This time last year, I wrote that Scottrade, a discount online stock brokerage that I have been using since 2001, was about to launch its own free dividend reinvestment program. I was really excited when I first heard that the program might be available in the fall of 2012 because that’s what I have been waiting for years. As a long time investor with Scottrade, I have every reason to like the broker, but one thing that’s missing from the otherwise great service from Scottrade is free automatic dividend reinvestment.

Over the years, I have gradually shifted part of my investments into stocks that pay regular dividends and a big portion of that investments is in stocks held at Scottrade. For the income generated from these dividend paying stocks, I don’t want to take it as cash distribution or use the money to buy other stocks. Rather I would like to reinvest the distribution and buy more shares of the stock that pays the dividend because, by reinvesting the dividend, I want to have a bigger payout later, at which time I may need to take the distribution as cash. However, since Scottrade doesn’t allow free dividend reinvestment, all the distributions I have received so far ended up being used to buy other stocks, not the way I want to use the payouts.

Well, the fall of 2012 has long gone and Scottrade’s dividend reinvestment is still a program in the making. Early this year, I contacted Scottrade to see when, or ever, the dividend reinvestment will be available. At that time, I even thought about moving my brokerage account from Scottrade to TradeKing because I was tired of waiting. Scottrade told me in January that the program will be available some time this year and asked for my patience.

Since I have been waiting for it for so long, I thought a few more months won’t hurt too much. So I waited. Last night, when I logged into my Scottrade account, I noticed this announcement “Coming Soon … Dividend Reinvestment on Your Terms”. So it’s finally coming? I clicked the link and was led to the “Flexible Reinvestment Program Overview” page that explains a little more what “on your terms” means:

Scottrade will soon offer a commission-free flexible dividend reinvestment program that will allow you to invest dividends from most dividend-paying stocks or exchange-traded funds that you own into most stocks or ETFs.

The program will be different from a traditional dividend reinvestment program (DRIP), which requires you to reinvest dividends back into the securities that paid the dividends. In the Scottrade program, dividends will accumulate into a pool of funds that you can use to purchase shares of almost any stock or ETF. The choice is yours.

The Scottrade program will provide significant flexibility and is designed to let you tailor your dividend reinvestment tactics to your overall investment strategy.

My suspicion from the above program description is that the program is not automatic and I have to the reinvestment myself but since it’s “commission free” I won’t pay the regular commission for reinvesting the dividend. When I contacted Scottrade about dividend reinvestment before, I was offered trading credits that, as I was told, could be used to reinvest dividends I received which accumulated into a pool of cash. With those trading credits, I could reinvest the dividends or use the dividends to purchase shares of any stock or ETF commission-free 

If this is what Scottrade has come up with after all these years, then I have to say that the time for me to move out of Scottrade has finally come because this is NOT what I wanted, a dividend reinvestment program that automatically reinvest dividends for free, the traditional DRIP.

I will need some confirmation from Scottrade on whether the Flexible Reinvestment Program has the option to let me automatically reinvest the dividend for free. If so, I will stey; otherwise, I will leave.

I don’t understand why they try to be creative here.

Original Post on www.thesunsfinancialdiary.com

Special Promotional Offers

• Free 401(K) Fee Analyzer
• Scottrade 3 Commission Free Trades
• Citi Dividend Select Platinum Card $100 Bonus
• Citibank Checking Account $300 Gift Card Promotion

I’m about to do something that I rarely do.  Admit that I made a mistake.  I’ve lamented before about how credit scores can be a notoriously fickle thing and can begin to drop rapidly if you start missing payments.  With a slight bit of shame, I’m about to give you a personal case study in how a missed bill affected my credit score and how that in turn cost me a big wad of cash.

I have a credit score right around 800.  All of my bills get paid in full and on time every month.  Like most people, I sign up for automatic payment so it’s one less thing that I have to worry about.  I have one credit card bill that currently doesn’t allow for automatic payment so I have to go online to pay the bill manually every month.

It turns out we didn’t have our e-mail address on file either so we didn’t get the benefit of an e-mail notice telling us that we had forgotten to pay our bill.  Before I knew it, this bill was 60 days past due and the credit agency had been notified.

The timing of this was especially bad because we were applying for a mortgage refinance at the time.  One of the first things that the bank did when we applied for the refinance was to pull our credit file so imagine our surprise when they came back and told us that our credit score was 730 – a full 70 point drop.  The top reason given for the score was recent delinquent payment.

The 70 point drop in and of itself probably wouldn’t have bothered me that much had we not been in the process of applying for a loan where we needed a high credit score.  At the rate we were applying (a 10 year fixed loan at a rate of 3.25%) with our prior credit score we were looking at a closing cost that we were quite comfortable with.  But our old credit score was a thing of the past and with it went our expected closing costs.  When the bank reran our application considering our updated credit score, we found that our closing costs would be about $700 more than we had originally estimated.

A 70 point drop in our credit score and an estimated $700 more in closing costs for our refinance.  All because of one missed bill that was completely by accident.  The funny thing is that the bill was for a credit card that we rarely use.  I think the total bill was only somewhere around $100.

I think the lesson here is obvious.  I need to pay closer attention to my bills.  Automatic bill payment is a great thing but even with that I need to keep an eye on my bank account to make sure that the bills are getting paid.  The ones that aren’t on automatic payment need to be monitored even closer so something doesn’t slip through the cracks again in the future.  E-mail reminders, calendars or even post-it notes would help make sure I don’t miss another bill in the future (read more on how to improve your credit score)

Consider it a lesson learned.

Photo credit: Marcus Metropolis

Original Post on www.thesunsfinancialdiary.com

Special Promotional Offers

• Free 401(K) Fee Analyzer
• Scottrade 3 Commission Free Trades
• Citi Dividend Select Platinum Card $100 Bonus
• Citibank Checking Account $300 Gift Card Promotion

Airline tickets are getting more and more expensive these days. A few years ago, I could a round-trip to China in September for something like $800. But now, the cost is 50% more for flying even in the off-peak season and more than doubled in the summer. And this doesn’t just happen to international flights. For domestic flights, ticket prices are also increasing slowly but steadily over the years. There are a couple of reasons I can think of that have caused ticket prices to go up. First, we can obviously blame higher oil price. Since crude oil broker the $100 a barrel mark the first time a few years ago, airliners have added surcharges to offset rising fuel prices. Second, there are less airlines now than before due to consolidation in the industry. Delta and Northwest have merged; Continental and United have joined together; and US Airways has bought American Airlines. Obviously, less flyers always means less competition and higher ticket prices. Finally, we have this long economic recession that has forces people and business to cut back travel.

One way to somewhat ease the pain of high airline tickets is to get a credit card for the airline that you usually fly with and use the card for shopping. That can earn you cash back that can be used to redeem for free flights or hotel stays. These days, many such cards also give a big incentive to new card members, usually more than enough to get a round-trip domestic flight for free. Even though I don’t travel much, that’s what I did a while ago when I applied for the the Citi® Platinum Select®/AAdvantage® Visa Signature® Card.

The Citi® Platinum Select®/AAdvantage® Visa Signature® Card is specifically for travelers who usually fly with American Airlines. If AA is your main carrier, then getting this card does make sense because it will let you earn AA frequent flyer miles that can be used for American Airlines tickets and if you accumulate enough miles, you can redeem them for free tickets.

The main benefit of the Citi® Platinum Select®/AAdvantage® Visa Signature® Card is that it allows you to earn miles from using the card for your everyday purchases, from groceries to gas. Basically, you can earn earn one mile for every dollar spent on the card. There’s no restriction on where you can or can’t earn miles. Everywhere you use the card to pay for your purchases, you earn miles towards free flight. The rewards program of the  Citi® Platinum Select®/AAdvantage® Visa Signature® Card plain, so it may not look very exciting, but every mile adds up, right? If you are considering of getting the card, there’s another good reason for doing so: 30,000 bonus miles. That’s right. If you become a new cardholder, you are eligible to receive 30,000 bonus miles after making $1,000 in purchases within 3 months of becoming a member. But there’s more. You can also receive a $100 American Airlines Flight Discount every cardmembership year with qualifying purchases and cardmembership renewal. Using the AAdvantage Visa Card, you are able to earn double miles on eligible American Airlines purchases.

The spending limit for the bonus miles may look high, but since you have four months to complete the requirement, it shouldn’t be a big problem because many other cards which offer similar incentive usually give three months instead to meet the limit.

The AA miles earned from this card never expire (you can go to aa.com website to track your miles), and there’s no limit on the number of miles you can earn per year. If you decide to redeem your miles, you can actually earn 10% o the miles your redeemed back, up to 10,000 AAdvantage miles each calendar year. That’s pretty awesome, isn’t’ it? After becoming a cardholder, you first eligible checked bag is free for you and up to 4 traveling companions. How much does a checked bag cost these days? Something like $30? So this card can save your some serious money if you fly with your family members or friends and you use your AAdvantage Card on those checked bags.

This card  does have an annual membership fee at $95. The good news is the fee is waived for the first year. Considering the bonus miles you are going to receive and other benefits, the membership fee isn’t that bad comparing with similar airline credit cards from other banks.

Original Post on www.thesunsfinancialdiary.com

Special Promotional Offers

• Free 401(K) Fee Analyzer
• Scottrade 3 Commission Free Trades
• Citi Dividend Select Platinum Card $100 Bonus
• Citibank Checking Account $300 Gift Card Promotion

Online discount broker OptionsHouse is currently running a promotion which will give away Google Nexus Tablet for free to new customers when certain conditions are met. In order to get the free Google Nexus Tablet, you will need to satisfy the following requirements:

1. Open an OptionsHouse brokerage account using promo code FIRE during the promotional period;
2. Fund the new account with $10,000 or more within 60 days of account opening;
3. Make 15 commissionable trades within 90 days after funding your account;
4. Get a free Google Nexus Table within 30 days after the above conditions are met.

Retail values totaling $600 or more during the calendar year will be included in your consolidated Form 1099.

Original Post on www.thesunsfinancialdiary.com

Special Promotional Offers

• Free 401(K) Fee Analyzer
• Scottrade 3 Commission Free Trades
• Citi Dividend Select Platinum Card $100 Bonus
• Citibank Checking Account $300 Gift Card Promotion

I have been a Scottrade customer for years and whenever I need to add fund to my brokerage account, I use an external bank account linked to the Scottrade brokerage account to transfer money before buying stocks (see my post on how to fund Scottrade brokerage account). It is quite convenient actually, though the system has changed a couple of times. Basically, I can transfer money from my bank account at any time during the day and use the money just transferred to buy stocks immediately even before the fund is settled (the exception is stocks below $4 a share which require cleared funds in order to purchase). This actually is one of the features I prefer Scottrade over other discount brokers because most of them require at least 3 business days of waiting period before any new money can be used for trading.

In addition to using Scotrade Money Direct to transfer fund from an external bank to Scottrade, you can also use Scottrade Bank account to fund your brokerage account. 

Though I don’t have a Scottrade Bank account, I would imagine that money in the Bank account can be used to purchase stocks immediately without the above mentioned limitation because the money in the bank account would have already been settled by the time you want to buy shares (there’s no point to transfer money from an external bank account to the Scottrade Bank account right before purchasing stocks).Of course, having fast fund transfer is one of the benefits, or conveniences, of having a Scottrade Bank account. Just like what I usually do when selecting a bank account, I also want to have the benefit of having my money in the account, i.e., the return of the money. That’s exactly the reason I don’t want to keep any extra money in the brokerage account because I got nothing for having the money there, though I can use the money to buy shares with no restrictions. Unfortunately, the new Scottrade Bank accounts, including checking, savings, CD and Money Market account, don’t impress me in terms of returns. For example, the savings account has a rate of 0.03% APY for balance below $10,000. That’s close to nothing. And if the daily balance goes up to $100,000, the yield is just 0.10%, better than nothing but still.

So basically, the Scottrade Bank account is a better place to park your money that you want to be ready for purchasing shares, cheap or expensive, than the brokerage account, though you still earn almost nothing for your money.

In addition of being a better tool to transfer money between Scottrade broker account and bank account, there are some other features of the new Scottrade Bank account, including

• No monthly account maintenance fees
• Free online bill pay
• ATM fee refunds on cash withdrawals (you will be charged when withdrawing cash using Scottrade debit card, but Scottrade Bank will reimburse the sum total of your transaction charges at the end of the month)
• Free Scottrade debit card
• Convenient local customer support
• FDIC insurance

There’s one condition for the Scottrade Bank account though. The bank account is tied to Scottrade brokerage account, which means that you have to have a Scottrade brokerage account including individual, joint, trust, traditional IRA or roth IRA. So you can’t open the bank account directly without having a broker account first. Scottrade Bank has no minimum account balance requirement.

The initial deposit for the bank account is $100, which is pretty low. And you can fund the new account through a external account. The Scottrade Bank ABA routing number is 081086674.

If you are interested in a Scottrade brokerage account and a bank account, you can open open a Scottrade account using promo code KGKP0724 to get 3 commission free trades.

Original Post on www.thesunsfinancialdiary.com

Special Promotional Offers

• Free 401(K) Fee Analyzer
• Scottrade 3 Commission Free Trades
• Citi Dividend Select Platinum Card $100 Bonus
• Citibank Checking Account $300 Gift Card Promotion