you spend more late in the year you’ll do worse.

This is the part I forgot initially – If you can get a card that gives you 0% APR on purchases and cashback, that rebate percentage can be stacked on top. Remember, cashback rebates are not taxable. So let’s say you get a card with 1% flat back on purchases, that would give you something in the neighborhood of 3% cash back.

Some other things that came to mind:

  1. You need a high enough credit limit fully take advantage of your spending. If you spend $500 a month you’ll need a $6,000 limit, otherwise you’ll need another card.
  2. Some people just don’t have the discipline to put away that money into a savings account every month. Don’t do this if this means you!
  3. You’ll need to get a new 0% card every 12 months to keep this up. Given the fast-changing nature of credit card rewards programs anyways these days, I personally don’t really care.

Conclusion
Look like TW was right. Although you get 5%/6% back on certain cards in specific categories, if you are only using one card, you really can’t beat 3% back on all purchases. Finally, if you find a card with some introductory bonus cashback offers you can do even better.

Here are some cards that would work well with this idea:
Chase PerfectCard MasterCard – No annual fee, 0% APR on purchases for 12 months, 6% cashback on gas for first 90 days, 3% on gas after that, and 1% back on everything else. Rebates credit monthly directly to statement.

Discover Open Road Card – No annual fee, 0% APR on purchases for 12 months, 2% back on gas.

Chase Home Improvement Visa – No annual fee, 0% APR on purchases for 12 months, 3% back on home improvement purchases, 1% back on everything else. Free laser level with first purchase.

I am leaving out cards that have no-fee balance transfer offers, as it would be more profitable to max those out for the full 12 months via balance transfers.

First Feedback Survey Results – Part 1

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I’ve tallied up the answers to the multiple choice portion of my feedback survey, and here are results complete with pretty pie charts!

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Wal-Mart: Generic Prescription Drugs For $4

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Wal-mart has a new program that offers certain generic prescription drugs for only $4, with or without insurance. Available in-store only, no mail orders. I don’t know much about drugs, but that sounds pretty cheap to me. From their press release:

The $4 generics program includes 314 generic prescriptions available for up to a 30-day supply at commonly prescribed dosages. According to www.rxlist.com, the list also represents 14 of the top 20 prescribed medications in the United States.

The 27 participating states currently are: AK, AL, AR, AZ, DE, FL, GA, IA, IL, IN, KS, MD, MI, MO, MS, NC, NH, NJ, NM, NV, NY, OH, OR, SD, TX, VA, VT.

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Updated Online Savings Accounts Comparison Page

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

As suggested in my survey, I am continuing to freshen up the parts of this site that are getting a bit dated. My old online savings account comparison just wasn’t cutting it, as a lot of new competitive accounts have entered the scene recently. I can’t keep up with every single bank, so instead I decided just to list what I see as the major ones and link to all the information that I’ve gathered about each. It’s now up on my Popular Posts section on the right.

Or, go directly to my new Online Savings Accounts Comparison page.

Free Trade Magazine Subscriptions

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

TradePub is a site with a big list of free subscriptions to trade magazines in various industries, from finance to IT/engineering to healthcare. It’s all advertiser-supported, so just pick out what you want. Here are a few financial mags that caught my eye:

Financial Planning – “Delivers in-depth features and articles that help advisers build their practices and enhance planning and investment.” This one would be interesting just to see what they talk about behind our backs.
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Free 250 Delta Skymiles For One Question Survey

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Free 250 Delta miles for telling them what you like to do while in-flight. Easy-Peasy. I can’t wait for free WiFi to hit airplanes.

3 Quick Tips For Dealing With Customer Service Reps

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Whether trying to get a fee waived, or calling in to check up a signup bonus, here are 3 quick tips for dealing with phone reps:

1) If you can’t get to a human within 30 seconds, try finding a better number at GetHuman.com.

2) If you ask nicely and don’t get what you want, don’t get mad. Just hang up and try again. You may have caught someone trying to reach a quota or simply on a bad day. If it doesn’t happen in three tries, it probably won’t happen.

3) When you do get what you want, try to have it credited immediately. If it is one of those “it should show up in 4-6 weeks” situations, have them type a note in your account. This can save a lot of research time later on, and helps make sure you get what was promised.

MBNA Credit Card Site Goes Bye-Bye

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

If you have an MBNA credit card, you may have noticed that the credit card site is no more. When you try to log in, it says that your cards should be at BankofAmerica.com. But if you have certain co-branded cards like Fidelity ones, you can only access them at IBSNetAccess.com. My other MBNA cards were automatically merged into my BofA Online Banking.

How To Get An Instant Credit Limit Increase With Citibank

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

There are a variety of reasons to get higher credit card limits, including improving your credit score by using a lower percentage of your available credit, and also the ability to get more free money from credit cards, and thus make more interest. Some people say there are disadvantages too, but it’s really easier to decrease your credit limits if somehow you need to.

Sometimes your issuer will automatically increase your limits without asking, like Citibank and MBNA. But many times you need to ask and it often involves a credit check. To be honest, I haven’t very aggressive recently in getting my credit limits as high as they could be. The only thing that I do, because it literally takes 5 seconds to do, is to occasionally request an instant credit limit increase online with Citibank. It doesn’t even hit you with a hard credit pull! Here’s how:
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Should I Outsource Myself?

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

I’m looking at a few online hire-a-freelancer sites, including eLance and Guru.com, and comparing the project descriptions and the winning bids. Most of the bidders are from foreign countries and the prices are amazingly low. Some of the finished projects are pretty awful, but many coders are obviously very skilled. With the proper manager mentality, a U.S.-based freelancer could probably arbitrage themselves quite easily. You’d have to coordinate things like taxes and confidential client information, but hey, don’t corporations do this every day?

Most of these sites have a mutual ratings system, much like the eBay seller feedback ratings. I get the feeling that some of the newcomers are so desperate to get a few reviews under their belt that they are willing to work for nothing. This is why I only take local jobs, where I can get personal referrals and offer better service in order to justify a higher price. Has anyone used one of these sites?

Tune Out All That Financial Noise

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

In geek speak, the term “noise” is any disturbance that interferes with or prevents reception of a signal, like the static on your cell phone. In the financial world, the intended signal is trying to tell us how to best accumulate wealth, and the interference is 95% of what you hear from the media. Forbes Magazine’s Mutual Fund Honor Roll? Well-packaged noise. Jim Cramer of Mad Money? Annoying noise. This is according to Chapter 18 of The Bogleheads Guide to Investing.

I think that there is much truth to this assertion. In essence, anything that attempts to “beat the market” is saying this:
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