A Few Financial Pointers

I've just learned a few things lately that I thought I would take a moment to share with all of you. Hopefully this knowledge will be a benefit.

1. Tax Refund Reality Check: A big tax refund is not necessarily a good thing. Why? Because all you're actually getting back is your own money that the government has kept from you and put to work for them during the past year. Your objective should be to have almost no tax return, or even to owe a little bit. That means that you've had a little extra of the "government's money" working for you for the past year. If you consistently get a big tax return, you need to fill out a new W4 and give it to your employer so that the Man will stop withholding more than his fair share of your money from your paycheck each month. (This is a bit more complicated for self-employed people, but for regular working Joes, this is a word to the wise).

2. Sneaky Credit Calculations: What amount of balance do credit card companies use to calculate the finance charge they bill you? Is the the $200 balance that you carried over from the previous month? Is it the $300 you charged since your last statement? Or is it both? If you were the credit card company, which would you choose? That's right, both! Mitzi and I carried a $400+ balance on our lowest interest credit card last month and I had already calculated, based on our card's interest rate, how much we were going to be out in finance charges. Much to my surprise, when I checked our statement to see how much they charged me, it was $8 in stead of the $3 I had carefully calculated. I called them to ask "What gives?" They told me that not only do they charge you on the amount you failed to pay off the previous month (which would only make sense; I mean, charging someone late fees on the amount that they actually paid late), but they also charge you on whatever else you put on the card in the mean time (regardless of whether you were planning on paying that amount off on time). What a racket. Anyway, be aware of this when considering how much you dare leave from one month to the next. Even if it's only $1, if you spend $1 or $5000 the following month, they'll go ahead and charge you interest on that money too, whether you pay it off in full or not. Sneaky buggers.

3. Falling Interest Rates: My wonderful high-yield ING savings account has quietly dropped it's interest rate from a hearty 4.5% to a lackluster 3.4% in the last few months. This information was buried nicely in my online activity statement amongst my transfers in and transfers out, as well as my interest payments. Apparently this has happened all over the place, what with the housing crunch, credit crunch, fed rate cuts, and whatever else affects how much interest banks are willing to pay you. My Schwab checking account that used to pay me 4.25% is now down to 3.1%. Consequently, I swung by Bankrate.com to see if anyone is still offering a savings account at a rate higher than 5% and found only one. Needless to say, I opened up an account and am transferring the majority of my funds over to get in on the 5.15% rate being offered by OneUnited Bank. However, I plan on keeping a close eye on the rate, and if they start to dip, I'm taking my little, green employees to work more profitable fields.