Archives for February 2016

MaxMyInterest.com Review: Automated Interest Rate Chasing

mmi_logoBack when interest rates were higher, I was a “rate chaser” that was constantly shifting my cash balances to whatever promotional rate was highest. With the growing popularity of “robo-advisors” that manage your retirement portfolio using automated software, what if there was a robo-advisor for rate chasing? Instead of switching between ETFs or mutual funds, you would switch between banks.

That’s the basic idea behind MaxMyInterest.com (Max). You set a Target Value you’d like to keep in your standard “brick-and-mortar” checking account. Max will then sweep any excess funds into whatever online savings bank has the highest yield. If their rates change, Max can move your money again. If your checking account balance gets low, Max will move money back into your checking account for you. The ole’ hub and spoke graphic:

mmi_spoke

If your balance exceeds the FDIC insurance limits of $250,000 per account type, Max will move the rest into the bank with the next-highest yield, and so on. This screenshot is a bit dated, but it shows you the general idea for very large balances.

mmi_ui

What banks does it work with? They officially support checking accounts from the following big banks. Their application suggests that they may support other checking accounts. (The official list has also expanded a bit since their launch.)

  • Bank of America
  • Citibank
  • First Republic Bank
  • JPMorgan/Chase
  • Wells Fargo
  • Charles Schwab Bank
  • US Bank

Max will use one of these five online banks as your spokes (others may be added in the future, but only these work right now):

  • Ally Bank
  • American Express
  • Barclays
  • Capital One 360
  • GE Capital

You can have them open already, or you can only open a few, or you can use their “common application” to apply for all of them at once.

The cost? 0.02% per quarter, or 0.08% per year.

Recap. I certainly think the idea is a neat one. But considering the cost and restrictions to the specific five online banks, the greatest appeal of MaxMyInterest is probably to people with $250,000+ balances that want the maintain the safety FDIC-insurance without having to juggle multiple accounts on their own. Money market funds in brokerage accounts are still stuck offering relatively low yields. You can get an idea of their target audience from their marketing materials. I didn’t even know Hermes sold ties, let alone that they cost $200 a pop!

mmi_hermes

For most people that don’t have that much sitting around in cash, simply picking a single online savings account with a good track record of offering high interest rates should be good enough. These days, I primarily use Ally Bank (review). At this writing (2/28/16), GE Capital is the highest out of the 5, at 1.05% while Ally offers 1.00%, so with the 0.08% fee I’m still better off on my own. With more modest balances of about $5,000 to $20,000, you can actually get higher interest rates using rewards checking accounts or prepaid-linked savings accounts, albeit with some hoops each month to jump through.

Bank of America Free Museum Tickets 2016 Dates

bofa_musBank of America runs a program called Museums on Us which offers cardholders free admissions to 150 museums, science centers, and botanical gardens nationwide on the first full weekend of every month (Saturday and Sunday). Simply present any valid Bank of America® or Merrill Lynch® credit or debit card and photo ID for free admission.

Note: Each cardholder gets one free general admission, so be sure everyone with their own cards bring them. Hmm, I wonder if my 3-year-old can be added as an authorized user?

2016 Calendar Dates (Check specific museum for actual hours)

  • January 2nd, 3rd
  • February 6th, 7th
  • March 5th, 6th
  • April 2nd, 3rd
  • May 7th, 8th
  • June 4th, 5th
  • July 2nd, 3rd
  • August 6th, 7th
  • September 3rd, 4th
  • October 1st, 2nd
  • November 5th, 6th
  • December 3rd, 4th

Here is the full list (PDF) of participating locations. One of the available museums is the Thinkery in Austin, Texas. We recently visited there, and found it to be a fun and interactive children’s science center. The admission was $9 per person (23 month and under free). That means taking advantage of this offer would have saved us $18 (or $27 if the little one had a BofA card in theory). I’ve seen other museums on their list with $20 admission prices.

While I wouldn’t open a new bank or credit card account for this feature, it is a nice perk if you already have such accounts. Here are the Bank of America credit cards that offer competitive features that I have reviewed in the past. The Travel Rewards card is my current primary rewards card.

Real World IRA Asset Allocations vs. “Age in Bonds”

As a follow-up to my last post on 100% stocks forever, the referenced NYT article had some neat data that I hadn’t seen anywhere else. This chart shows how the overall asset allocation of IRAs held by Vanguard change according to the age of the investor. The glide path of Vanguard Target Retirement mutual funds is also included for comparison.

nyt_100stocks_glide

Eyeballing things, it appears that past age 65, Traditional IRAs settle at roughly 58% stocks, while Roth IRAs settle at roughly 67% stocks. This “real world glide path” declines much more gradually than ones from the major all-in-one fund providers, and also stays flat from retirement age onward. For comparison, here are additional glide paths for Fidelity, T. Rowe Price, Blackrock, and American Century, taken from a Morningstar paper. (For this chart, retirement age would be roughly 2015.)

target1_full

I don’t know any studies that have found the real reason behind the “real world” numbers. I would suggest as a possible explanation that the average percentage must be asset-weighted, and “rich” people have more assets in aggregate. The “rich” don’t need to make big withdrawals (unless required by law), and so they don’t need to spend every penny before they die. They will leave a chunk of money to heirs and thus have a long time horizon. In turn, this longer time horizon would support the holding of more stocks. Roth IRAs are especially useful as an inheritance vehicle as they don’t have required minimum distributions (RMDs), which could also explain why they are even more strongly weighted in stocks.

Meanwhile, if you need to spend down your assets during retirement, then the asset allocation suggested by Vanguard Target Retirement funds (and all the other major target-date funds) would make more sense. But it’s certainly a good point that these one-size-for-all solutions will not apply to everyone.

If you like low costs, diversification, and simplicity but want more control, I would suggest the option of switching to a Vanguard LifeStrategy all-in-one fund that stays fixed at 40%, 60% or 80% stocks. I use the 60/40 LifeStrategy Moderate Growth Fund (VSMGX) as a benchmark for my own long-term portfolio asset allocation.

BankAmericard Travel Rewards® Credit Card: Redemption Tips for 2.625% Back

bofa_travelrewards191As previously mentioned, I have switched to using the BankAmericard Travel Rewards® Credit Card as my primary catch-all rewards cards. This is because if you give them enough assets to hold onto (admittedly not possible for everyone), you can receive 2.25% or 2.625% cash back against past travel-related purchases. Please see my Bank of America Travel Rewards® Credit Card review for details on the card structure. As I’ve made a few points redemptions already, I wanted to share my tips and experiences with that. The good news is that the process is quite simple and I found it easy to use up all of your points to maximize value.

Account setup and eligiblity. I have both a Bank of America checking account and a Merrill Edge brokerage account. The checking account doesn’t have much money in it (it pays no interest) and technically isn’t necessarily at all, but I do keep $100,000 in assets in the Edge brokerage account in order to qualify for the highest tier of Preferred status, Platinum Honors. $50,000 in combined balances will get you the Platinum tier. Vanguard ETFs trade free at Vanguard, but Edge gives me commission-free trades a month on any stock or ETF (100/month Platinum Honors, 30/month Platinum). There are no account maintenance fees for Merrill Edge. Thus, it cost me nothing to switch to Edge besides having yet another account in my life (in fact, they paid me a sign-up bonus).

When logging into BofA, this bundling also offers the convenience of viewing my bank account balance, credit card charges, and Edge investment value all on the same screen. It also tracks which tier I am on their Preferred Rewards program (Gold, Platinum, or Platinum Honors), including my exact qualifying balance:

bofa_travel_redeem2

The official measurement is of your “3-month average combined balance”, so if you just transfer the bare minimum $100k over into an empty account, it may take a few months to reach the $100k level and officially qualify for Platinum Honors. Only after that will the 75% rewards bonus on credit card rewards kick in. (You may qualify for Gold and Platinum in the meantime.)

Earning rewards, bonus verification. Here is a screenshot taken from one of my monthly statements, which I have highlighted for clarity.

bofa_travel_redeem1b

I put $2,527.99 in purchases on my card during this statement cycle, so at 1.5 points per dollar that came out to 3,791 points. Since I am on the Platinum Honors tier, I received a 75% bonus of 2,846 points. (This appears to be off by a few points when compared to my calculator, but is very close.) Gold members would have received 25% bonus, Platinum members would have received a 50% bonus.

The total is 6,637 points, which will get me $66.37 of statement credit towards a previous travel-related charge (see below). The bonus points were calculated automatically without any additional legwork on my part.

Redemption process. Here are the rules:

  • 1.5 points for every $1 spent on all purchases. No limit to the points you can earn. Points do not expire.
  • Redeeming for Travel Credit offers the best value for your points. There are no restrictions or blackout dates. You can also get gift cards, but why bother?
  • Valid travel-related expenses include airfare, hotels, car rentals, baggage fees, and airline upgrades. (Possibly more depending on merchant categorization, for example inflight food counted for me.)
  • Minimum redemption is 2,500 points = $25 when redeemed for a Travel Credit.
  • A travel purchase is eligible to redeem for a Travel Credit up to 12 months from the date the purchase posts to your account.
  • Partial redemptions allow you to use all your points up. For example, if you have a $26.00 eligible purchase but you only have 2,500 points, you can use just those points and get $25 back. You don’t have to accrue more points to reach any specific purchase value.
  • The system will remember your partial redemptions, and allow you to apply future points redemption up the remaining balance of that purchase. So that big annual vacation bill? You can chip away at it with your rewards over a year.

You can perform all your redemptions online, no need to call anyone. Here is a screenshot of the rewards redemption website, which should provide a good idea of how it works. Click to enlarge.

bofa_travel_redeem3

(Side tip: If you are worried about cashing out all your points, simply adjust your redemptions to keep a minimum of 2,500 points in your account at all times. Then, if for some reason you want to close the card and do one final cashout (i.e. they announce upcoming changes for the worse), you can do so and use up every last point.)

Recap. I have shown that my real-world experience matches the promised rewards payout. $66.37 of reward divided by $2,527 in purchases is 2.625% back. I was able to get full reward value by offsetting a travel purchase from the last 12 months (airfare, hotel, and all those annoying airfare-related fees). The points arrived without hassle, and redemption was both easy and offered a high level of control.

I realize not everyone will have at least $50,000 of assets to move around, and so this is somewhat a restricted offer. But again it doesn’t have to be idle cash, it can be stocks or ETFs that you’re just holding elsewhere like TD Ameritrade or Vanguard. 2.625% back is a great rewards rate, assuming you charge enough travel-related stuff on the card every 12 months. For example, if you charged $1,000 a month, 2.625% back would be $315 a year. The card has no foreign transaction fees, so you can use it internationally as well.

Please see my Bank of America Travel Rewards® Credit Card review for additional card details.

Best Asset Allocation Plan: 100% Stocks, Forever?

The NY Times had a provocative two-part series on portfolio asset allocation by David A. Levine, former chief economist at Sanford C. Bernstein & Company:

I enjoyed reading his opinions, but didn’t agree with all of his points. The heart of my argument is that when the writer says “most people”, he seems to be talking about his Wall Street peers with multi-million dollar retirement portfolios, where most of it will eventually be passed onto heirs or charity. Instead, “most people” are actually trying to make something like a $200,000 nest egg last as long as it possibly can.

Time horizon vs. asset size. The first article brings up the topic of “time horizon”:

This consensus view, though, rests on a fallacy: the belief that as people grow older, their investment horizon shortens and, therefore, their ability to withstand volatility diminishes considerably.

I would argue, instead, that there is an insufficient appreciation of just how apt the metaphor of the “investment horizon” is. Just as a sailor sees but never reaches the horizon, the same is true for nearly all investors.

[…] But what if there’s a bear market? “No big deal,” I say. As long as you don’t panic and sell most of your holdings at the worst times, your annual withdrawals are limited. As a result, you should not really worry about fluctuations in the stock market.

A rule of thumb is that stocks can drop 50% in any given year. Again, let say all you have is $200,000 and you’re withdrawing 4% of that ($670 a month) to supplement your Social Security and/or pension income. If your balance drops to $100,000 due to a economic crisis, and you still need that $670 a month to pay the bills, yes you are going to panic.

If you have a $10 million portfolio, and a market crash means that you simply reign in some of your discretionary purchases, then your stress level is going to be lower. As my own portfolio has grown, I now only hold 70% stocks but also worry less about the stock portion as I know can ride out a bad sequence of returns.

As Josh Brown reports on The Reformed Broker:

Having worked directly and indirectly with investors from all walks of life and every region of the country over the last 18 years, I can promise you that almost no one can endure – emotionally speaking – the volatility and drawdowns that an all-equity portfolio brings to the table.

Long-term performance vs. asset allocation. The second article makes the point that the historical long-term performance of stocks has been higher than all types of bonds, over many different holding periods:

nyt_100stocks_bonds

In my opinion, the logical conclusion from such tables as above is limited to saying that if you are going to invest in stocks, you need to hold them for 20+ years. So if your portfolio is 60% stocks, keep that portion in stocks for 20+ years. The table doesn’t take into account withdrawals or timing risks where you are forced to take out money to meet spending needs during a period of negative returns.

In addition, Warren Buffett is used as an example because he stipulated 90% S&P 500 stocks and 10% Treasury Bills for his wife’s trust upon his passing. Buffett is worried about the long-term returns, not the risk of his wife running out of money. Do you think her withdrawal rate will be anywhere near 4%? It’s going to be a tiny fraction of 1%. I’d bet big bucks that Buffett would not have set the same asset allocation if she only had $500,000 to live on.

In the end, I guess what I am saying is that your asset allocation also depends on your asset size. Your time horizon matters, but also how close you are to missing a rent payment matters too. Products like target-date retirement funds don’t adjust based on if your balance is $10 million or $10,000. Nor should they really, as they don’t know your future spending needs either. Investors themselves (or their advisors) need to take both of these factors into account.

Of course, it would be great not to have to worry about keeping a balance greater than zero. With a big asset base and modest spending levels, you could indeed have an indefinite time horizon and keep 60% in stocks forever, much like a traditional pension plan. I’d require some enormous amount like $10+ million to be 100% stocks forever, though.

Real Estate Crowdfunding 10-Month Update – Patch of Land

pol_house200Here’s an update on one of my real estate crowdfunding experiments. In mid-April 2015, I invested $5,000 into a loan for a single family fix-and-flip in West Sacramento, California. The loan was supposed to be for 6-months (one of the main reasons I chose it). (More details in my initial update.) Well, the short version is that the fix part happened, but it has now been 10 months and the house is still on the market. The borrower took the option of a month-to-month extension. The loan is still current. Here’s a screenshot and some more thoughts:

pol_feb16

Interest received in a timely manner. So far, I’ve been receiving my $45.83 every month ($550 annualized) on my $5,000 initial investment (11% APR). I enabled the option of having my interest automatically swept to my bank account each month. So far, this investment has required zero maintenance.

Read your contract. Just because there is a “6-month expected term” doesn’t mean you’ll get your money back in 6 months. You should read the terms carefully to see what options are available to the borrower if they can’t make that date. Is an extension automatically granted? Is there an increased interest rate? How long does the extension last?

Liquidity, liquidity, liquidity. One of the defining features of this type of investment is that it is highly illiquid. If I buy a mutual fund, I can sell the entire thing and get fair market value as cash in my bank account in a few business days. With an investment like this, the borrower could pay it back early, take their sweet time, or even default entirely and they’d have to liquidate the home before I get my principal back. You must be prepared for all scenarios.

Be happy with your loan-to-value ratio. I personally believe the house is listed for too high a price, but that part is not under my control. What was under my control was choosing to invest only in a loan where I was comfortable with the collateral. For example, they may be asking ~$320,000 but the loan amount was only for $179,000. As I am (one of the folks) in first position lien on the property, the house would need to sell for under $179,000 in net proceeds for me to lose principal.

In other words, have an adequate cushion so that you don’t lose sleep about it at night. It also helps that I’ve already earned 8.6% of my initial investment back over the last 10 months, cash in hand. Finally, I will repeat that this is a speculative investment using “experimental money” that makes up a very small portion of total assets. (Even Burton Malkiel and Jack Bogle have such “funny money” accounts.)

Tax documents. I received a 1099-INT for the interest earned through this loan. The 2015 form was made available in a timely manner on January 27, 2016. As such, it should be rather easy to add this in at tax time.

Behavioral Economics on Bigger House vs. Shorter Commute

mcman286Inside a post about what economists think about buying vs. renting a house, Alex Tabarrok of Marginal Revolution ended with a nice sentence that I think applies to both buying and renting:

One final point: behavioral economics tells us that we quickly get used to big houses but we never get used to commuting. So when you have a choice, go for the smaller house closer to work.

In general, our current choice of house is aligned with this advice. We could get a bigger, newer, and/or cheaper house in exchange for a longer commute, but are happy with our size (2,000 square feet) and location (I work primarily from home and my wife’s distance to work is 3.5 miles). Our jobs are relatively stable, however, as jumping to a new job could easily change our commute.

Going for the shorter commute over the bigger house certainly feels like good advice. But what are the behavorial economics studies that support this statement?

First, let’s take the statement we get used to big houses. The overall concept of the hedonic treadmill has been found in a variety of circumstances. Brickman, Coates, and Janoff-Bulman (1978) found that lottery winners and paraplegics eventually returned to their baseline happiness levels over time. That is, both the joy of winning the lottery and the sadness from being paralyzed was not permanent. Per Wikipedia, Lucas, Clark, Georgellis, & Diener (2006) also “ultimately concluded that people completely adapt, return to their baseline level of well-being, after divorce, losing a spouse, birth of a child, and females losing their job.”

However, but I couldn’t find one that studied housing specifically. There’s probably one out there? Perhaps a bigger house can simply be lumped in with other consumer material goods.

Second, if we can get used to being paralyzed or losing a spouse, who says that we don’t get used to commuting? Perhaps this is taken from Stress That Doesn’t Pay: The Commuting Paradox (Stutzer and Frey, 2004). Abstract (emphasis mine):

People spend a lot of time commuting and often find it a burden. According to economics, the burden of commuting is chosen when compensated either on the labor or on the housing market so that individuals’ utility is equalized. However, in a direct test of this strong notion of equilibrium, we find that people with longer commuting time report systematically lower subjective well-being. Additional empirical analyses do not find institutional explanations of the empirical results that commuters systematically incur losses. We discuss several possibilities of an extended model of human behavior able to explain this ‘commuting paradox’.

If you know of more please let me know in the comments.

Money, Sex, and Happiness: What is Worth $50,000 of Happiness Per Year?

rothheartMid-Feburary is the time of year when writers everywhere tie their subject matter to Valentine’s Day. Here’s how mine came about. I was reading 23 Science-Backed Ways to Feel Happier at Mental Floss. #8 was “Twist the Sheets” which included the claim:

One study even suggests that having sex once a week may make you feel as stoked as scoring an additional $50,000 in income.

Really? The link provided was rather vague, but the study referenced is Money, Sex, and Happiness: An Empirical Study by Blanchflower and Oswald (and hosted at the National Bureau of Economic Research, thank you very much).

Working from there, I found this NY Times article that covered the study in more depth (emphasis mine):

In their study, Mr. Oswald and Mr. Blanchflower analyzed the self-reported sexual activity and levels of happiness of more than 16,000 American adults who participated in a number of social surveys since the early 1990’s. (Happiness is notoriously difficult to define, and the surveys make no attempt to do so; the respondents simply record how happy they believe themselves to be on a sliding scale.) By factoring out the measurable effects of other life events, the study revealed, to no one’s surprise, that, ”The more sex, the happier the person.”

Furthermore, the economists compared the levels of happiness produced by a vigorous sex life with other activities whose economic values had been calculated in prior research, allowing them to impute, in dollars, how much happiness sex was worth. They also estimated that increasing the frequency of sexual intercourse from once a month to at least once a week provided as much happiness as putting $50,000 in the bank.

A lasting marriage, by comparison, offers about $100,000 worth of happiness a year — that is, on average, a single person would need to receive $100,000 annually to be as happy as a married person with the same education, job status and other characteristics. Divorce, on the other hand, imposes an emotional toll of about $66,000 a year, though there may be a short-term economic gain from the immediate relief provided by leaving your spouse.

As they say, correlation is not causation. The study doesn’t suggest whether more sex leads to more happiness, or happiness leads to more sex. Same with marriage.

In addition, a different set of studies analyzed in the academic journal Social Psychological and Personality Science supports the idea that once-a-week sex is the optimal frequency for maximizing feelings of “well-being” (i.e. happiness?). Taken from the abstract (emphasis mine):

In Study 1, the association between sexual frequency and well-being is only significant for people in relationships. In Studies 2 and 3, which included only people in relationships, sexual frequency had a curvilinear association with relationship satisfaction, and relationship satisfaction mediated the association between sexual frequency and well-being. For people in relationships, sexual frequency is no longer significantly associated with well-being at a frequency greater than once a week.

Or, as Men’s Health magazine puts it: The Happiest Couples Have Sex Once a Week (And No More). Via NPR:

The take-home message, Muise says, is that it’s “important to maintain a sexual connection with a romantic partner, but it is also important to have realistic expectations for one’s sex life (given that many couples are busy with work and family responsibilities.)”

The first study also found that making more money does not mean more sex. Others have found that making more money (past a certain point) does not mean more happiness. Tricky stuff, this happiness thing. In any case, I wish you all a happy long weekend!

Marriott Rewards Premier Credit Card: 80,000 Bonus Points Review

Marriott Rewards® Premier Credit CardMost travel cards offer an ongoing sign-up bonus, but it’s even better when you snag them during a bump-up – this time it is the Marriott Rewards® Premier Credit Card from Chase. Check out the highlights below, and remember that it is free and takes just a minute to add an authorized user:

  • Earn 80,000 Bonus Points after you spend $3,000 on purchases in the first 3 months from account opening.
  • Plus, earn 7,500 bonus points when you add the first authorized user and make a purchase in the first 3 months from account opening.
  • Enjoy 1 Free Night Stay at a Category 1-5 location every year after your account anniversary date!
  • Earn unlimited Marriott Rewards points and get free stays faster
  • Earn 5 points for every $1 spent at 4,000 Marriott locations, 2 points for every $1 spent on airline tickets purchased directly with the airlines, at car rental agencies and restaurants and 1 point everywhere else.
  • The fastest way to earn Marriott Rewards points towards free nights
  • The fastest way to earn Marriott Rewards Elite Status.  Receive 15 Elite Credits guaranteeing Silver Elite Status or better.  Plus, Earn 1 Elite Credit for every $3,000 spent on purchases.
  • All for an $85 Annual Fee

We’ve started traveling again as a family, so I looked through Marriott’s redemption offerings. Marriott properties include Ritz-Carlton, Renaissance Hotels, Courtyard, Residence Inn, and Fairfield Inn & Suites. You can view their redemption chart here. Redeem 4 nights and get the 5th night free. Hotels on their PointSavers list have temporarily reduced redemption costs.

80,000 points is enough to get you a night at any Ritz Carlton Tier 5 hotel in the world. Or, 80,000 points can get you four nights at any Category 4 hotel. Or, it could get you eight nights at a Category 2 hotel. The free night award can be used for up to a Category 5 hotel. In the top right corner of the redemption chart link, you can view a comprehensive list of what hotels are in any specific category. Here are some options that caught my eye.

Ritz Carlton Tier 5 (Highest tier, 70,000 points a night)

Category 8 Hotels (40,000 points per night, 35,000 if Pointsaver)

Category 7 Hotels (35,000 points per night, 30,000 if Pointsaver)

Category 6 Hotels (30,000 points per night, 25,000 if Pointsaver)

Ritz Carlton Tier 1 (30,000 points per night, 20,000 if Pointsaver)

Category 4 Hotels (Eligible with Cat 1-5 Certificate or 20,000 points per night standard, 15,000 if Pointsaver)

  • Orlando: Courtyard Orlando Lake Buena Vista at Vista Centre
  • Orlando: Courtyard Orlando Airport
  • Orlando: Fairfield Inn Orlando Airport
  • Orlando: Fairfield Inn & Suites Orlando at SeaWorld®
  • Orlando: Fairfield Inn & Suites Orlando Lake Buena Vista in the Marriott Village
  • Orlando: Courtyard Orlando International Drive/Convention Center
  • Orlando: SpringHill Suites Orlando Airport
  • Orlando: Fairfield Inn & Suites Orlando International Drive/Convention Center

As always, hotel points are only good if you can use and enjoy them. Poke around their award listings – Marriott has a lot of different hotel brands to choose from. The Courtyards I’ve stayed in have been modernized and updated, while SpringHill Suites are nice for families. I’ve also gotten to stay at some terrific properties thanks to such point promotions, although I tend to value location and convenience over the bling factor.

If you’ve gotten a bonus from this Marriott Rewards® Premier Credit Card within the last 2 years, please note the following:

This 80,000 bonus point offer is available to you as long as you have not received a new cardmember bonus for this product in the past 24 months.

I was wrong initially as Marriott points are convertible to gift cards, but it takes 60,000 points to redeem for a $200 gift card for Marriott or retailers like Best Buy, Home Depot, or Nordstrom. That ratio isn’t all that great, you’ll definitely get the most value out of your points if you stay at Marriott hotels.

On your account anniversary, you’ll get a certificate for a free Category 1-5 night which you can weigh against another $85 annual fee. As long as you can use that certificate for a decent hotel, getting $85 value is certainly achievable. For example, a random night at the (Category 4) Courtyard Orlando Lake Buena Vista at Vista Centre was $115 when including taxes.

  • Marriott Rewards® Premier Credit Card

“Disclaimer: This content is not provided or commissioned by the issuer. Opinions expressed here are author’s alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer. This site may be compensated through the issuer’s Affiliate Program.”

“The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.”

Consumers Credit Union Free Rewards Checking Review – New Rate Tiers

ccu_logo_200Consumers Credit Union (CCU) has a Free Rewards Checking account that offers a high interest rate between 3.09% and 4.59% APY if you meet certain requirements. As with similar accounts elsewhere, the catch is if you don’t jump through all of the hoops, you effectively won’t earn any interest at all that month (0.01% APY). As of February 1st, 2016, their rates, balance tiers, and requirements were changed. Let’s take a closer look at the new structure.

Membership
To open a Rewards Checking account, you must be a member. However, CCU has a very open membership policy; basically anyone nationwide can join if they do the following:

  • Join the Consumers Cooperative Association with a one-time $5 fee.
  • Open and maintain a share savings account with a minimum $5 deposit.

Earn 3.09% APY on up to $10,000 + ATM Fee Refunds if you:

  • Complete at least 12 Debit/Check Card point-of-sale purchases (transactions must be made without using your personal identification number [PIN] to count toward the minimum of 12 and must post and clear your account on or before the last day of the calendar month). In stores, select to run it as a “credit” purchase.
  • At least one of the following transactions must post and clear on or before the last day of the calendar month: direct deposit OR ACH debit OR electronic bill payment via CCU’s Free Online Bill Pay.
  • Access Online or Mobile Banking at least once each calendar month
  • Receive e-Documents (enroll and accept the disclosure)

Earn 3.59% APY on up to $15,000 + ATM Fee Refunds if you:

  • Complete all of the 3.09% Tier requirements above,
  • $500 or more in CCU VISA Credit Card purchase transactions

Earn 4.59% APY on up to $20,000 + ATM Fee Refunds if you:

  • Complete all of the 3.09% Tier requirements above,
  • $1,000 or more in CCU VISA Credit Card purchase transactions

A nice feature is that their online interface has a progress tracker, updated daily, telling you number of debit card transaction and the total spend on your CCU credit card.

ccu_tracker

Tracking is also available via their smartphone app (Apple/Android):

ccu_trackerapp

All tiers will also receive:

  • No minimum balance. No monthly service fees.
  • Free online Bill Pay.
  • Mobile check deposit via smartphone app.

Excess Balances
Note that each tier has it’s own specific APY and balance limitations. Here is a table that shows the APY if you exceed the high-interest balance limits.

ccu_excess

Qualifying Credit Cards
If you don’t have a CCU credit card, the best you can do is the 3.09% APY tier. Here is a list of their credit cards. It looks like the best one is their Visa Signature Cash Rebate Card, which offers a 3% cash rebate on up to $6,000 in “Grocery/Convenience Store” purchases annually, 2% cash rebate for “Gas” purchases, and 1% cash rebate for all other purchases. No annual fee.

Cost/Benefit Analysis
As a benchmark, I choose a “no hassle” high-yield savings account which would roughly yield 1% APY. You could also use a certificate of deposit, but a rewards checking account is liquid with no early withdrawal penalties.

  • $10,000 times 3.09% APY would be $309 per year, or $25.75 per month in interest. $10,000 times 1.00% APY would be $100 per year, or $8.33 per month in interest.
  • $15,000 times 3.59% APY would be $538.50 per year, or $44.88 per month in interest. $15,000 times 1.00% APY would be $200 per year, or $16.67 per month in interest.
  • $20,000 times 4.59% APY would be $918 per year, or $76.50 per month in interest. $20,000 times 1.00% APY would be $300 per year, or $25 per month in interest.

The 3.09% APY tier would be an increase of $17.42 per month over 1% APY, in exchange for tracking 12 debit card purchases a month. If you keep those debit purchases small, then you’d come out ahead by about $200 per year.

The 3.59% APY tier would be an increase of $28.21 per month over 1% APY, in exchange for tracking 12 debit card purchases a month $500 in credit card purchases. Let’s say you could earn 2% cash back on credit card purchases elsewhere, but only 1% on a CCU credit card. That is a loss of $5 in (non-taxable) rewards per month, for a net increase of $23.21 per month ($278 per year).

The 4.59% APY tier would be an increase of $51.50 per month over 1% APY, in exchange for tracking 12 debit card purchases a month $1,000 in credit card purchases. Let’s say you could earn 2% cash back on credit card purchases elsewhere, but only 1% on a CCU credit card. That is a loss of $10 in (non-taxable) rewards per month, for a net increase of $41.50 per month ($498 per year).

To qualify for the 3.59% APY and 4.59% APY tiers, you’d also have to apply for a new credit card, which would entail a credit check. There is an opportunity cost here, as there are other new credit cards that offer $400 or $500 in sign-up incentives within a few months. You can apply for multiple new credit cards, but once you reach a certain number it will hurt your chances for getting the next one.

My thoughts. These types of checking accounts are not for everyone. Not only do you have to jump through hoops each month to get a reward (higher interest than no-hassle account), if you don’t you’ll actually get punished in a way (lower interest than a no-hassle account). Try to create a reliable system where you satisfy the requirements early on in the month, for example putting some automatic insurance, phone, or utility bills on the credit card. My favorite feature is their qualification tracking; I wish all rewards checking accounts had this feature.

To justify the opportunity cost of getting a new credit card, you should definitely try to reach the 4.59% APY tier. The changes have made the middle 3.59% APY tier much less attractive than before. Otherwise, the debit card-only 3.09% APY tier isn’t bad for more modest balances. Keep in mind that there is no longer any guarantee on how long these rates will last. The positive spin would be that CCU has been running a rewards checking account now for well over 5 years, so hopefully they have crunched the numbers and set the rates at sustainable levels.

Google Cloud Storage Promotion: Extra 2 GB Free w/ Security Checkup

February 9th is “Safer Internet Day”. To help celebrate, Google will add 2 GB of free Drive storage to your Google account if you complete their Security Checkup. By default, free users get 15 GB to share across Gmail, Google Drive, and Google Photos.

The Security Checkup tool is a handy feature that Google users should be running anyway. It makes sure you have covered the following bases: update recovery options in case you forget your password, verify which devices are currently connected to your account, manage access for less secure apps, and verify permissions with connected 3rd party apps and websites.

googledrive1

You should instantly see an increase in your Google storage limit. Two birds, one stone!

googledrive2

Dilbert’s Financial Advice on an Index Card

Scott Adams continues to convert wise observations about the workplace into clever and funny comics. Occasionally, he tackles investing and personal finance, like in this recent Dilbert comic:

scottadams_ret

This older comic is more subtle but reflective of why market timing is so alluring:

scottadams_mt

Recently, Ron Lieber of the New York Times profiled a new book about financial advice that fits on an index card. Included was a link to Dilbert’s One-Page Guide to Personal Finance. Looking back on it, I would have to say that Adams’ list stands up to the test of time. I might put #7 about emergency funds a little bit higher on the list, but that’s just nitpicking. For the vast majority of people, sticking to such simple advice would be more than adequate. Certainly much better than Wally’s “above-average” plan!

our company