It has been a long while but MUYF is back and just in time for summer! Unfortunately, our other site was hacked and so we have returned to using this one, so come back and check often for updates.
Emy and Kathy
Two weeks ago, the WSJ published an article on credit cards that offer cash back or points that can be used to fund your retirement or another investment account. As the article explains:
Instead of redeeming earned points for the typical airline tickets or gift cards, users of these cards receive cash that they can then deposit into an individual retirement account or another investment or savings account.
This seems like a reasonable deal, and may in fact be useful to those who need some help remembering to move some of their savings into their retirement account. But beware of the conditions and reward rates. Here, we review the cards mentioned in the WSJ article:
The WSJ article also warns about interest rates, but even readers who pay their balances in full every month should think carefully before signing up for one of these retirement or investment cards. These cards require that rewards be deposited into an account opened at their respective financial institutions. Further, their reward rates are quite low, and you are likely better off getting a good cash back card – such as Discover or CitiForward – and, if you want, depositing some or all of your returns into an investment account or IRA of your choice.
I’ll be honest. I hadn’t been paying much attention to the new credit card legislation. I figured it wouldn’t actually affect me that much, since I always pay my credit card bill on time and in full (which everyone should do in the first place as paying 18% interest on credit card debt really is not the best use of your money).
The big piece of good news is that credit card companies are required to inform me of any major changes in my rewards programs. Besides that, what this new legislation means to us, never-late-full-balance-payers, is still unclear. The WSJ reasoned, along the lines of the threats coming from the credit card companies themselves, that rewards programs will have to be trimmed down to compensate for the loss in revenue due to the new legislation. Personally, I recently noticed that Discover raised the minimum amount of accumulated cash back that I can redeem for a check or credit from $20 to $50 (that is, my accumulated cash back will sit with them for longer until I can actually get a hold of it).
According to NY Times, however, the new bill might also lead credit card companies to focus more on their rewards programs to get people to spend more money. This also makes perfect business sense, since I am the best kind of customer. I help them collect revenue from vendors by spending money on my card and I am never behind in my monthly payments. Hopefully, they’ll keep that in mind when they think about their rewawrds program. The legislation will not kill competition between cards, and if my card’s rewards program goes dry, I could always take my spending elsewhere.
Money Under Your Futon was first conceived during a lunch break at TGIF at Tyson’s Corner. After a long day of swiping our credit cards, our conversation inevitably got to personal finance – namely, taxes. It was tax season and we had talked about different forms, deductions, and credits several times over the last few months, much to the amusement of our friends.
When we graduated, we were befuddled by the many personal finance decisions we suddenly had to make, from the simple, such as opening a bank account that had ATMs beyond campus borders, to the more complicated, such as 401k versus Roth IRAs. We found there was no single comprehensive source for people who had just started working – either they were catered towards adults balancing retirement and paying for their children’s college or they were outdated. Over the past two years, we have researched personal finance topics way beyond the interest of the average person, picking and choosing resources as relevant to our needs.
After seeing our efforts come into fruition in the shape of cash back, free flights, and lavish dinners (not just TGIF) and realizing that too many people our age do no take advantage of many financial opportunities, we created this blog. Because we live in the DC area, some of the entries may be region-specific, but we hope most of them will be relevant outside the beltway as well. Enjoy!