Student Credit Card and Credit Education Blog

While we use them on a regular basis and usually take them for granted, there are certainly ways that they can be improved upon. Some have confusing benefits, while some don’t always work how they’re supposed to. Here are a few areas where I believe they can be even more beneficial to their customers.

Make it easier for more stores to accept a wider variety of cards – I’ve heard that American Express charges merchants a higher surcharge rather than a Visa. Why? Does it really offer that much more in terms of benefits? If they were to even out the surcharge with the other cards, would the new business balance the lost surcharge revenue?

Simplify the stolen credit card process – Who has all the numbers to their credit card companies? If your wallet is lost or stolen, it may take you a day to cancel your cards, if it takes you that long to realize your wallet is missing. In that time period, the thief or person who found your card may have drummed up a great deal of charges. You would then have to deal with removing them from your record. How about instead of making 5 or so calls; maybe just one? A company could offer a service to handle this arduous undertaking.

Better explanation of benefits – Credit card companies seem to provide a lot of bonuses for their customers. Insurance services. Product discounts. Extended warranties. How about a list of these on a regular basis? You have my email address – use it!

Continuing from last post, you may be at the stage where you have purchased some stock and are debating whether or not you should sell.

Before you do, take a look at these important factors:

Keep your wits about you with the stock market. Don’t go crazy, buy what you know and what’s been around, and you should do just fine!

While in college, the existence of disposable income is quite rare. However, if you are in this situation, through a co-op or summer job, or just graduated school and are beginning your first year of employment, you may wonder what to do with the savings you accumulate. Of course rent, utilities, credit card, and student loan bills take precedence – but after all that, let’s say you want to play the stock market.

First, you need a way of buying them. You can always call up Charles Schwab and hire a broker, but the volume you’ll be buying in won’t warrant such a luxury (or expense). So, sites like Fidelity, eTrade, TD Ameritrade, etc are all great places to get your feet wet. The trade costs are relatively low and the sites are fairly easy to use.

Second, what should you buy? There are probably 1,000 books and 10 times as many websites which attempt to answer this question. My thoughts towards this is if you don’t need this money for a period of time (a.k.a. 10 years) you most likely won’t get burned by picking up companies within the Fortune 500 list. I say “most likely” because of situations like Enron and Sun Microsystems (went from 60 to 5 and hasn’t rebounded in 6 years). So, peruse through the list and pick out a few that you have some knowledge of. Also, it’s actually better to pick them up after a recent decrease or downward trend. Consider them “on sale” since due to their size, they should come back at some point.

Third, you’ve got a few, and maybe one of them went up a few bucks – should you cash in? This is based on a few factors – necessity, commission cost, capital gains taxes – all of which we’ll go into next time…

You just got a part-time job for the summer (or are starting your first full-time position). Someone from HR provides you with a benefits packet. You glance through it and try to make sense of it all – Health insurance? Got it. Life insurance? OK. Vacation days? Definitely. 401k plan? Ummm..huh?

The 401k is something you should certainly understand. It’s an investment plan that allows you to take pre-taxed money and deposit it into a separate account for your retirement (or at least until you are 59 1/2.). Usually, your company will provide you with a series of investment options – these will most likely include a variety of mutual funds or company stock. Once you reach the withdrawing age, you should then have a great deal more money because you’ll have the initial principal you invested plus all the interest you earned from your investments in mutual funds, stock, etc. Since your money isn’t taxed when you make the initial deposits, you are taxed at whatever your income tax rate is when you withdraw – ideally, a much lower amount than when you were working.

Sounds complicated – what’s so great about all this?

There are a number of reasons why you should participate:
1) Many, many companies offer a company match. This means that if you contribute 3% of your salary to your 401k, the company will also contribute 3% (or whatever their matching policy is). So, if you add $50 a month, your company may also add $50 to your account. Yes, this is free money!! Yes, you should take advantage whenever you can!!

Why do they do this? Because saving for your future is very important and most companies understand this. Therefore, assisting their employees boosts morale = happier employees = better productivity.

2) The fact that the money is deposited on a pre-tax basis means that you’ll actually get more money than if you just threw your post-tax money into stocks or a savings account. Say you’re in a 30% tax bracket, and your gross pay is $1,200. If you sock 3% of your paycheck into a 401k account, that $36 you’ve saved isn’t hit at the 30% tax rate. Very nice.

3) If needed, you can use this money in an emergency. You’ll be penalized a bit but if you need the money, you need the money.

Clearly, the company match is the main reason why workers participate in this program. And, if your company is one of them, there’s no reason why you shouldn’t either. It’s free money!

Want more info on 401ks? Visit Fidelity or Wikipedia.