Could Your Wish Actually Be Your Bank’s Command?

by John Kiernan on October 3, 2012

checking accountsEver think that those studies and recommendations you always see research firms coming out with don’t have much of an actual influence? Well, you’re wrong, and the way the Pew Charitable Trusts is changing how banks disclose checking account terms and conditions is a prime example of why.

Banks, as we all know too well, have long buried the true cost of their financial products in fine print.  However, it wasn’t until Pew conducted a study on the checking accounts offered by the nation’s 10 largest banks and found them hard to compare given that half boasted at least 97 pages of disclosures that any changes were made.

Is Mortgage Tax Relief On Its Way Out?

by John Kiernan on September 5, 2012

The Republican National Convention is now behind us and the Democratic version is set to conclude Thursday, and while this might have you thinking there will be an entertainment void in the coming weeks, the truth is that the real fun starts when these idealistic celebrations are in the rear-view mirror.  I’m referring to the beginning of the debate season (though I would have accepted the start of the NFL regular season as well), when we can hear the candidates mix it up and offer retorts to each other’s grandiose claims.

The debates usually give ordinary citizens like you and me a chance to ask the candidates questions as well, and one question that I’m sure a lot of people would like answered is what will become of the mortgage forgiveness tax break that has helped lower the financial burden on so many people since 2007.

Checking Accounts for Students & Seniors: Are They Worth It?

by John Kiernan on August 15, 2012

checking accountsWhat’s one thing that young people and the elderly have in common? Some of our more immature readers might answer “diapers,” but if the folks over at the Pew Charitable Trusts had a chance to respond, they’d probably say “bank accounts.” That’s right, certain bank accounts are specifically targeted to students and seniors, and while they’re supposedly tailored to the unique needs of these consumer demographics, a pair of recent Pew studies can help shed some light on whether they’re actually valuable or not.


How High Fees and Conflicts of Interest Are Hurting Your 401(k)

by John Kiernan on August 1, 2012

401k feesWhether you love or hate your job, the freedom to retire is inescapably appealing. In fact, it’s the American Dream – work hard in order to attain the requisite financial freedom to retire to a comfy home with a white picket fence, pursue your interests irrespective of earning potential, and provide for your family. Unfortunately, the changing dynamics of retirement accounts, Social Security, and the economy at large may be making this dream harder to realize, if not turning it into a nightmare for many folks.

Not only does the aging American populous put Social Security in jeopardy, but the increasing reliance on 401(k)s instead of pension plans has also made many Americans’ safety nets less reliable, especially since a lot of people do not fully understand these plans or their true effectiveness.

Upcoming Changes to Gift-Tax Exemption May Cost Your Children Millions

by John Kiernan on July 25, 2012

gift tax exemptionParents, if your children have unexpectedly started cleaning their rooms, adhering to curfews, and making you breakfast in bed, there’s good reason to be suspicious. Kids, start doing those things immediately and casually mention that you saw something on the Web about an upcoming change to the gift tax exemption. This holiday season could result in a lot more value changing hands than usual, which means we can expect a lot more sucking up in the coming months.

All kidding aside, New Year’s marks an important date for the way wealth in the United States is passed down from generation to generation. This is when the federal lifetime gift-tax exemption will revert back from the roughly $5 million threshold now in place thanks to the Tax Relief Act of 2010 to the standard $1 million. In other words, through December 31, 2012 you can give another individual (presumably a loved one) up to $5.12 million without it being taxed, but come New Year’s, amounts over $1 million may be taxed at rates upwards of 50%.

How Old is Too Old for Hands-On Financial Management?

by John Kiernan on June 28, 2012

RetirementEver pull up to a stoplight and glance over to see an elderly driver beside you hunched over the steering wheel, peering through goggle-like glasses and express concern over their ability to continue driving safely? Perhaps, but I bet you haven’t given much thought to their ability to manage their finances into old age. That’s a big mistake.

People are becoming increasingly reliant on their 401(k) as a source of retirement income, and while that might not seem like too big of a deal on the face of things, a 401(k) is inherently volatile and requires consistent maintenance in order to provide maximum value. This can prove problematic no matter how old you are.

Why You Should Think Twice Before Hitting a Toll Road in a Rental Car

by John Kiernan on June 6, 2012

automated toll roadYou know the toll that usually costs around $3? Well, imagine how you’d feel if the price tag suddenly rose to $53. Unfortunately, this is not a hypothetical scenario for many consumers, but rather an all-too-common headache associated with renting a car in the age of automated toll plazas.

Typically, when a driver goes through an automated toll without an EZ-Pass or another similar electronic payment device, the toll’s cameras will snap a picture of the license plate and mail a bill to the registered driver. This is obviously impossible with a rental, however. So when a rental company gets charged, it typically passes the cost on to the driver, along with a hefty surcharge, through a company like the aptly-named Violation Management Services (VMS), which works with Fox Rent a Car.

Mortgage Rates Hit Record Lows

by John Kiernan on May 9, 2012

Record Low Mortgage RatesIt might just be time to buy that home of your dreams or refinance your existing mortgage. According to a Freddie Mac survey released May 3, average rates for a number of fixed and adjustable rate mortgages hit record lows last week, creating a significant savings opportunity for refinancers and prospective homebuyers who’ve recovered sufficiently from the negative effects of the Great Recession.

Ok, but how much savings are we talking here?

Last-Minute Tips for Filing Your 2012 Tax Return

by John Kiernan on April 9, 2012

2012 TaxesIt’s getting to be that time. April 17 (i.e. tax day) is nearly upon us, and as was the case in school, such a major deadline is inevitably met with a bit of procrastination. Luckily for those of us who’ve put off preparing our tax returns, CalCPA has some Cliff’s Notes of sorts that will help get them filed correctly, on time, and with the greatest possible savings. The Internal Revenue Service is not going to accept the trite “dog ate my taxes” excuse, after all.

  • State Tax Refunds: Don’t make the mistake many taxpayers do by blindly reporting prior-year state tax deductions as income in the current year. Even if the state taxing authorities notified you of your refund, they have no idea whether that refund is taxable. If you didn’t benefit from a state tax refund on your 2011 federal return (e.g. if you took the standard deduction or deducted for sales taxes instead of state income taxes), then your refund might not be taxable, either in part of in full.
  • Unnecessary Itemization: Many taxpayers assume they’re better off itemizing expenses, but those who have already paid off a mortgage or who live in a state without an income tax might be better served just taking the standard deduction.
  • Alternative Minimum Tax: Trying to figure out whether this type of income tax is applicable can be confusing, but you could wind up being on the hook for penalty fees and interest if you mistakenly don’t account for it. The IRS has an online Alternative Minimum Tax (AMT) Assistant that can help you make this determination.
  • 2011 Carry-overs: You can often deduct losses from previous years (e.g. bad stock choices) on your current year’s taxes.

Logistical Tips
In addition, CalCPA has some basic logistical tips that may seem obvious but can easily be overlooked with the filing deadline looming:

Do You Know What Your Bank is Charging For?

by John Kiernan on April 4, 2012

When you were in school, did you ever have one of those dreams where you slept through an exam or woke up one day to find that you’d been registered for a class all semester, yet had done none of the work and were bound to fail? Well, the personal finance equivalent recently befell me, only it wasn’t a dream.

I discovered that for 18 months my bank had been charging me interest for a checking account overdraft I was unaware of, and as a result, I had already paid more than $150 in interest. Now, it’s important to note that I am not writing this because I have an axe to grind (the charges were eventually waived), but rather to enlighten others who may fall victim to the same sneaky practices.

Do You Have to Pay Taxes on Your Rewards?

by John Kiernan on February 8, 2012

Initial rewards bonuses have been all the rage in the personal finance world ever since economic recovery began following the worst of the Great Recession a couple of years ago. Banks across the country have been using bonus cash, points or miles – given in return for account opening or spending a certain amount in the first few months – to lure some of the best consumers into using their products and services. The benefits of this strategy were obvious: banks got a more consistent customer base and consumers got hundreds of dollars in free money to play with. But with tax season rolling around, the rage inspired by these initial bonuses has been less about popularity and more about actual anger. You see, as it turns out, things like airline miles, hotel points and cash back could actually be taxable!

Uh, what? That’s right, as first reported by the LA Times’ David Lazarus, Citibank has been sending 1099 forms to customers who took the company up on promotional deals offering thousands of American Airlines rewards points in return for opening a checking or savings account. Since Citi values these points at 2.5 cents each (despite the fact that they’re only worth 1-2 cents through redemption), consumers who opened a new bank account thinking they’d get a couple free flights are instead being handed bills of up to around $262.50 payable to good ole’ Uncle Sam. Exactly how much you owe the IRS depends on how many points you were given and what tax bracket you’re in, but perhaps even more concerning is what Citibank’s tax surprise means for rewards in general. Are all rewards taxable, even those tied to rewards credit cards? Or is it limited to account opening throw-ins? If so, how significant must a gift be to be taxed?

Helpful Tips for Tax Season 2012

by John Kiernan on January 3, 2012

With the holiday season in the rearview mirror, we are all getting back into our normal routines. Unfortunately, that means starting to think about tax season 2012. April is right around the corner, after all, and if you foresee an inability to pay your full tax bill in full, this can be quite disconcerting. To help ease concerns, the California Society of CPAs recently announced some important strategies for dealing with the Internal Revenue Service (IRS) if you cannot cover your total tax toll.

Before we get to them, however, there are a few things that you need to know about the IRS, its practices, and the terminology you can expect to come across when dealing with an inability to pay:

Top Six Money Saving Tips for Your Household

by Guest on December 19, 2011

Saving money in your household finances needs to be a top priority, especially when you consider the difficult economy in which we are living. Every dollar and every cent counts and so does every one that you can save. There are many ways that you can stretch the hard earned cash in your household to make it last longer and work harder. Here we zero in on the top six money saving tips for your household that you can start doing not tomorrow, next week, or next month,  but today!

1. Pay your credit cards off in full every month. The interest you will pay if you carry a balance from month to month is astronomical and not something you even want to think about! Okay, maybe thinking about it for a minute is essential to driving the point home. Consider the fact that a $1,000 balance that is being charged at 18 % will cost you approximately $200 a year in interest charges. Wouldn’t you rather keep that $200 in your bank account? When you use them pay them off- completely!

5 Ways To Stop Impulse Shopping

by Guest on November 23, 2011

cut-wasteful-spendingImpulse purchases, we all make them and almost always end up regretting them later. Decisions involving money should always be well thought out. For me at least, impulse buys almost always end up being bad decisions. They are bad choices because you haven’t taken the time to decide if you really need the item or you just want it. Since you also did not spend any time doing any comparison shopping, purchases made on a whim will cost you more.

So how do you stop yourself from making these bad choices time and time again? Here are five ways you can stop your impulse purchasing habits.

iPhone 4S: International Use, Mobile Hotspots and “Anytime” Minutes

by John Kiernan on October 20, 2011

iphone-4-verizon-sprint-attBy now, everyone knows what Verizon, Sprint, and AT&T have to offer in terms of standard data, texting and talk plans for the new iPhone 4S. But what about the niche aspects of major carriers’ iPhone offerings? Not every consumer is content with plain vanilla utility and many, in fact, require certain supplemental features. With that being said, we took a look at how the aforementioned networks differ in terms of international usage costs, mobile hotspots and how “Night & Weekend” minutes are classified.

Night & Weekend Minutes
In our previous article examining the iPhone 4S, we noted that the three carriers offered calling plans in terms of how many “Anytime” minutes they provided: 450, 900, or “Unlimited.” Obviously, if you opt for the unlimited anytime minutes, the number of “Night & Weekend” minutes you get or when in the day these minutes begin doesn’t matter, but the same cannot be said for those of you that choose the two other options. So let’s take a closer look at what they offer.

Six Important Financial Planning Tips for Retirement

by Guest on October 18, 2011

home-insurance-tipsRetirement is ultimately a function of your bank balance, not your age. Not long ago, I came across some statistics which showed that the majority of the US population will either retire broke or still have to work to have a decent retirement.

I don’t know about you, but this isn’t even close to good enough for me, and definitely is not in alignment with my vision of a happy retirement lifestyle.

iPhone 4S: Verizon, AT&T or Sprint?

by John Kiernan on October 13, 2011

iphone 4 verizon sprint attYou’ve likely seen the Sprint commercial that shows phones from the four most prominent smartphone carriers—Sprint, Verizon, At&T and T-Mobile—racing up a chart, almost as if they are those mascots that race at sporting events, in order to display the differences in their data plans. And while it’s been around since about late July, this commercial might not have struck a chord with you until the October 4 announcement that Sprint would for the first time be carrying the iPhone. With the new iPhone 4S slated to hit stores tomorrow at 8 AM, many of you have a tough choice to make in terms of which network to get it on. So, how are you supposed to decide?

Obviously, people already under contract will stick with what they’ve got, but where you cell phone free agents end up depends on precisely how much texting, talking and e-mailing you plan to do. Each of the networks carrying the new iPhone—the aforementioned four, minus T-Mobile—offers plans at different price points, and figuring out your usage habits ahead of time is the best way to get the coverage you need without incurring extraneous costs. To help in this endeavor, we took a look at the best carriers for different types of smartphone consumers:

Hurricane Recovery Tax Benefits Explained

by John Kiernan on August 29, 2011

hurricane-recoveryFrom time to time, knowledgeable sources from around the personal finance industry send us timely information, hoping to use Wallet Blog to better reach the general public. The following information about hurricane recovery tax benefits was sent to us by the California Society of CPAs, and we thought it would be both useful and of interest to our readers:

Hurricane Irene has done an estimated $7 -13 billion in damage over 10 East Coast states. Wind and flood damage alone could total about $5 billion and $2 billion, respectively, according to the Consumer Federation of America.

Eliminate Back-to-School Spending Stress with the Right Rewards Card

by John Kiernan on August 26, 2011

Help for College StudentsIf you looked at your child’s back-to-school checklist and wondered how in the world you’d pay for everything on it, don’t worry, you’re not alone. About one out of every five Americans feels stressed about back-to-school shopping this year, according to a survey conducted by Chase, and 25% plan to spend less on school supplies this year than they did last year. What’s more, 34% of people intend to save on back-to-school shopping by re-using old supplies, while 26% plan to clip coupons and 25% say they’ll shop at discount stores. Those are all great ideas, which can lead to big savings. But why not throw the right rewards credit card into the mix and save up to another 6%?

As we all know, rewards credit cards often offer particularly high rewards on particular spending categories. And since the Island Approach to spending advocates having a few different rewards credit cards that complement each other and help you save on your biggest expenses, both your credit card arsenal and your back-to-school budget could benefit from the addition of a card with particularly attractive grocery and department store rewards or a card offering rewards at a mega-store where you can buy practically everything or a card that helps you save on office supplies.

Money Market Accounts vs. Savings Accounts

by John Kiernan on August 12, 2011

money market accounts vs savings accountsWe recently took a look at the differences between money market accounts and money market funds. This week, to follow up on that discussion, we will examine what separates a money market account from a traditional savings account. After all, if we’re to make responsible banking decisions and effectively manage our money, we must understand the options available to us.

Both savings accounts and Money Market Deposit Accounts (MMDA) are essentially bank accounts insured by the federal government that allow you to safely deposit your money and garner interest. Accounts offered by banks are insured for up to $250,000 per depositor ($100,000 beginning in 2014) by the Federal Deposit Insurance Corporation (FDIC). The National Credit Union Administration (NCUA) insures those accounts offered by credit unions for the same amount.

Money Market Funds vs. Money Market Accounts

by John Kiernan on August 5, 2011

money market accounts and money market fundsDespite their similar names, money market accounts and money market funds are most certainly not the same thing. So let’s take a look at both to clear up whatever confusion might exist and provide insight into which will best suit your particular needs.

Money Market Accounts
A money market account, also known as a “money market deposit account,” is essentially a savings account. Money market accounts tend to pay more in interest than standard savings accounts and have higher minimum balance requirements but are interest-bearing bank accounts at their core, typically allow for limited check writing and debit card use, and most importantly, are explicitly insured by the FDIC—usually for up to $250,000.

Could Credit Card Companies be Groupon Killers?

by Odysseas Papadimitriou on July 22, 2011

credit card companies grouponConsumers have shown an obvious affinity for Groupon and its hundreds of copycats, but lost amidst their buzz is the notion that daily deals as we currently know them might not be the end-game for targeted local consumer marketing. The recent announcement of a partnership between American Express and Facebook to create “Link, Like, Love,” a deal-driven spending platform which takes advantage of the credit card company’s extensive customer base and purchase tracking capabilities as well as the social media giant’s unique reach into the lives of consumers, highlights the potential credit card companies have to change the game significantly. But, in the end, do credit card companies really have what it takes to be Groupon killers?

On Tuesday, American Express and Facebook launched Link, Like, Love and immediately became a serious contender to popular daily deal providers like Groupon and Living Social. The joint partnership allows consumers to link their American Express credit cards to their Facebook accounts and immediately access a virtual treasure trove of deals from leading national retailers and travel providers, including H&M, Dunkin’ Donuts, Sports Authority, Sheraton, Westin, Celebrity Cruises and Travelocity. Small businesses can also load their own deals through the service’s self-serve feature. Consumers simply select deals to load onto their Amex accounts, purchase the goods or services advertised, and automatically receive a statement credit.

Want Better Healthcare at a Lower Price? New Primary Care Models Are Gaining Traction

by John Kiernan on July 7, 2011

primary care providerAn interesting new trend in the healthcare industry is primary care that patients buy directly from physicians, thereby removing insurance companies from the process and lowering costs for both the doctor and the patient.

Built upon the idea of concierge medical practices, doctors using this innovative model provide day-to-day care to patients who pay a monthly fee for the service. For $49-$130 a month patients receive preventive care, basic tests, treatment for chronic conditions, and non-life-threatening emergency services like X-rays and stitches. Patients are also able to get advice from doctors via e-mail, phone or video messaging, thereby saving both parties time and reducing the number of unnecessary office visits.

Southwest Airlines Credit Card Offers Two Free Round-trip Flights

by John Kiernan on July 6, 2011

wb-southwestFeel bad about missing the British Airways offer for two free round-trip international flights a few months back? Well, here’s a chance to make up for it. Southwest Airlines recently announced a limited-time deal whereby consumers can score two free roundtrip flights simply by opening the Southwest Airlines Credit Card and making a single purchase.

Think that sounds too good to be true? Let’s take a closer look at the terms of this deal and see whether you are really free to move about the country with this credit card.

Traveling Abroad? Save Big With A Credit Card

by John Kiernan on June 29, 2011

international-currency-exchangeCredit cards provide the cheapest means of currency conversion. Hold on, before you balk at this statement and argue that someone working for a credit-oriented blog would of course make such a claim, let me tell you something: I have the facts to back it up. In fact, credit cards have the potential to save international travelers as much as 15% on currency exchange, according to a recent Currency Exchange Study by Card Hub.

Card Hub – using both online fact finding and anonymous phone calls – was able to determine the U.S. dollar-to-Euro exchange rates offered by Visa and MasterCard, the credit card networks with by far the largest coverage areas worldwide; 15 of the largest consumer banks in the United States; and Travelex, the most significant airport currency exchange service in the world. And aside from the mere fact that the payment type most conducive to international travel is a credit card, this study revealed that:

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