It wasn’t that long ago, as the economy was crashing down around us, that people started noticing a drop in the number of credit cards that were offering the 0% transfer rates, and a drop in the number/quality of the rewards associated with rewards cards. Higher default rates and changing regulations seem to have been the culprits, making it harder for credit card companies to offer the great rates and rewards while still maintaining their (already bloated) margins.
But, as the economy levels off (if not starts a recovery), there have been an increase in cards offering the great transfer rates, and now, there’s been an increase in rewards cards too.
Just the other day, Chase announced the British Airways card, with a pretty good rewards system. Then, today, I got an email announcing the Hyatt card. It too, has some pretty good rewards.
The thing I don’t really like about cards like these is that you get locked into an airline or hotel chain. Also, they both charge an annual fee. I think in a pinch, you might be able to call Chase and be able to get that fee waived once or twice, or at least get your value out of it in flights and stays. Aside from that, the rewards are pretty good. The British Airways card has a potential for 100,000 Avios (BA’s points) which should be able to get you a couple of trips overseas or quite a few domestic trips on their partner airlines. The Hyatt, with it’s 2 night free stay bonus, is pretty good as well. And in both cases, the points accumulate at a good rate.
As always, responsible credit card use is a must. You’ll pay way more than what the rewards are if you don’t pay the balance off, and lose money on the whole deal. It’s just not worth it. If you do pay your balance off, however, it’s something to look at.
I might even have to think about that Hyatt card, as the Financial Bloggers Conference this year is at the Denver Hyatt, and while the even rate is pretty good, it’s not as good as two nights free!
Editors Note: As with any financial offer, credit card or otherwise, YOU are responsible for reading the full terms and disclosures in order to understand what it is that you’re applying for. Don’t read them, don’t come crying to me.
If you’ve been following along, you know that I’ve been performing a bit of an experiment. I’ve been taking 10% of my earnings from this and other online ventures and splitting it evenly between Lending Club and Sharebuilder accounts. The idea was to see what kind of returns I could get from the two, and to test for stability. I’ve been running the experiment for a little over 6 months now, and I’m calling it done. The difference has been so drastic, that I don’t think there’s any point in running it any longer.
In short, Lending Club is kicking Sharebuilder’s butt. Really, the only thing that the Sharebuilder account has going for it is that the chance of default on any of the investments is extremely low. So, I suppose that it is possible that in 5 or so years, the gains on the Sharebuilder account could potentially be better. However, as I’m about to show you, the short term results are strongly in Lending Club’s favor.
My Lending Club Returns
As of today, Lending Club is telling me that I’m seeing a return of 13.15% on my account. My Sharebuilder account is currently reporting a return of -16.42%. It doesn’t take a math major to come to the conclusion that Lending Club is performing far better. To date, with a bit over 2 years of total history, I haven’t had a default in my Lending Club account. I’m pretty sure that has more to do with just getting lucky, than with any effort of my own. Some other interesting numbers, besides the return: The portfolio has grown enough that it brings in enough in principle + interest payments to reinvest monthly now. The monthly interest gains, as of the end of March, have now exceeded $4 monthly. It’s not much, but it’s been fun watching that number grow.
My Lending Club Portfolio
When I first started out investing in my LC account, I was investing in mostly A, B, and C investments. I’ve recently shifted that to be mostly C and D investments. Why? Well, as I mentioned in my post on selecting Lending Club investments, I have to purchase my investments through their trading platform rather than directly invest in the loans. What that means is that in most cases, I have to absorb a small percentage of profit to the original investor. So, a loan that has an actual interest rate of 14% might only return 11% to me because I bought it at a higher price than what it was worth in principle at the time. Because of that, I have to invest in the higher grade loans in order to maintain a higher return rate. But, I’m OK with that. Even the worst graded loans that LC has are still well above what a traditional bank or credit union would lend to. And, at less than $25 per investment, I can afford to take the risk. I’ve diversified the account so that one or two defaults isn’t going to destroy the account. Sidenote: If you can buy your LC loans directly, I suggest you check out Peter at SocialLending.net’s post on how he’s investing in 2012. He’s got several filters and some interesting insight into how he’s set up his investing that are worth the read. They’re somewhat useless to me because of the way I have to invest, but will be useful to someone who can invest directly.
Lending Club, Going Forward
With the end of the “experiment”, I’m now putting the full 10% that I had been splitting into my Lending Club account. The overall total for the account is still at less than 3% of my overall investment portfolio (including retirement investments), but it is growing. At some point, I’ll have to decide if I want to continue to add to the account or not, but with the returns that I’m getting, and the luck I’ve had in the default area, I can’t see wanting to stop investing in the account.
Have you given Lending Club a try yet? How have your returns been? What’s your default rate?
The following post is a guest post provided by Money Supermarket.
When it comes to savings account options, different countries offer different types of savings accounts and some of these may come with more benefits than others. One good comparison is that between savings accounts in the US and those offered in the UK.
Savings Accounts in the United States
You’re probably already familiar with the basic US savings account. This is the account offered by your bank or credit union and is usually required in order to open a checking account at the same institution. Many banks charge a monthly savings account fee if certain stipulations are not met, such as not having a direct deposit linked with at least one of your accounts or going below a minimum required balance.
With credit unions, a minimum amount called a “share” needs to be kept in the savings account at all times. This serves as your placeholder as a member of the credit union. Often, the share amount is as low as $5.
Regardless of whether you keep your money in a credit union or bank, this type of savings account provides you with convenient access to your money. A newer spin on the traditional savings account is an online account. Online banks allow you to have just as much freedom over your money as traditional banks, but online accounts generally come with more competitive interest rates, meaning that you can grow your money faster.
Another type of US savings option is the Certificate of Deposit. A CD is a great idea if you want to put your money away for a while and forget about it. You cannot withdraw the money during the designated CD period until it matures, which can be anywhere from six months to a full year. Taking the money out before then subjects you to penalties.
A money market account comes with a much higher rate of interest, but it also requires a much higher deposit than traditional savings accounts. There is also a minimum balance requirement.
Savings Accounts in the United Kingdom
savings © by 401K
In the UK, there is an instant access account that works a lot like a traditional US savings. Your money is linked to a debit card so it’s great for building up an emergency savings fund. Of course, there is also the regular savings account that works well for those wanting to get into the habit of saving money.
Like a CD in the United States, UK notice accounts allow you to put your money away and forget about it for a set period of time. Just like with a CD, you could end up paying penalties if you withdraw the money too early.
A cash individual savings account, or Cash ISA, is one option that the United States doesn’t have. Although you are limited in how much money you can deposit into a Cash ISA each year, everything you earn in interest is tax-free. While you can’t find Cash ISA accounts in the US, there are plenty of online banking options, so anyone can take advantage of this unique savings account.
Regardless of whether you live in the US or the UK, online banking has given people better control over their money on a worldwide virtual stage. Simply research your options to find Cash ISA accounts or high-interest savings options online and sit back and watch your money grow.
Beating Broke was included in four carnivals this week: Yakezie Carnival – Easter Edition hosted by Roshawn Watson Totally Money Carnival #62 hosted by Stupid Cents Carnival of Money Pros – Spam Folder Edition hosted by yours truly Carnival of Financial Camaraderie #28 hosted by My University Money Thanks to all of the hosts for including my posts!
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