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A Gold Bug’s Moment In The Political Sun

January 24th, 2012

Jim Grant, noted gold bug and fine prose stylist, is having a moment in the political sun. Ron Paul has said he’d nominate Grant as Fed chairman. Now, Newt Gingrich says he’d appoint Grant to a “Commission on Gold” that would consider whether the U.S. should return to the gold standard.

Grant has been arguing for years that returning to the gold standard — tying the value of the dollar to the value of gold — would be preferable to the current system, in which the Federal Reserve controls the value of the dollar. In an interview with us last year, Grant said:

Ben Bernanke testifies one day, he thinks he wants to impart a little zest into our shopping by injecting more green, paper dollars into the world. He thinks that more of them will be more better. Why? Because it will cause prices to go up just enough. Not too much, but just enough. Do you believe that? It’s risible. Laughable.

But, as Grant himself told us, Grant’s point of view is wildly unpopular among economists left, right and center.

 

“The argument I’m making is in fact the wingnut argument,” Grant said. “Eve

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Tags: Political Sun, Sun

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Avoid Wasting Money On Overdraft Charges

January 24th, 2012

Overdraft charges are one of the most expensive bank charges that can be levied against a checking account and cost consumers billions of dollars every year.  It has been estimated that nearly 25% of checking accounts experience an overdraft at some point over the course of a year and the fees average around $35 per occurrence.  Avoiding overdraft charges is not impossible and by following a few simple tips, you can ensure that no overdraft charges will be charged to your account.

Keep An Accurate Checking Ledger

Keeping track of the amount of money available in your account is the best way to avoid being charged an overdraft fee because you will always know how much money is in the account.  All deposits and withdrawals should be noted in the checking ledger, including any purchases made using a debit card, and the ledger should be balanced regularly.  Many people choose to balance their checking ledger at the end of every day because it only takes a few minutes of time and it is always up to date.

Add Some Additional Padding To Your Account

Another good way to avoid overdrafts on your checking account is to add two or three hundred dollars to the account that is not reflected in the checking ledger to pad the account.  Adding this additional money will come in handy if a paycheck is delayed and automatic payments are withdrawn from the account or if a transaction is missed in your checking ledger.  Act as if this additional money does not exist and do not plan to spend it for purchases.

Sign Up For Low Balance Alerts

Many banks have added low balance alerts to the services available on their websites.  This service sends you a text or email when the balance of your checking account falls below a certain threshold, alerting you that you need to make a deposit and restrict your spending until there is more money in your account.  The amount of the threshold is chosen by the account holder when they sign up for the alerts and can be set for amounts ranging from $50 to $500.

Tags: Charges, Overdraft Charges

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Tax advice of the week: Transfer to a foreign bank account

January 18th, 2012

From 6 April this year, capital gains from foreign currency bank accounts will be tax free, says Nick Braun in Business Tax Saver. It’s good news for those who are non-domiciled, or who often keep cash in offshore bank accounts. It may also “create a new tax-free investment opportunity for all UK individual taxpayers” (though not for companies).

Say you transfer £100,000 into a US dollar account. The dollar strengthens, so that your investment is worth £115,000. If you cash it in after 5 April, the £15,000 gain will be tax free. Cash it in beforehand, and it is taxable.

If you own a foreign property that you have been renting out, you may benefit too. Until now, if rental income is accumulated in foreign currency over a number of years, it has been viewed “as a long-term investment and subject to capital-gains tax”.

As of 5 April, it will be tax free. The flip side is you will not be able to offset capital losses from foreign currency accounts against gains from other asset sales, so you may want to withdraw the funds before the end of the tax year to lock in your losses.

Tags: Account, Bank Account

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Mortgage Rates After the EU Downgrade

January 17th, 2012

Nine European countries saw their S&P credit ratings chopped yesterday. Among them, France and Austria lost their coveted “AAA” and Italy and Spain’s ratings sank two notches to BBB+ and A respectively.

While somewhat expected, this move undermines EU confidence and raises borrowing costs for some countries that barely make ends meet now.

By comparison, Canada’s AAA bonds (which impact our mortgage rates) look more appealing to investors. Barring offsetting news, downgrades in Europe should push our yields lower next week, some traders think.

Lower yields normally mean lower fixed mortgage rates. Unfortunately, that linkage is now less reliable due to widening credit spreads on riskier borrowing. (Mortgages are deemed riskier than government bonds, even if insured.)

We spoke with a capital markets expert at a major bank on Friday. He advises mortgage shoppers not to get their hopes up if yields fall in response to European turmoil.

“I suspect that you are not likely to see any real pass-through (to mortgage rates),” he said. “(Every len

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Antitrust Litigation Brought Against Visa, MasterCard for Alleged Price Fixing

January 14th, 2012

Visa, MasterCard and a plethora of large banks are the subject of a new antitrust litigation drawn on the behalf of five million retailers in the country, with potential settlement costs in the tens of billions of dollars.

Central to the lawsuit are claims that these institutions have been setting prices on credit card transactions that fall outside of what would be expected in a truly open and competitive market.

Average interchange fees incurred by credit card transactions hover around 2 percent, but could be dropped as low as half of a percent, which would result is losses projected also in the billions annually.

The Durbin Amendment of the Dodd-Frank Act effectively capped debit card swipe fees as 24 cents per transaction, which caused banks to increase credit card transaction costs to recoup their losses.

The case is scheduled to start on Sept. 12 and will be presided over by Judge John Gleeson of the U.S. Eastern District, a judge that ruled over what is considered the largest antitrust lawsuit in American history.

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Tags: Antitrust Litigation, Mastercard

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Lenders woo customers with credit card offers

January 13th, 2012

Nationwide strives to retain current account customers with exclusive deals.

By Emma Wall

12:16PM GMT 13 Jan 2012

It’s not just the small building societies that are fighting to keep their customers on board, as we reported last week.

But rather than offering cash incentives to switch, or interest on credit balances, Nationwide is offering its current account customers unique products.

This week, the society has opened up its market-leading low-rate credit card to new customers – but only if they already use its FlexAccount as their main current account.

The card has lengthy interest-free periods for both balance transfers and purchases, and a fee-free policy for purchases made abroad, but you must pay at least £750 a month into the FlexAccount.

Nationwide opens up

The Nationwide Select credit card is now available to new customers – as long as you hold the FlexAccount.

Tags: Customers, Customers Credit

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