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Archive for April 2013

Should optimists avoid credit cards?

Published 4/26/13

Should optimists avoid credit cards? By Peter Andrew

I like optimists. Who doesn't? Optimism is one of America's defining national characteristics, and was an essential part of this country's rise to greatness. But some academic studies suggest that people with too rosy an outlook can get themselves into trouble, especially financially, and can-do can quickly turn into couldn't-do.

The trouble with optimism

Of course, it's not just Americans who can find their optimism tipping over into overconfidence or even self-delusion. Last year, Australian researchers uncovered similar traits in their compatriots. Unusually optimistic subjects in their trials tended to work fewer hours, have shorter planning horizons and fail to clear their credit card balances in full each month.

But there's plenty of that here too. A 2005 Duke University study, Optimism and Economic Choice, found a similar correlation in the U.S. And another, published in the Journal of Economic Psychology in 2007, indicated that the overoptimistic often make poor choices when choosing a new credit card.

For example, those who usually roll forward significant balances might seek out the best credit card reward programs when their rational, optimal choice would have been finding the lowest APRs. Presumably, they kidded themselves that their lives would change: Their income would grow, they'd win the lottery, or they'd magically alter their patterns of behavior and start zeroing their balances each month.

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Should you switch to an online-only bank?

Published 4/24/13

Should you switch to an online-only bank? By Jennifer Goforth Gregory

Many of us bank online today without a second thought. I use online bill pay to handle the electric bill each month, and regularly check my accounts and transfer funds without leaving my house. And while I haven't accessed my bank account from my mobile phone, according to a recent study from the Federal Reserve, 21 percent of mobile phone users have accessed their accounts through mobile applications in the last year.

But when my husband recently suggested moving our funds to an online-only bank account, I was a little surprised. Each year we sit together and review the rates and terms on all our accounts to make sure we are getting the best deal possible. While looking at the information, my husband pointed out that our credit union offered an online account with a higher interest rate than we were currently earning and much lower fees.

But when I looked at the fine print, I realized that this account would not grant us free access to our local branch and would require us to give up our checkbook. Not all online-only banks require you to give up your checkbook -- many now offer check-writing privileges just like an ordinary bank -- but that was the deal with this particular account.

Because we were already comfortable using online banking, our main concern was what we would lose in services and convenience by changing accounts. Here are three key questions that we asked ourselves when trying to make the decision.

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3 tips for negotiating better credit card terms

Published 4/8/13

3 tips for negotiating better credit card terms By Justin Boyle

A friend of mine recently sat me down and told me that she was in a dismal, one-sided relationship with her credit provider. She had been a responsible customer, never missing a payment and never maxing out her limit, but the terms of her contract hadn't changed since college and she didn't feel like she could talk to them about it.

Luckily for her (and for all of us), not only is it possible to reason with credit companies, but there are proven pathways to the raised limit or lowered rate that you know you've earned. By arming yourself with a few key pieces of information, you can gently but firmly encourage your issuer to hear what you have to say.

1. Know who to talk to

First of all, most companies put customers through an automated phone tree for routine services. You're not going to get anywhere presenting your reasoned negotiations to the robot that answers your call, so get out of the tree as soon as you can (this is often achieved by mashing the 0 key until you're asked to hold for an operator).

Even when you get a human voice on the phone, you're still not all the way to your destination.

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