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Financial Reform Ends Erroneous Fees…For 2 Seconds

In response to looming ‘financial reform’, banks are continuing to find new and creative ways to jack their customers.

Bank of America is leading the way by charging $9 per month for paper statements!

For now, the $8.95 monthly fee applies to just one type of account, and only in Georgia. But B of A plans to roll out the product in other markets soon as a replacement for its popular student checking account, which has no monthly fees when opened online.

This is disheartening. We all know B of A can screw their customers much more rapidly than the Federal Government can sluggishly stumble over attempts to block them.

Grrr

Not So Free Credit Reports

You know those catchy FreeCreditReport.com commercials. For years we have tried to differentiate those guys from the federally supported AnnualCreditReport.com (which is actually free).

Now, it seems that the government has stepped in to protect its own cause. Recently, the Federal Trade Commission has begun requiring ‘Free’ credit report services to distinguish their separation from the truly free AnnualCreditReport.com. In response to the FTC rule changes, FreeCreditReport.com has begun to charge for their ‘Free’ reports. The cost? – $1.

But will the FTC buy it? The new promotion appears to sidestep new FTC rules that require companies that tout “free” reports to indicate that the only government-authorized site for free credit reports is AnnualCreditReport.com.

Although I enjoy the catchy tunes, I am glad that the FTC is stepping in to draw a clear distinction between their free service and the services that try to feed off of customer confusion. Remember, you can always find a link to the real thing in the ‘Helpful Links’ sidebar.

article | free credit report now costs $1

What Hawaiian Coffee Growers Can Teach Us About Money

The story behind First Fruits. The following is a guest post I wrote last month for dollarsanddoctrine.com.

The following is an excerpt from the Freakonomics Blog. If you haven’t read the book, you really should. It’s fantastic.

The price offered to coffee growers who turn in their “cherries” — ripe coffee beans — at Greenwell Farms in Kona, Hawaii, is $.90 per pound if they are paid weekly and $1.05 if paid monthly.

The weekly price is lower because it takes the company’s accountants more time to work out and record pay if they do it weekly rather than once a month. But what does this price differential imply about the grower’s discount rate? If he takes the weekly rate, on average he is getting $.90 one-half month earlier than he would get $1.05.

That implies an annual discount rate of nearly 4,000 percent — (1.05/.90)^24 – 1 –- a truly remarkable rate of impatience. Despite this, the tour guide tells me that a lot of growers do take the lower rate of pay.

So what do Hawaiian coffee growers have to do with sound Biblical finance?

They teach us the importance of planning:
The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty.
~Proverbs 21:5

By budgeting and having a plan for their money, the more experienced coffee growers maximize their income. They don’t work any harder, but (as the old adage goes…) they work smarter. They are diligent. The have made plans which account for ‘this week’ and by doing so, they have an advantage over the other coffee growers.

As we read the story, we are tempted with judgment. I mean, what idiots! Don’t these coffee growers realize the high cost of their impatience! Well, not so fast.

Although it is easy to look at the coffee farmers with eyes of contempt, Americans are guilty of a similar crime. Although our employers do not offer flexible payment schedules like the coffee buyers, we often pay the high cost of needing money this week.

The average American household carries over $8,000 in credit card debt. The average interest rate on that debt is 18.9%. That means, the average American household is paying $1,512 in interest every year (or $126 every month).  And all of this is only credit card debt.  Add the car payment(s), boat payment, preposterous mortgage, student loans, and all of the sudden…you are paying hundreds of dollars a month in interest.
Now that is the high cost of needing things ‘this week’. Can we now see the power of having a plan for our money?
photo | Stirling Noyes