Make Frequent Flier Miles Work Better for You, in Just 2 Steps

November 12, 2014, 10:00 pm

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Filed under: Personal Finance, Travel, Credit Cards, Airfare, Financial Education

Using a credit card to earn frequent flier miles is a popular way to get free travel. For example, I am flying to California this Thanksgiving. I was able to book my $650 roundtrip with 25,000 miles and a fee of $11.20. That means my miles were worth 2.6 cents each. Or, to put it a different way, I earned a 2.6 percent return on my credit card spending.

However, which frequent flier strategy will be best for you is not always obvious. To make the smartest decision, you should ask yourself:

• On which airline should I earn my miles?
• For my chosen airline, which credit card should I use?

Airline Choice

If you are a frequent flier, then the answers may be obvious. For example, if you fly 30,000 miles a year on Delta (DAL) for work, then topping up your air miles with credit card miles makes a lot of sense.

But if you don't travel a lot for business, then you should let the numbers guide your airline choice. And you really shouldn't think about a lifetime loyalty strategy. Instead, you should think about your immediate travel goal. A free trip to Hawaii? Or Europe? Or do you just want to fly home for Thanksgiving, like I did? Your answer impacts the airline that you should chose.

When redeeming miles for a free trip, airlines offer multiple redemption tiers. For example, if you want a free trip in the continental United States, American Airlines (AAL) offers MileSAAver awards (25,000 miles for a round-trip ticket), but they are only available some of the time. AAnytime Awards cost 40,000 miles. That is a huge difference.

A MileCard.com study showed big differences among airlines on how many miles are required, on average, to redeem for a free ticket. For example, if you want to fly to Hawaii, the average number of miles required was 65,463 at Delta vs. 82,246 at American.

Here is a summary of the best airlines, and the miles required, by region. Remember, these are averages based upon historic data, and your mileage requirement may differ.

• Mainland U.S. flights: Southwest Airlines (LUV) (20,969 miles)
• Hawaii: Delta (65,643 miles)
• Europe: American (77,049 miles)
• Mexico: JetBlue (JBLU) (32,679)
• Asia: United (UAL) (104,470)
• South America: Delta (87,275)
• Australia: American (75,000)

Credit Card Choice

Once you choose the right airline, you then need to decide which credit card can help you earn the miles the quickest. And that answer is not always obvious. Most airlines have many various credit cards that help you earn miles. The biggest differences:

• Bonus offers. And how much spend is required to earn them.
• Category bonuses. Some cards may offer two points per spent spent in restaurants, whereas the other card offer two points per dollar spent on airline tickets.
• Free checked bag. This benefit can add up quickly.

I used a MileCards.com tool, where I can input how much I spend by category and see the best credit card choice. Here are a few examples.

Let's Use United Airlines as an Example

To earn miles on United, you can choose from several cards. Chase (JPM) offers a United MileagePlus Explorer Card, where you automatically earn United Airlines miles. Chase also offers the Sapphire Preferred Credit Card, where you earn Ultimate Rewards Points. Those points can be converted instantaneously online into United miles. Both cards have annual fees.

How you spend can have a big impact on how quickly you earn miles. The Sapphire Preferred card offers two miles for every dollar you spend at restaurants. So, if you are a big foodie, you can earn miles a lot quicker on Sapphire Preferred. In addition, you can earn 40,000 bonus points if you spend $3,000 in the first three months. All other purchases earn one point.

• A wealthy foodie spending $1,000 a month in restaurants would earn 64,000 miles in the first 12 months (40,000 bonus offer and 24,000 points from restaurants).
• A recent graduate spending $500 a month (none of it on restaurants) would earn 6,000 points (not enough spend to qualify for the bonus offer, and 6,000 points from spending).

Compare that to the United MileagePlus Explorer Card, which allows you to earn two points for every dollar on United purchases. In addition, you get one checked bag for free per flight, which can be a savings of up to $100 per flight. The bonus offer is 30,000 points after you spend $1,000 in three months. All other purchases earn one point.

• Our foodie would only earn 42,000 points (30,000 bonus offer and 12,000 points from restaurants).
• The recent grad would earn 36,000 miles (30,000 bonus points and 6,000 points from spending).

Another Example for Delta Airlines

You can earn Delta Airlines miles in a number of places. American Express (AXP) offers Delta credit cards. In addition, any Amex card with membership rewards can have those points converted to SkyMiles. And even the Starwood Hotels' (HOT) Preferred credit card can have the Starwood Points converted to SkyMiles. Each card is a little different.

• The Amex EveryDay Credit Card offers two points on up to $6,000 worth of groceries and a 20 percent bonus if you make at least 20 purchases per month.
• The Platinum Delta SkyMiles Credit Card offers two points for every dollar spent at Delta and free checked bags.
• The Starwood Preferred Guest Credit Card allows you to earn one point for every dollar spent. However, when you transfer 20,000 points to Delta, you get a 5,000-point bonus. So, that means you can earn 1.25 points per mile on your everyday spending.

This Seems Complicated

Without the right strategy, it could take you a very long time to earn free travel, and you probably would have been better off earning cash back. Just remember to choose the airline that makes the most sense, and then choose the card that best rewards your spending pattern. A tool like MileCards helps to make the math easy.

But, if you just don't want to be bothered, you can easily earn 2 percent cash back and spend it on whatever you want, including travel. Citi (C) recently introduced the Double Cash credit card. So long as you pay on time, you earn 2 percent cash back. And there is no annual fee.

Unlike airline miles, the value of cash is obvious. And you don't need to worry about availability of reward seats. As airline miles become less valuable, and cash back rates get higher, the difference between the two is narrowing.

Just remember, if you decide to earn rewards (either cash or miles) from a credit card, make sure you pay the balance in full and on time every month. If you don't, the interest you pay on your debt will be much higher than any miles or cash back that you earn.

Nick Clements is the co-founder of MagnifyMoney.com, a website that makes it easy to cut your costs without cutting your lifestyle. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the United Kingdom.

 

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Not Buying a Home Was the Best Life Move I Ever Made

November 12, 2014, 10:00 pm

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Filed under: Life Stage Lessons

Every one of us has had "aha! moments." Epiphanies. Days when we reach a crossroads and realize that we have to make some changes. For the next two months, we're sharing moments like those in our Life Stage Lessons series: Real stories straight from the financial lives of our DailyFinance contributors about times when they realized they were due for a serious course correction. So read on, learn from our mistakes, and get inspired to improve your relationship with your money.

I was five years into my career, saving $10,000 a year, making my 401(k) contributions, and flush with a big raise. The logical next step was to buy a house -- a place I could call my own. Society supported it. It would allow me to feel established, and buying real estate was a great investment -- right? Well, two months later, I quit my job, and six months after that, the economy crashed. I never made that home purchase.

Here's what I learned by avoiding disaster.

It's the American Dream

There are certainly good reasons to buy a home. Owning a home allows you to create a comfortable living environment you can call your own, in a neighborhood that suits you, with good schools for your children. You might even be looking far down the road, thinking of it as a place to retire.

But I wanted to buy because society said it was the next step for me, and that in general owning real estate is a good thing. I wanted to buy because it would prove to everyone that I was established, like I was staking my claim and owning my land. (That has a certain Wild West feeling to it, don't you think?) I wanted to buy because real estate was viewed as "always a good investment." But where did these thoughts come from? Why was I thinking this way?

Society has a funny way of planting seeds in our heads that sprout into full-blown ideas that look like facts. Yet, many of these ideas are completely irrational. The truth is that I was considering this major life decision under false pretenses.

People say hindsight is 20/20, so let's look back and see why a home purchase at age 27 would have been a disaster for me.

Putting Down Roots

For one thing, buying a home is a little like a tree growing roots. Once that home is purchased, you don't have all that much freedom to move around. And, as a guy in my late 20's who hadn't found his place in the working world and didn't have a significant other, being tied to a single location wouldn't have worked for me.

My options would have been limited at a time when I needed the complete opposite.

What would I do if I was presented with an incredible job opportunity in another state? What if I met the woman of my dreams and she lived four hours away? Could I simply uproot and go? No. Sure, I could have sold my home, but that would have taken a while. And in 2009, I would have suffered a huge loss even if I could have found a buyer. And paying rent elsewhere while I still owned my house would have been unaffordable. My options would have been limited at a time when I needed the complete opposite.

"Sure, Eric, but owning a home is so much better than throwing away money to rent. Real estate is always a good choice," said the voice inside my head back then.

But in fact, we don't have any idea what the real estate market or the economy are going to do tomorrow, and there's no certainty that even historically common real estate returns will continue -- let alone the high-powered gains of the decade before the bubble burst.

That alone is no reason to avoid buying a house -- but it is a reason to be darn sure that you're buying for the right reasons.

Freedom to Explore

I'm thankful that I did not buy a home back in the late 2000s, and not simply because I missed the crash. I would have been buying for the wrong reasons, and the decision to remain a renter allowed my life to unfold. It provided me with the opportunity to explore several career paths in various locations, before creating a location-independent company (which I still run today). It also allowed me to date women outside of my area without having to worry about a major financial anchor tying me to one place.

Sure, the economic meltdown reinforced that my decision had been the right one for me -- but it was bigger than that. I learned that life isn't lived linearly, and that just because many people follow similar paths (graduate college, get a job, meet a significant other, buy a house, have kids, etc.), it doesn't mean that I have to do that. Buying a home didn't (and still doesn't) fit into my vision for what I want for my life. I am committed to traveling, having a flexible lifestyle and investing in my business -- not fixing the sink, mowing the lawn and going to block parties.

Sure, the block parties might be fun. But not at that price.

 

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2014's Top Travel Brands Will Help You Escape This Winter

November 12, 2014, 10:00 pm

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Filed under: Personal Finance, Travel, Travel Industry, Financial Education

As the fall winds start blowing harder, leaves whirl across the lawn, and winter looms, you might be thinking now's a good time to plan a vacation. If that's the case, then we have bad news: Air travel prices are soaring and the quality of service is plummeting.

However, if you really need that getaway, you can minimize the pain by sticking with the travel providers that consumers have found offer the best service and prices. Harris Poll EquiTrend asked 41,806 U.S. consumers ages 15 and older to rate travel brands on familiarity, quality and "purchase consideration," a marketing term that basically boils down to how likely you are to consider buying a service from a vendor. The winners:

Online Travel Service -- Two-Time Winner

Harris finds that American consumers prefer to begin their vacation planning with online searches at Expedia.com (EXPE), Travelocity.com -- owned by Sabre Corp (SABR) -- and Orbitz.com (OWW), in that order. Expedia topped this list for the second year in a row, and according to Harris, recently earned its highest score of the past 10 years.

Airlines -- The Old Guard and the New

The top two full-service airlines in Harris' survey are the two with the most limited reach -- Alaska Airlines (ALK) and Hawaiian Airlines (HA). The good news, however, is that travelers surveyed by Harris give decent marks to larger legacy airlines Delta (DAL) and American Airlines (AAL) as well, which come in at third and fourth place, respectively.

Among so-called discount airlines -- a distinction that's losing its difference as the discounters grow bigger and older, while the legacy airlines cut services and flights -- Harris finds travelers giving the highest marks to Southwest (LUV) and JetBlue (JBLU).

Hotels -- What Kind of Accommodations Do You Like?

The study included 47 hotel brands across five categories:

• Luxury: Omni wins top honors in the luxury hotel category, followed quickly by Starwood (HOT) and Four Seasons. W Hotels (also owned by Starwood) and Ritz-Carlton (owned by Marriott (MAR)) take fourth and fifth places.
• Full service: Marriott also tops the rankings for full-service hotel brand of the year in Harris' survey, followed in short order by Hilton Hotels (HLT), Courtyard by Marriott, and Hilton's own Embassy Suites.
• Extended stay: Like where you've arrived at, and want to stay a while? Homewood Suites (owned by Hilton) and Residence Inn (Marriott) win top honors in this category.
• Mid-market: Hilton's Hampton Inn ranks No. 1, followed by Holiday Inn Express and Holiday Inn (both owned by Intercontinental Hotels Group (IHG), which failed to rank in the luxury category but redeems itself here), and then La Quinta (LQ) in fourth place.
• Economy: America's Best Value Inn tops this category for the third consecutive year, followed by Super 8 and Red Roof Inn.

And now it's your turn. Do Harris' findings match your own impressions of these online travel agents, airlines and hotels? Or are some of these "winners" not really up to snuff? Chime in and sound off -- tell us what you think below.

Motley Fool contributor Rich Smith hasn't really enjoyed traveling since about 1995 and thinks most travel services ratings these days should be qualified as "the lesser of X number of evils." Neither he, nor The Motley Fool, has any position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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Consumer Reports Ranks the Best and Worst Prepaid Cards

November 12, 2014, 10:00 pm

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Filed under: Consumer Ally, Consumer Protection, Debit Cards, Financial Education

Once known for a wide array of fees, the market for prepaid cards is changing as more companies dive in and the playing field evolves. On Wednesday, a day ahead of a Consumer Financial Protection Bureau hearing on new rules for the industry, Consumer Reports issued a ranking of 23 prepaid cards.

"Competition has helped bring down fees, and many prepaid cards offer an attractive option for managing your money," said Christina Tetreault, a Consumers Union attorney. "But some cards come with costly fees that aren't always disclosed clearly, and prepaid cards still lack the same legal protections consumers get with debit cards."

For some, reloadable cards have become an alternative to using traditional banks. Others see it as a way to budget their spending. After all, you can only spend what you put on the cards.

Celebrity-branded cards, such as the Suze Orman card, took a big hit in the past year after they were taken to task over onerous fees. The Orman card was discontinued. Some cards still charge monthly fees up to $9.95 a month and fees for opening an account and even for just about every use from contacting customer service to withdrawing cash to making a purchase.

Consumer Reports considered the cost of use, convenience, level of protection (such as government insurance) and transparency of fees. The magazine ranked the cards in two categories: Those used as a substitute for banking and those used as a supplemental card.

Best Prepaid Cards for Supplemental Use

• Bluebird card from American Express (AXP) and Walmart (WMT): The magazine liked that its fees are easy to understand, and there is no monthly fee.
• H&R Block (HRB) Emerald Prepaid MasterCard (MA): This has no monthly fees or purchase fees.
• Chase (JPM) Liquid Visa (V): With free ATM access and clear fee disclosures, this card ranks third.

Worst Prepaid Cards for Supplemental Use

• American Express for Target (TGT): Unlike the other cards, this card does not have FDIC insurance, according to Consumer Reports.
• NetSpend Prepaid Visa Fee Advantage Plan, NetSpend Prepaid Visa Pay-as-You-Go Plan, and AccountNow Gold Visa Prepaid Card: All have high monthly fees, making them particularly inefficient for those who use the cards for budgeting. The Pay-as-You-Go Plan charges $1 or $2 per purchase, according to the magazine.

Best Substitutes for Banking Accounts

• Bluebird card from American Express and Walmart: There's no monthly fee, and no fees for other basic services, like calling customer service. In addition, there's a bill-paying feature.
• Chase Liquid Visa: There's no bill pay feature, but the magazine rates it highly due to many other features that resemble bank accounts.
• The American Express Serve and Prepaid Visa RushCard Rush Unlimited Plan were ranked just behind the top two as being good values with a range of features.

Worst Substitutes for Banking Accounts

• NetSpend Fee Advantage Plan, NetSpend Pay-As-you-Go Plan and the AccountNow Gold Visa Prepaid Card: With no in-network ATM access, users are being set up to get slammed on fees when they try to get cash.
• American Express for Target: The card's lack of FDIC insurance troubles the magazine.

 

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Special Needs Kids Need Special Financial Planning

November 12, 2014, 10:00 pm

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Filed under: Family Money, Wills, Planning, Financial Education

Isaac Cutler-Kreutz, like most kids in high school, is looking forward to graduation two years from now. But unlike his classmates, Isaac's future is not wide open. The 19-year-old doesn't have dreams of college, a job or an independent life.

Before his third birthday, Cutler-Kreutz developed brain cancer, which led to a severe stroke, both of which have limited his mental and physical abilities.

"We recently had to go before a judge and argue that he should be declared incompetent and stripped of all of his rights so we can become his legal guardians. How sad is that?" said his mother, Liz Cutler, a teacher at a private school in Princeton, New Jersey. "Isaac is essentially penniless, and he has to be kept penniless or he won't be eligible for government aid when he graduates high school."

Life Planning for a Expensive Future

The financial rules are different for the 20 million U.S. families with special-needs children. While most parents hope to leave something to their offspring, parents of special-needs kids who want to do that can't simply name them in their wills.

"Medicaid is the golden ticket the child needs to get into the programs they require," said Mary Anne Ehlert, president of ProtectedTomorrows.com, which helps people navigate the process of planning life processes for people with developmental, physical and mental disabilities. Assets of more than $2,000 in the child's name could disqualify the child.

However, Medicaid, Medicare, Supplemental Security Income and other government programs cover only a fraction of the $2 million to $4 million it will take to provide a lifetime of care. So experts suggest that parents in their wills set up a special needs trust, which can hold an unlimited amount of assets for a disabled individual.

Ehlert emphasized that families need to consult a specialized attorney who can proactively correct the common slip-ups that can undo such a plan. For example, families need to check beneficiaries on pension plans and employer-provided life insurance policies. "You may have checked the box years ago [naming the child as beneficiary], but that's what we're trying to avoid," she said. She notes that many people fund these trusts with life insurance policies, but she advises against using term policies.

"There are lots of hoops to jump through in order not to jeopardize his future," says Albert Freedman, father of 19-year-old Jack, who has lived his entire life in a bed or a wheelchair. Jack has spinal muscular atrophy, a genetic disease that severely limits his ability the move or talk but does not impair his ability to think or learn. He goes to a mainstream school -- Unionville High School in Pennsylvania -- and is set to earn a graduate certificate next year but will stay at the school until age 21. He communicates by typing on an iPad that has a camera calibrated to his eye. "Basically, his left eye is the computer mouse," Albert said.

Adulthood Raises Another Issue

One key issue for parents of children with special needs is to decide on how and where these children will live as adults. The options are limited, expensive and often difficult to find. Choices include residential programs in large group homes, smaller group homes, or remaining with their parents.

Both Cutler and Freedman have decided to keep their children at home. "I don't think Isaac has the capacity to live without us," said Cutler. "For one thing, he would be incredibly sad."

"Isaac has so many needs. I would have to hire a really great mom to be with him. I'm already a great mom for him, so why would I do that?" says Cutler. "I'm almost 60, and I'm going to be a caretaker until I'm elderly, but I would be torn apart if he lived somewhere else."

Retirement Issues, Too

Dave Sosson and Laurie Frankel Sosson are in different position. Their 7-year-old son Kyle has autism and attends a specialized school. "Kyle is making progress, especially with the life skills he needs," according to Sosson. "We hope he'll go to a regular school soon, but we have to be realistic, so we need a plan to guide Kyle's life, to make sure he gets the services that he needs." They have also set up a special needs trust. "I have had to coach my parents that we have a trust and anything they want to give to Kyle has to be directed to that," said Sosson. "That took a lot of teaching," as well as direct contact with his parents' attorney in Florida.

Ehlert noted that that many parents of special-needs young adults may be nearing retirement age. "Remember, you're retiring for three people, not one or two. You'll be subsidizing him for the rest of your life."

Drew Trachtenberg has personal relationships with several people in this article: Albert Freedman recently married a relative; Liz Cutler is a long-time friend; and Laurie Frankel Sosson is a former colleague.

 

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Honda Widens Air Bag Recall After Malaysia Death

November 12, 2014, 10:30 pm

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Filed under: Company News, Automotive Industry, Honda, Consumer Protection, Auto Recalls

TOKYO -- Japanese automaker Honda Motor (HMC) expanded its recalls related to defective air bags Thursday, saying a driver in Malaysia died in an air bag-linked accident earlier this year.

The Japanese automaker, which has reported the biggest number of recalls related to defective air bags, announced recalls of 70,979 more vehicles: 22,607 of its Fit Aria subcompact and 48,190 of its That's model.

The air bags, made by Japanese manufacturer Takata, have faulty inflators that can explode, hurling shrapnel toward drivers and passengers.

Around the world, some 12 million vehicles have been recalled by automakers because of the problem air bags. The recalls involve 10 automakers including Toyota Motor (TM) and General Motors (GM) and various nations such as Japan, China and European countries. About 8 million of the recalls are in the United States.

A Honda spokeswoman, Misato Fukushima, said the latest death, in July, was thought to have caused by a suspect air bag.

Safety advocates say defective air bags caused four deaths in the U.S.

Takata CEO Shigehisa Takada apologized for the problems with the air bags in a statement issued Thursday, saying his company was determined to prevent further problems.

 

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Four Americans: How Obamacare Affected Them

November 12, 2014, 11:18 pm

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Filed under: Health Care, Family Money, Personal Finance, Health Insurance, Financial Education

By CARLA K. JOHNSON

CHICAGO -- More than 7 million people have signed up for private health insurance under the system introduced last year for those who were uninsured or had policies considered substandard.

What happened to them since has varied greatly.

Many have been happy with their new insurance, according to polls. Others are encountering a variety of snags -- high premiums, telephone runarounds or difficulty getting care. Together their experiences provide a glimpse of how the largest social program launched since Medicare has worked out for the people involved.

With lessons learned, the program enters its second year with enrollment beginning Saturday.

Nick of Time

Shawn Turner didn't realize it when the health insurance program debuted last year, but she would become a dramatic example of its purpose.

A 54-year-old medical transcriptionist in the tiny Illinois village of Cisco, Turner had gotten health benefits through her job for 15 years. "The main reason I worked was to get the health insurance," she says.

Then, last year, she lost coverage when her employer outsourced her work to an Internet-based transcription service. Her husband, Lloyd, who owns an auto body shop, had been on her policy so he lost his insurance, too.

In December, the Turners signed up for a "silver," or medium grade, plan on the new government website listing policies available. They would pay $236 a month and the government would pay the insurance company $830 a month, a subsidy based on their estimated $22,000 income. Their deductible was $750.

A few weeks after her coverage started, she was suddenly doubled over with abdominal pain that sent her to the emergency room. It was uterine cancer.

"I was in shock, just kind of numb," she says.

From late January through July she endured two surgeries and chemotherapy. Blue Cross Blue Shield covered more than $265,000 in medical bills, a sum that otherwise "could have wiped us out I would imagine," she says.

Today, Shawn Turner says, her doctors believe she's cancer free. Her once-lustrous brown hair is beginning to grow back after chemotherapy. She's preparing to look for a part-time job as her strength returns. The Turners were able to keep their small house on the edge of town surrounded by corn and soybean fields.

"We got to keep our livelihood and we didn't become a detriment to society and our hospitals got paid," says Lloyd Turner.

More for More

For 10 years, Steve Duchesne, 49, carefully purchased health insurance that covered what he believed his family of five needed -- catastrophic illness and injury -- and that omitted what it didn't, such as full vision care services and treatment for drug abuse.

Now, under the new system, he has more insurance than he's ever had, but at a higher cost, and he's not happy about it.

The public relations consultant's old plan was canceled because it didn't include all the minimum services required under the new law. His monthly health insurance costs have risen to $1,033 a month for the new policy from $645 a month.

"We're a middle-class family with what I consider a middle-class income for our area," says Duchesne, who lives in Redondo Beach, California. No subsidies were available for a family of five with a household income of more than $110,000.

Duchesne says he's had to drop his adult dental coverage, reduce his contribution to his individual retirement account and cut other household expenses to make up the cost difference.

"The idea the government would destroy my health insurance policy -- one that I was satisfied with, which met our needs and was affordable -- and force us to buy a new product that's 60 percent more expensive, is shocking to me," Duchesne says.

A Search for a Specialist

Vince and Patty Mastracco, an enterprising Northern California couple, have always preferred to take care of themselves. He's a self-described "house rat," a real estate agent who loves to show houses and meet new people. She's a food stylist and recipe consultant with a bright collection of camera-friendly blouses ready for her TV cooking appearances.

They purchased their own health policies before the Affordable Care Act and never had difficulty getting care. Last year, they chose a similarly priced "bronze" policy on California's version of the health marketplace.

"I did not expect to be 100 percent happy with the changes, but at the same time I did not expect we would receive less bang for our buck," says Vince, 63.

A mysterious lump on Patty Mastracco's knee led to a maddening search for a bone specialist who would accept their insurance. Four different orthopedists rejected her without much explanation. An MRI showed the lump was probably nothing, but she still wanted a specialist to take a look.

I believe that this is a case where, by design, [our plan] is now being made to resemble an HMO. An inferior HMO.

"To date we still have not identified a doctor that accepts our insurance and will accept her as a patient," says Vince. It's a common pattern with the most economical policies: the insurance companies are paying doctors lower rates so fewer are joining their networks. A recent small national survey conducted by the Urban Institute found that 14 percent of newly insured adults with marketplace plans say they've had trouble finding a doctor.

"I believe that this is a case where, by design, [our plan] is now being made to resemble an HMO," he says, referring to the health maintenance organizations that inspired a patient backlash in the 1990s for limiting care. "An inferior HMO."

The couple will be shopping for a new policy this year, hoping for a better network.

Perseverance Required

Pat Barone has the willpower to lose 90 pounds and keep it off. She turned that perseverance into a weight-loss coaching business that has led to speaking engagements and clients on four continents.

But her resolve has been tested by the new health insurance system.

After losing her insurance following a divorce in 2013, Barone, 59, of Madison, Wisconsin, signed up for a new health plan last year that costs her just $50 a month and also covers her 21-year-old son.

But the technical snafus have been endless. In July she began getting requests from the plan's government administrator to send paperwork verifying her citizenship and income or her coverage would be terminated. She got the documents, but the system's website, HealthCare.gov, wouldn't upload them.

"When I finally got someone on the phone, they instructed me to mail the documents in. I did that, but I am being barraged by monthly email, snail mail and phone calls to get my documents filed, or I will lose coverage," Barone says.

The letters, she says, "are kind of demanding and threatening." For now she's decided to take the assurances from operators at the HealthCare.gov telephone help line that she can ignore the warnings. She hopes they're right.

Despite the problems, she says, she's delighted with the coverage. "It's a godsend to those of us who don't have other alternatives," Barone says. "I have used it for preventive care with no problems."

 

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Walmart Takes on Amazon by Matching Online Prices

November 12, 2014, 11:39 pm

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Filed under: Company News, Earnings, Retail, Holiday Shopping, Wal-Mart

By ANNE D'INNOCENZIO

NEW YORK -- Walmart Stores (WMT) on Thursday announced an aggressive holiday plan that includes free shipping on the top 100 items and price cuts on 20,000 items, in a bid to win its share of holiday dollars.

Starting Friday, Walmart will start to match online prices such as Amazon.com's (AMZN) in its stores. Managers of half of its stores were already doing that, but now it's become an official policy.

"Being the price leader is an ongoing priority for us and a commitment to our business," said Doug McMillon, who took over as CEO in February. "And with every year, that is even more important during the holiday season."

He added that while he's encouraged by the sales increase at its Walmart stores, he's still not satisfied with the performance.

"We need to continue to improve the customer experience, both in our stores and online, to deliver stronger sales growth and strength our bottom line performance," McMillon said in a transcript of a prerecorded call to investors.

Sales Perk Up

Walmart eked out a rare gain in an important sales measurement during the third quarter as it reported profits that beat Wall Street expectations.

But the world's largest retailer issued a fourth-quarter profit outlook that missed Wall Street expectations because of expected fierce holiday discounting. The quarter also marked two full years of traffic declines at U.S. Walmart stores.

Macy's (M), J.C. Penney (JCP) and Kohl's (KSS) all reported results this week that show middle-income shoppers remain cautious heading into the holiday shopping season.

Walmart itself is a barometer of consumer spending, and its challenges reflect the struggles of its low-income shoppers, who are being squeezed by stagnant wages and reduced government food stamps. But Walmart sees potential help: Lower gas prices that could put more money into shoppers' pockets.

Revenues Rise

Walmart reported earnings of $3.71 billion, or $1.15 a share, for the three months that ended Oct. 31.

The company, which is based in Bentonville, Arkansas, posted revenue of $119 billion in the period, beating Wall Street forecasts. Analysts expected $118.35 billion, according to Zacks.

Walmart's U.S. discount division posted a 0.5 percent increase in revenue at stores open at least a year. That was the first increase in seven quarters.

Its smaller Neighborhood Markets, which cater to shoppers looking for more convenience and offer groceries, fresh produce and beauty items, had a 5.5 percent increase in revenue at stores open at least a year.

During a call with reporters Thursday, Walmart Chief Financial Officer Charles Holley said Walmart is already seeing some benefit from lower gas prices, which are translating into improved customer traffic in stores. "We all know it can help the average consumer," he said.

The average gasoline price in the U.S. has fallen for 48 straight days, according to AAA. Drivers are now paying $2.92 a gallon on average.

Ken Perkins, president of RetailMetrics, believes it will take until December for Walmart and other stores to really benefit from the money saved.

Walmart said that it expects fourth-quarter earnings a share to range between $1.46 and $1.56, which includes the negative impact of closing underperforming stores in Japan. Analysts had expected $1.57 a share.

The company expects full-year earnings to be $4.92 to $5.02 a share. Analysts had expected $4.99, according to FactSet.

Shares of Walmart rose nearly 3 percent, or $42.54 to $81.74 in morning trading.

 

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Buffett's Berkshire Hathaway to Acquire P&G's Duracell

November 13, 2014, 12:18 am

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Filed under: Company News, Mergers & Acquisitions, Consumer Goods, Warren Buffett

By JOSH FUNK

OMAHA, Neb. -- Warren Buffett's Berkshire Hathaway (BRK-A) 9BRK-B) is buying the Duracell battery business from Procter & Gamble in a deal valued at approximately $3 billion.

P&G (PG), the world's biggest consumer products maker, had announced last month that it wanted to make Duracell a stand-alone company. P&G, which acquired Duracell in 2005, said at the time that it preferred a spinoff of Duracell, but that it was considering a sale or other options.

I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette.

The sale of Duracell to Omaha, Nebraska-based Berkshire Hathaway turned out to be slightly different from P&G's initial plans.

P&G will receive shares of its own stock that are currently held by Berkshire Hathaway. Those shares are currently valued at about $4.7 billion. Offsetting part of that price, P&G will contribute about $1.7 billion to the Duracell business before the deal closes.

"I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette," Buffett said in a statement Thursday.

P&G, whose products include Tide detergent and Pampers diapers, has been trimming its product lineup to focus on its top performers. After it finishes jettisoning more than half its brands around the globe over the next year or two, P&G has said that it will be left with about 70 to 80 brands.

Berkshire has been a significant P&G shareholder since the consumer products firm acquired Gillette in 2005, but the Duracell acquisition will use nearly all of Berkshire's 52.48 million shares.

Buffett has estimated that Berkshire's P&G stake cost it roughly $336 million.

Buffett is always looking for acquisitions to help his conglomerate grow, but this deal won't use up any of the $62.4 billion cash Berkshire held at the end of the third quarter. He favors easy-to-understand businesses that have a strong competitive advantage.

Berkshire already owns a number of well-known consumer brands in its portfolio of more than 80 businesses, including Fruit of the Loom, Geico insurance, Helzberg Diamonds and half of the H.J. Heinz Co.

Cincinnati-based P&G said it will take a charge of about 28 cents a share in its current quarter related to the Duracell deal.

The transaction is expected to close in the second half of 2015.

Shares of P&G shed 88 cents to $88.60 in premarket trading about a half-hour before the market open.

 

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The Cost of a College Education Continues to Creep Higher

November 13, 2014, 2:09 am

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Filed under: Student Loans, Family Money, Inflation, College, Education

By KIMBERLY HEFLING

WASHINGTON -- Time to stock up on the ramen noodles. The average cost of attending college crept up again this year, the College Board said Thursday.

The average sticker price, with room and board included, for undergraduate students attending a four-year college or university in their home state was $18,943. Out-of-state students at those schools paid, on average, $32,762. At two-year public schools, in-state students paid an average $11,052.

The cost to attend a private, four-year nonprofit college: $42,419, on average, including housing and meal plan.

For-profit schools cost about $15,230, but housing figures weren't available.

Books and transportation costs can add more than $2,000 to the cost of attending college, and that rises even more for commuters.

The highest rate of increase of 3.7 percent was among private, nonprofit colleges. And even though the increases across higher education outpaced inflation, the rates of increase were lower than those students saw five, 10 or 30 years ago, the College Board said.

When adjusted for inflation, students are paying more than triple what students paid 30 years ago to attend a public, four-year institution and about 2.5 times more to attend a private nonprofit or two-year public one.

"The price increases are actually quite moderate this year, but still, what people are paying, and this is before financial aid, is the accumulation of many years of price increases," said Sandy Baum, a co-author of the nonprofit College Board's annual college pricing report. "So, if the price goes up just a little bit this year, people aren't really going to breathe a sigh of relief because the price is already high from their perspective."

Baum said during tough economic times, college costs tend to go up because public institutions receive less in state dollars and private ones see a decrease in endowments and in giving. Other contributing factors are wide ranging from the increasing costs of technology to health insurance for university employees.

Only the wealthiest of Americans are seeing their incomes rise, so most students feel the tuition upticks more, Baum said.

The number of full--time undergraduate students increased by 16 percent in the three years leading up to fall 2010 to 13.7 million, but then declined to 13 million in fall 2013. The number of students taking out student loans and the amount taken out, on average, by students has been declining, the College Board said. It said about 60 percent of students who earned a bachelor's degree in 2012-2013 from public or private, nonprofit schools from which they began their studies graduated with debt, borrowing an average of $27,300.

The breakdown in pricing:

• Sticker prices, on average, for in-state tuition and fees at public four-year schools increased to $9,139 this school year -- a 2.9 percent increase over the 2013-2014 school year. The average out-of-state price tag was $22,958, an increase of 3.3 percent increase. Room and board was $9,804.
• Public two-year schools had a $3,347 published price on average for tuition and fees-- an increase of 3.3 percent. Room and board was $7,705.
• Tuition and fees at private, nonprofit schools rose 3.7 percent to an average of $31,231. Room and board was $11,188.
• For-profit schools saw a 1.3 percent increase in tuition and fees.

Published prices don't necessarily reflect what students actually pay because they don't include grant dollars provided by institutions or government aid such as Pell Grants, the GI Bill and tax credits. This school year, full-time students received an average of about $6,110 in aid at public four-year schools, $5,090 at public two-year ones, and $18,870 at private colleges.

The average in-state prices at four-year schools ranged from $4,646 in Wyoming to $14,712 in New Hampshire.

For out-of-state students, the most affordable tuition of $9,910 was in South Dakota. On the other end, the most expensive was $34,331 in Vermont.

 

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One-Third of Part-Timers Want Full-Time Jobs, Can't Find Any

November 13, 2014, 2:10 am

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Filed under: Careers, Economy

Part-time work can be great if you want to make some money but have other obligations or desires, such as being a full-time student, kids at home or retirement. But if what you really need is a full-time job with a full-time income, and you can't find one, that's a problem. And almost a third of part-time workers have it.

According to a new survey of 301 part-time workers by Harris Poll for CareerBuilder, 32 percent said they wanted to work full-time but couldn't find a position. Within that group, 31 percent were the sole breadwinners for their families, and 39 percent said they struggle to make ends meet. A quarter of the group already work two or more jobs.

The lack of full-time work is hitting them hard:

• 31 percent have downgraded their lifestyles, in ways that included getting a cheaper car, smaller house or dropping cable TV.
• 29 percent borrowed money from family or friends.
• 23 percent suffered depression.
• 22 percent moved back in with their parents.
• 17 percent have high credit card debt as a result.
• 14 percent experienced health issues.

This is a sign of a deep and persistent flaw in the economic recovery. Many new jobs have been in low-income or part-time positions. Too many positions being reported don't provide the economic benefit and security of the ones lost.

7 Million People Who Want More Work

According to the latest jobs report from the Bureau of Labor Statistics, there are 7 million people, seasonally adjusted, who work part time -- less than 34 hours a week -- for "economic reasons." Another term for this group is "involuntary part-time workers." Although these people would prefer full-time employment, they either had their hours cut by their employers or were unable to find a full-time job. Focus on non-agricultural industries, and the number is still 6.9 million.

The total is down from 8 million in October 2013, which is certainly good news. But for the many millions still stuck in underemployment, it matters little. The respondents gave a variety of reasons (with multiple reasons possible) for why they couldn't find full-time positions:

• 54 percent said there were fewer jobs in their fields than before the recession.
• 51 percent didn't have the skills necessary for in-demand jobs.
• 31 percent didn't look for full-time jobs on a regular basis.
• 29 percent said they lacked the necessary education.

And yet, 27 percent of the people who couldn't find full-time work had at least a four-year college degree; another 8 percent had an associate's degree, 18 percent had some college and 7 percent had taken post-secondary school job-specific training. But 40 percent had a high school degree or less.

And whatever one thinks about unpaid internships, most of those part-timers stand ready to try one: 62 percent said they would be willing to work without pay for some period just to prove the value they could bring as a full-time employee.

 

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After Recent Gains, Mortgage Rates Head Back Down

November 13, 2014, 2:23 am

≫ Next: Sears Holdings' Proposed REIT Won't Right the Sinking Ship

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Filed under: Mortgages, Refinancing, Housing Market, Home Buying, Interest Rates

WASHINGTON -- Average U.S. long-term mortgage rates edged lower this week, approaching their lows for the year. The benchmark 30-year loan rate hovered near 4 percent.

Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year mortgage slipped to 4.01 percent from 4.02 percent last week. The 30-year rate, which stood at 4.53 percent back in January, now is at its lowest level since June 2013.

The average for a 15-year mortgage, a popular choice for people who are refinancing, ticked down to 3.20 percent from to 3.21 percent.

Long-term rates recovered in recent weeks following a five-week decline that had sparked a wave of homeowners looking to refinance mortgages at a bargain rate.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

• The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point.
• The average rate on a five-year adjustable-rate mortgage rose to 3.02 percent from 2.97 percent. The fee was steady at 0.5 point.
• For a one-year ARM, the average rate declined to 2.43 percent from 2.45 percent. The fee held at 0.4 point.

 

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Sears Holdings' Proposed REIT Won't Right the Sinking Ship

November 13, 2014, 3:35 am

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Filed under: Company News, Earnings, Market News, Investing

Sears Holdings (SHLD) has failed to impress investors as a growth stock in recent years, so now it's exploring a new income-producing corporate structure that could yield big dividends if it pans out. Shares of the parent company of Sears and Kmart soared 30 percent last week after it announced that it's considering forming a real estate investment trust -- or REIT, for short -- that would purchase 200 to 300 of Sears Holdings' physical stores, and then lease those locations back to the retailer.

The REIT would be financed by debt, and existing shareholders who would have the right to buy into the rent-collecting entity if they want an income-producing investment. The parent company would receive the proceeds of the sale. The REIT will raise money for Sears Holdings investors, but that money will go to pay rent, cover debt interest payments and pay back suppliers. It's not going to go to turn Sears and Kmart around.

The Harder Side of Sears

The Sears REIT will be a seedless orange. It looks round, vibrant, and tempting from the outside, but after squeezing it a few times, there will be little left but a rind that can't produce new fruit. Sears Holdings will be even worse. Preliminary analysis indicates that it will report its tenth consecutive quarterly loss in a few weeks.

Asset sales and mounting deficits have taken their toll. Common equity at Sears has gone from more than $9 billion at the end of fiscal 2010 to $512 million this summer.

Analysts expect a turnaround. They foresee losses widening through fiscal 2019, and it's a fair bet that Sears won't get that far if it keeps bleeding money. With credit rating agencies slashing their designations and CEO Eddie Lampert ignoring the massive investment necessary to update Sears and Kmart stores so they are attractive and relevant to today's shopper, it's hard to see a happy ending here.

Thing were pretty bad three years ago when I wrote about Sears and its inability to regain its former greatness, and this story gets uglier with every passing quarter. The Sears REIT play is doomed because the chain itself doesn't have a viable turnaround strategy that would make relying on rent payments from the parent company a long-term strategy. The real shock here is how a desperate announcement was enough to pop Sears Holdings shares higher. There is only so much pocket change that Lampert will find under the couch cushions before realizing that the sofa itself is the problem.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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Pay Less for Pet Care -- Savings Experiment

November 13, 2014, 3:51 am

≫ Next: Here's Where to Find Your Own 0% Financing Deals on a Car

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Filed under: Savings Experiment, Home & Garden, Did You Know

Going on vacation? There are budget-friendly ways to make sure your pet is well taken care of while you relax. Here are two easy tips to start.

Boarding facilities will cost you between $22 and $55 per day per pet, but you may be able to save a little bit on that, depending on your timing. For cheaper rates, it's best to drop off your pet during business hours and during the week.

If you don't want to take your animals out of their cozy home, a house sitter might just be the best option. Plus, you get more bang for your buck. Not only will house sitters make sure your furry loved one is okay, they'll also look over your garden, home and get the mail, too!

Try out HouseSittersAmerica.com a convenient website that matches travelers who need home and pet care with travelers who need a place to stay.

Having a dog or cat doesn't have to be that expensive. With a little bit of creativity, you can have a pet, go on trips and save your cash.

View Poll

 

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Here's Where to Find Your Own 0% Financing Deals on a Car

November 13, 2014, 4:02 am

≫ Next: The Home Equity 'Piggy Bank' Is Back, But Not the Attitude

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Filed under: Personal Finance, Car Buying, Auto Loans, Consumer Issues, Financial Education

By Jerry Kronenberg

NEW YORK -- The zero-percent car loan is less than half as common as it was four years ago, but U.S. consumers who find such deals can expect to save $3,500 on average, an Edmunds.com analysis shows.

"Sometimes consumers think zero-percent loans are some sort of scam, but they're actually legitimate. It's not a 'bait-and-switch' situation," says Jessica Caldwell of Edmunds, a car-buying site that recently studied zero-percent deals in depth.

Sometimes consumers think zero-percent loans are some sort of scam, but they're actually legitimate.

Dealers and automakers often use zero-percent financing to attract shoppers to certain car brands or models, typically offering buyers with good credit three to five years to pay off purchases using interest-free loans.

These deals can cost manufacturers less money than cash rebates or special leases, but still save consumers big bucks.

For instance, Edmunds estimates that shoppers who got zero-percent financing during 2014's first nine months will save $3,554 on average when compared with what those who got regular financing will spend on interest over their loans' lifetimes. (The firm found that the average loan taken out during the period had a 4.31 percent interest rate, a $28,000 principal and a 67-month term.)

Caldwell adds that this year's savings are actually small in historic terms because of today's low interest rates. For instance, consumers who got zero-percent deals in 2007 typically saved around $6,000 on financing, as regular loan rates averaged 7.3 percent then.

Fewer Zero-Interest Loans

But Edmunds also found that zero-percent loans are harder to come by these days, accounting for just 1zero-percent of all dealer-provided financing.

That's way down from the 23 percent that interest-free financing represented in March 2010, when Toyota offered lots of special incentives amid the Japanese automaker's "sudden-acceleration" scandal.

Caldwell attributes today's paucity of interest-free loans to the fact that financing deals usually give only automakers a brief sales "pop" rather than a sustained revenue increase.

Edmunds also discovered that the odds of getting a zero-percent deal vary greatly depending on where you live and what kind of car you buy.

For example, the firm found that 19 percent of dealer-financed van buyers got zero-percent financing during 2014's first nine months, compared with just of 3 percent of those who bought luxury vehicles.

Caldwell says automakers offer lots of interest-free loans on vans to attract business customers, but tend to put more money into leasing deals when it comes to luxury cars.

Edmunds' analysis also found that:

Just 4 percent of pickup-truck buyers got zero-percent financing during 2014's first three quarters. Caldwell says that's because truck buyers typically prefer cash rebates to no-interest loans.

Demographic Differences

People in the Heartland get lots of zero-percent deals. Edmunds discovered that states with the largest share of interest-free loans during the study period were Kentucky (16.7 percent of all dealer-financed sales), Wisconsin (16 percent), Illinois (14.2 percent), Nebraska (13.9 percent) and Iowa (13.7 percent). Caldwell theorizes that financing deals appeal to Middle Americans who buy and hold cars for years and appreciate long-term zero-percent loans.

Interest-free deals made up the tiniest share of dealer-financed sales in Alaska (1.6 percent), Hawaii (4.5 percent), Louisiana (5.1 percent), Georgia (5.3 percent) and Florida (5.3 percent) during 2014's first nine months. Caldwell ascribes Alaska and Hawaii's low level of zero-percent loans to an overall dearth of incentives in those hard-to-reach markets. As for the other states, she suspects a below-average number of Southeasterners have good enough credit to qualify for zero-percent loans.

What about situations where automakers offer consumers their choice of zero-percent financing, a big cash rebate or a low-cost lease on a given car?

Caldwell says which deal to take depends on a consumer's individual circumstances.

"If you're a 'buy-and-hold'-type person, financing a car at zero-percent for 60 months might make more sense than taking a rebate or lease deal," she says.

The analyst says online tools can help consumers decide which offer to go for. For instance, Edmunds has a calculator that specifically compares rebates to low-interest loans.

 

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The Home Equity 'Piggy Bank' Is Back, But Not the Attitude

November 13, 2014, 4:23 am

≫ Next: 300,000 More Air Exchangers Linked to House Fires Recalled

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Filed under: Mortgages, Refinancing, Home Loans, Home Equity Loans, Planning

The end of the U.S. housing boom in the mid-2000s was a prime cause of the 2008 recession and the near-collapse of the financial system. In the years that followed the peak, millions of American homeowners struggled as property values fell far below the amount of mortgage debt they owed. Even low interest rates weren't enough to save many mortgage borrowers from defaulting on their loans and ending up in foreclosure (especially those whose financial situations made them poor candidates for refinancing).

Yet as the housing market has slowly and steadily recovered ground over the past several years, many homeowners who were once underwater on their mortgages have found themselves with equity in their homes again -- and they're increasingly looking at tapping that equity, according to a new report from home-finance specialist Freddie Mac.

Coming Full Circle

What crushed homeowners in the aftermath of the housing bubble was the realization that home prices could fall for a sustained period. Combined with the aftereffects of years of questionable mortgage practices that had encouraged many borrowers to take on more debt that they could afford, the impact of the housing bust cascaded throughout the financial system, bringing several large banks to the brink of collapse.

But the recovery in home prices has finally sent home equity levels in a positive direction. According to the Federal Reserve, home equity has grown by about $3 trillion between mid-2012 and mid-2014, thanks in large part to an almost 17 percent climb in the price of the typical U.S. home. Among those refinancing during the third quarter of 2014, about half had seen their property values rise since they took out their previous mortgage, a figure which Freddie Mac says is the highest in five years.

One big reason home equity levels rose so much is that most borrowers chose not to use cash-out refinancing strategies. Instead, much of the refinancing focused on trying to capture lower interest rates, either through locking in conventional fixed-mortgage financing or by looking to shorten loan maturity through the greater use of 15-year mortgages and other less-common products. Not only were borrowers not tapping equity as it accumulated, but their use of shorter mortgages made their equity climb faster than it would have under conventional 30-year loans.

Government programs also played a role. The Home Affordable Refinance Program led to rate reductions of about 1.7 percentage points on an average loan, which Freddie Mac says cut payments by about $280 a month on a typical $200,000 mortgage. With many HARP-eligible properties involving underwater mortgages, supporting those who wanted cash-out refinancing wasn't the focus of the program.

Cash-Out Refinancing: Getting Back to Normal?

The latest figures from Freddie Mac, though, show that the trend might be moving back toward cash-out refinancing. During the third quarter, about $8 billion in home equity was cashed out through refinancing transactions, up more than 40 percent from second-quarter levels. The increase was the second straight quarter in which cash-out refinancing volume rose, returning to levels last seen in early 2013.

As large as that percentage of increase sounds, cash-out refinancing remains at extremely low levels. At the peak of the housing boom in the second quarter of 2006, borrowers pulled out $84 billion in cash through such refinancing activity, more than 10 times the most recent rate. Put another way, in 2006, 89 percent of those refinancing their mortgages took advantage of the opportunity to pull out extra cash from their home equity. That compares to just 28 percent last quarter, and even though that figure was the largest since 2009, it's nevertheless at historically low levels.

Another thing that homeowners should understand is that cash-out refinances aren't the only way to tap home equity, and right now, they might not even be the best way for many borrowers. The Freddie Mac study only looked at borrowers refinancing their primary mortgage loans, which is most likely to happen when interest rates are trending downward. With such low mortgage rates prevailing over the past several years, most people who ever planned to refinance their mortgages have already done so and now enjoy rates that they can't easily improve on. For them, the better way to tap into their equity is through a home equity loan or line of credit, which preserves the low rate on their current mortgage and comes with fewer fees like closing costs.

For now, policymakers don't have to worry much about cash-out refinancing helping to inflate a new housing bubble, as homeowners in general haven't yet started treating home equity as a piggy bank again. The uptick might have a minor impact on economic activity, but for it to become troubling from a longer-term perspective, the figures would have to come a lot closer to matching what we saw during the housing boom.

Motley Fool contributor Dan Caplinger is quite happy with his home-financing situation right now. You can follow him on Twitter @DanCaplinger or on Google+. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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300,000 More Air Exchangers Linked to House Fires Recalled

November 13, 2014, 4:34 am

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Filed under: Consumer Ally, Recalls, Home & Garden

More than 300,000 air exchangers used to circulate air in and out of homes are being recalled in the U.S. and Canada after a string of fires attributed to them, the U.S. Consumer Product Safety Commission said on Thursday.

Another 77,500 units were previously recalled in three announcements dating back to 2007. The air exchangers were made by Venmar Ventilation between 2002 and 2009 and were sold under a variety of brand names, including Bryant, Carrier, NuTone, Frigidaire, Maytag, Tappan, Heil, Westinghouse, Rheem, Sears (SHLD) and York. They were sold with and without a heat-recovery feature.

So far, 30 fires have been reported to have been caused by the air exchangers, resulting in more than $1.1 million in property damage. The recall was expanded after four new incidents were reported. The motor can overheat and start fires, the CPSC said.

If you have one of the recalled air exchangers, you are urged to shut it off immediately and call Venmar at (866) 441-4645 to schedule a free inspection and repair.

This latest recall affects 108,000 units sold in the U.S. and 207,000 in Canada, the CPSC said, and brings the total number recalled in the U.S. to more than 185,000.

 

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FTC Shuts Down Huge Medical Alert Scam Targeting Seniors

November 13, 2014, 6:08 am

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Filed under: Consumer Ally, Consumer Protection, Ripoffs & Scams, Financial Education

A huge robocalling operation that conned seniors out of nearly $23 million by offering them "free" medical alert systems was shut down under a settlement announced on Thursday by the Federal Trade Commission.

The settlement, reached jointly with the FTC and the Florida attorney general, includes a $23 million judgment against the defendants. The judgment was the amount that seniors were charged in monthly fees for their "free" medical alert units.

However, most of that judgment will be suspended if the defendants surrender their available cash, cars and a boat, the FTC said. The defendants are also barred from telemarketing and misleading consumers in sales pitches.

The Systems Weren't Free, and They Weren't Recommended

The scam involved robocalls to seniors that told them, falsely, that they could get a free medical alert system that had been paid for by a friend or family member. Many victims were elderly, had limited income and lived alone, the FTC said.

Those who were interested after hearing the recorded spiel simply pressed "one" on their phones and were transferred to someone who claimed, again falsely, that the alert systems had the recommendation of the American Heart Association, the American Diabetes Association and the National Institute on Aging.

They were then told that a $34.95 monthly fee would be charged after installation activation. But, the FTC said, that was also not true. Billing was immediate.

Defendants include Worldwide Info Services, Inc., Elite Information Solutions Inc., Absolute Solutions Group Inc., Global Interactive Technologies, Global Service Providers, Arcagen Inc., American Innovative Concepts, Inc. Unique Information Services Inc., National Life Network, Inc., and its principals Michael Hilgar, Gary Martin, Joseph Settecase and Yuluisa Nieves.

Agencies involved in the investigation include the Indiana and Minnesota attorneys general, the U.S. Postal Inspection Service (Atlanta, Boston and Houston divisions), and the Better Business Bureau Serving Eastern Missouri and Southern Illinois.

The FTC offers tips and videos to help consumers avoid getting ripped off from robocalls.

 

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N.Y. Mall to Fine Stores That Refuse to Open on Thanksgiving

November 13, 2014, 7:46 am

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Filed under: Retail, Holiday Shopping, Shopping

A mall near Buffalo, New York, is threatening to hit retailers who fail to open on Thanksgiving with fines of around $200 an hour.

Home to over 200 stores, Walden Galleria is already taking flak for the move, with a mention on Boycott Shopping on Thanksgiving's Facebook page. According to the Huffington Post, store managers were informed last week that there would be consequences if they remained closed on the holiday, when the mall will open at 6 p.m.

"It's a family day, it's a holiday and frankly it's really getting out of hand with how stores are opening so early," Brian McKnight, manager of Walden Galleria's Art of Shaving boutique, told HuffPost. "It's about having that comfortable work-life balance and respecting my employees' holiday time with their families."

McKnight's shop will remain closed until 5 a.m. on Black Friday. The potential fines vary from one shop's to the next based on their lease agreements. McKnight says he expects to be hit to the tune of around $250 an hour -- $2,750 in total if he proceeds as planned.

"We're just stuck following the rules," Shaun Deutsch, the manager of the mall's Tee Shirt University store, told Time Warner Cable News, Buffalo, "because if we didn't, we'd be fined by the mall and being a small company, that's substantial to us. We can't just pay that."

"It's been a lot different this year trying to find people to work," Deutsch said. "It's not been easy. I've been forced to schedule myself because I can't find anyone else, really, to help me out."

Last year, the Walden Galleria opened at midnight on Black Friday. Pyramid Management, which owns the mall, plans to have several other properties open on Thanksgiving, including Crossgates Mall near Albany.

 

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Market Wrap: Seventh Dow Record in Eight Days

November 13, 2014, 9:23 am

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Filed under: Energy, Earnings, Market News, Oil & Gas Industry

By BERNARD CONDON

NEW YORK -- Stocks wavered between small gains and losses on Thursday to close little changed as traders weighed generally strong earnings reports against the falling fortunes of energy companies.

Indexes rose from the opening of trading following encouraging quarterly results from Walmart (WMT) and the media giant Viacom (VIA), then flitted up and down most of the day. After four weeks of healthy gains for stocks and a series of record daily closes, the tepid trading wasn't unexpected.

After a move higher so far, so fast, the market needs a pause.

"After a move higher so far, so fast, the market needs a pause," said Quincy Krosby, a market strategist at Prudential Financial. "We need another catalyst to move higher."

All three major U.S. indexes closed higher after a late-afternoon rally. The Dow Jones industrial average (^DJI) rose 40.59 points, or 0.2 percent, to 17,652.79, a record. It was the seventh record close for the blue-chip index in eight trading days.

The Standard & Poor's 500 index (^GPSC) rose 1.08 points, or less than a tenth of a percentage point, to 2,039.33. The Nasdaq composite (^IXIC) rose 5.01 points, or 0.1 percent, to 4,680.14.

A slump in the energy sector held back the overall market as oil prices continued to slump over fears that supplies will outstrip demand. Benchmark U.S. crude lost 4 percent and is trading at a four-year low.

Energy stocks closed down 1.4 percent, after being off more 2 percent earlier in the day.

Energy company shares trimmed their losses after a late-day report from the Wall Street Journal that Halliburton (HAL) is in talks to buy rival oil-field service company, Baker Hughes (BHI), citing unnamed sources. Baker Hughes soared $7.77, or 15 percent, to $58.75.

In other deal news, DreamWorks (DWA) jumped 14 percent on a New York Times report that the toy maker Hasbro (HAS) is trying to buy the movie studio. And Berkshire Hathaway (BRK-B), run by billionaire Warren Buffett, said it was buying the Duracell battery business from Procter & Gamble (PG) in a deal valued at about $3 billion.

Jim Russell, a portfolio manager at Bahl & Gaynor, an investment firm, said the deal making helped keep stocks positive for the day.

"It's another source of demand for stocks, and presumably from smart buyers," he said. "It's lent some optimism to the market."

Among other stocks making big moves:

• Walmart jumped $3.74 to $82.94 after reporting earnings and revenue that were higher than financial analysts had expected. The 4.7 percent gain was the biggest in the Dow.
• Viacom, which owns the Paramount studio, MTV and VH1, rose $1.95, or 2.8 percent, to $71.20 after its results topped forecasts.
• Amazon (AMZN) rose 1.6 percent following news that it had resolved a bitter, long-running dispute with the book publisher Hachette. Amazon stock gained $4.97 to $316.48.

Benchmark U.S. crude fell $2.97 to close at $74.21 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $2.46 to close at $77.92 a barrel, also a 4-year low, on the ICE Futures exchange in London.

In other energy futures trading on the NYMEX:

• Wholesale gasoline fell 10.5 cents to close at $2.002 a gallon.
• Heating oil fell 8.5 cents to close at $2.362 a gallon.
• Natural gas fell 20.8 cents to close at $3.977 per 1,000 cubic feet.

In metals trading, the price of gold edged up $2.40 to $1,161.50 an ounce. Silver was flat at $15.62 an ounce and copper fell three cents to $2.99 a pound.

U.S. government bond prices rose slightly. The yield on the 10-year Treasury note slipped to 2.34 percent from 2.36 percent on Wednesday.

What to watch Friday:

• At 8:30 a.m. Eastern time, the Commerce Department reports retail sales for October, and the Labor Department reports import and export prices, also for October.
• The University of Michigan releases its initial survey of consumer sentiment for November at 9:55 a.m.
• The Commerce Department reports business inventories for September at 10 a.m.

 

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