SPG AmEx Card Promotion: 30,000 Bonus Points Worth $600
American Express is having a promotion for its Starwood Preferred Guest credit card. If you apply for this card and charge $1,000 during the first three months, you will get 30,000 bonus points in the Starwood Preferred Guest (SPG) program. Starwood operates hotels under Four Points, Sheraton, Westin, W, and few other brands. SPG points can be redeemed for free nights at those hotels. At a value of at least $0.02 for each SPG point, the 30,000 bonus points are worth $600 or more. I applied and received an instant approval. The promotion ends on July 6.
This is not a sponsored post. American Express or anyone else doesn’t pay me anything if you apply. I’m just passing along the deal.
I knew about this card for some time. I didn’t apply until now because of its $45 annual fee (waived in the first year). Now the signup bonus will cover the annual fee for the next 10-15 years.
Why a Credit Union Isn’t For Everyone
I joined Alliant Credit Union back in December. So far, I primarily used the savings account. Because all my bill payments are on autopilot, I didn’t want to go through all the trouble of making changes to the checking account. But I’ve come to like Alliant Credit Union more and more. I decided use its checking account for some bills.
The biggest difference is that Alliant pays 1.5% interest on the checking account balance versus others paying near zero. There are no minimum balance, no interest rate tiers or cap, and no debit card usage requirement. To get the 1.5% rate, you only have to get paperless statements and have one electronic deposit a month (ATM, direct deposit, or transfer from another account).
As I mentioned in the previous post, anyone can join Alliant Credit Union by joining a PTA or by donating $10 to Orphan Foundation of America. Alliant doesn’t pay me in any way if you join.
A Checking Account Wants to Be Free
Wall Street Journal ran an article by reporter Robin Sidel End Is Seen to Free Checking a week ago. Over the weekend, it published another article by the same reporter The New Bank Fees: How to Fight Back. Both articles said because new rules from the government will reduce banks’ revenue from overdraft fees and possibly debit card interchange fees charged to the stores, banks will stop offering free checking accounts.
I have two comments. The first one is:
Why should a checking account be free?
Cap ATM Fees at 50 Cents
Wall Street Journal reported that some Senators proposed to cap the ATM fees at 50 cents in an amendment to the financial reform legislation.
The financial reform bill being considered in the Senate is S. 3217 Restoring American Financial Stability Act of 2010. The amendment that the newspaper referred to is S.Amdt. 3812, sponsored by Senators Tom Harkin (D-Iowa), Charles Schumer (D-New York), Bernard Sanders (I-Vermont), and Tom Udall (D-New Mexico). The meat of the amendment says:
(D) REGULATION OF FEES.–The regulations prescribed under paragraph (1)shall require any fee charged by an automated teller machine operator for a transaction conducted at that automated teller machine to bear a reasonable relation to the cost of processing the transaction, and in no case shall any such fee exceed $0.50.
Brokered CD and Bank Failures
I wondered how long that 0-star R-G Premier Bank of Puerto Rico would last (see previous post Treasure Hunting in Secondary CDs). Now I know the answer: six months.
Last week, the regulators closed R-G Premier Bank of Puerto Rico together with two other banks in Puerto Rico, Westernbank and Eurobank. Before they were closed, all three banks consistently offered the highest yield on brokered CDs at Vanguard, E*Trade and other brokers who get their brokered CD listings from BondDesk Group.
I bought the R-G Premier CD on the secondary market through Fidelity. I knew it was a weak bank when I bought the CD. So I made sure that I paid below the face value. Its failure actually would give a small boost to my expected yield.
The Average Daily Balance Mystery
How to calculate interest on a loan should be very simple, but it seems to be a mystery to many people, including highly educated consumer advocates.
MSNBC.com columnist Bob Sullivan wrote a book Stop Getting Ripped Off: Why Consumers Get Screwed, and How You Can Always Get a Fair Deal. It was published around Christmas time last year. He spent five pages in the book trying to explain how credit card companies use the average daily balance method to calculate interest and how that method maximizes the revenue for the bank.
With the help of a spreadsheet created by blogger NCN at No Credit Needed, Sullivan showed that when a consumer doesn’t have a grace period because he’s carrying a balance, if he charged $3,000 on the 5th of the month (assuming the billing cycle runs from the 1st to the 30th), he would owe five times more interest than if he charged the same $3,000 on the 25th of the month. The author announced the surprise discovery:
Why a Bank Makes $500 a Year Off an Average Customer
Banks are not popular these days. Mike Konczal, a fellow with the Roosevelt Institute, wrote What are you worth to your bank? in The Washington Post a few weeks ago. He estimated that a bank makes about $500 a year off an average retail customer. That story also made its way to NPR’s Planet Money blog.
I have a good explanation for that and it’s not because banks are cheating customers.
Before we continue, let’s take a look at how Konczal got the $500 a year number. He first gave this formula: » Read more …
Why Is ACH Slower At Some Places Than Others?
ACH stands for Automated Clearing House. It’s low-cost method to move money from one account to another. When you have payroll direct deposit, it’s done by ACH. When you give your bank account to an insurance company for automatic monthly payments, it’s done by ACH. When you transfer money from a checking account to an online savings account or to a brokerage account, it’s done by ACH. ACH is everywhere.
ACH transfers take longer at some places than others. When I transfer money from Fidelity to my checking account, I see the money the next day. When I do the same from Vanguard, it takes two days. When I do it from E*Trade, it sometimes takes three days. Why is that?
ACH supports both credits and debits. You can ask one institution to move money to another institution (credit, or "push") or you can ask it to get money from another institution (debit, or "pull").
Schwab Invest First Visa: Get In Before The Door Closes
I have been using the Schwab Invest First Visa credit card for several months now. It replaces the Fidelity Investment Rewards Visa I used before.
Both cards are issued by FIA Card Services, a subsidiary of Bank of America. The Schwab card pays 2% cash back to a Schwab brokerage account. The Fidelity Visa card pays 2% cash back only after you spend $15,000 in a year (1.5% cash back for the first $15,000). Fidelity also has a 2% cash back card — Fidelity Rewards American Express Card — which is also issued by FIA. More merchants accept Visa than American Express cards.
2% cash back is on everything. No tiers. No special categories. It can’t be any simpler. You also get ShopSafe, the one-time credit card number generator. ShopSafe is not available for the Fidelity American Express card.
Grace Period and Double-Cycle Billing
Twitter brought my attention to this article on SmartMoney:
It’s another "banks are out there to get you" article. It alleges that some banks are exploiting a loophole in the Credit Card Accountability Responsibility and Disclosure Act of 2009 ("CARD Act") for double-cycle billing.
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The Little Book of Main Street Money by Jonathan Clements
