The Discretionary Dollar » Banking

Racking Up the Rewards

Discretionary Dollar — Tue, 25 Jan 2011 04:21:09 +0000

Rewards points are certainly not new. Nearly every major credit card, bank or airline has their own form of currency called miles, rewards, points or something else. Companies “reward” you to build customer loyalty and return business for simply using their company’s credit card or purchasing their company’s product. However, with some forethought and a few minor changes in your habits, you can convert your rewards points into cash.

Spend a Dollar to Save a Penny
Let’s be clear here. Spending a dollar to make a fraction of a dollar isn’t usually a good strategy. However, if you already must purchase a product why not benefit a little from it.

We do our best to maximize our rewards and usually end up with about $1000 a year in cash. We put this bonus in our replacement fund which we use each year for trips and vacations. Not a bad starting point.

Rewards Defined
There are many types of rewards programs but we prefer a simple program. We earn points for using our bank’s check card or credit card. Since both these are provided by our bank we earn points that can be used to purchase (overpriced) things, or redeemable for cash rewards. My points, my business points and my wife’s points, all pile up and once or twice a year we cash them all in for a nice little bonus. If you don’t already have rewards points, check with your bank or credit card company to see what type of rewards they offer.

We don’t like rewards that lock us into using one product/company or service. For example southwest credit cards rack up mileage, which you can use to purchase tickets. This is great, but unless you travel a lot, it really won’t add much padding to your wallet. In addition, you are subject to blackout dates and other restrictions in some cases.

Also, other company programs such as gas cards or other store cards require you make purchases at their store. In most cases we shop deals and buy our necessities at several locations. So locking us into one store or brand would actually cost us more, which would defeat the purpose of earning rewards.

How to Earn More Points
Well the simple answer is just to use your credit card rather than cash or check. Are you still writing checks? With every purchase you make try to use your plastic purchasing power.

Credit vs Check Card
Many rewards programs earn you more points for using your credit card, rather than your check card. So if you are on the fence, and not sure if you should use a credit or check card, go with the credit card. Just make sure to pay off your balances each month (the interest charged will more than outweigh any rewards points you may accumulate).

Business or Reimbursed Expenses
Have a small business? Add your business cards to your rewards program also. For many businesses paying with plastic is simple, and can really provide a nice shot in the arm for your rewards balance. Do you purchase things for your employer that you get reimbursed for? Use plastic! As an added bonus, any rewards points you earn usually are earned individually. This means you get the reward check personally. Consult your tax professional, but many times they can remain unclaimed and tax free.

Dining Out
Ever had trouble figuring our how to split up your dinner out with friends. Well next time, whip our your visa and pay for the entire group. Have your friends just write you a check, paypal you or pay you cash for their portion. You will rack up some more rewards. Once you start thinking this way, you will be surprised how easily you can shift you purchases to maximize your rewards.

Bills
We hope you are tracking your expenses the easy way. If you are, take another look at your monthly bills. Which companies offer you plastic payment options? Can you pay your mortgage with a credit or check card? What about utilities and other bills?

Reward Pitfalls
There are few things to watch as you navigate the new land of rewards.

Annual Program Fees
Initially I remember being charged a program fee to have a rewards account. It was $19 a year, and you could use rewards points to pay it. However, now that we have a “better” account at the bank, they waive the rewards program fees. So it’s free. Ask your bank about their program fee to see how you can get it as a free benefit. And if you have to pay it, use your rewards points to do so.

Credit Card Minimums and Fees
There are some merchants our there that don’t know the rules. They make things difficult for those that do. Next time you see a minimum purchase, charge for using credit cards or some hybrid, fight the fees. There a many ways not to get charged minimums and fees.

Talking Point: Do you have any rewards tricks up your sleeve? Any programs or company rewards that you have had good success with?

The Case For Paperless

Discretionary Dollar — Sat, 26 Jun 2010 18:31:12 +0000

Paper litters nearly every aspect of our life. Not only is paper a nuisance, but for every piece of paper you decide to keep, you have to organize, store and manage it. What a waste of time and resources.

Is your desk covered with neat (or messy) stacks of paper? Do you find it frustrating to find documents in a file cabinet? Tired of having stacks of mail and paper clutter your life? Are you interested in simplifying your life and spending more time doing the things you love?

Here are just a few reasons to work towards eliminating the endless stream of paper.

Paperless is Safer
I have heard the argument that things online are unsafe. But we easily forget how unsafe a typical mailbox is. Which is easier to gain access to: a large national bank’s system or a typical mailbox in front of your home? Even a locked mailbox is easy to pick an offers little or no protection.

With paperless statements you won’t have files cabinets full of account numbers and other documents in your home for someone to rifle through. If you choose to save documents locally on your computer, look into password protection or other security in case your computer is compromised.

Paperless is Backup-able
If you are storing your bank statements and other paper mail in a file cabinet and your home robbed, burned or you simply misplace them, you are usually out of luck. However, with paperless documents you can easily setup a system for automatically archiving and backing up your important documents. Dropbox.com is my favorite backup and online storage service. (It’s free under 2gigs)

Paperless is Cheaper
You will spend less on storing and organizing all your paper statements and mail. You will also spend less on stamps mailing back all your payments. You won’t have to worry about running out of desk drawers or room in your office with electronic files either. If your office is paperless, you can even lease less space, or fit more desks furthering the savings.

Paperless Produces Less Waste
Take a close look at all the paper you toss after opening your mail next time. Inserts, junk mail and return envelops are all just extra wasted paper in most cases. If you are paying your bills the easy way, you won’t be sending in a good’ol check anyway.

Paperless Saves Time
I dread opening mail because I know that opening it is only the beginning. After I open it, I will need to file it, respond to it, and review it. If you are getting a lot of mail, you know how fast it can pile up. Try coming back from a vacation to a huge pile of mail. Now imagine coming back from a vacation with no mail at all to open! You may not realize how much time you spend processing mail, unnecessarily.

In addition, you won’t have to walk or drive to your mailbox daily (maybe once a week at the most). You also won’t have to spend time sorting through old statements to locate one. A quick search on your computer, or online document site and you can find your document quickly.

Paperless is Faster
You get online statements immediately. You don’t have to wait for the post office, and online statements can come 24/7 rather than being restricted to the US Mail hours, holidays and routes. You have the ability to check your statements the day they are created.

Paperless is Mobile
Not only are you not tied to a physical location, you can check your online statements on the go. If you travel for any reason, you know how nice it can be to get some of the day-to-day busy work out of the way as you wait in an airport or hotel room. Use this time to review your statements etc.

Now that we understand the benefits of eliminating paper mail, how do we do it? Please check back for:

1. Paperless: Reducing the Stream
2. Paperless: Getting Started
3. Paperless: Managing the Digital Files
4. Paperless: Organizing/Backup/Sync
5. Paperless: Other Creative Ideas

Paperless: Reducing the Stream

Chuck the Checkbook

Discretionary Dollar — Sat, 26 Dec 2009 00:28:44 +0000

Balancing your personal checkbook is not as necessary as it once was. In fact it’s not necessary at all. Ten years ago you’d have to wait for a statement showing what checks cleared. Times have changed. Here are a few ways for you to get rid of the checkbook and the balancing chore that goes with it.

Stop Writing Checks

First thing is first. In order to eliminate the checkbook you have to stop writing checks. While you may not be able to do it cold turkey, in most cases you can use other means of payment. For example you can use your credit/check-card or a BillPay type service. Electronic transactions like plastic and BillPay clear within a day or so.

What is BillPay?
Most banks now offer a BillPay type feature, however it may be called by another name. It is even free with many banks and account types. BillPay basically enables you to create a list of companies or people that your bank will send payment to. In a few clicks you can add a new payee and send a payment. There is no cost to your recipient. The payment comes out of your account the very next day and the payment is sent. If your payee is a small vendor, friend or local business they will get a check from you (generated by your bank) in the mail (at no postage cost to you).

Free or not, BillPay is worth every penny if it means you don’t have to write checks or balance a checkbook. An added feature to BillPay (there are many) is the ability to track payments. You can see all the payments you made to any vendor, when the check was negotiated/cashed and more.

Here are a few common payment examples:

Rent
Pay your rent via BillPay. While you are at it set it up as a recurring transaction and never worry about late charges. Your landlord will simply get a check from you each month. If the bank makes a mistake and it is late, they will even pay your late fee in most cases.

Mortgage

Most all mortgages offer a EFT payment option that comes right out of your checking/savings account. Set it up monthly and don’t worry about late fees.

Utilities

Just chuck those prepaid envelops the utility companies send you. Log onto their website and setup online statements and automatic payments. Have it charged to your credit card if you are concerned with cash-flow or your checking account balance.

Friends/Family

Let your friend know you will send him/her a check. If your friend has a problem with that you may want to re-think your financial relationship with that person since trust is a problem. Better yet, if you both have Paypal accounts send them money via PayPal. This will save your friend a trip to the ATM to deposit the check your BillPay sent them.

Discuss Spending Rules

If you are sharing a checking account with your spouse it is good to have some guidelines. Determine a preset limit for electronic purchases and a minimum balance. It’s a drag when your wife just paid the bills and you are stuck in line with a denied card. If either of you notice the account’s below your agreed minimum then one of you need to transfer funds asap. If you are shopping and your transaction is larger than your preset spending limit use your credit card so you don’t drain the checking account.

Track Transactions/Balances Online

Since you aren’t writing checks and longer and don’t have a ledger, you will need to keep an eye on your balance via online banking. The frequency you check your account balance depends on the amount of transactions you have. Remember essentially you are using your online banking records as a checkbook. You used to check your checkbook each time you wrote a check, so you’ll need to keep a eye on your balance just as often. Learn more about easy expense tracking.

Talking Point: What are some types of transactions that you still write checks for?

No related posts.

Tracking Expenses The Easy Way

Discretionary Dollar — Sat, 19 Dec 2009 06:46:04 +0000

Do you wonder where your hard earned dollars get spent? Here are some ways to track your expenses in just a few minutes per week.

1. Use Online banking

Some smaller banks are still catching up but the larger banks have done a great job of giving you all the tools you need online. If you aren’t using online banking then tracking your expenses will be much more difficult and may require far too much time and effort.

2. Use Plastic Exclusively (or as often as you can)

Using your checkcard/credit card is the easiest way to make your purchases trackable. Everytime you pull money out of an ATM or you use cash to purchase something, you lose the ablity to track and account for that money or item. The same generally goes for checks also. There are other ways to keep track of your expenditures but none of them rival plastic. By using plastic you set yourself up for automatic tracking of expenses. Plus there are other benefits of using plastic.

3. Use an Online Account Aggregator

Now that you have all your transactions trackable via online banking, you are ready to process and categorize them. Find a service that will use your online banking credentials to process and cateogorize your transactions automatically. Here are a few:

Mint.com (Personal Favorite) | Free. Custom Budgeting for all accounts including investment, brokerage and mortgage. Also has Cyberhomes.com integration for real estate valuation. It will give you a pretty accurate net worth in addition to very flexible and easy to use budgeting tools.
Wells Fargo Spending Report | Free (with certain Wells Fargo accounts). No Hassle Budgeting and Categorization of expenses. Only limited to Wells Fargo accounts, and has no custom bugeting feature. From a trusted source, no other party has your login credentials.
MoneyStrands.com | Free. Claims to have similar features to Mint.com. I have not used this but it appears to have some neat features.

4. Classify and Demystify

The above sites may not perfectly classify your spending types and accounts. The first few months it may be nesscary to audit your budgeting tools just to make sure Mint.com didn’t classify a few transactions incorrectly. For example your Safeway Gas purchase may default to the groceries category. Make sure to set it up so that future transactions are classified correctly so you won’t have to manually correct any classification more than once.

Mint.com will suggest a few budgets automatically but you will most likly want to tweak them to fit your needs. Check back weekly or as often as you need. You can even setup alerts that warn you as you get close to your budget. You now have a fully automatic way of tracking nearly every expense and income source.

Talking Point: What is your favorite feature of your online bank or budgeting tools?

Chuck the Checkbook

Use Your Credit Card Without Transaction Fees or Minimums

Discretionary Dollar — Tue, 15 Dec 2009 05:24:32 +0000

The biggest drawback to going cashless is the problem of uninformed merchants charging minimums or transaction fees. So are you tired of getting nickel and dimed as you go to use your credit or check cards?

If you are still unclear on the different types of debit/check cards, be sure to read Credit or Debit? Plastic Explained first.

The Problem
Merchants see credit transactions as an additional cost. In general store owners pay between 1-3% per transaction to process your card. They also have a fixed transaction cost ranging from .15 cents to .45 cents. Different accounts have their own prices, but that’s generally the structure.

A cost conscious owner decides they would prefer customers to use cash (after all there is no fee for cash right?). So the next day they craft a small homemade sign and tape it to the cash register with their new policy. $10 minimum purchase for all credit cards! Problem solved! Now customers will use cash, or purchase enough merchandise to cover any costs they have incurred by accepting plastic payment.

The General Rule – Fees Are Not Allowed on Credit Transactions
In most cases it is against any merchant’s VISA/MasterCard agreement to charge a minimum, an extra fee, or in any way discriminate against those using plastic means of payment (with the exception of some schools and government offices). The other exception is debit transactions. Debit transactions may involve cash back and generally allow for the merchant to charge the card holder a fee.

In no way are merchants allowed to require a minimum purchase (amount or quantity) or any extra fee for VISA/MasterCard transactions. Sometimes you will get punished twice and a merchant will try to charge you .75 cents for any purchase under $5.00. That is breaking one policy twice!

$10 Ice Cream Scoop Problem
Several years ago I took my wife to ice cream at a local ice cream shop. They arguably make the best ice cream in town. The door states that they except VISA/MasterCard. When I handed the clerk my check card for our $4 worth of ice cream (that we were already eating), she apologized and informed me they require a $10 minimum for all credit card purchases. Remember this is an ice cream shop! $10 worth of ice cream is a lot of something that is going to melt quickly! What would you do? Hand back the cone? Let’s just say it didn’t end pretty.

What You Can Do
Until several months ago, all I could do is complain to the clerk (with no decision making authority) that their store’s policy was in violation of standard credit card terms/conditions and that if they charged me an extra .75 cents, I’d report them, which may lead to a fine or suspension. Many times their response was an unsympathetic, “sorry sir, I don’t make the rules.”

Now I simply let them know to charge me according to their policy. I don’t put up a stink. You can even be kind and inform them that their policy is in violation of VISA/MasterCard terms and you will be reporting them. I do this knowing I have the final say and will get any fees reimbursed.

Getting Your Money Back!
To dispute such a charge log into your online banking, send an email to your bank about the issue. Many times you can click right on the charge and dispute it right from your bank’s site. Sample email:

“This merchant charged an additional fee for using my check card/credit card. The charge should have been $3.15, they charged an additional $.75 for paying with a visa/mastercard. Please adjust this transactions to reflect the correct $3.15 charge. I understand it is not allowed for a merchant to charge such fees.”

In many cases the very next day you will see a credit in your account for the disputed fee. The merchant will get a letter informing them of the viloation of service and they may get a fine if they have been warned before.

At last justice. Anyone for ice cream?

Talking Point: What similar enforced policies have you seen or been frustrated with?

Credit or Debit? Plastic Explained

Discretionary Dollar — Sun, 06 Dec 2009 22:35:46 +0000

because there is some confusion on what types of plastic are out there. You bank

sends you a card but what does it really do? Here is my definition of a few commmon types of plastic.

You might have a good idea about how your cards work, but it seems there is still a whole lot of confusion on what types of plastics are out there. Your bank sends you a card, but what does it really do?

Credit Card - Most Widely Understood.
This is not your money. You simply sign and present this card when you purchase something. You can use it interest free for about 30 days, then you must pay it off, or make minimum payments plus interest.

Check Card – My Personal Favorite.
This is your money. Any purchase with this card comes straight from your checking account. You simply sign and present this card when you purchase something (just like a credit card). This card also has all the funcationaitly of a debit card defined below.

Debit Card/ATM Card - Practically Extinct.
This is your money. This card only allows you to access funds via an ATM with use of your PIN or with merchants that accept debit/ATM cards. Merchants can charge a fee for this service, since you can ask for cash back. Generally the only reason to use this type of payment is when you need cash back, or when the merchant doesn’t accept credit cards.

Type	Issued By	ATM Access	Signature Required	PIN Required	LOGOS	Merchant Fee/Minimum Allowed
Credit Card	Bank/Credit Card Company	YES*	YES	NO	VISA/MC	NO
Check Card	Bank	YES*	YES	NO	VISA/MC	NO
ATM/Debit Card	Bank	YES	NO	YES	BANK/DEBIT	YES

* Note: Dependent on your credit card company. You must also have a pin (sent to you when you first get the card many times.)
** Note: Many banks have varing polices on over-drafted transactions. They can even be different for a Debit vs. Credit transaction. It is possible to overdraft your account with either, but generally, it is easier to do it with a credit transaction (compared to debit). Debit transactions check your account in real time, where as credit simply looks for an approval (there can be floating transactions, and unsettled transactions).

Allowable Fees
You will see all sorts of fees and minimums as you use your plastic around town. Most of which most likely are in violation of VISA/MasterCard policies. Generally the only type of transaction that permits a fee (charged by your merchant to you) is an ATM/Debit transaction. But wait? Why all the minimums and fees for using the other types of cards? The answer, for the most part is ignorance. You can dispute these fees also.

So What Should I Use?
Well that depends on your personal situation, but in most cases a check card will be the best type of card for the majority of your purchases. For example my wife and I have a limit, for example let’s stay it’s $20. Anything over $20 we use a credit card, anything below we use a check card. There are a number of reasons we do this but the main reason is simplicity. We don’t have to worry about overdrawing our checking account since the credit card is used for all larger purchases. We get more reward points if we use a credit card (we still earn points on check card purchases but its a smaller point system). You can find your own system.

And if you are a person that still uses cash, you can use this same check card at most ATMs. Just remember only to use your PIN when you have to. Running a transaction as a credit (rather than a debit) not only can earn you reward points, but gives you more protection (like a credit card) and doesn’t permit the merchant to charge extra for it. In addition, using your checkcard makes it easy to track your expenses.

Talking Point: What is your favorite card to use and why?