Anachostic

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Tag Archives: finance

Innocent Villains

It’s in the news today that Toys R Us executives are going to be granted bonuses, despite the company entering bankruptcy.  It was a little over a year ago that the same thing happened with Sports Authority.  In the case of Sports Authority, there were going to be bonuses, then a judge said no, then another judge said yes.  There was lots of public outrage.  Why should executives get bonuses for a failed company, especially when all the floor workers just lost their jobs?

I’m going to take an unpopular position and say that the bonuses should be awarded.  I can’t address the loss of employment for the rank and file workers.  I am also very sensitive to income inequality and I would hope that somehow we can curb outrageous executive pay in the future.  The only thing I am focused on is putting the blame where it belongs.  And that blame is actually not on the executives.  The fault is higher up than them.

Both Toys R Us and Sports Authority are victims of leveraged buyouts.  You can expect that Guitar Center will soon be joining them, because Guitar Center has the exact same situation stemming from its own leveraged buyout.  This article has a very succinct description of how the bought-out company is doomed after a leveraged buyout.

Private equity firms like Bain take mid-sized companies and pump them full of debt with the express intent of making them industry-dominating competitors, selling them to the stock market as a candidate for massive growth, and cashing in. To make this possible, private equity’s stake in the company is usually represented by “payment in kind” (PIK) notes, a type of bond that pays crushing interest – in this case 14.09% – but requires no cash outlay until the bond’s maturity. So that 14.09% is accruing, but it isn’t due for years, ideally after the company has been sold to what is often charmingly referred to as “the dumb money,” the retail investors who buy a stock without knowing the company’s true financial position. Before any of the company’s real problems are revealed, the private equity firm receives its payback in the form of stock, since PIK notes can be paid back in any medium of exchange. If all goes to plan, the stock price shoots up after the IPO and the PE firm makes a tidy profit – all in about three to five years.

The end result is that the company has enough money to pay the daily bills, but has no reserve cash to pay off this growing obligation.  It’s a lot like interest-only mortgages back before the last housing crisis.

But back to the executives.  These guys didn’t write up the buyout.  They weren’t able to stop it from happening.  When the buyout did go through, they kept the machine running.  They kept the company viable, if not spectacularly profitable.

So, how much at fault are they?  They did their job and fulfilled the duties in their job description to receive their full compensation package, which would include defined bonuses.  You can very easily protest, “They didn’t earn it!  The company went bankrupt!”  The company didn’t go bankrupt through their actions.  That card was cast long ago by people much higher than them.  These executive’s only fault was hitching their wagon to a falling star.

My point in taking this controversial stand is that the blame needs to go where it deserves.  It’s not with the executives, it’s with the companies that are executing leveraged buyouts and destroying perfectly valid corporations for their own gain.

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Slow Bleed

Do you have a credit card?  I’ll bet you do.  Do you use that credit card at restaurants?  You probably do.  Do you check your receipts against your credit card statement?  Well…  Do you even take your receipt when you leave?

Why go through all that hassle?  When I explain that I log every receipt into MS Money, then download my transactions from my CC company and match them all up, you might be thinking it’s a colossal waste of time.  Maybe you’d relent a little if I explained that I can track spending habits and trends.  I can see that I’ve been spending more on gas.  Are gas prices going up or am I driving more or is my car in need of a major tune up?  I’m spending more on food.  Is it because I’m eating more expensive meals, or is it something a little more sinister?

It could be something more sinister, and you could be subject to it too.  You may never even know it’s happening.  And the culprits are banking on it.  It’s illegal.  It’s fraud.  It’s theft.  Do you want to be on the receiving end of that?  And yet, at the same time, when it happens to you, you might just react with a shrug.  Meh.

This is something that has happened to me about a half-dozen times, and I used to shrug it off, but not anymore.  What I am talking about is credit card charge modifications, post-sale.  When you go to a restaurant, you are presented with a bill.  You give your credit card and then are presented with a charge slip to fill in a tip, total, and sign.  Then, the tip is added to the original sale amount and the transaction is finalized.  Does this finalization happen in your sight?  No, it does not.  Can you be assured that the tip entered is what you wrote on the paper charge slip?  No, you can not.  Can you verify that the tip entered matches what you wrote?  Only if you keep your receipt.

Shitty employees are getting wise to the fact that many people don’t keep their receipt and even fewer verify the charge later.  So, these assholes simply add a dollar to the tip.  It’s such a small amount that few people would notice it and those that would notice might not be inclined to make a fuss about it.  These dollars add up for them. 

The first couple of times it happened to me, I was annoyed, but didn’t think complaining was worth the hassle.  Then it happened at a place I trusted and the feeling of betrayal compelled me to act.  And now, I’m not ever letting it happen again.  You want to steal a dollar from me, I hope you get fucking fired for theft.  Because I know I’m not your only mark.  Beware the victim mentality.  You might think (and I had moments, too) that your tip was modified because it was an unfair tip amount.  You should have tipped more, and you should feel bad for that.  You should consider the extra amount an education in proper tipping etiquette.  No.  Fuck that.  It is your choice entirely on how much to tip.  No one else has a right to make that choice for you or to demand that you give a different amount.

I just caught another instance today.  A local pizza place that I go to weekly put a dollar on my tip for a dine-in order.  Tipping for dine-in and carry-out orders (and the proliferation of tip begging in general) is for another post, but suffice to say, I don’t tip for counter service.  So, having my transaction differ at all at this establishment is highly suspicious.  And tonight, I will handle it.  Again, it is a major breach of trust for a place I’ve been visiting for over 10 years to do that to me.  It’s infuriating.

You should not let it happen to you.  It’s a major change in habit if you haven’t done it before, but you need to do it.  At a minimum, you can take a picture of your receipt and check it later.  But ideally, you should begin tracking your transactions.  MS Money Sunset Edition can be used without registration and is freely available from Microsoft.  Don’t feel like you have to pay for Quicken every year for the same basic functionality.  Get started now and stop the bleeding.

Farewell Half.com / Dream On

Yesterday, I learned half.com is closing.  I had one day of notice, essentially.  I had just purchased two things the previous day.  How did I not know this beforehand?

Today, I’m searching for news stories about the closure.  There aren’t any stories of significance.  Maybe 2 or 3 in second-tier tech news sites.  Then there’s a few stories about 6 months ago when the announcement was first made.  Included in those stories is a posting about someone who only found news of the closing in the help section of half.com, and no contacts at half or eBay would confirm the closing.  How weird.  Supposedly, the sellers were notified of the closing, but for whatever reason, the users and buyers were not.

So, the expected plan is for everyone to move their listings to eBay.  But as far as I can tell, eBay is not designed for the sale of media.  The whole design of half.com was that you searched for media, then you see who is selling it.  On Ebay, you would search for media and you get a bunch of listings selling that media.  Every listing would be created by each person, so there would be little to no consistency between them.  Amazon is better suited for sales of that nature, since they have a product, then they have sellers of that product.  It’s the same way that Amazon is not well suited to sell things that eBay excels at, like collectables and one-off unique items.

At some point in the future (not near or far future, somewhere in-between), I was planning on opening an online presence to sell my excess CDs.  Half.com was the frontrunner.  Now I have to choose between eBay and Amazon.  Or maybe Discogs, but I think the buyers would be more discerning there, which would require more effort.

Well, in the meantime, I have plenty enough going on to not worry so much about it, but it is sad to see one of the few physical media marketplaces close down.  You know what would be cool?  What if… Barnes and Noble, who isn’t doing all that well themselves, resurrected the Borders brand (which they bought in bankruptcy court) and re-launched it as a used media outlet. (I hate the word outlet in this instance, but juggernaut is a word that has to be earned).  I’m going to call this idea “Boarders” to prevent any confusion or lawsuits.

So here’s how I would see it operating.  We have to recognize that used media, whether it be books, CDs, DVDs, VHS, or cassette, has a low value – except to collectors.  So, understanding this, margins will be low across the board, no one is going to make a real killing at this.

So you’d start with an online store, structured mostly like half.com.  That’s the cheapest way to get things started.  People make their listings, sell their products and life goes on.  Admittedly, getting the momentum started so it looks like you have lots of items will be difficult.  To help in this, the tools to create listings will have to be top-notch.  Something like having a pre-populated database of UPC codes with product descriptions and stock photos.  Maybe have automated imports of structured files to batch add items.

That’s all well and good, but it’s just another vanilla ecommerce platform.  How’s that going to be an Amazon?  So let’s go to phase two.  Amazon is already at phase two, so nothing earth-shattering here.  Phase two is having Boarders warehouse the inventory.  The sellers use the site’s control panel to create a shipment of product to the Boarders warehouse.  This submision includes the item and the price at which they want to sell the product.  Then they box everything up with a printed submission sheet and send it.

When the shipment arrives, the warehouse worker scans the code on the submission sheet, then begins scanning barcodes on the incoming products.  The items get added to the sellers listings immediately.  I’m no logistics expert, but I’d assume the warehouse manages the inventory in the most efficient way.  The warehouse also gets notified when items sell and would ship them out efficiently as well.

I’m not going to downplay the expense of shipping and processing hundreds of books or CDs or DVDs for both the seller and Boarders.  That’s something that would need to be overcome by the beancounters.

Since we’re still having fun with this, let’s move on to phase three.  Phase three is physical storefront.  These could be built into existing B&N stores or could be standalone.  Stuff that was sent to the warehouses is bundled up and sent to various locations.  Why would the seller care where the product actually is?  All brick and mortar stores become warehouses.

Since these are low-margin sales, you need low-margin maintenance.  You also need to know your potential customers.  So for CDs and DVDs, what is needed is a clamshell container that holds the CD/DVD case and the disc separate, so they can both be inspected for condition without needing an associate to assist.  I would have to think about how books would be handled because buyers would want to see inside the book.  But anyway, back to disc-based media.  You also don’t want to have cashiers deal with opening clamshells and ringing customers up, so you would have a self-checkout machine that accepts the clamshell in a slot, scans the barcode, completes the sale, then releases the unlocked clamshells for the customer to remove and bag up their purchases.  The money goes off to the original seller and life goes on.

It’s just kind of a pipe dream.  Realistically, there isn’t enough potential profit to engineer a checkout machine like that, plus manufacture tens of thousands of cases to hold media that is selling for $1.00 or so.  Not to mention the cost of processing other people’s inventory and shipping it to storefronts.

Or maybe there is, somewhere.  Or maybe, there can exists a company that makes enough money to survive, and doesn’t have to make its owner a multi-billionaire.

May The Odds Be Forever In Your Favor

I ran across a letter recently that was addressed to the participants of a company’s retirement plan.  From what I gathered, it seemed like a pension plan.  You know, those old-fashioned things where you work X number of years and they will pay you Y dollars for the rest of your life?  Well, if you haven’t paid attention to that, (and if you haven’t, that’s excusable, because pensions are pretty rare anymore) you would find that companies are doing anything they can to avoid having to pay out those Y dollars.

I read a book a while ago that explained the multiple schemes that were being performed to avoid any sort of pension plan funding.  That book is Retirement Heist.  It’s a good book and you should read it.  This letter to pensioners was just an illustration of those exact cons, and the letter was selling it like it was the greatest thing ever.

Here’s the gist of the letter.  Because of two laws, and I need to write these laws out because they are totally insane, the Moving Ahead For Progress In The 21st Century Act and the Highway And Transportation Funding Act of 2014 (blahhhh), pension plans are allowed to calculate their numbers differently.  Differently in that they can make the badness go away.

So, in this example, before the laws, in 2016, the pension plan was short $8.3M dollars to cover the costs of the members’ retirement.  After the laws?  $0.  Percent funded before the law?  86%  After the law? 104%  The law completely fixed the problem of not having enough money!  Amazing!!!

How was this done?  The projection of how much money would be needed was based on interest rates for the last two years.  Why are they looking at interest rates?  Because that’s how the fund stays solvent while money is being withdrawn, through investments with interest.  If the plan doesn’t make enough money in interest, the corporation has to pitch in extra money to keep it going.  Hmmmmmm.

If you have a savings account in the last couple of years, you know that you’re not making any money off of it.  And a pension fund wouldn’t be making any money either.  So because the fund is not sustaining itself from its investments, that means the corporation would have to supplement it with additional money.  Corporations everywhere collectively said, “Fuck that” and instead spent the money on lobbyists to change the laws. 

They succeeded.  Now, instead of considering that interest rates in the future will be the average of two years, now it’s going to be the average of 25 years.  25 fucking years.  Fortunately that range includes the late 90’s and early 00’s, where interest rates were around 5%, instead of 0.1%

So, do you get it?  They refuse to accommodate current market conditions and instead want to pretend the future is going to be as great as the past.  But here’s the thing, if these corporations would just fucking suck it up and pay into their pension funds now, like they are supposed to, when things get awesome in the future like they CHANGED THE LAW to reflect, they wouldn’t have to pay anything then, because the funds would be fully funded or even overfunded.

Now the infuriating part.  This letter says all of this.  It doesn’t hide anything.  They can tell the truth because a) lots of people won’t understand what just happened, and b) it’s the law; it’s all perfectly legal now.

Whole-Life Hatred

If you follow any financial pundits, eventually you will hear them say that whole-life insurance is a bad choice, how it is a poor “investment”, and sometimes, how you’d be stupid to buy it.  Well, I was just reviewing my numbers and I’m not sure I understand what all the hatred is about.

First off, you need to think about why you have life insurance.  The purpose of life insurance is to make things easier on the ones you leave behind.  Primarily, in my case, it is to pay off my mortgage.  Whoever I leave behind should not have to be saddled with a mortgage payment when that was my responsibility.  Other assets like cars could be repossessed, so what?  My credit score doesn’t matter anymore when I’m dead.  The secondary purpose of insurance is to replace whatever income I was contributing to the family until whoever is left behind can get back on their feet.

So these two reasons are enough to have life insurance unless you are a total loner and have nothing you want to pass on to someone else.  But that’s only good when you’re dead.  What if you keep living?

If you don’t know anything about life insurance, here’s some quick info.  You typically buy a “term life” policy, which is effective for a period of time (a “term”).  If you buy a Term 30 policy, it is active for 30 years.  Buying it today, the policy will expire in 2046.  If you die in 2047, your beneficiary gets nothing.  But, by that time, I would expect your mortgage would be paid off so there’s no burden on your heirs.

Whole-life policies have no expiration.  As long as you keep paying the premium, you get the benefits.  However, they are vastly more expensive (I’ll share my numbers in a bit).  Additionally, whole-life policies have a cash value, which can be accessed as needed, either through an expensive loan or as a retirement account when/if you get to retirement age.

That’s the part that finance people hate.  Whole-life is so expensive, but your cash value is locked up and there’s little way to access that money without spending a lot in interest or waiting until you’re old.  They call it a savings account for people who can’t discipline themselves to save.  It’s almost like a 401k, but without the tax advantages.

Whole-life insurance is a hard sell and brokers will push on you pretty hard to sell it.  As such, there’s some salesman-ish stuff that gets promised.  For example, I was sold on the idea that the dividends from my whole-life policy would eventually pay the premiums for my policy, then I’d basically have free life insurance.  Awesome, huh?  Well, it will happen, eventually.  I just have to be really patient.

Ok, let’s look at some real numbers.  I have $250k in life insurance.  $100k is in a Term 20 policy and $150k is in a Whole-life.  I pay $118/mo for the whole-life and $16/mo for the term.  Now do you see why people freak out about whole life?  It’s almost 10x more a month. 

There’s not much to say about the term policy.  It has no cash value and expires in 2027.  In 2028, I will only have $150k in life insurance.  Hmmm, that sounds like a good thing.  I’m not dropping to zero, and I don’t have to worry about qualifying for a new Term policy at such an old age.  It almost sounds like a “plan”.

So how about this Whole-life policy?  Well, since 2007, the cash value has grown to $9500.  The value is growing at about $1300/yr.  But wait, I’m paying a little over $1400/yr in premiums.  So my net cost is about $100/yr, which is actually almost half the cost of my term policy.

So, what am I glossing over?  For one, the $1300 in cash value increase hasn’t always been that high.  Four years ago it was $1200, and since 2007, the average rise has been $1055/yr.  But, the value should continue to climb through the magic of compounding.  But, I just want to say that I’ve got 9 years into this, and you wouldn’t see numbers like these right off the bat.

You could argue that I’ve spent $12,771 in premiums to gain $9500 in cash value.  That sounds horrible.  But that also works out to getting a 150k life insurance policy for $363/yr or $30/mo.  And that average cost is over 9 years.  That number is going drop over time as the cash value increases relative to my constant premium payments.

One more number to give consideration to.  After 9 years, my annual dividend is $781.  My annual premium is $1400.  I’m a little over halfway to the point where my dividends will pay for my premiums.  That’s going to coincide well with the expiration of my Term policy (which would also reduce my premium by almost $200/yr).

Let’s recap the whole scenario.  I have $250k in life insurance now, when I am most vulnerable with the most mortgage debt and the most to lose if I die.  If I had a family, that money would be needed to pay bills and help replace my income.  11 years from now, my Term life expires.  I have less life insurance coverage, but I also have less financial burden.  If I had a family, they would be grown and on their own by then.  The insurance would just pay my reduced debts.  I would also have $200/yr less in expenses because the policy expired.  Looking even further ahead, when I don’t have any reason to have life insurance because all my bills are paid, then I can start withdrawing money from my whole-life policy.  And guess what?  I still have the life insurance policy.  By then, my dividends will probably be paying my premiums, too, and I won’t have that $1400/yr expense anymore.

When you hear financial people trying to sell you on a “plan”, it can be hard to swallow all that information and difficult to see what the future will look like.  It was hard for me as well, but I took a leap of faith and now that I’m a significant way into the “plan”, I can see further ahead and understand that yes, it was a good choice.  Early on, it would have been easy to say, “I’m throwing away my money!” But like any investment, it takes time to grow.

Coming Soon, Housing Crisis 2.0

This guy I know, well, I know him because he’s the one who used to own my house, but anyway, he keeps me around to do computer work for him.  And I do it.  And I get compensated handsomely, despite me telling him I don’t really need the money.  Well, anyway, I was at his house the other night doing computer stuff and he and his GF were having a conversation in hushed tones.  But I was right there beside them, and I was the only other one in the room, so I don’t know exactly why they were talking like that.  Except, I kinda do.

But let me first say this about the guy.  He’s successful.  Quite so.  He runs his own business in a subset of an industry where there is little to no competition and he is sought out for that skill and expertise.  He’s down to earth, but at the same time, he’s got plenty of money to spend.  You name it, he’s got it.  Boat, Corvette, camper, truck, huge house on a large plot of land, huge TVs everywhere.  Just got a divorce and is swallowing multi-thousand dollar alimony payments without slowing down.  Has someone who runs over right away when he has a computer problem and pays them much more than necessary.

And he’s pretty business smart.  I mean, he has a very successful business of his own, but he also had the sense to buy the land his house was built on when it only had a couple of trailers on it.  He now rents out the trailers and that pays his mortgage and then some.  So, I guess you would say he’s a successful landlord as well.

But now, in whispers, he’s talking to his GF in front of me about an opportunity to become a house flipper.  He has heard of an opportunity to buy a distressed house and he thinks he can flip it without investing any time or effort and learn how to do it correctly.  He may be right or he may not be.  But when I hear, “I just want to be the middleman”, it kind of rubs me the wrong way.  Maybe he’s been watching too much Flip or Flop.  Maybe he’s been inspired from stories from his GF (who’s a property appraiser).  Maybe he’s just got too much cash lying around (what a problem to have). 

The thing is, experts say that when the rabble starts acting like experts, it’s time to make for the exits.  I’ve been reading stories about the increase of flipping and I’ve seen the HGTV shows that are promoting this more and more.  It doesn’t seem like it was that long ago that we were here.  But here we are.  I’m going to have to get myself prepared for this.

In Memoriam, In Advance

I stopped by my local pool place last weekend for some chlorine.  At the checkout they had a sign stating that as of August 1st, they will no long accept credit cards – cash or check only.  I asked for more clarification, no debit cards either.  So, I give them about 2 months to live.  Definitely won’t see 2017.

This business had recently tried implementing a “cash discount” and that didn’t seem to work, because I don’t see those signs anymore.  I’m very confused as to what their logic is.  Accepting a check is probably more risky than accepting a credit card.  No one carries $500 around with them to buy a chlorine generator.  It’s unlikely businesses would set up accounts with them unless they can do monthly invoicing and hold out the net 30 terms.

I thought this would make their online sales unworkable, but a quick check shows that their website cart uses PayPal.  This raises even more questions.  Why not get a PayPal mobile card reader and use the same account for store sales and online sales?

I mean, if they are getting hammered with CC swipe fees and TX charges, they need to renegotiate.  Or they need to look at their margins.  I’ve always known that the ones paying cash were getting shafted because a store’s prices had to assume that CC fees would be included.  I’m puzzled by this in the same way I’m puzzled that gas stations can survive with Cash/Credit pricing.

But in the end, my guess is they won’t be sticking around much longer.  Here’s the important thing.  They’ve made a decision they can’t easily take back.  They may get one more transaction out of each customer (they already got mine).  But after that, customers like me aren’t going to return.  If they realize their decision has now brought the business into a death spiral and they want to start accepting credit cards again, who’s going to know?  All the former customers have written the business off.  They could put a banner out front saying “We fucked up and we accept credit cards again!” but that’s some serious crow to eat.  Maybe the banner will be “Under New Ownership!” which might invite old customers back to see if the payment options have returned.

It’s sounds like another case of small-business America dying, but sometimes that death is caused by a self-inflicted injury.

Much Fun With Finance Institutions

A Libertarian view of the world is that government interferes with life too much.  Also, that government regulation costs businesses so much money to remain legal that the business can’t make any money. On one hand, I agree.  On the other hand, I say, you made this bed, now look at the fucking mess it is.

Here’s the thing.  New laws and new regulations don’t just appear out of thin air.  They are created in response to a case of abuse to prevent the abuse from happening in the future.  That’s it.  You look at every law and regulation and tell yourself, “That law exists to prevent someone from doing it.”

So now I’m in the process of refinancing my mortgage.  The last time I dealt with a mortgage was when I bought my home, 11 years ago.  You have heard the stories from that era, where you only needed a pulse to qualify for a mortgage.  That’s not the case any more.  So here’s what I have experienced with the new, modern, regulated mortgage industry. 

I initially spoke to a “mortgage consultant” who took my information, ran my credit and locked me in on a mortgage term and interest rate.  Then, I was handed off to a “mortgage processor”.  This person was unable to do the tasks of the consultant, and isn’t actually involved with the mortgage approval process.  They collect the documentation for the “mortgage underwriter”.  One of the documents is the house appraisal.  But the processor can’t call an appraiser directly.  They place an order with a company who will dispatch an appraiser.  After the documents are collected, they are submitted to someone in “pre-underwriting review” before they are submitted to the underwriter.  The pre-underwriting team can request additional documents for the processor to collect.

So, after you get through the mortgage consultant stage, you are charged a pretty significant application fee, which also includes the appraisal fee.  Then you have to fight your way through three boss levels to succeed in your goal of a mortgage.  And each one is going to be pickier than the rest.  I thought I was being proactive in providing a scan of the cleared check proving that I bought out my ex’s share of the property.  Nope.  That just raised red flags.  “Where did you get that money from?”  Are you fucking serious?  That’s pretty much none of your business.

But you know what?  It is their business.  And you know why?  Scammers.  God damn scammers.  Why would they ask that?  Well, what if I cashed out equity in another property to cut that check?  What if I cashed out my 401k for that money?  To you and me, that doesn’t matter.  It’s my money and I’ll use it however I want.  It doesn’t matter if that money came from equity (it’s my money), a 401k (it’s my money), or from saving from my paycheck (it’s my goddamn money).  But to them, the source of the money can be a liability.  And actually, the money is nothing more than a reduction in my net worth, which is something that is very important to them.  No bank wants an over-extended client struggling to pay his mortgage.

How did this come about?  Because scammers.  Because people scammed the system and got away with it.  And now everyone has to suffer and prove that they are not a scammer, too.  Because their actions resulted in a lot of regulation forcing a separation of concerns.  There is absolutely no way for collusion in this structure.  No one talks to the underwriter.  No one talks to the appraiser.  It’s like offering sacrifices to some pagan god and hoping for acceptance.

But It Was The Right Thing To Do

I’m sorry, Kaitlynn.

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Your ATM card is dead.  You left it in the Publix parking lot tonight.  There were no other cars around, so I couldn’t try and find you.  I had a thought to turn it in at the customer service counter and see if you would call and say you left your card there.  Instead, I called your bank.

Bank of America.  What a great bank.  In their phone queue, they ask for my (your) account number.  I enter it from the card.  They ask for the last four of your SSN.  Hell, I don’t know.  I said 0000.  I was wrong.  So they start to blow me off (a machine, saying eff off –  wonderful) and I say “operator” (that’s supposedly a trick to get to a human).  Sorry, their customer service center is closed and no one can help me (or you).  Instead of getting pissed off and hanging up, I got pissed off and listened to the rest of their message.  I could report a stolen or lost card by saying “lost card”.  Bingo!

The lady handling the situation was pleasant.  She said she would deactivate your card right away.  I said that deactivating a card could result in a huge hassle.  Can’t you call the person and tell them their card will be waiting at the Publix service desk?  Nope.  Who knows who’s seen and copied the information on that card already before I found it.  Fair enough.  Goodbye, ATM card.  Goodbye, scheduled online payments.  Goodbye, electronic means of buying cigarettes (my assumption).  Oh, and they’re not going to call you either and say your card was found.  They’ll just wait for you to notice it’s gone and report it missing.  Seriously, that’s what they said.

So, I’m sorry.  But you should be happy it ended like this instead of the alternative.  Also, you need to sign your card before using it.  It says right on it: “Not valid unless signed.”

Happy holidays.

A Comparison Of Credit Card Sites

Recently, I got a call from Capital One’s Fraud Department, which I always take immediately.  They told me my card was compromised and they would be sending me a new one right away.  Then they asked a bunch of questions, and that was that.

First off, I stayed on guard the entire call.  You need to always be aware that someone could be spoofing your bank to get information from you.  However, the call was legit and the operator asked me for nothing suspicious and only asked me to confirm recent purchases.  So, I had to start using other credit cards while my primary card was being replaced.  Right now, I don’t think it was a fraud issue on my card.  I think it was an excuse for them to issue me a new card with the new embedded chip.

But anyway, the point of this post is that after using Capital One exclusively for so long, I had a chance to see how my other cards compared.  There’s nothing to the actual use of the card – they’re all the same.  The difference I was interested in was the web sites.  And there was a big difference.

I used three other cards in this time period.  The branding of the card is probably as significant as who it was issued by, since the web site contains that branding and could be completely different code bases.  So the cards I used were: Bank of America’s Elite Rewards VISA, Barclays’ Choice Privileges VISA, and Citibank’s Sears MasterCard.

The Sears MasterCard is my oldest card (from 2001) and actually was converted from my former Sears store card, which was actually my very first credit card.  It doesn’t get a whole lot of use, and they know it.  My credit line on that card has been chopped down to a pretty low limit. 

The site itself is managed by AccountOnline.com, and I have no idea how it is operated.  The transactions must be processed in batches because I checked yesterday and there was nothing.  I checked today and I have activity between 7/31/15 and 8/3/15.  There doesn’t appear to be a way to see pending transactions, which would make sense if the transactions were refreshed on a schedule.  They do provide a way to download transactions to common financial applications, but you can only download a full statement or the current activity – no date ranges.

The Sears card is a rewards card, and the site does allow you to view your rewards balance and provides a link to searschoicerewards.com where you can spend your points.  I had all of 150 points and the cheapest gift card I could get was $20 for 2,500 points.  I guess I won’t.

A good sign of a website’s age is their minimum system requirements.  In this case, you need at least IE 4.0, Firefox 1.0, Safari, the IE browser in AOL, and Chrome must fall under “Other”.  They use security questions and the password complexity is 6 chars min, including 2 numbers and 1 letter.  You can use spaces, but only one consecutively.  You can set alerts on balances and payments, but not on transactions.

The Elite Rewards VISA (since 2009) is a newer card, so it would make sense that it has a newer website.  It also has the same style of transaction downloading as Sears, where you can download current activity or a past statement’s worth.  BoA doesn’t support downloading in Money OFX format, so you have to use Quicken.  I don’t see any obvious display of pending transactions, but I think they do display them.  BoA has a nice clear link to notify them if you will be travelling with the card, to prevent declined transactions from suspected fraud.  Capital One has that as well, but it is tucked away off the main screen.

The site uses SiteKey, an image that supposedly ensures you are on the correct website.  They’re getting rid of that feature soon, they say.  I was never a believer in whatever security it provided; pretty sure it was just a cookie.  BoA has a two-factor authorization called SafePass for transfer transactions.  They also use security questions.  The site’s password (which they term “passcode”) has a complexity of 8-20 characters, 1 letter and 1 number, and allows some special characters.  You can set alerts on balances, payments, and transactions.  I set mine up to email me on any charges over $1.  That’s something I have set up on Capital One and one of the reasons I doubt there was fraud on my card, because I got no unexpected notifications.

Choice Privileges VISA (from 2013) is my newest card, so you’d expect it to have the newest website.  Well, as these cards get newer, the websites have more flashy features, and the Choice VISA is right there with them.  They allow downloads for Quicken and CSV only and download by date range.  Pending transactions are easily accessible on another tab in the list.

The site uses a SiteImage and security phrase like BoA.  Password complexity is 8-30 characters, must have 3 of: uppercase, lowercase, numbers, or special characters.  The last 5 passwords can’t be reused.  Security questions are also used.  BoA and Choice won’t show you what the current security questions are, which I guess is a good thing.  You can set alerts on balances, payments, and transactions.  Again, I set my transaction notifications here as well.

So in summary, my newer cards are just as good as my Capital One services.  But to Capital One’s credit, their card is my second-oldest card (2003) and yet they have continued updating their website to be just as secure and functional as my newest card, unlike my Sears Citibank card.  After the big meltdown in 2008 where card companies were closing accounts left and right, I lost a few accounts.  One was another Citi card and I seem to remember the website was more fully featured than my Sears card is.