Who Gains and Who Loses from Credit Card Payments?
This new Federal Reserve study is a fascinating look at credit card utilization across income brackets. It’s showing up all over the place: NY Times, Wall St. Journal, etc.
It’s also an incredible distortion. There are a number of variables for which it fails to account. The most egregious were pointed out by Matthew White a WSJ commenter, “Credit cards allows merchants to do higher volume of sales, which then increases economies of scale, thus making the net affect of credit card use lower prices for all consumers. In addition credit cards reduce transaction error and transaction time, further making it more efficient for a merchant to sell its goods.” Read more
PerkStreet Review Part 3, Management Speaks!
First, let me say I’m humbled that senior management at PerkStreet have contacted me not once but twice about my commentary on their checking account (see Part 1 and Part 2 of the ongoing saga). What follows is my response to their recent comment in Part 2. Second, it’s a great sign to all of PerkStreet’s customers that their management is so dedicated and in tune with monitoring their brand perceptions. Clearly, their finger is on the pulse of their business at even the most micro level, and management should be lauded for it. Now, let’s get to the points John Magee, VP, Analytics & Customer Management, made today over at my PerkStreet Review Part 2. Read more
PerkStreet Review Part 2
In the month since Part 1 of my PerkStreet review, the one thing that has become quite clear is that PerkStreet users are passionate about the checking account. The emails and comments have been numerous, and I appreciate every one of them. In response I've done some additional number crunching to again elaborate on why PerkStreet may not be the best option available (yes, I'm maintaining my position in spite of all comments). Before we get to the numbers, let's first recap what PerkStreet is offering. They are offering a checking account that pays you 0% interest, but will give you 1% back on all purchases. Additionally, if you keep over $5,000 in the account (beginning daily balance), any purchase made during that day receives a 2% rebate. In addition, and it appears rather randomly, they offer 5% back on certain items at certain times (limited to $500 annually). For example, on July 20, PerkStreet announced that in honor of National Junk Food Day on July 21, you could get 5% back on fast food purchases. I'm not going to go into why I think even playfully encouraging fast food eating is an ethically questionable thing (although they did include some healthful tips in the blog post), but I will note that this is a 1-day teaser rate that PerkStreet can basically toss out on a whim to keep you hooked into their card usage. You never know when it's going to happen or if it's going to happen in an area of interest to you so you have to pay attention all the time. In psychology we call that variable ratio reinforcement, the same thing thing they use to keep gamblers hooked. Let's forget the ethics for a minute and get down to dollars. Read more
Best Answers to Kid’s Money Questions
This week, the New York Times Money section has been sharing a list of some of the toughest money questions a child can ask his/her parent. I’ve been intrigued with this discussion and thought it might be helpful to have one resource that not only lays out these questions but also looks at some of the best answers. Mind you, “best” is a subjective term, but these are the answers that I found most thoughtful and thought-provoking. So, without further adieu, let’s take on some tough money questions. Read more
MicroVentures Review
As most of my readers know, I have a strong interest in peer to peer lending. I was an active lender on Prosper for a couple of years before realizing the wide difference between Prosper’s actual default rates versus what was being reported. I also have a fascination with one day becoming a venture capitalist and getting involved in private equity. I’m just a few 000′s added to my net worth away. So I was very excited to see a merger of these two worlds when reading a recent article in Entrepreneur magazine about a new business called MicroVentures. Microventures is seeking to establish a peer to peer investing platform that bring investors and businesses together. Read more
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