TradeKing and Zecco Announce Merger

Online trading companies TradeKing and Zecco announced recently that they intend to merge their two companies in an effort to create a larger alternative for investors who like the freedom to invest how they want to with limited fees.

Tokyo Stock Exchange © by Dick Thomas Johnson

I first started following Zecco when they first came onto the scene in 2006.  At the time, they made a pretty big splash by offering $0 real-time trades.  As many of the naysayers of the time predicted, that didn’t last long.  They did manage to keep their fees fairly low, and TradeKing, as far as I know, has maintained a fair trading fee for it’s lifetime.  I think it’s a bit interesting that the two are merging.  There are, obviously, several online trading giants out there (talking babies anyone?) that they are competing with and if they remain separate, they can’t really compete.  Together, they might be able to do so.

The challenge, with any merger like this, is to attempt to keep the investors from both companies happy.  There will be people who like Zecco for certain reasons, and people who like TradeKing for certain reasons and just won’t like what the combined company is like.  That happens with any merger, I think.  But, keeping the number of people who actually jump ship to a different trader to a minimum will have to be their highest priority for the immediate future.

In the end, I can’t see any good reason why this won’t be good.  The two companies are similar enough that the merger will eliminate a competitor for each and allow the new company to compete on a much larger scale.

Mega Millions Mania

For the last several days, it’s been nearly impossible to watch any news, read anything on Twitter, or even look at my Facebook timeline without hearing something about the record-breaking Mega Millions jackpot.  At the moment, it’s estimated to be about $540 Million dollars.  That’s a little over a half-Billion dollars.  It’s obviously gotten quite a few people excited.

Mega Millions Lottery

Just thinking about what a person could do with $500 Million dollars is a bit dizzying.  When you think about how you would put $1 Million or $2 Million to use, there’s a limit to how far you can go.  After all, a couple of Million only goes so far.  But $500 Million?  It’s hard to imagine an end to what you could do with that much money.  In fact, according to Google Finance’s stock screener, there are over 600 companies with a Market Cap of under $500 Million.  You could buy any one of them out!
Seriously though, I appreciate that the rules are what the rules are, and that, based on those rules, the jackpot has to be this large.  But, really, what would any one person do with that much money?  Me, I’d be set for life if I won $10 Million or so.  Even if I allow for some frivolous spending.  Heck, that’d probably set my kids up for life too, if they learned to manage it properly and not buy into every crazy pyramid scheme they could find.

According to the Mega Millions website, the odds of winning the jackpot are about 1 in 175,000,000.  I don’t need to list out the long list of things that are more likely than winning this thing.  Mathematically, it borders on impossible.  There’s a reason that Dave Ramsey calls the lottery a “stupid tax”.  He’s mostly right too.  It’s not like you see too many people who have bought lottery tickets, not won, and are better for it.  Surely, they could have put that money to good use somewhere else?

I wonder too, if having bought a ticket, there isn’t some psychological benefit from spending those few days in a “what-if” wonderland.  Or, if doing so allows a person to remove themselves from their current obligations and responsibilities?

What I do know, is that I bought some tickets. ;)  Like I’m gonna let a chance, however slim, to win a half-Billion dollars pass me by.  How about you?  Did you buy a ticket?

Suze Orman Releases Prepaid Card. Wait, What?

Suze Orman, one of the most well known personal finance gurus in the media, announced a few days ago that she had created, and was releasing, a new prepaid debit card.  Prepaid debit cards, if you’re not familiar with them, are cards, like credit cards, where you prepay and then can only use the card for amounts up to what you’ve prepaid.  In most cases, they are marketed towards people who are unable to get credit cards because of bad credit.

Phil, from PT Money, blasted Suze for the card, on his site and on twitter.  I can’t say that I entirely disagree with him.  His problem with the card, and mine, is that prepaid cards should be a last resort for people who are unable to get a bank or Credit Union account that has a debit card attached to it.  What Suze is doing with this card, however, is pushing it to the general public who really have no use for it, and, by using it instead of a debit card from their bank or CU, are going to be lining the pockets of Bancorp (the bank behind the card) and Suze.  That’s shady, when you are claiming to be “America’s Most Trusted Personal Finance Expert”.  If she is an expert, she should know better. And, I think she does.  Which is why, instead of responding to PT (and others) on Twitter with a factual defense of the card, she had this to say:

Suze Orman Calls PT Money an Idiot

Suze Orman Calls PT Money an Idiot

Terrible way to take criticism, Suze.  To some degree, I discount her response because of the “sassy” way that she responds to questions and such on her shows, but I think she crossed the line here.  It’s one thing to tell the guy who calls in and asks if he should buy a new car when he’s 500k in debt an idiot, but another thing altogether when you’re calling a guy an idiot simply because he thinks your new prepaid card is a bad product.

Is the card a bad product? To Suze’s credit, unlike some prepaid cards that have had celebrity endorsers, this one has plenty of good things going for it.  It includes a credit watch program, and a free credit report with credit score.  It’s got a program to allow you to put money into a separate account for an emergency fund, free bill pay, and the ability to transfer money from one cardholder to another.

But, my Credit Union has all those things.  A $3/month fee on the card isn’t the worst of the cards, but it’s still a fee.  $36 a year to have access to your own money via a debit card?  Come on.  Again, my Credit Union does that, and they do it for free.  Yes, there are some who are unable to get a bank account.  And for those people, if you absolutely need to have access to a Visa/Mastercard card, then go for it.  But, despite what Suze is claiming, don’t expect it to improve your credit score.

There is no way that any of the credit agencies are going to take your activity on a prepaid card into account.  They’ve never taken your cash spending habits into account, and a prepaid card is no different than spending cash.  Would it be nice?  Absolutely.  Many of us who make most of our transactions on debit cards or with cash would agree.  But, it isn’t going to happen.  Your cash spending has nothing to do with your credit, so why would a credit score take that into account?

I just don’t see enough difference between this, and other similar cards to say that Suze went out on a limb here and created a product that is going to change the industry.  As a prepaid card, it’s decent.  There are better.  In the end, it’s still just a prepaid card that should be used as a last option when you can’t/won’t get a bank or credit union account with a debit card.

Read what some other Personal Finance Bloggers are saying:

Suze Orman’s “Approved Card” gets Denied; Thinks PF Bloggers are Idiots

Suze Orman’s new prepaid debit card: The Approved Card

My two cents on Suze Orman and her prepaid card

Young, Gullible, and Broke: Suze Orman’s debit card FAIL

Suze Orman’s prepaid debit card scam

Suze Orman’s Card is Not Approved by Me

Suze Orman’s Approved Prepaid Debit card is Bad for Consumers

Suze Orman Shows True Colors with Her Approved Prepaid Debit Card

And that’s just a smattering of the posts on the subject.  I have yet to come across one that is entirely positive about the card. What do you think? Do you think that Suze did a good thing here, or is it just another way to milk some money out of her followers?