Archive for August, 2009
If you’re reading this site, you already know how important your credit scores can be. They’re essential to getting credit and a good score is a prerequisite for the best interest rates.
Internet-based credit report monitoring and improvement services aren’t in short supply. If you’ve made the smart decision to find out what your scores look like and to take efforts to improve and protect them, you can choose from many options.
You can go to the site that advertises with a band of 20-somethings who serve up catchy jingles. You can use the service that Ben Stein promotes (note that questions about the quality of this option cost Ferris Buehler’s favorite teacher a regular gig with the New York Times), or you can roll the dice with literallly scores of other sites promising to get you the data and to show you how to improve your scores.
In this extremely crowded arena, one site appears to be separating itself from the pack. A site called myFICO.com has a nice range of products available to those who are ready to smartly deal with their credit and credit scores. It may not have the mindworm musical commercials, but it does have what most people really need–solid information and guidance at reasonable prices.
WHAT DOES myFICO OFFER?
The myFICO.com site advertises four different product options–all of which come with free credit reports for members. They’ve also released a new FREE service for those with an interest in government mortgage relief.
SCORE WATCH: Score Watch is the least expensive product on the myFICO option list. This is an alert service. For just a few dollars per month, it will monitor your credit scores and reports, providing you instant notifications. This is a good way to sense whether the changes you’re making in life and money management are having a postive effect. It’s also a nice protection against unauthorized uses of your credit and/or identity.
Score Watch customers receive two reports from Equifax per year, along with reports detailing their content and menaing. Currently, myFICO is providing a 30-day free trial of Score Watch. You get a credit report, credit score and FICO score with some potentially valuable extras.
SCORE STANDARD: This is an option that has no recurring billing, provides essential information and comes in for less than $20. Score Standard allows myFICO customers to get their hands on either a TransUnion or Equifax credit score and report. This is the ideal option for those who’ve already requested their free annual credit report but who need to check reports or numbers again before being eligible for another free copy.
FICO Standard also comes with a simulator designed to show you how various actions and/or improvements may impact your credit score. This is a great way to get an idea of how you can improve your scores.
SUZE ORMAN’S FICO KIT PLATINUM: While the other sites rely on singers, myFICO has a wildly popular and highly-regarded financial self-help expert on board. Best-selling author and television host Suze Orman does more than lend her name to the company, she’s also involved with one of their more interesting and full-featured products. Suze Orman’s FICO Kit Platinum gives myFICO clients a full range of information and tools for optimal credit managment.
Of course, you get your credit scores and reports–including full explanations of their contents. That essential core information is supplemented with a range of additional tools, all of which are easily accessible online via any Internet-connected computer.
The FICO Kit Action Planner marches users through a step-by-step system to improve credit scores.
- Debt Eliminator shows users how to get out from under their credit card bills by creating a personalized debt analysis and payment plan.
- A bill reminder system will email you to remind you of approaching bills, helping you to break the “late pay habit”, which can wreak havoc on credit scores.
- The InfoVault allows you to save critical information in a secure online location.
- Online Home and Car Coaching gives you a chance to find out what kind of financing and rates you may quality for BEFORE you start shopping for a loan. The myFICO site claims this “could save you thousands of dollars in interest payments over the life of your loan”.
- The FICO Simulator will show you how different actions may influence your credit score.
- Error detection services will highlight potential mistakes in your credit reports and will help you to fix them.
FICO QUARTERLY MONITORING: Knowing your credit score is good. Knowing it and how to improve it is even better. Knowing it, having a plan to improve it and checking it on a consistent schedule is ideal. That’s the idea behind this myFICO product. You get the scores and reports on a quarterly basis, allowing you to track your progress as you make an effort to iprove your scores.
This option includes a number of interesting extras including identity theft insurance and is available for less than five bucks per month. You can also access the free FICO credit score estimator.
MORTGAGE RELIEF. You can use myFICO.com to get FICO scores and mortgage relief information with this new, FREE, option. The Mortgage Relief Online program is sponsored by MyFICO, the Homeownership Preservation Foundation and Money Management International. It’s designed as a way to help individual homeowners learn more about, and to determine their likely eligibility for the US Treasury’s “Making Home Affordable Program”. This government program was designed with the objective of aiding as many as nine million homeowners who may be in difficult straits to avoid foreclosure.
According to MyFICO, the option works like this:
Simply enter a few details about your mortgage and your financial situation and we will instantly tell you if you appear to be eligible for mortgage relief under the Making Home Affordable plan. If you appear to be eligible for a loan modification, you will be connected with a professional counselor from Money Management International who will guide you through the loan modification process.
SUPPORT FOR myFICO
While other online credit reports are consistently lambasted by media sources and consumers as overpriced and unnecessary, myFICO.com continues to receive positive attention.
The New York Times, LA Times, and Wall Street Journal have all reported favorably about myFICO.com and its mortgage relief option, as have many other well-respected newspapers. According to myFICO, The Chicago Tribune has stated, “The best spot I’ve found on the Internet to check my credit is www.myfico.com.”
A quick check of completely independent reviews of the services revealed that most customers are happy with what they get. They get the reports, the scores and the added services without incident. The only complaints you’re likely to find from seemingly reasonable users involve the ease with which one can cancel subscription services. Some feel as though myFICO could be slightly faster and more responsive in this regard.
STRAIGHT FROM THE HORSE’S MOUTH
The quality of service and rave reviews for myFICO aren’t suprising when you understand who’s behind the site and its products. While many credit report services are owned by elements lacking a long involvement in the credit industry and are hoping to capitalize on consumer fears during these trying economic times, myFICO stands out for its direct connection to those who know the most about the issues.
You see, myFICO is part of Fair Isaac’s consumer division. Fair Isaac is the very company that invented the FICO score. Fair Isaac has been providing these services to consumers since 2001 and have sold over ten MILLION socres since that time. In other words, when you deal with myFICO.com, you’re getting information, scores and direction straight from the horse’s mouth instead of relying on a third party who may or may not have the background or experience necessary to handle things correctly.
While myFICO is a for-profit wing of Fair Isaac, it does offer valuable free information, as well. In addition to the aforementioned mortgage relief tool, the site also features a Credit Education center that offers free content covering issues related to credit scores, how they’re determined, what makes them go and and down, and how to best manage credit. There’s even information targeting new American citizens, giving them a primer on our credit system. While the free information may be simplistic for those with experience and strong interest in matters of personal finance, those just getting started in efforts to improve their situations may find it quite valuable.
HSBC Direct entered the online banking world in 2005. Since then, they’ve become one of the most popular providers of high-yield savings accounts. The Executive VP of HSBC Direct, Kevin Martin, describes the company as being “committed to helping [HSBC] customers to get the most from their money”. He states that “[W]e constantly look for ways to reward them.”
That dedication to a quality product, combined with HSBC’s reputation as one of the oldest and most firmly established banks in the world has been responsible for “cementing its status as one of the most popular and consistent big-name marketers of online only savings accounts with very appealing interest rate deals.”
A FREQUENTLY (AND STRONGLY) RECOMMENDED OPTION
HSBC Direct isn’t a fly-by-night way to set up a savings account. The bank has been regularly recognized for the quality of its options.
In 2007, Kiplinger ranked HSBC as the “best overall online savings account,” citing its many features and the high interest rates paid to depositors.”
A Kiplinger endorsement should be a sufficient reason to have faith in the institution and quality of its services. With that big-name testimonial in place, it comes as no surprise that many others have added their voices to the chorus of support the bank receives. A review from 2008 put HSBC among the top three online banking options. Jim Wang ranked HSBC in the top five, as well.
SAVINGS ACCOUNTS WITH FLEXIBILITY
Most of us think of savings accounts as little more than a place in which we can park a little extra money that we’d like to keep liquid. Interest rates generally range from low to nonexistent. Accounts offer very little flexibility. Savings accounts, in most cases, are the most boring financial instrument in the world. HSBC Direct, however, has re-envisioned the idea of a savings account, creating a more feature-rich account.
HSBC Direct savings account holders experience tremendous flexibility in addition to everything one would generally expect to get from a savings account.
- ATM. Savings accounts come with ATM cards that can be used all around the world. This allows customers to handle their banking and to make withdrawals with ease.
- FEE FREEDOM. Unlike many online savings account options, HSBC Direct does not charge its customers any fees for accounts.
- NO MINIMUM. There’s no minimum balance requirement. You can open an account for as little as $1 and you’re not required to keep more than a penny in the account after that.
- GOOD RATES. Like other online banking options, HSBC Direct offers interest rates unrivaled by your corner bank.
- INSURANCE. All accounts are FDIC insured up to $100,000. These are legitimate accounts with a legitimate bank and standard federal protections.
For a long time, HSBC attracted customers with an impressive 6% rate of return (APY) on its accounts. While that was a promotional rate that later dipped, it was enough to get a great deal of attention and is probably one reason for the bank’s rapid climb up the popularity ladder.
You won’t get 6% today. That rate is long gone, a casualty of the Fed’s actions on interest rates and the banks negative experience in the wake of the subprime mortgage crisis and attendant financial crisis. Like other major online account providers, including Ing, HSBC Direct has reduced its interest rates.
Currently, the APY sits at 3%. While 3% isn’t the kind of ROI we’d like to help give our retirement money a boost, it’s still much more than what most brick and mortar banks can even think of providing. It’s also more than what you’ll find from a variety of competitors, too.
GETTING AN ACCOUNT
Signing up for an HSBC account isn’t significantly different than signing up for any other online savings accounts. You complete an online application and later “seal the deal” with some traditional paperwork. In order to move through the process, you will need information about your other accounts and the standard material you’d expect to produce when opening any other bank account.
HSBC does not appear to require any particular level of creditworthiness to establish an account. The do conduct a credit check, but it’s of the “soft” variety and is used exclusively to confirm the identity of the account holder.
People who’ve set up accounts with HSBC report that thee process worked ran smoothly and that the bank quickly posted initial deposits.
If you’re interested in establishing your own account with HSBC Direct, you can access the online application by clicking on this link.
Most of us use savings accounts. They may not be the centerpiece of our personal finance strategy, but they are an element of how we handle our money. Many of us are currently relying on checking accounts that offer us little more than an old-fashioned passbook and a few cents worth of interest earnings per year.
HSBC Direct provides a compelling alternative. You can secure all of the benefits traditionally associated with brick and mortar bank offerings while experiencing a higher level of overall functionality and a superior interest rate.
You’re going to maintain savings account. You should do it in a smart place and that’s exactly what HSBC Direct provides.
Gerber Life Insurance has been offering whole life coverage for children for over 40 years. The highly-reputable and well-financed company is probably the best known of all child life insurance providers and their Grow-Up Plan is something of a standard against which other policies are measured.
If you’re going to buy life insurance for your child, Gerber seems like an obvious choice. The real question, however, isn’t from whom to buy the policy. It’s whether you should buy ANY policy in the first place.
In the insurance world, there are few subjects of disagreement as pronounced as the child life insurance question. Opinions are split. While some view it as a wise investment others decry it as a waste of money. What’s the bottom line? Should you be calling the folks at Gerber immediately or should you save your dough?
THE CASE FOR INSURING A CHILD’S LIFE
The arguments in favor of life insurance for children are persuasive. Consider the following:
– Low costs
– Guaranteed future coverage
– Investment value
Cheap, cheap, cheap. The actual cost outlay associated with life insurance for children is low. While every dollar counts, this isn’t a budget-busting decision for most families. One could certainly argue that the peace of mind stemming from having a policy in place, in and of itself, is worth the expense associated with its purpose.
Future insurability. Children’s life insurance, including products like the Gerber Grow-Up Plan, allow the child to lock into whole life coverage at a low price and the insurance will remain in effect and available in the future–regardless of the child’s eventual medical circumstances. That doesn’t just apply to the tender years, either. The policy will still be in effect after the insured reaches the age of majority. Think about what that means. If the child develops a serious medical condition as an adult that would make life insurance cost-prohibitive or impossible to obtain, he or she would still have coverage in the form of the policy opened when he or she was young. This opportunity for guaranteed future insurability is a definite mark in favor of buying that policy for your little one.
Investment value. As noted, kids’ life insurance is a whole life product. That means that it does have investment value. One can also eventually borrow against the policy’s benefit. Many people have used whole life insurance, started during childhood, as a method of obtaining down payment money for a home or to defray the costs of a college education. Unlike term insurance, which is basically “rented coverage” with no lasting value beyond the designated term, whole life provides a secure investment vehicle for the insured.
ARGUMENTS AGAINST LIFE INSURANCE FOR CHILDREN
So, in light of those arguments, why do some people maintain that buying life insurance for a child is unnecessary or undesirable? They have a few arguments of their own–and a few of them are persuasive at face value. They include:
– Low risk of utilization
– Absence of at-risk income
– Investment inferiority
The policy probably won’t be used while the insured is a child. That’s a statistical reality. Fortunately, most of us do survive well into adulthood and the risk of death for a child is almost slight when you look at it in actuarial terms. This, critics argue, means that the premiums paid for coverage are, not considering potential investment value, wasted. Likewise, the number of adults unable to secure term life or other whole life coverage later in life is relatively small, statistically speaking. This, some argue, renders the “guaranteed future coverage” argument moot.
There’s no income to replace. Critics of Gerber and other child life insurance providers maintain that the primary function of life insurance is to protect income. Since children generally don’t bring home the bacon, they claim that insurance becomes an unnecessary expense.
It’s not an ideal investment. Borrowing against a policy isn’t “free money”, after all. You do pay interest on the funds. Additionally, the historic rate of return on whole life policies of these sorts has underperformed other popular investment options. Those who disagree with the idea of insuring a child’s life will often point out that the parents have other opportunities to earn more money at their disposal and that whole life isn’t a great option.
ANSWERING CRITICS OF CHILD LIFE INSURANCE
While criticisms of Gerber and other child life insurance products do have some prima facie appeal, they become far less persuasive when examined critically. Let’s look at the three aforementioned arguments against insuring your children a little more closely.
The “you won’t use it” argument isn’t all that persuasive, nor is the idea that there’s no real income to replace.
I’ve carried auto insurance for over 22 years and I’ve never personally needed it. Not once. Does that mean I should’ve been taking to the streets with nothing more than a rabbit’s foot in the glove box? Of course not. We insure ourselves and our loved ones against low-risk propositions every day. And before you discount the auto insurance parallel due to the higher statistical likelihood of a crash compared to a child’s death, consider the risk analysis involved in situations like these.
We’re talking about an event that will be costly on its face (funeral expenses, etc.) and that brings with it a huge emotional impact. The impact of a child’s death is so substantial that it warrants action in the face of even a reduced risk of need.
Critics of children’s life insurance seldom consider the emotional trauma associated with a child’s passing. It’s actually a very important consideration, however. Not because a cash payment will “make things feel better”, but because the emotional impact of the tragedy will undoubtedly have a financial repercussions. Critics fail to consider these.
If your child is sick before he or she passes away, how much work will you miss tending to his or her medical needs? How will your time away from work and constant rumination on the seriousness of the child’s condition impact your work performance or opportunities for advancement? If the unthinkable should happen, how much time away from work will be required? Will you be prepared or capable of returning to work before you begin to feel a financial squeeze? If your spouse works, what will the impact be on his or her work situation?
We live in a society where even many so-called middle class families are only a few paychecks removed from falling into poverty or extreme financial hardship. Under those circumstances, it makes no sense to ignore the REAL financial risk associated with a child’s passing. It’s amazing how infrequently you see even the strongest advocates of these policies explain this position.
Think in terms of solid risk analysis when considering the issue of future insurability, too. Is it likely that your child will be unable to secure good coverage later? Of course not. If the risk was that high, the product couldn’t be that affordable. However, the seriousness of the impact associated with being unable to get coverage is substantial enough to justify the relatively small cash outlay associated with Gerber and other life insurance products for children.
The argument regarding the merits of whole life as an investment is, admittedly, slightly stronger. Historically, other investment opportunities have outperformed whole life. However, an examination of what has happened during the last few years demonstrates that putting one’s faith in traditionally stronger investments isn’t always the best idea. Look at your 401k balance and compare the number with where it was at a few years ago. If you’re like most Americans, you’ve witnessed a significant decline in the value of your investments.
While whole life insurance may not have the potential to create rags to riches stories, it does have a solid track record of producing quality returns and of being an almost completely safe investment opportunity. At times like these, the idea of trading fast cash potential for security makes a great deal of sense. Plus, the gap between earnings associated with other investment vehicles and whole life for kids usually doesn’t represent a huge chasm even during non-recessionary times. When one considers the other advantages of products like those offered by Gerber, the return is more than adequate.
A LIFE INSURANCE POLICY FOR YOUR CHILD
Now that we’ve established why purchasing a policy for a child makes so much sense, let’s examine Gerber’s most popular product, the Grow-Up Plan. This should give you a good idea of what a strong child’s life policy can look like.
- Benefit levels are variable. Parents can choose between $5K, $10K, $15K, $25K, $35K and $50K. Premiums start at as little as eleven cents per day and are locked in forever—they’ll never increase. That’s true even when the insured turns eighteen—even though the benefit level AUTOMATICALLY DOUBLES at that point, providing heftier levels of adult coverage without a price increase.
- Insured parties can also offer to increase their coverage levels as they age. They will have guaranteed continued coverage AND opportunities to “buy up” to higher benefit levels.
- As a whole life insurance offering, the Gerber plan does build cash value. According to the company, that cash value is worth 100% OR MORE of the sum of the premiums paid after just 25 years.
While the debate will undoubtedly rage on, it would appear as though purchasing life insurance for a child can make a great deal of sense—assuming one is purchasing a quality product from a solid vendor like Gerber Life Insurance who combines security and stability with solid policies.
Here are some Blog Carnivals that we participated in over the last week. Enjoy!
– Carnival of Personal Finance #213 (The New Zealand Edition) was hosted by Man vs Debt and you can find our post entitled The Average Cost of Groceries Per Person: Best Guesses listed there.
– Money Hacks Carnival #73 (Working for the Weekend Edition) was hosted by Money Beagle and you can find our post entitled Save Money on Your Coffee Addiction: Buy a Starbuck’s Gift Card listed there.
- Tammy: After being injured during a robbery then cancer I fell a month behind but called them, sent documents and...
- Ana: How on earth are people spending so little on food? My husband and I spend an average of $1000 on groceries. It...
- Bill Johnston: For Mac I strongly recommend to use iBank or Quicken with Numeric Notes.
- Will: I started rolling my own and found that the technology is a lot better than when I was a lot younger. The...
- James: I pay 8$ for two big loads+ free drying. I do laundry once a month or twice. my sisters bill went up by 150$...
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