Merchant Credit Card Fees

I have several posts lauding the benefits of credit cards for consumers, especially those with no annual fees and reward programs.  Assuming that you treat your card like cash and only spend enough to pay off your monthly bill when it comes out, there is only positive benefits: you get a 1-5% cash reward on all your spending, you delay your payment for a month which allows you to earn interest (albeit small in the current environment), you decrease the risks with carry cash like losing it or getting it stolen, and you establish/improve a credit history for future use with other loans.  However, credit card companies still need to make money.  Thankfully (in some aspects), not all of us are as careful with our spending and those who miss their payments or spend more than they can afford will be paying these banks and credit card companies high interest rates.  However, if in some magical world the majority of people were to become more responsible with their credit cards and paid all their bills on time, the only source of revenue for companies on these cards will be from fees merchants pay to accept them.  And even that is slowly going away.

Free Pizza

For all you pizza lovers, sign up for Papa John's Super Bowl Coin Toss.  You pick whether the coin toss at the Super Bowl will be heads or tails and if you get it correct, you will get a code for a free pizza.  You also fill in your address and email so Papa John's will have a large database of contacts for future promotions, but you don't have to sign up for their listserv to participate in this.  Last year, they had a similar promotion but gave everyone who signed up a free pizza if the collective majority of voters was right on the toss.  In last year's case, it was so regardless of what you voted, since the majority got it right, everyone got a free pizza.  This year is a bit different (probably to lower the risk of having to give everyone a free pizza) where only those who vote correctly will get the code.  So if you get all 10 of your friends to vote and sign up and split your votes 50-50 for heads or tails, you should be able to get around 5 pizzas for your group.

The Fiscal Cliff Deal

With the new year, the much anticipated fiscal cliff was partially averted, partially delayed as U.S. leaders reach some sort of compromise.  It makes permanent the Bush administration's tax rates for those earning less than $400k per year ($450k for couples) but raises rates on those earning more than those thresholds.  Above that, the income tax rate increases from 35% to 39.6%, bringing back the top bracket from the Clinton era.  Dividends and capital gains will also be taxed for people in that bracket at a new 20% level instead of the normal 15%.  Obama is now able to say that he succeeded in raising income rates on the wealthiest of Americans but not his initial target of those earning more than $200k annually.  Also, the temporary lower payroll tax rate implemented in 2011 (lowered to 4.2% from 6.2%) has also expired which will cost $50 a month for those making $30k a year and about $190 a month for those making around $114k.  Itemized deductions will also be capped for those making more than $250k ($300k for couples).  Taxes on inherited estates over $5 million will also increase to 40% from 35%.

The Market

What do people mean when they talk about "the market?"  When they say the market is up 200 points, what exactly are they referring to?  If you hear this terminology, but never knew exactly what it referred to, this is the post to read.

Banks Rethinking Debit Card Fees

A few posts back when I mentioned Bank of America's plans to introduce a $5 debit card usage fee, a huge consumer backlash came about.  People across the country were talking about closing their Bank of America checking accounts and it seemed as if there was a mass exodus from national banks to more local credit unions.  J.P. Morgan Chase has been testing a similar $3 debit card fee in a few states but plans on abandoning the idea.  Wells Fargo had been implementing an almost identical $3 fee that it has also decided to cancel.  TD Bank conducted a customer survey and found that about 75% use debit cards for convenience and that almost all of them would discontinue their account if a fee was imposed.  U.S. Bank has also come out saying that they do not plan on adding any fees.

New Debit Card Fees

Anyone with a Bank of America account should already be aware that the company is planning to institute a $5 monthly debit card fee starting in 2012.  They will roll it out slowly, selecting a few states at a time but no specific information is available yet.  This fee does not include use of ATMs but whether you use your card at the cashier once or 100 times, you will be charged $5 for that month.  This is essentially a $60 fee assuming you use your debit card at least once a month.  Wells Fargo and Chase are already testing debit card fees in certain locations and this may prompt them to also institute a global debit card fee for their own cards too.  However, I believe there will always be some banks offering free use of their debit cards and the promotion of this feature will become more prominent in the years to come.

The Passing of an American Visionary

This night saw the unfortunate passing of Steve Jobs, one of the greatest visionaries and businessmen in the world.  We all knew it was coming but I'm sure it is a shock that it was so soon.  I really appreciated his Stanford 2005 Commencement Address and thought I'd share it for anyone interested.  The speech is really moving and it's hard to hear that he is now gone.

Sell-off as U.S. Rating Drops

I apologize for not updating this past week.  I've been pretty busy but apparently, so has the market.  I am trying to get some more personal finance posts up but until then, I thought I'd point out the current stock market's performance.  Over the weekend, the S&P downgraded the U.S. credit rating to AA+ from AAA.  Nothing has fundamentally changed these past two days, but with the market today, the S&P is down more than 6% and this is on top of a 5% drop last Thursday.  Equities are getting to look very attractive.  Professor Siegel came on Bloomberg earlier today and said that unless you believe there is going to be a double dip recession, stocks are looking very cheap.  Will the market continue to drop another 5%?  Potentially.  Could this be the bottom and everything will rebound from here?  Possibly.  In the short term, it is almost impossible to time the bottoms in the market, but for those people who are looking to put away some cash for the long-term, now is a great time to get in, even if its just a little bit.