Hey Investors, You Up for a Dip in a Dark Pool?

by Odysseas Papadimitriou on January 31, 2013

They’re three of the most tried-and-true, commonplace expressions:  1) Look before you leap; 2) Don’t swim within 30 minutes of eating; and 3) Buy Low, Sell high.

While decidedly trite, we were raised on such sayings, and they typically don’t lead us astray.  But do they hold true in the post-Great Recession world of finance, which is marked by things like “shadow banking,” “floating-rate demand notes,” and “dark pools” that are not only unclear to most consumers, but could also get you in over your head and ultimately eat your lunch if you aren’t careful?  That remains to be seen.

CD Rates on Steroids (and With Some Risk, Of Course)

by Odysseas Papadimitriou on January 23, 2013

corporate bondIt can be difficult to find an investment vehicle that gives you a safe, yet lucrative return on your deposit these days.  Rates on savings accounts, Money Market Accounts (MMAs), and Certificates of Deposit (CDs) have remained low since the Great Recession began; the stock market is doing its best Yo-Yo impression; and commodities like gold have left many scratching their heads.

That’s why private-label corporate bonds – more commonly known as floating-rate demand notes – might seem so attractive.

Why You Can’t Comparison Shop For Life Insurance

by Odysseas Papadimitriou on January 2, 2013

There’s always a lot of talk about resolutions this time of year.  It’s a New Year, after all, and that means many people are embarking on new beginnings or striving for self-improvement.  It’s not all about losing weight or giving up cigarettes either.  A number of the most popular New Year’s Resolutions are financial in nature, and one in particular – taking out a life insurance policy – raises some important questions about how certain aspects of the personal finance landscape operate.

It’s understandable why people would factor life insurance into their resolutions.  I mean, New Year’s is when many of us finally address long-shirked obligations (plus, barely surviving New Year’s Eve can have that effect on you).  Parents in particular want to make sure their loved ones are provided for, not burdened financially, if they pass away.  Well, anyone who’s ever taken out a policy knows that while you can try to shop around for the best rates, offers aren’t finalized until your paperwork and physical exam results are processed.

How Can a U.S.-Made Prescription Drug Cost Hundreds More Domestically Than Abroad?

by Odysseas Papadimitriou on December 20, 2012

prescription drug pricesJust a few weeks ago, my wife and I welcomed into the world our first child, Achilles Spiro Papadimitriou.  He obviously takes after his papa when it comes to having an exceedingly Greek name (just check out my byline), and my hope is that he can channel his namesake, Achilles of Greek mythology, when it comes to strength, bravery, leadership, and general badass-ness.  Anyway, that’s beside the point.

You see, Achilles recently had some trouble with his eyes (I know, surprising it wasn’t a leg tendon), and our experience getting him medication raised some very interesting questions about our country’s medical system (I know, U.S. healthcare is flawed, surprise surprise).  To make a long story short, there was some sort of snafu with our insurance and Achilles didn’t show up on our account, so we had to pay for the medicated eye drops he needed out of pocket.  No biggie, right?

Consumers are Being Scored on More than Just Their Credit

by Odysseas Papadimitriou on November 14, 2012

big brotherFor starters, let me just say that if you’re a bit of a conspiracy theorist or have been known to be paranoid, you might want to stop reading right now.  They’re watching you, after all.

Who are they, you ask?

Can Campaign Spending Solve All of Our Financial Woes?

by Odysseas Papadimitriou on November 6, 2012

election 2012The idea has been floated more than once over the last few weeks:  How about we take all the money that candidates have spent on advertising time, polls, yard signs, and general campaigning and just use that to pay down the deficit?  While those who suggest this wacky plan do so knowing that it will never actually take effect, there is something to be said for directly allocating our money where we need it most and getting rid of those annoying ads that have dominated the airwaves of late.

This, of course, begs the question of exactly how much has been spent on major political campaigns and what it could fund if appropriated elsewhere.  It can be fun to dream, after all.

Finally, Debt Collectors are Being Held Accountable

by Odysseas Papadimitriou on October 24, 2012

debt collectionThe tables, it seems, have turned.  We as consumers are all too familiar with being the subjects of debt collection efforts, and now it’s the debt collectors’ turn to face some scrutiny.  Not only has the controversial Patient Protection and Affordable Care Act (better known as Obamacare) implemented some new rules that require hospitals to curb unfair collection practices against patients if they want to receive their federal tax exemption, but the Consumer Financial Protection Bureau (CFPB) also published a rule yesterday giving itself the ability to oversee the nation’s largest debt collectors.

Roughly 30 million Americans have debt subject to collections, according to the CFPB, which estimates the average amount owed to be around $1,500.  These statistics are worrisome both because they speak to our country’s obsession with overspending and in light of the negative repercussions of severely delinquent debt.  You see, in addition to the inconvenience and stress of having debt collectors pester you, your debt burden will grow as interest continues to accrue, you’ll incur more and more credit score damage as delinquency increases, and you could eventually default and even get sued.  To complicate matters, debt collectors are notorious for misleading consumers, overstepping the law, and making mistakes that cost people like you and me a lot of money.

Americans Need New Financial Role Models

by Odysseas Papadimitriou on October 10, 2012

 

“The first time I got a check and I seen the chunk out of it … that’s when I found out about taxes, that’s when I found out about everything.”

Does the US Aid Foreign Tax Evaders?

by Odysseas Papadimitriou on September 26, 2012

internal revenue serviceThe financial upheaval of the last few years, a growing national debt, and the recent crackdown on Americans using offshore accounts to evade taxes, have all brought more and more scrutiny to the issue of international banking secrecy of late.  But while this has naturally resulted in growing frustration over the stubbornness of tax havens like Switzerland, Luxembourg, and Bermuda, one important question remains:  Are we hypocrites?

Could the United States be withholding information about bank accounts held by foreign nationals from their own governments – the exact thing we rail against other nations for doing?  Are we therefore party to tax evasion in nations around the world?

How Foodborne Illness Impacts the Economy

by Odysseas Papadimitriou on September 12, 2012

foodborne illness and the economyEver see the movie Contagion?  If so, you’ve got a sense for how a chef failing to wash his hands after touching some contaminated pork and then shaking hands with a customer can end up making people sick clear across the world.  Sure, the events in the film might be a bit sensationalized, but foodborne illness is a real threat, both to our health and that of the economy.  And interestingly enough, modern media actually both exacerbates the problem and could help provide a solution.

When an outbreak occurs in this the era of Facebook, Twitter, and streaming news on cell phones, millions of consumers know about it immediately and are likely to swear off the product involved for the foreseeable future.  Therefore, not only will the farm at which it originated almost certainly go bankrupt as a result, but the entire industry will suffer as well.

Should We Be Worried About Corruption & Ineptitude With Student Financial Aid?

by Odysseas Papadimitriou on August 8, 2012

college financial aid Financial literacy in the United States is clearly lacking right now, and what are our institutions of higher learning doing about it? Setting a terrible example and bleeding their most financially vulnerable students of much needed aid money, that’s all.

Don’t believe me? A new report from the US Public Interest Research Group (PIRG) confirms the dirty practice. The report, titled The Campus Debit Card Trap, revealed that while the federal government has long mailed students financial aid checks, nearly 900 colleges and universities have struck affinity partnerships with financial institutions in order to tie campus records to bank accounts, effectively turn student IDs into debit cards, and disperse aid to more than 9 million students through these cards. This might sound great in theory, but a closer looks reveals significant drawbacks to the supposed convenience the new system offers.

Why We Need a Return to Direct Democracy This Independence Day

by Odysseas Papadimitriou on July 3, 2012

athenian-democracyBy now, I think we’re all a little sick of the stagnate politics in Washington, where politicians on both sides of the isle seem unwilling or unable to compromise and appear more concerned with electability and party reputation than the true good of their constituencies. That’s why we as Americans need to get back to the basics – the basics of democracy, that is – and take back a measure of control over the decisions that are made on our behalf. At the end of the day, inefficient decision making leads to wasted money and resources, which is the last thing our wallets need right now.

I’m sure you would have never guessed it, but I am Greek. In fact, I hail from Athens – the birthplace of Democracy. Democracy looked a bit different back in 507 BC, when a wise man by the name of Cleisthenes first introduced a political system called “demokratia,” which translates to “rule by the people.”

What to Do if You Lose Your Wallet

by Odysseas Papadimitriou on June 21, 2012

lost walletWait, where is it? Back pocket? Nope. Purse? Not there either. Even a quick sweep of the house comes up empty. You’ve lost your wallet, and the panic is starting to set in. As your mind races through all of the places where you could have left it, you wonder what to do if you can’t find it. That’s a very good question, and one which we should all know the answer to (especially the ADD folks among us)!

When you lose your wallet, it’s not just a folded piece of leather that you’re missing, but also your IDs, debit card, credit card(s), gift cards, cash, health insurance information, family photos, and maybe even your Social Security card. The ramifications of your loss are therefore many, and to be safe you unfortunately have to operate under the assumption that it’s been stolen. That necessitates a sort of lost wallet triage.

Forget Your ATM Card? No Biggie, As Long as You’ve Got Your Phone

by Odysseas Papadimitriou on June 13, 2012

Mobile ATM WithdrawalsAnother layer has been added to the relationship between personal finance and smartphones: Pretty soon, you’ll be able to withdraw cash from ATMs without ever inserting a card.

NCR, a Georgia-based ATM manufacturer, announced on June 11 that it has developed a new service that will allow consumers to make withdrawals via a cell phone application. But don’t worry, you won’t run the risk of “butt-dialing” your local ATM and having your hard-earned money spill out into the streets. The so-called NCR Mobile Cash Withdrawal service requires that you use your phone to log into your mobile banking account in order to authenticate your identity and then scan a barcode on the ATM’s screen to complete a transaction.

Get Screwed During Foreclosure? Time is Running Out to Get Even

by Odysseas Papadimitriou on May 30, 2012

independent foreclosure review programIf your home was foreclosed upon during the Great Recession, not only do you have company – there were 6.6 million foreclosures in 2009 and 2010 alone, according to RealtyTrac – but you may also be entitled to compensation under a government program that will run through July 31 (that’s only two months away, so get a move on!).

The Federal Reserve and the Office of the Comptroller of the Currency are requiring that 27 major lenders let independent consultants review foreclosures that were initiated, pending, or completed between January 1, 2009 and December 31, 2010 because (surprise, surprise) these lenders didn’t always do things by the book.

Are Austria & Luxembourg Hurting American Taxpayers?

by Odysseas Papadimitriou on May 23, 2012

austria and luxembourg tax evasionHow do you say “wrench” in German, French, and Luxembourgish because those are the primary languages spoken in Austria and Luxembourg, and a wrench is exactly what these two nations recently threw in European Union plans to increase national budgets by cracking down on tax evaders.

Tax evasion has long been problematic in the EU and around the world due to a combination of the EU’s lack of authority to tax its member states and the secret banking policies that allow foreign nationals to anonymously stash cash in countries like Switzerland with no questions asked. To compensate, the EU in 2005 enacted a law that requires all EU members and a number of non-EU countries to withhold taxes on the interest gleaned from foreign nationals’ savings accounts and then distribute the funds to the account holders’ respective governments. Most countries are also required to share information identifying the individuals behind the accounts, but there are a few notable exceptions, including Switzerland, Austria, and Luxembourg.

5 Ways to Make Your Job Application Stand Out

by Odysseas Papadimitriou on April 12, 2012

Things are looking up for job seekers. According to the Department of Labor, December 2011 marked a three-year high for job postings, and while the numbers dipped slightly in January, they were again on the rise as of February, the latest month for which data is available. Just because employers are hiring doesn’t mean you’re assured of a job, however, so how are you going to differentiate yourself?

If the Great Recession has taught us anything, it’s that competition for jobs can be fierce. Under healthy economic conditions, roughly two people compete for every job opening, yet there were as many as seven candidates for each available position in 2009. Now, with 12.8 million people unemployed and 3.5 million jobs available, there are roughly four people per each open job. And when you consider that most jobseekers apply for a number of different openings at the same time, it’s clear that the competition level is actually exponentially higher than that.

Occupy Wall Street & Credit Score Reform

by Odysseas Papadimitriou on March 21, 2012

Credit Score ReformYes, the whole Occupy Wall Street thing seems to be losing a bit of steam, but did you hear about the changes the organization’s Alternative Banking Group proposed we make to our nation’s credit reporting system? They want a major overhaul, one that shifts credit scoring duties to the federal government, and they have issued a list of 10 recommendations for how this should be brought about. I’ll give you the highlights: full transparency is needed in regard to how credit scores are calculated, consumers should have free and unlimited access to their credit reports, conflicts of interest related to credit scoring bodies should be eliminated, and we should make sure that credit reporting practices are not somehow racist, sexist, etc. So, do they have a point?

Certainly, the credit scoring system needs to be fixed, but not necessarily in the manner recommended by the Occupy Wall Street Alternative Banking Group. You see, the group is dead on when it says that the new Regulation V (Fair Credit Reporting Act) is inadequate in that it merely transfers the authority to regulate the collection and use of consumer credit reporting data between federal agencies (from several different agencies to the Consumer Financial Protection Bureau). However, the Occupiers are off-base in suggesting that we centralize credit scoring and make the underlying formulas public. This would only make it easier for people to game the system, which would make existing credit scores less useful to banks and lead more of them to create their own proprietary scores that consumers would have no way of accessing.

No Balance Transfer Fee Credit Cards Are Back, But Are They Here to Stay?

by Odysseas Papadimitriou on February 22, 2012

No Balance Transfer Fee Credit CardsRemember the good old days when free balance transfer credit cards – you know, the ones with 0% balance transfer rates and no balance transfer fees – were in abundance? We all thought such credit card offers went the way of pay phones and Polaroid film once the CARD Act took effect, as this law prohibited the type of “gotcha,” hair-trigger pricing that allowed issuers to make money off cards without obvious revenue-generating features. However, Discover and Chase recently resuscitated the free balance transfer with a pair of new offers, a development which begs the question: Are they here to stay?

A changing credit card environment
Back in the old days, credit card companies were able to offer cards with 0% intro rates and no transfer fees because such features largely served as bait soon to be followed by a switch. You see, issuers knew that a very high percentage of customers who opened such cards would inevitably miss a payment by a day, exceed their credit line by at least $1, or mistakenly use the card to make a purchase, allowing them to implement penalty rates and fees as well as an unfair payment allocation policy that forced consumers to pay off their highest-interest balances last.

Think Miles & More is Bad? Check Out What British Airways Has to Offer

by Odysseas Papadimitriou on December 20, 2011

A few months back, I wrote an article about how glaring flaws in Lufthansa’s rewards program were causing me to question my long-time relationship with the Star Alliance member. With these doubts in mind, the 100,000 initial bonus miles being offered at the time by the British Airways Credit Card proved too much to resist. What’s the worst that could come of shifting my airline loyalty program allegiances and opening the British Airways Card, I thought? Sure, BA’s network of partner airlines doesn’t even come close to matching Star Alliance’s, but shouldn’t that result in the company compensating via better rewards, customer service, etc.?

Apparently not, as my experience thus far with the British Airways rewards program has made Star Alliance look terrific by comparison. While BA’s problems are numerous, they can be separated into two primary categories: effectively worthless rewards and unprecedentedly bad customer service.

Calling Customer Service? A New Scam is in Town

by Odysseas Papadimitriou on December 7, 2011

During a recent experience to forget with WalMart.com and its customer (dis)service department, I happened upon something likely to be quite interesting to both American Express and anyone using an American Express small business credit card.

It all started when a WalMart representative informed me that my digital gift card order had not been completed as a result of a problem with my credit card. I, of course, reacted by immediately flipping the card over and calling the number listed on the back for Amex’s 24/7 small business customer service department…or so I thought.

How Does Europe Solve its Debt Crisis?

by Odysseas Papadimitriou on November 29, 2011

Whether you are well-versed in international economics or not, you’re probably aware that Europe is having substantial problems. You’re also likely familiar with the resulting worldwide ripple effects: uncertainty amongst investors, fears of a global double-dip recession, and widespread political upheaval, just to name a few. Of course, there are a number of prominent theories for how to solve Europe’s debt crisis, but given the depth and complexity of the problem, none is perfect and each requires tough choices to be made. People – not just in Europe, but around the world – need hope, however. We need a plan, a sense that these economic issues are finite and not permanently debilitating. So, with that being said, what say we take a quick look at four different courses of action that Eurozone governments can take, the pros and cons of each, and which will provide the most long-term benefit without causing short-term chaos.

Option 1: Economically sound European countries pay down southern debt
This plan would involve countries like Germany, the Netherlands, and Finland using savings, tax revenue, and export surpluses to help pay down the debts of southern neighbors like Greece, Portugal and Italy until they are at manageable levels. Such an approach is logical in the sense that the economies of European Union (EU) nations are interconnected, and the default of one or more countries would have negative repercussions for others.

Walmart.com Review: Be Prepared for Problems

by Odysseas Papadimitriou on November 28, 2011

While the tradition of stores being veritable zoos on Black Friday continued this year – news reports describe consumers getting pepper sprayed, trampled, and even shot – many people turned to the Web for their Thanksgiving purchasing, hoping to score the same deals without the lines, bodily harm, and overall hassle. Unfortunately, this approach did not help Walmart.com customers save money or live better, as we all learned the hard way. You see, before learning of the technical problems that plagued the retailer’s website on Black Friday, forcing shoppers to look elsewhere to complete their purchases, I had quite the adventure when trying to purchase a digital gift card.

My ordeal began on the Tuesday before Thanksgiving when I placed my Wal-Mart electronic gift card order. It’s important to note from the start that I opted to get a digital gift card precisely because the person I was buying it for wanted to purchase a TV from Walmart.com on Black Friday. In order words, time was a factor. After providing my payment information and completing the transaction, I received an e-mail confirmation, saying that the gift card would be delivered to the recipient’s inbox within a few hours. Everything was going according to plan.

What’s the Connection Between Unions and Your Wallet?

by Odysseas Papadimitriou on November 9, 2011

labor union workersUnions are inextricably tied to the U.S. economy. Since the industrial revolution, they have served an important purpose, ensuring that there is a balance of power between management and labor. But what if things have gone too far? Could unions actually be costing Americans jobs by forcing companies to outsource? And, if so, what’s the solution?

To understand the role of labor unions today and how they could be jeopardizing your wallet, we must circle back to their origins. When most of the U.S. labor force was concentrated in mills and factories in small towns and growing industrial epicenters, connected only by a limited railway network, unions played the dual role of watchdog and agent. They ensured that management could not subject workers to inhumane conditions or force them to accept unfair compensation by giving workers bargaining power borne from unity, organization and educated leadership. For many of us, the noble role unions played during this time, righting wrongs like those explored in Upton Sinclair’s famous novel about the U.S. meatpacking industry, The Jungle, created a romanticized image that unfortunately does not match up with current realities.

Switzerland Supports Criminals & Hurts Your Wallet

by Odysseas Papadimitriou on November 2, 2011

wb_swiss_criminalsWhen you think of Switzerland, the first few things that likely come to mind are bank accounts, chocolate, and neutrality, and there’s a reason for that. The Swiss love to portray themselves as mild mannered people who eschew crime, make delicious candy and run perhaps the most unique banking industry in the world. But hidden behind this façade are layers of hypocrisy and implicit criminal involvement, which allow illicit operations to flourish around the world and provide safe haven for tax evaders. Lost in the aura and tradition of Swiss banking isolationism is the negative effect the Swiss system often has on citizens of other countries. The bottom line is that economies around the world are now more interconnected than ever, and if we want the world to become a safer place or all U.S. citizens to be held accountable for the same tax laws, then Switzerland will need to adjust or risk expulsion from the Western financial network.

Swiss Banking’s Murky Past
Swiss banking secrecy officially took effect in 1934 with the passage of the Swiss Banking Act—which effectively made it illegal to share bank account information with third-parties, including Swiss authorities and foreign governments—and even the circumstances of these origins are enough to raise eyebrows. Switzerland has long justified its banking secrecy laws by harping on the merits of personal privacy, and while this is likely a large part of the equation, scholars seem to agree that the aforementioned 1934 law was passed in reaction to a French scandal, which involved France’s Prime Minister accusing distinguished French citizens from various walks of life of stashing money away in Swiss banks and thereby funding the Nazi regime.

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