Archive for the ‘Finance’ Category

Running Your Money: Protecting your privacy – sort of

Thursday, August 27th, 2015

Running Your Money column logo 233x300 Running Your Money: Protecting your privacy   sort ofBy Harry Stoll

About once a year, you’re no doubt receiving a missive from credit card companies informing you of what they do with your private information. This includes when you open an account or make deposits or withdrawals; pay your bills or apply for a loan; or use your credit or debit card. It also collects personal information for others such as credit bureaus, affiliates, or other companies.

I certainly have no quarrel with my credit card company, or loan holder getting such data; they are laying their money on the line and it’s good business to know what I’m up to.

But sharing information goes further. There are seven categories of private information and you can limit the sharing of only three categories. Here are the categories and what you can limit:

-For their everyday business purposes such as to process transactions, maintain your account, respond to court orders and legal investigations, or report to credit bureaus. You cannot limit this sharing.

- For their marketing purposes to offer deals to you. You cannot limit this sharing.

- For joint marketing with other financial companies. You cannot limit this sharing.

- For their affiliates everyday business purposes. (An affiliate is an entity owned or controlled by the financial institution.) You cannot limit this sharing.

- For their affiliates’ eveyrday business purposes—information about your credit worthiness. Ta da! You can limit this sharing.

- For their affiliates to market to you. You can limit ths sharing.

- For their non-affiliates to market to you. You can limit this sharing.

I don’t mind my bank or credit company marketing to me. Mostly I hit the delete button, but occasionally they offer something I can use, such as a bonus for opening an account or using my card a bunch of times.

From childhood, we’ve been taught that it’s nice to share. But we’re (hopefully) all grown up now and should be able to decide with whom to share.

These categories were last laid out in the Financial Services Modernization Act of 1999. It was enacted to thwart wholesale sharing of information, including sale of personal information to porn sites and to dodgy financial institutions offering high risk investments to low risk clients. The last time credit card reforms were enacted by the Federal government was in 2009, known informally as the Credit Card Holder’s Bill of Rights. It did not change the sharing of information rules.

So we have but three categories we can limit, but I urge you to limit what you can (assuming that’s’ what you want.) Formerly, financial institutions made it somewhat difficult to limit by requiring you to call an 800 number and work your way through the maze or to stamp and address an envelope. Now, they usually include a postage paid envelope.

We Californians can limit the sharing of personal and financial information with affiliates and outside companies the financial institution does business. That’s a step beyond.

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Running Your Money – Zero % on purchases – such a deal

Monday, June 15th, 2015

Running Your Money column logo 233x300 Running Your Money   Zero % on purchases   such a dealBy Harry Stoll

If everything is hunky dory with your credit cards—paying the balance each month, paying on time, and keeping expenditures below 30% of your available credit, and whatever I’ve been nagging you about—you can get a card charging you 0% interest on purchases for a specified period.

That’s right, 0%. Their motives are not altruistic, what did you expect? They hope you’ll put everything on the card; it’s a cuddly stuffed tiger that could morph into the monster under your bed.

Since I advocate paying credit card debit in full each month, why would I recommend a 0% credit card? Because that classic bumper strip is right, things happen. The roof she is leaking and the rain is coming in, or your car’s oil leak is more than a bother. Or it could be something enjoyable: a vacation or a root canal.

You might see ads about them or go online and enter “0% on purchases” and be inundated. Of course, that’s the easy part. The essential part is figuring out how you’re going to pay the piper because at the end you’re going to dance to his tune.

You should have funds to pay for your purchases immediately from an interest bearing account (You have one, right?). But you can open a 0% on-purchases card and keep funds in the interest bearing account. If you make one big purchase you divide it by the number of months of the 0% and set up automatic payments from your bank account. Or, if you are very sure of yourself you can make the minimum payment until closing time when you have to pay the bar tab.

Eve if you have not yet arrived at the ideal state of paying the balance in full each month, and are still paying interest (but working toward the ideal goal), the 0% balance card can be useful, but with all credit cards, danger lurks.

Sometimes the offer includes a pitch for a balance transfer at 0% interest. The catch is they charge you a one-time fee, typically 3% or 4%, which ends being more because you pay it up front; and then poof! It’s gone and won’t come back even if you pay it off tomorrow. So don’t go there.

I keep seeking interest-bearing accounts. Patelco Credit Union (membership available to anyone who lives, works, goes to school, or worships, in Contra Costa County) offers a money market account of 3% on the first $2,000.

It goes down from there until it reaches the puny amount most banks pay, but for $10,00 the “blended interest” is 1.7 %, which is more than the current inflation rate. Depositors are limited to six withdrawals a month. The deposit is federally insured. it can change it any time, without notifying you.

Or you could get a CD. Bankrate.com lists several with an annual percentage rate of about 1.2%. That could be ideal to stash money for your 0% purchase card. A CD rate can’t change (but there are penalties for early withdrawals).

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Helping you understand the new tax rates

Wednesday, March 12th, 2014

Marlen Rosales 300x107 Helping you understand the new tax ratesBy Marlen Rosales, CPA

What advice would I want to give you to prepare for the remainder of tax season, this year? First, and foremost, if you haven’t already, I would tell you to get your tax information to a tax preparer ASAP. Recently, there have been many delays in the finalizing of forms by the government agencies, this year. As a result, there is going to be, if there isn’t already, a flood of returns once the forms are finalized. You may already be in the flood. Avoid it to the extent possible.

Today we are going to touch on three items; capital gains rates, federal tax rates and qualified dividends rates. I am choosing to discuss them in one topic because they are interrelated.

For the top ordinary tax rate, long-term capital gain maximum tax rates have gone from 15% in 2008 through 2012, to 20% for the top rate of 39.6% in 2013 and after. For example, for Married Filing Joint, a tax bracket of 39.6% is taxable income of $450,001 and over. Any long-term capital gains would be taxed at 20%, instead of 39.6%, a savings of 19.6%.

For ordinary tax rates of 25% to 35%, the long-term capital rates have remained the same at 15% for 2013 and after. For example, for a Single individual, tax brackets of 25% to 35% are taxable income of $36,251 to $400,000. Any long-term capital gains would be taxed at 15%, instead of 25% to 35%, a savings of 10% to 20%.

For ordinary tax rates of 10% or 15%, the long-term capital rates have remained the same at 0%. For example, for Married Filing Joint, tax brackets of 10% and 15% are taxable income of $0 to $72,500. Any long-term capital gains would not be taxed, a savings of 10% to 15%.

To figure your tax bracket, you can look up your taxable income by finding it on line 43 on page 2 of your form 1040. If not, you can call me on my Research Hotline and I will assist you.

Similar to capital gains, qualifying dividends are ordinary dividends that qualify equally for the 0%, 15%, or 20% maximum tax rate that pertains to net capital gains discussed above.

Marlen Rosales is a Certified Public Accountant, and Founder and CEO of Certified Accounting Services in Antioch. She can be reached at 978-4484 or marlen@cascocpa.com. Learn more about her on LinkedIn at www.linkedin/pub/marlen-c-rosales-cpa/1/305/7b3

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Kredit Kard Fu uses the usurers – Get their rewards but read the fine print

Saturday, January 26th, 2013

Running Your Money column logo 233x300 Kredit Kard Fu uses the usurers   Get their rewards but read the fine printBy Harry Stoll

One reason to use your credit card for as many purchases as possible is the rewards for using the card. But pay off your credit card each month, otherwise the rewards are for a fool in a fool’s game. The usurers say the more you spend, the more you save. Well, really, the more you spend the more you owe. Still, stay within your means and pay the card off each month, and the rewards are beneficial.

Frequent Flier Miles is one type of award. Another is the 1% to 5% credit cards reward for purchases. These started as percentages, so for every dollar you spent you got a credit of from a penny to a nickel. Then some of the card issuers got tricky and talked about “points” rather than percentages; although the numbers are similar, the card issuer sets the points’ worth.

Citbank in particular plays a shell game. A few years ago, they changed, and rather than getting a $25 check for 2,500 points it took 4,000 points. It gets trickier. Recently they offered a 5X times the 1-point per dollar of purchases, making it seem like 5%, but it takes 5,000 points to get a $25 check. That’s 2.5%. Perhaps still a good deal. The Citi card with this offer is the Diamond Preferred (they prefer you don’t pay it off). The 5X program ran through Sept. 2012, and probably will be repeated. Always make sure what a point is worth.

Chase Freedom Card changes rewards every quarter; in two of them you get 5% for gas, and in another 5% for groceries, and in another 5% at drug stores. Other purchases award 1%. You must have at least $25 coming to collect, but they pay to the penny so no unused points lie about. As with all cards, “purchases” include whatever you buy (but not balance transfers or cash advances). You have to sign up each quarter and they send you an e-mail reminder. You must have a Chase banking account to qualify for more than 1%.

Discover card for July-September 2012 offered 5% on gas, and you can collect in $10 increments. The awards change each quarter. October-December 2012, it’s department stores, no doubt aimed at Christmas shoppers. The awards are capped at $75. They offer a bonus if you use your points to buy a gift card.

Jumping from card to card could get tedious; Bank America offers a 3-2-1 card, with 3% for gas, 2% for groceries, and 1% for everything else. It doesn’t change from quarter to quarter.

Take advantage of these rewards but make sure you know if the points are percentages or are worth some other ratio.

A note: Recently, I said Provident Credit Union pays 2.26% on free checking accounts (with some easy hoops to jump through), but they could change it without notice. While cheering on the Giants in the Venezuelan World Series, I saw their ad, stating it is 2.01%. Still a good deal.

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Kredit Kard Fu: Entry Level – Pay Them Off, Get The Float

Monday, September 24th, 2012

Running Your Money column logo 233x300 Kredit Kard Fu: Entry Level   Pay Them Off, Get The FloatBy Harry Stoll

As a veteran of the Kredit Kard Wars, who is in the trenches, kicking sand in the bully’s face, I advocate using a credit card for every possible purchase. Hold it! This is not a run-amok license. You should stay within your means and pay the credit card off each month, and credit rating agencies get antsy when you exceed 60% of your available credit. So don’t.

Maybe later I’ll do a Suze Orman jaw torque and suggest how to tunnel out of credit card debt, but basically you have to find the way.

Once you’re paying them off every month, you’re in the catbird seat and ready to take advantage of The Float (the “grace period” to the usurers). This means you have from 25 to 55 days from when charges for insurance, utilities, TV/landline/cell phone/internet, newspaper subscription, broccoli, toothpaste, gas, bouef Bourguignon and pinot noir go on your card until you must pay the piper. (Some of these are discretionary spending so use discretion.) So, if your credit card statement closes on January 15, any purchases made after that go on the next closing date of February 15 and will be due by March 10.

So, in February any money you have in a checking or savings account remains there. Does this make your head hurt? Go over it in your mind. Draw diagrams. It’s real. But what makes The Float pay off is having an interest-bearing account that you can pay from a month later. This action repeats itself every month.

The result is you always have one month’s worth of those amounts in an interest-bearing account and get 1/12 of the interest each month.

Provident Credit Union currently pays 2.26%. (Although they can pull that rate any time, they’ve kept it for a few years. Your principal is federally insured. You have to jump through some hoops but they are easy.) There must be other accounts.

Making mortgage payments with your credit card is possible, but perhaps difficult. What a huge deal that would be. I’ll research it.

Now the amount you save by using The Float might not seem big, but as with much of Kredit Kard Fu, it’s incremental. Would saving of over 2% on your payments be worthwhile?

Another advantage of using your credit card is the awards they offer that vary from 1% to 5%. They can get tricky. I’ll explain them soon. Another way is getting an account-opening bonus, which I’ll also cover.

Using a credit card is to let the genie out of Pandora’s Box, so you’ve go to be prudent.

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