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One of the most annoying things in personal finance is opening a bank account and then seeing the interest rate drop. This happened very often in the falling interest rate environment of the last year and a half. I remember opening an online savings account only to see the rate fall the next day! It’s not bait and switch, it’s not sneaky, and banks don’t do it on purpose because nothing stops you from leaving. Interest rates aren’t guaranteed. It’s just how it is.
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br />There is only one thing more annoying than falling interest rates, it’s rising interest rates after you’ve opened a new certificate of deposit! With CDs, if you close one before it matures, you will pay a penalty of three to six months’ interest. Again, it’s not bait and switch, it’s just the nature of fluctuating interest rates.

10 Day Rate Guarantee
That’s why it’s kind of nice of Ally Bank to offer a ten day rate guarantee on all new and renewing certificates of deposit. If the rate goes up within ten days of you opening or renewing a CD, you get the new rate automatically. You don’t have to do anything, your rate is automatically increased.
When should you open a CD? As long as I’ve been looking at Ally Bank CD rates, they usually change their rates on Fridays. If you want the maximum window then you want to open your CD on a Wednesday or Thursday. This gives you two potential rate changes in your ten day window.
What else can you do? You can open up a bump-up CD, which lets you increase the rate once per CD, or a triple option CD, where one of the options is the bump up provision. The rates are usually lower than the same maturity CD at the same bank, because you have more options, but it can alleviate your fears of being locked into a lower interest CD.
In the end, remember that interest rates generally don’t move around a significant amount. Lately we’ve only see changes of 0.05% or 0.10% in either direction. Over the course of a year, an extra 0.05% APY on a CD with $1,000 is only fifty cents!
(Photo: puntodevista)
Ally Bank Ten Day CD Rate Guarantee from personal finance blog Bargaineering.com.




26
You're probably starting to think about what you and your family will do over the winter holidays. Spend a week at Mom's in Tucson? Jet to Paris? Stay home and clean the basement?
8
There are a lot of “rules of thumb” in the personal finance world. We all know the classic ones: you should save at least 10% of your income, you should have 6 – 12 months of expenses saved into an emergency fund, and you should X% of your portfolio invested in stocks where X is 120 minus your age. In fact, rules of thumb are so ubiquitous in personal finance that I took a look at four rules of thumb in need of some refreshing.
However, those are publicly known rules of thu
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mb that experts have repeated over and over again. What I’d like to know is whether you have any personal rules of thumb that you live by? It doesn’t have to be strictly personal finance related, it just has to have served you well over the years.
I ask because in my post about the best car for students, Financial Samurai offered up a great rule:
I use the 1/10th rule we coined. Essentially, the car you buy should cost no more than 1/10th your gross income. I’ve used this rule to a T, and it works well.
I think that it might be a little on the low side, especially if you only have one income, but you wouldn’t be wrong to use a similar rule.
Do you have any personal rules of thumb that have worked well for you?
Your Take: What Are Your Rules of Thumb? from personal finance blog Bargaineering.com.




39
Last week I asked email newsletter subscribers for their experiences with debt collection agencies. I’ve been fortunate never to have crossed paths with a debt collector so I was looking for stories to help put me in the shoes of those who have.
I read about stories of people paying off debts but through some clerical error, the debt was incorrectly sold to a collector. I read stories about legitimate debts that suddenly went to a collector and stories of people who simply didn’t pay up.
If you thought debt collectors only went after “deadbeats,” you’re
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wrong. There are as many stories of people current on their debts as there are those who are behind.
Here’s one story and Craig’s advice on what he would’ve done differently:
I have had a bad experience with a debt collection agency. I was behind in my payments to [a credit card company]. I worked with a debt management company to get my interest rates reduced on other cards and make payments through the debt management company, but [this credit card company] was the only company who refused to participate in the program. They would not reduce the interest and would not accept payment through the management company.
They set their loan collection agency on me, and these people were horrible. I was told I had to pay immediately or they would take me to court. After initially being really shaken up, I reviewed the “credit card bill of rights” that I found online, and the next time I spoke to the guy, I told him I was familiar with my rights. He backed off somewhat after that.
Then there were the daily phone calls to my home and work, until I finally told him to stop calling because I was working on pulling together the money to pay it.
He stopped, but then on the day I had promised to FedEx it, he called me to make sure I was going to do it. I wrote them a check and FedEx’d it, just like I said I would. Then I found out that rather than cash the one large check (for approximately $10,000), the company made two unauthorized withdrawals from my checking account and then charged me for doing so.
When I called to complain, they told me that they couldn’t accept a check that large (although no one had told me ahead of time), so they had to take it from my account. I pointed out that I had never authorized them to remove money from my account and that they had broken the law.
The person I spoke to said fine, do you want us to put it back? At that point, I was feeling so harassed and tired of the whole process that I just wanted to get it over with and so I said no. But to this day I regret not saying yes, and then filing a police report against them.
What would Craig, our anti-debt collector, have done?
Yes, you have not had a good experience with debt collectors, and I wanted to impart a few things you could have done differently and some things that you may be able to do now.
First of all, if a company won’t take your payments, I would not push the issue. At some point, they will come around and play ball if they want to get paid.
As far as the collection agency, if this happened less than a year ago, you need to sue them. If not, then the statute of limitations has passed, but you will be wiser next time.
As far as things you can do differently, if you ever get a call from a collector or anyone you might need to reference again, record the call! Many Nokia cell phones have recorders built in to them. You can get recorder attachments from Radio shack for around $100 including the recorder and connections for a typical phone. There are cell phone connection devices as well. For smart phones there are also recording apps and software that you can download. Lastly, you can record from skype as well. I don’t care how you do it, but you need to have the capability to record the call! Trust me, you can thank me later.
Secondly if you are in a one party state, which most states are, you do not have to tell them you are recording and you should not tell them you are recording. Resist the temptation. Let them violate away and sue their butts off.
Third, kudos for looking up the credit card bill of rights, but you should become more familiar with the FDCPA and your state law equivalents. Google consumer protection laws and your state and see what requirements and penalties are in place. Does your state require bonding? A license? Does this company have one? If they are not compliant, the money they took from you was illegally gained and you have every right to get it back.
Now, as far as what you can do now:

  • When you told them to stop calling and they called you back, that was a violation of your rights under the FDCPA, and they owe you at least 1,000 in statutory damages, plus arguably whatever you paid them. State law may impose enhanced damages under deceptive trade practice laws doubling or tripling your damages.

  • If they called with an auto dialer or pre-recorded voice, that likely violated the TCPA as well. They owe you $500-1500 per call.

  • The unauthorized withdrawals are fraud/theft, and you again have a legitimate claim against them for that. To add insult to injury, they charged you for the unauthorized transactions. I would sue them on principal just for that. Unless you agreed to the charge, it is an unauthorized fee, and I believe they are just trying to pad their profits.

  • I wouldn’t entertain any of this business about not being able to take a large check. I would call them back and demand every penny to be repaid. Like today.



You can probably see why I asked Craig to author a series on how to deal with debt collectors, right?
A Classic Debt Collection Story from personal finance blog Bargaineering.com.




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Question: I always heard that you will need 80% or so of your working salary to live on in retirement. But is that a percentage of your gross income or your take-home pay? --Mary Taylor, Chalfont, Pennsylvania
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Yesterday, the House of Representatives voted 416 to 0 to pass the Service Members Home Ownership Tax Act of 2009 which extends the current $8,000 first-time home buyer tax credit for another 12 months for members of the military, Foreign Service, and intelligence corp who served at least three months of qualified overseas duty in 2009. The program is set to expire on November 30th, 2009 for everyone else and the justification for the extension makes sense. If you’ve been serving abroad for our country,
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it makes it very difficult for you to look for a house and take advantage of the program. Extending it another year certainly makes sense.
At the moment the bill has passed only the House of Representatives, it or a similar bill needs to pass the Senate, then reconciled, then signed by the President before it is law.
“If you are in a conflict zone, you don’t have time to get together with your spouse and family to go house shopping,” says Rep. Ron Kind, a Wisconsin Democrat. Rep. Dave Camp, a Republican from Michigan, expressed similar concerns. “A lot of service members get called overseas at a moment’s notice,” Camp says. “And because of the time limit on the legislation now, they can’t always take advantage of it, not because of anything that they did or didn’t do but because of the unique nature of serving in our armed forces.”
It’s estimated that this will result in an additional 10,000 home sales, likely clustered around military facilities, at no extra cost. It’s revenue neutral because there are other revenue generating provisions included in the bill. The Senate received the bill yesterday and is set to vote on it fairly quickly.
As for the original credit set to expire on November 30th, there are discussions about extending the credit an additional six months.
House Votes to Extend First-Time Home Buyer Tax Credit for Service Members [U.S. News & World Report]
$8,000 First-Time Homebuyer Credit to be Extended for Military from personal finance blog Bargaineering.com.




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Wise investing isn't simply about your brain power; you also need a sense of how strong your stomach is -- of how much market turbulence you can take before you sell in a panic.
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I’ve been doing research on the various reward catalogs of credit card companies when I discovered my favorite reward, a student loan rebate check from the Citi ThankYou Network, had gone up in price. I would routinely cite that reward as one of the main reasons I kept using my Citi card. A few short months ago, for 10,000 points, you could get a $100 check written to your student loan servicer. That came out to each point being valued at 1¢.

Now, the point prices for student loan rebate checks are (
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rds.thankyou.com/b2r/rewardsSubCategory.do?categoryName=studentloanrebate" target="_blank">reference):


Reward
Points
Value per Point (¢)


$1,000 check
125,200
0.79872¢


$750 check
93,900
0.79872¢


$500 check
62,700
0.79745¢


$250 check
31,400
0.79618¢


$100 check
12,700
0.7874¢


$75 check
9,500
0.78947¢


$50 check
6,400
0.78125¢


$25 check
3,300
0.75758¢


At even the most favorable rate, it’s still at least a 20% reduction in value!
Another thing to note: the schedule as a little hitch at the $75 check mark. You get a slightly higher value out of converting to a $75 check than a $100 check, which disappears if you can wait to $250.
This is one of the reasons why I wanted to do a review of all the reward networks’ catalogs. It’s important to understand that while you may get “5 points per $1 spent,” to assume it’s equivalent to a 5% cashback credit card would be a mistake.
All good things come to an end, I suppose.
(Photo: m00by)
Citi Student Loan Rebate Reward Price Increase from personal finance blog Bargaineering.com.




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In recent years college students could get credit cards almost as easily as they could score beer. Some 84% of undergrads have at least one card, a Sallie Mae study found, and half carry four or more.
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