If you live anywhere but the East Coast, you already have had access to a free annual credit report from each of the three major credit bureaus, as mandated by the government. Access to states on the East Coast* was supposed to start on September 1st, but according to some impatient people 😉 it is available now, five days early. So if you want to beat the rush, go for it! The official website is here: AnnualCreditReport.com. Don’t confuse it with those other “free credit report” sites that make you sign up for a 30-day trial.

Note that you just get a your report, listing your credit history, lines, and balances. Access to your credit score will cost you, but unless you are shopping for a mortgage or insurance, you’ll probably be fine using the free FICO Score Estimator from myFICO.
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FICO scores are everywhere now. You should be able to buy them while pumping gas soon. Sometimes I think there is too much emphasis on credit scores unless you are in the market for a loan or trying to refinance debt, but I guess they are used on a lot of things now. I just can’t see myself paying $15/month just to track my FICO score. But with the FICO Score Estimator from myFICO, you can estimate your FICO score for free, which is really all you need, I think. And it’s from the official FICO guys, Fair Isaac. You will need to answer ten questions about your credit history.

The main thing you can get out of this, besides your approximate score, is what actually affects your score. Let’s dissect the 10 questions:
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I got caught twice this weekend without any cash, and running around searching for an ATM. I use my credit card for just about everything now, and only keep a max of $40 cash on me. I just found out that I can even pay my garbage bill now with a credit card. And last month I started paying my newspaper subscription with credit to save $1 a week on my rate. The only bills I can’t pay with my credit card now are my water bill, electric bill, and rent.

I’m guessing the utilities have a monopoly, so they have no incentive to offer the convenience of paying by credit card, unlike for instance long distance phone companies. But isn’t processing mailed-in checks also expensive? And I’d think there would be more on-time payments with credit card billing. That’s my guess why the garbage company decided to accept Visa/Mastercard (no American Express).
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I get a lot of credit card offers in the mail. I usually just junk them since they aren’t better than my current list of best no fee 0% APR offers, but this one caught my eye. The outside envelope mentioned “0% APR FOR LIFE” (emphasis their’s). I knew there had to be a catch, but I actually opened this one. I guess this is Discover Card’s new thing? Sorry, it looks to be a targeted mailing, so no online application link to the offer.

The terms of my offer are as follows: 0% APR on balance transfers until 2/06. The 0% APR can be extended for the life of the balance if I make two purchases or cash advances each billing period. The balance transfer transaction fee is 3%, with a minimum of $5 and a max of $29. This offer seemed juicy enough to crunch some numbers…
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I thought I was pretty knowledgeable about credit cards and all, but in doing my due diligence for my Discover 0% For Life credit card offer, I learned something new to look out for – two-cycle billing. (Coincidentally, I wake up to the a comment mentioning it). I guess I never heard of this becuase I never carry a balance that isn’t at 0% APR. Also, most credit card companies don’t use it. Two biggies that do are BankOne (now Chase) and Discover. What is two-cycle billing?
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(Continued from Part 1: Citi Dividend Platinum Select MasterCard)

Some of you may have noticed in my Net Worth Updates that I have a 529 account. Yet, I have no kids! The MBNA/Fidelity Investments 529 College Rewards Card is why.

Like I mentioned in Part 1, I buy everything I can with the Citi Dividend Card to get 5% back. Everything else I use this card or the Amex Starwood. This card also has no annual fee, and gives you 2% cash back on all your purchases (up to $1500 annually) which can only be transferred to a Fidelity 529 account. (You can be the beneficiary, no need to procreate.) 2% is a very generous amount of cash back, very few cards offer 2% straight cash back on everything, and those that do are usually invitation-only. This is not straight cash back, but very close!

(If you do have kids, this may be a great way to save for their education, I’m ignoring this scenario for the next few paragraphs)

So you have to open a Fidelity-managed 529 account. I chose the Unique Plan as it’s offered as the “National Plan”. You get to pick how your money is invested, either in an Age-Based plan, a Static Plan ranging from 100% bonds & money market to 100% stocks, or a custom mix of both. I chose the 2009 Portfolio, designed for people starting college in 2009 (50% stocks, 40% bonds, 10% cash). I just picked it as a more conservative option as I’m my only beneficiary for now and I didn’t want to risk my principal much.

(edited) Per the rules, you can withdraw the principal without penalty, even if not used for college. There are penalties on earnings withdrawn not for college, since one of the perks of the 529 is that earnings grow tax-free. Any earnings on nonqualified distributions will be subject to federal income taxes at the distributee’s (me) rate as well as a 10% federal penalty tax. When you withdraw, the amount withdrawn is always the same percentage principal and earnings.

Let’s say you put in $100, and it grew to $110. If you take out all $110, then you have to pay tax + penalties on the $10. No or penalties tax on the $100. Now let’s say you just take out $55. In this case, $5 is considered earnings and is subject to tax + penalties. $50 is not taxed or penalized. So, you only get penalized on any growth in your principal.

What does this mean? Short version: With this card you can get basically 2% cash back on all your purchases!

Long version: Ok, say you spend about $750 per month on your credit card. Over a year, you’d get $180 at 2% back in the 529. Say it grows 4% to $187.20. You want to cash out, no problem, just call up Fidelity and ask for ask for a check. You are the one responsible for making sure you pay taxes for unqualified purchases. Got kids? Keep it in there and let it grow tax-free! Your new $5,000 home audio set-up just added $100 to their college fund!

So you get the check. Your penalty on the $180? Zip. Your penalty on the $7.20? Assuming a 25% tax rate + the 10% penalty, you’ll keep $4.68. Net? $184.68, or 2.05% cash back! If your investments lost 4%, you just get the $172.8, or 1.92% cash back. Still almost double the 1% you get from most other cards.

Ok, there are some catches. You must open the 529 with either $1000 or a $0 and a $50 automatic monthly deposit. I went with the $50 monthly deposit. Also, there is a $30 annual fee if you don’t meet this or other certain requirements. The easiest way to get around this is to keep up the automatic deposits. Remember, you can get all your money back out with no penalty. Personally, I’ve chose to leave all my money in there for my future kids, I think this is a great way to save.

Does this sound like too much of a pain in the butt? Try the Fidelity Investment Rewards MasterCard. You can get 1.5% cash back into a Fidelity Brokerage account. The key? There are no minimum balances if you get online statements! So, when the cash comes in, just transfer it back to your checking account. Voila! 1.5% cash back, still better than 1%.

Tips: Got grandparents or other relatives that aren’t as interested in credit card rewards? You can get them to sign up for this card for themselves, yet the rewards go to (you or) your kid’s 529 account. I bet that could really add up. Again, don’t bother with the 2.9% balance transfer offer, you can do better elsewhere.

Ok, there are more little details to this card, but this post is running really long. Check out the site, and if you have questions, please post a comment!

Next: Starwood Preferred Guest American Express Card (Great rewards card, could be worth >3% cash back!)

Yeah, earning free money off 0% balance transfers is great, but those cards go straight from the envelope to the lockbox. So what’s in MY wallet? Only the best rewards cards, of course:

This entry used to be about the Citi Dividend Card, but since it is no longer available I have replacing it with the Citi Driver’s Edge MasterCard (discussed here) which has a similar but not identical rewards structure.

Also in my wallet are the MBNA/Fidelity Investments 529 College Rewards Card with 2% cashback towards a 529, and the Starwood Preferred Guest American Express Card, which is a great airline/hotel rewards card.

In anticipation of anyone trying open any accounts in my name due to recent leaks of my personal information, I am creating an Identity Theft Recovery Plan. A lot of this information is gathered from the net and various newsletters from banks that I get.

1. Keep a record of all your accounts. Download and fill out the Free Financial Preparation Kit here. Verify your account activity by reviewing statements or an online aggregator like Yodlee. Check your credit report regularly, which can be free for many people.
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Yay. My credit card was already stolen last month, and now I come home to see that my personal information, including Social Security number, name, date of birth, and address was leaked by my school via a stolen laptop. Why is all this information, which supposedly spanned three decades, sitting in an unattended laptop?? Seriously, people!
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Ever notice that very few cashiers ever check to see if the signature on your receipts really matches the signature on the back of your credit card? At the grocery store I go to, you just take out your card, swipe it yourself, and put it away. They don’t even look at the name! They just hand you the receipt and you sign it. I mean, you could just sign it “Zeus”. And this guy did!

Apparently he’s tried everything from signing the receipt at Krispy Kreme as “Dunk N Donuts” and at Dunkin’ Donuts as “Kris P Kreme”, to just signing it “X”, to finally just drawing hieroglyphics. Check it out, definitely good for a laugh. Of course, it doesn’t exactly inspire confidence in the security of using credit cards, especially with one of mine being recently stolen.

In my opinion, the one where he actually computed a negative tip at a restaurant and signed it “Service Sucked” was the funniest. Goes against my tipping guideline, but there have at least been a couple times the service I received was bad enough to consider it! *cough* Denny’s *cough*

(This entry is continued from Part 1 and Part 2.)

5) Things to watch out for: Even if things go smoothly and you get your money, here are some possible consequences to consider –
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I just found that that someone just used my Amazon.com credit card to buy $138 worth of shoes at a store called Journey. They also tried to buy $300 of shoes at Payless, but that got rejected. That’s a whole lot of $10 shoes. For some reason Bank One didn’t feel the need to call me about this, but they did disable the online access to my account. I guess this is cheaper than just calling me?!?
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