Category Archives: Banking

Are ISAs the best all-round option for savers with families?

Providing for family is a lot harder than it might seem. As well as thinking about the present and short-term, it’s also important to have one eye on what the future may bring, which makes building up a financial nest-egg of some kind a smart idea. Saving some money every month is handy for later on in life, but where should it be stored?

It might be easy to think that a run-of-the-mill savings account will suffice, but it’s possible to get more for your money. However, as most savings accounts are based on the interest rate set by the Bank of England, which currently stands at just 0.5%, getting extra money from interest might be hard to find, but with few options available, one type of savings product stands out.

Efficiency plus value

ISAs (Individual Savings Accounts) are seen as a great option for anyone with a family to provide for. The reason is that, up to a point, any money made in interest from total savings under £5,760 a year is exempt from tax per a tax tool.  Also, ISAs typically come with higher interest rates than the norm, although it’s imperative to open up one ISA per year to make them worthwhile in the long run.

Perhaps the only drawback that regular ISAs have is that money stored in them cannot be readily accessed. Fortunately, Cash ISAs, which have become far more visible in recent years, seem like a more viable option for anyone who needs to access their savings in emergencies. They’re also a little easier to understand, and are no less secure.

isas

Extra flexibility

“YBS Cash ISAs are designed for money that you may wish to access in the short or medium term to suit different needs”, said a spokesperson from Yorkshire Building Society.

“Once you’ve invested up to your maximum allowance for the tax year, we have other savings options for your short and longer-term savings goals. With us you can transfer your old ISAs with just two simple steps and we’ll do all the paperwork for you.

“Switching could really make a huge difference to the amount of interest you’re earning and, using our Savings Rate Checker, we can tell you quickly and easily what rate your current ISA provider is giving you.

“That way, you can make sure that you’re getting a good deal and if not, you can switch to us. We’re a mutual building society you can trust owned by and run solely for the benefit of our customers, who are our members”, they concluded.

Suze Orman’s “Approved Card” Gets Denied; Thinks PF Bloggers Are Idiots

Suze Orman, personal finance “extraordinare” has recently debuted a prepaid debit card called The Approved Prepaid MasterCard. Personal finance bloggers, including myself, were a little perturbed. Other celebrities including Russell Simmons and the Kardashians have been criticized for making a buck off of lower and middle class with these cards, so we didn’t quite understand why a finance guru such as Suze would be advocating a prepaid debit card. With its $3 monthly fee, fees for paying bills, fees from withdrawing from the wrong ATMs, fees for paper statements, fees for additional customer service, the list goes on. Sure, there’s some free things like opening the card and PIN transactions, but the fees outweigh the benefits. Seems as if she wants us to be mindless sheep and agree with everything she says.

Suze was making snarky remarks earlier in the evening that made me give the side eye. Things like:

[blackbirdpie url=”https://twitter.com/#!/scrpbks4u/status/156745340077359104″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156748717637124096″]

[blackbirdpie url=”https://twitter.com/#!/YourMoneyDrawer/status/156747547350810625″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156761034261139457″]

[blackbirdpie url=”https://twitter.com/#!/somladen9/status/156762053120491520″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156767876341178371″]

[blackbirdpie url=”https://twitter.com/#!/BlogFinanzas/status/156767535163916288″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156768191119507457″]

[blackbirdpie url=”https://twitter.com/#!/Gingerlatte/status/156883567379611648″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156894055098351616″]

[blackbirdpie url=”https://twitter.com/#!/Audrey00211/status/156824575181717504″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156895169579462656″]

[blackbirdpie url=”https://twitter.com/#!/BrianCBock/status/156923684446154752″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156926385573736449″]

Then I guess I stepped into the murky waters that is the Suze Orman Twitter feed:

[blackbirdpie url=”https://twitter.com/#!/20andengaged/status/156901845678301184″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156927914955390976″]

[blackbirdpie url=”https://twitter.com/#!/20andengaged/status/156928111143952386″]

[blackbirdpie url=”https://twitter.com/#!/freefrombroke/status/156928879334928384″]

[blackbirdpie url=”https://twitter.com/#!/ptmoney/status/156929680723820544″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/156930002431127553″]

Twitter went wild! PF bloggers came to the rescue and voiced their opinions, infuriated with someone we thought was a genuine person. Boy, were we wrong!

[blackbirdpie url=”https://twitter.com/#!/FrugalZeitgeist/status/156930165526634496″]

[blackbirdpie url=”https://twitter.com/#!/Gingerlatte/status/156930612404555777″]

[blackbirdpie url=”https://twitter.com/#!/4BetterWorse/status/156930914042130432″]

[blackbirdpie url=”https://twitter.com/#!/WellHeeledBlog/status/156931531951190017″]

[blackbirdpie url=”https://twitter.com/#!/WellHeeledBlog/status/156931683134873600″]

[blackbirdpie url=”https://twitter.com/#!/URFinanceSimple/status/156931812109713408″]

[blackbirdpie url=”https://twitter.com/#!/flexo/status/156931368759201792″]

[blackbirdpie url=”https://twitter.com/#!/CanadianFinance/status/156935334981140480″]

[blackbirdpie url=”https://twitter.com/#!/MyMoneyMinute/status/156935630218215424″]

[blackbirdpie url=”https://twitter.com/#!/tfneb/status/156935744961789953″]

[blackbirdpie url=”https://twitter.com/#!/URFinanceSimple/status/156936685937115136″]

[blackbirdpie url=”https://twitter.com/#!/iammsparker/status/156941263223005185″]

[blackbirdpie url=”https://twitter.com/#!/amaravp/status/156948431376621568″]

[blackbirdpie url=”https://twitter.com/#!/applecsmith/status/156951019786469376″]

Safe to say it was an eventful, and unfortunately eye opening night. After reading the tweets, what do you think? Don’t just take my word for it; I’m willing to give Suze some much needed link juice for her poor debit card’s website, The Approved Card. If you feel as strongly as I do, share this post with the hashtag #denysuzecard!

Update! 1/11/2012

You know how Suze basically implied bloggers aren’t “legit reporters”? Well, she even insulted one of those too. Ron Lieber, New York Times money scribe (and Verified by Twitter) also got a taste of Suze’s nasty medicine:

[blackbirdpie url=”https://twitter.com/#!/ronlieber/status/157201207927128064″]

[blackbirdpie url=”https://twitter.com/#!/ronlieber/status/157201227795537920″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/157212651288670208″]

[blackbirdpie url=”https://twitter.com/#!/ronlieber/status/157215776108056576″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/157217869216743425″]

Ron’s article can be found at the New York Times. After Ron got his apology, we all got one, including Phil!

[blackbirdpie url=”https://twitter.com/#!/PhilVillarreal/status/157219402545246210″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/157220495035600897″]

[blackbirdpie url=”https://twitter.com/#!/MJTM/status/157222064179253248″]

[blackbirdpie url=”https://twitter.com/#!/SuzeOrmanShow/status/157222736765272065″]

Feel free to leave a link to your Approved Card review in the comments:

Carnival Mentions

The Price Point Strategy: Don’t Be Fooled

This guest post comes from Mike of CreditCardForum. I met him at FINCON11 and I’m forever indebted to him for paying for my PF Changs. Anyways, enjoy his post!

If you live in SoCal, then you already know how much Time Warner sucks. So it comes as no surprise that the topic came up while Briana and I were having lunch a few weeks ago. What was our #1 complaint? The fact that when our internet goes out, Time Warner typically tries to peddle us “Business Class” service, which costs significantly more.

Personal vs. Business?

While I don’t know exactly how much Briana is paying, I’m guessing it’s close to what I’m paying since she’s lives in the next county over:

$44.49 for “standard” personal service, which has speeds of 6-10 Mbps.

Meanwhile, whenever I report an outage and rant that it is preventing me from blogging, they try and sell me a higher price subscription:

$58.90 per “business class lite” service, which has speeds of 3 Mbps.

So right off the bat, I would be paying more money for slower speeds. For the purpose of writing this article, I tried calling their customer service to find out how much comparable speeds would cost (Premium, Premier, or Ultra) and surprise! Their sales associates don’t work on the weekend, so they couldn’t tell me (which is ironic, considering the sales dept. for personal service is open on the weekends).

Henry Blodget says “what a joke” about this service, so that brings us to the question… why would someone pay more for it? My guess is that they’re using the price point strategy.

I once attended a speech by a well-known venture capitalist and he said (I’m paraphrasing here): “Start a company that sells services to businesses, because they’re much less price sensitive. Businesses are accustomed to paying for things.” Perhaps that’s why Time Warner knows they can get away with charging “business” customers more, despite how similar the two versions look and sound.

Preferred vs. Premier. vs Prestige?

Since I review credit card offers all day long on my site, as you can imagine I’m even sicker than you are of all those buzz words like “premier” and “preferred” that banks attach to the end of card names. Though you have to admit… they truly have mastered the price point strategy.

When American Express launched the Gold Card in 1966, it suddenly made their Green Card look less prestigious. In turn, customers were willing to shell out more money for the Gold (despite that it essentially offered the same benefits at the time). Then in the 80’s it was Platinum. For 90’s it was the Centurion a.k.a. black card. Now that precious metals have been overplayed, banks have resorted to gem stones (Chase Sapphire) and most recently, those “P” words mentioned above.

Obviously there are differences between most card tiers and for the right person (namely, avid travelers) it is worth paying for the higher tier. But a lot of times it seems that the differences between the two price points aren’t as profound as you may think.

For example, the $500 Thank You Prestige and $125 Thank You Premier from Citi are almost identical. They share almost all of the same benefits and even the rewards are nearly identical (one gives 1.2 points per dollar on categories, the other gives 1.3 points). For the life of me I can’t see why someone would pay $375 more for the Prestige. But I guess just like Time Warner, Citibank realized that by tweaking it and re-packaging the Thank You Premier card under a different name, they could make extra money.

Average vs. Special vs. Most Special Coffee?

Last but not least, we can’t talk about the price point strategy game without discussing Starbucks, who is perhaps the all-time unequivocal master of convincing us to pay more.

Next time you’re there, study the way their coffee menu is laid out and you will see it boils down to three different price points. I’m not going to call any of them “cheap” because all three are expensive, but the differences are more about the feeling you get than what you’re actually getting…

I’m average: These are under the $2.50 mark. Notice the rather boring sounding names – iced coffee, coffee with steamed milk, etc.

I’m special: From $2.50 to $4.00. These have a bit fancier sounding names, usually consisting of one or more words that end with an accented “e” to invoke haute taute European flare.

I’m the most special: For above $4.00, expect all the bells and whistles. Instead of 2 words in the name, many have 3 or even 4 (i.e. skinny cinnamon dolce latte). There will also probably be some sort of powder or spice sprinkled on top of the foam – which doesn’t really change the taste of what you’re sipping, but it does make for fancier aesthetics.

Contrary to what you are led to believe, the differences between the “average” and “most special” tiers can be trivial for some of the drinks (and certainly not as big of a difference to warrant costing up to 2x the price).

For example, not too long ago I was on my way to get my haircut and asked the woman who cuts mine if she wanted me to pick her up some coffee from Starbucks. Of course, she texts back the most expensive drink on the menu. But that’s no surprise, being that she has princess stickers on everything and loves her designer handbags… she likes to feel the most special.

So what did I do? I ordered her something from the “average” tier and disguised it was being fancy – a regular grande coffee ($1.85) only filled half-way, with the rest being steamed soy ($0.60). I then went to the condiment bar, sprinkling and stirring all kinds of goodies on it. Total cost? Around $2.50… which was almost 1/2 what she was asking for!

I give it to her and guess what? The first thing out of her mouth was“Wow this is really amazing. Are they using a new recipe?”

The lesson? Don’t be like my hairdresser and fall for the price point strategy games. Sometimes you do get what you pay for, but other times you just end up paying a lot more for a little better.