Propaganda Alert: Visa Direct Deposit Prepaid

There I was driving home from work, when an ad on the radio catches my attention.  It was an ad for a Visa Direct Deposit Prepaid card.  Apparently not satisfied with a plethora of prepaid cards that are terrible for users (some are O.K., just not most), Visa would now like you to believe that it’s the next best thing to sliced bread to have your paycheck direct deposited to a prepaid visa card.  Yeah, you read that right.

Prepaid Direct Deposit

The radio ad is the voice of a woman, and she talks about how she has her paycheck direct deposited to a Visa prepaid card.  She goes on to talk about how she doesn’t have to drive all the way downtown and stand in a line at her bank to cash the check.  Not content to simply portray the card as a time saver, the ad goes on for the woman to say that because she’s not driving all the way downtown and standing in line, she now has so much more time with her daughter.  Now, the prepaid direct deposit card is not only a time saver, but a family bringer-togetherer.  No, that’s not an actual word/phrase.  I don’t care.

I have a friend from college that used to make fun of infomercials by saying that all they really did was demonstrate how terribly impossible common everyday tasks can be and then show you a miraculous new gadget to “fix” that impossibility. The problem is that most of those every day tasks aren’t all that impossible.  Most able-bodied humans can do them easily without any help from the gadget.  It loses a little something without his “demonstration” of the whole situation.  Obviously, the tactic works though, or we wouldn’t have those infomercials.

Welcome to the Infomercial-ization of Prepaid Cards

Not that we haven’t seen some of this done before.  Heck, the level of celebrity endorsements of prepaid cards with outrageous fees is still amazing to me.  But, this goes a level further.  They aren’t just banking (see what I did there?) on your needing a card with Justin Bieber’s face on it anymore.  No, they’re going right for your heartstrings.  After all, what parent among us doesn’t desire to spend more time with our children?  And this card can deliver it to you!  (You should read that last sentence in your best Billy Mays voice.  R.I.P. Billy.)  In fact, maybe they need the Sham-Wow guy to do the next voice-over for a commercial!

Visa Direct Deposit Prepaid : Solution to a Problem that Doesn’t Exist

Visa Direct Deposit Prepaid Card

Much like those infomercials, the problem that they claim the card fixes just doesn’t exist.  Direct deposit isn’t a new service.  Most employers offer it.  In fact, most actually require it now.  It’s just easier for them.  No lost checks to try and track down.  No delay in mailing a check from a payroll service.  And, most of the time, if they direct deposit the check, it gets deposited into a checking account.  And, do you know what most of those checking accounts have attached to them as a service?  A debit card!  It’s exactly like a prepaid visa card, but without most of the fees!  Mine has no fees.  I’m not sure there are many places that do have fees, in fact.

Maybe I’m wrong.  Maybe there’s a whole population of the country who’ve been waiting patiently for someone to come along and solve this very problem.  Maybe they still bank at an institution that keeps their account records on old green ledger books.  If that’s so, I’d like to introduce them to the amazing egg shell separator that I’ve created.  Yes, it looks exactly like the lip of a mixing bowl.  But, it doesn’t have the added bulk of the bowl!  It’s just a convenient shard sized device that helps you separate your egg shells without having to have the whole mixing bowl there!  Yes, I came up with the idea when the bowl I was cracking eggs into suddenly grew heavy in my arm and fell to the ground, breaking into lots of small pieces.  And one of those pieces was the prototype for the amazing egg shell separator!

What do you think?  Am I wrong?  Was there a need for a product like this?  Or is Visa just pulling on emotional strings to get more cards in peoples’ wallets?

original img credit: classic visa (the inception of the “we’ve got you covered” campaign) : london underground ad (1988) by torbakhopper, on Flickr

Saving vs Investing: Investing for Income

Saving and investing go together like milk and cookies, sweet and sour, and Elvis and banana peanut butter sandwiches, right?  Right.  Well, almost right.  It’s easy for us to say that saving and investing are important parts of a personal finance plan.  It’s easy for us to say that and then move on.  After all, we just said they’re important, right?  Not so fast.

Saving and Investing ARE important

They just aren’t equally important.  Heck, it’s another whole post, but even the different types of investing aren’t equal.  Just as important as saving and investing together is the concept of when to use which, and how much.  The mix of liquid savings in the form of cash accounts and CDs with the amount of your money that’s invested can be one of the most important parts of your overall personal finance plan.

Traditional advice tells us that cash accounts and CDs are the super safe way to keep your money with you, and investing, in it’s varying forms is all kinds of risky.  Investing in stocks?  Risky.  Investing in pork bellies?  Risky.  (unless you really like bacon.  Just kidding, still risky.)  But, is the amount of risk involved in investing more or less risky than leaving too much of your money in the bank to rot away at current interest rates?  How about you ask the people of Cyprus if they still feel safe having their money in the bank?

Saving vs Investing : Investing for IncomeSuccess is risky.

Few who accomplish success do so without some element of risk.  In fact, the easier the path to success is perceived, the less chance there is of truly obtaining it.  I don’t say that to seem philosophical.  I want to make a point, however.  You’ve got to have a little risk, if you want to succeed.  You’ve got to have Investments if you want to succeed financially.  And, I think the ratio of investments to savings should probably be much higher than most would suggest.

Investing for Financial Independence

One of the key tenets in a financial independence plan is that you need to replace your income in order to free yourself up to be independent of a job.  Not independent of work, but of a job.  There are, obviously, many ways that you can go about replacing that income.   Decreasing your expenses is usually a part of most plans.  But, most people’s expenses will only decrease so far.  Sure, you can go extreme, and get them lower, but for many that isn’t what financial independence is about.  Even with your expenses decreased as low as you’re willing to take them, you’ve still got to replace the income to pay those expenses.  Investing can be a very good way to get started towards replacing your income.

Investing for Income

In order to replace income with investing, you’ve got to invest for income.  You probably try and do that by becoming a super successful day trader and making up the income in profits from all the great deals you made.  First, find yourself a few super successful day traders who have done that.  Come back when you’ve given up.  If you’re going to invest for income, it’s got to be reliable.  It can’t rely on your ability to find a good bargain and then sell it at a massive profit a few days later.  There are traders who are still waiting on Facebook to make a comeback so they can even get their money back.  Reliable income is the key.  For this, we need investments that are steady, don’t require the continued increase in value of the stock, and also don’t require us to sell like a fiend in order to create the income.  What are these mysterious investments, you ask?  Dividend stocks.

Dividend stocks are stocks that pay a dividend on each share of the stock that is held.  The amount of the dividend can vary, but there are many that you will find that pay dividends in the range of 2-4%.  Depending on the policy of the company, they usually pay quarterly, but there are some that pay monthly and yearly.

Dividend stocks aren’t the only way to invest for income, however.  Investing in peer-to-peer lending in a program like Lending Club is one.  Rental real estate is another.  A business can even be a way to invest for income.  Each has varying levels of passivity, or the amount of direct interaction on your part to earn the income.  A business that you run can mean well over 40 hours a week of direct interaction to create the income.  Something like Lending Club or rental real estate can be brought down to a level that borders on passive income entirely.

Savings vs. Investing

With any investing tool, whether it be dividend stocks, lending, real estate, or some other instrument, there will be risk.  With risk usually comes reward.  I’ve been earning over 14% return on my Lending Club portfolio.  Dividend stocks can lose value, or even stop paying dividends.  The real estate market can dry up, and you can have problems finding renters.  Risk is inherent.  Unless you want to directly trade your time for money (call it a job), you’ve got to take on a little risk and begin setting yourself free.

Savings shouldn’t be shunned completely.  I still believe that an emergency fund is an important tool.  I still covet a debt free lifestyle.  But, once my debt is paid off, and my emergency fund is full, you can bet the rest will go towards investing for income, and building my wealth towards financial independence.

How about you?  What is the role of savings in your personal finance journey?

Original img credit: Two men with pipes posing as boxers / Deux hommes, pipes à la bouche, prenant une pose de boxeur by BiblioArchives / LibraryArchives, on Flickr

The Top 3 Cash Back Credit Cards with No Annual Fee

Spring has arrived, and that means summer is only a few months away. If you’re thinking of different ways to cut down on expenses and save up for a summer vacation, then you may want to consider a cash back credit card. There are great cash back credit card deals being offered by the major credit card companies right now, including several cards with no annual fee.

Here are my picks for the best cash back credit cards of 2013:

  1. Discover it Card – The Discover it Card is my favorite cash back credit card with no annual fee currently on the market. With the Discover it Card, cardholders receive 5% cash back on rotating categories such as restaurants, gas, groceries, entertainment, and more throughout the year. In addition, cardholders also receive 1% cash back on all other purchases. The Discover it Card also offers a 0% Intro APR on both purchases and balance transfers for 14 months, and charges no over-limit fees, no foreign transaction fees, and no pay-by-phone fees. Lastly, Discover will not increase cardholders’ APR when they pay late.
  2. Capital One Cash Rewards Card – The Capital One Cash Rewards Card is another great choice for a cash back credit card with no annual fee. With the Capital One Cash Rewards Card, cardholders receive a $100 bonus when they spend $500 on purchases in the first three months that they have the card. The card offers a 1% cash back bonus on all purchases, but also offers a 50% bonus at the end of each year on the cash back you earned throughout the year. This bonus pushes the effective cash back rate to 1.5% on all purchases. Cardholders also receive a 0% Intro APR on purchases and balance transfers until February 2014. The card is also customizable with an image of the cardholders’ choice.
  3. Blue Cash Everyday from American Express – The American Express Blue Cash Everyday Card closes out my list of the top three best cash back credit cards with no annual fee currently on the market. With the Blue Cash Everyday Card, cardholders earn 100 Reward Dollars after they make $1,000 in purchases in the first three months that they have the card. In addition, the card offers 3% cash back at United States supermarkets, 2% cash back at gas stations and major department stores, and 1% cash back on all other purchases. The card also offers a 0% Intro APR on purchases for 12 months. The only reason the card isn’t higher on this list is because the 3% cash back rate at supermarkets reverts to 1% after $6,000 in purchases.