It is no secret that Americans are not good at saving.  

In fact, before the economic downturn, Americans were only saving 1% of their income according to The Atlantic.

Compare that to the Japanese, who save 25% of their income, down from a high of 30 to 35% according to Maki, the Japanese woman behind the blog Just Hungry.

My husband was born in Japan and lived there the first 25 years of his life, so I asked him about his experience growing up.  He was at first hesitant to share because he is nearly 40, so he doesn’t feel his family is representative of the way things may now be in Japan.  Still, this is his family’s experience, which I find to be in stark contrast to many American households, even 30 years ago.

His Parents’ Backgrounds

His parents each have modest educations and careers.

His dad, Shoji, only has a high school degree; he worked for the local government and did not move into a management position until he was nearly 50.  He worked 10 hours a day, seven days a week.  Even on Saturday and Sunday he went to the office and worked 10 hours or more.

My husband has memories of his dad not coming home some nights until 9 or 10 p.m.  Shoji also lived several hours away for a few years when work required it and only came home sporadically on weekends.

His mom, Yuki, has a two year degree and worked at the local preschool.  She worked nine hour days Monday through Friday and a seven hour day on Saturday.  Sunday was her only day off.

Societal Structure Helped Them to Save

What do you think of the Japanese frugal values in this article? Possible today?

In Japan, tradition dictates that the oldest son and his wife care for his parents in their old age.

Per this societal expectation, Shoji and Yuki moved in with Shoji’s parents as soon as they were married.  While this arrangement can be personally taxing for some, it does offer significant financial benefits.  They never had to pay rent or take out a loan to buy a home; when my husband’s grandparents died, his parents took over the house.  Likewise, Shoji and Yuki did not have to pay for daycare for my husband and his sister while they worked; the grandparents took care of them.

Because Shoji’s dad developed Alzheimer’s disease, he did eventually require more care than the family could give, so he lived in an assisted living facility.  All members of the family chipped in to pay for his care.

Implementing Frugal Behaviors Allowed Them to Save Prodigiously

My husband had a long list of frugal behaviors his parents implemented to allow them to grow their savings with their modest careers.  Here are a few of them:

- Grew their own garden to save on the cost of vegetables;

- Went on vacation just once every three or four years, and then the “vacation” was simply an overnight trip or a two day trip, often at a facility the local government owned so their stay was free;

- Went out to eat only once or twice a year;

- Used cash only, not credit cards;

- Rarely bought their kids’ clothes (besides the uniforms required for school); instead they dressed in hand-me-downs from their older cousins;

- Ate basic, low cost but healthy foods such as fish, rice, miso soup, and other Japanese staples;

- Bought the smallest cars they could that would comfortably fit their family of four so they could save on the price of the car itself as well as gas over the years;

- Kept each of their cars for at least 10 years;

- Never had cable tv;

- Put any extra money they made immediately into savings.

How Their Children Benefitted from Their Frugality

Education is very important to Shoji and Yuki.

Because of their strong work ethic and dedication to long hours at work as well as their frugal lifestyle, they were able to pay for my husband’s three year education in Tokyo (one of the most expensive cities in the world), as well as his 3 month exchange trip to London, and his three years of education in the United States.

They also paid for four years of my husband’s sister’s education and living expenses.  They paid for all of these educational expenses outright, without loans.

In addition, because my husband is living in the United States, his sister took over the traditional role of caring for her parents (though they don’t need to be cared for yet and are in fact still working even though they call themselves retired).  In return, rather than living with them, Shoji and Yuki built her and her family a large two story house right next to their house and bought her a new car.

Again, they were able to afford this thanks to their prodigious savings.

Despite these expenses, they still have plenty left for retirement and are enjoying their pseudo-retirement and spending time with their grandkids.

Finally

As Americans, many of us feel that luxuries (though we may not see them as such) are our right such as the latest electronic gadgets, a home as large as we can afford, a new car every few years, dinner out several times a week, and vacations to exotic locales, to name a few.

My husband’s parents’ example seems to prove that it is good to work for the things you really want, in this case their children’s education, but you can’t have everything you want.

To grow your own wealth, you must put a priority on the one or two things that are very important to you and let the others fall by the wayside.

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Reflections on a Frugal Japanese Life

Like so many other industries, there are small players and big players.

Little fish in a very large pond may be another applicable cliché to describe this story.  The pond is the brokerage business and that pond is big.

Companies like Fidelity, the world’s largest retirement account holder has 13.5 million accounts, E*Trade, one of the most well known of the brokers for retail investors has 3.9 million accounts and TD Ameritrade has 5.7 million.

In the past, there were plenty of smaller discount brokers but most were bought by the larger firms.

Schwab acquired OptionsXpress for $1 billion and TD Ameritrade acquired Thinkorswim for an undisclosed amount.

As the big brokers keep getting bigger, there was little room to compete if you were still holding on as one of the smaller firms in the highly competitive field of discount brokerage.

[Related: Best Online Brokers for Inexpensive Trades]

This was true for two small firms, Zecco and Tradeking.

New companies often open their doors because they want to do things differently.  They want to challenge the traditional models and solve the problems that other companies have been unable to address.

The financial services industry might invest in trendy technology with their clients’ funds but not with their business.  Financial services have very little use for social media but Tradeking and Zecco wanted to change that.  Clients using their platform can place trades directly from Facebook and participate in social media driven investing communities as well as trade without account minimums.

Not only is social media a focus for these companies, pricing more suited to the smaller retail trader is one of the reasons that Tradeking has been voted best in customer service for the past three years.

But even with some standout services and a trading experience that customers like, Tradeking and Zecco knew that they weren’t able to compete with the larger brokers.

TradeKing and Zecco to Merge

On May 15th, 2012, Tradeking and Zecco announced a merger that would consolidate several billion dollars in client assets and create a company with 500,000 clients.

This would make them the 6th largest firm behind Schwab, E*Trade, TD Ameritrade, Scottrade, and Fidelity.

Along with the social media capabilities, the two companies will give customers more trading options.

From TradeKing CEO Don Montanaro:

TradeKing and Zecco share a similar mission, applying pressure on the industry to give the individual investor a far better trading experience and a far greater value.  By merging, we have an opportunity to ratchet up our ability to influence the direction of the online brokerage industry. We believe this is great news for clients of both firms and investors as a whole.

Tradeking concentrated on equity options and Zecco offered Foreign exchange trading along with the more traditional stocks and options.  Together these specialties will combine to add more options for investors.

[Related: TradeKing Review]

Even as a combined company, some analysts are skeptical that they can compete with the top five.  Most consumers have seen the commercials for the top five brokerages but have probably never heard of Tradeking or Zecco.

In some industries, size is important and that is true in the brokerage business.  

Consumers are more likely to trust their money to larger financial institutions instead of taking the chance on a smaller, less known company even if the price and features appear to be better.  These two headwinds may prove to be too much for the combined company.

Still, this could be great for Tradeking which already gets high praise for its customer service and low-price trades.

Bottom Line

In an industry filled with big players and deep pockets for advertising, this merger not only makes sense from a competitive standpoint but combining services to give customers more for the same low price is a smart and likely necessary step, according to analysts.

What do you think of the Tradeking and Zecco merger?  Are you a customer of either?

See more from the CEOs of TradeKing and Zecco:

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Tradeking and Zecco to Merge – More Capabilities, Same Great Pricing

Facebook’s IPO finally hit the market at a raised price of $38 per share.

Some were expecting the shares to “pop” as soon as they start trading.

Instead, shares went up to the $40-41 range, but finished the day at $38.23.

I didn’t get into the action, but many others hopped on to get a slice of Facebook.  I’m still not convinced they should be trading at a Price-Earnings ratio of 122.  In comparison, GE trades at P/E of 15.5, Apple at P/E of 12.93, and Ford at P/E of 2.11 times earnings.

Did you buy shares of Facebook? If they skyrocket, these articles will help you manage the windfall:

Boomer & Echo | How Young Adults Can Still Thrive Financially
Prairie Eco-Thrifter | Why Buying Green Is Not Always Eco-Friendly.
The Simple Dollar | The Great Things You Already Have
On Target Coaching | S.H.I.E.L.D Your Finances From Total Destruction
The Financial Blogger | Partnership Failures and Lessons Learned
Cash Money Life | How Balance Multiple Savings Goals
NPR’s Planet Money | Pizza Delicious Bought an Ad on Facebook – How’d They Do?
Don’t Do It Yourself | How I Tripled My Affiliate Revenue Without Adding Traffic and You Can Too
Get Rich Slowly | When a Women’s Work is Done
The Digerati Life | Should You Cancel Your Credit Cards?
Five Cent Nickel | Being Too Frugal Can End Up Costing You Money
Enemy of Debt | I’m Not Paying For Your Mistake, Even If You Are Only 13
Consumerism Commentary | Young Americans Likely to Be Unbanked Regardless of Income Level

Free From Broke was featured in the following carnivals:

Carnival of Personal Finance #361 – The Mothers Day Edition | One Cent At A Time

If you’ve included Free From Broke in a carnival and I haven’t mentioned it please drop me a line and I’ll make sure to include it.

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Facebook’s Moderate Introduction and Links

Do you fly United Airlines with any frequency (or the former Continental Airlines, which merged with United)?  Would you like special flying privileges on your United flights?  Would you like to earn free flights and more?

If you answered yes to any of the above then you need to look at the United MileagePlus® Explorer Card from Chase.

The United MileagePlus Explorer Card is considered an airline miles credit card.  What that means is the purchases you make earn you airline miles which can be redeemed for flights and more.  Airline miles cards are a great way to use your purchases to earn you free flights.

Here’s a quick rundown of what the United MileagePlus Explorer Card offers you:

• Earn up to 40,000 bonus miles & first year free, a $95 value*

• First checked bag is free for you and a companion when you fly United flights, up to a $50 value

• Board your flight before general boarding with priority boarding privileges

• Visit the United Club with two complimentary day passes every year, up to a $100 value

• Earn 2 miles for each $1 spent on airline tickets purchased from United and 1 mile per $1 for everything else

• Your miles don’t expire and there is no limit to the number of miles you can earn.

Let’s take a more detailed look now, shall we?

Airline Miles

You earn 2 mile for every $1 spent on tickets you buy through United.  All other purchases are one for one (one point for one dollar spent).  The miles you earn don’t expire (you have to keep up your cardmember status – that is, you can’t cancel your card, get a new one, then expect your miles to still be there).  There’s also no limit to the amount of miles you can earn.

You can redeem your miles for any flight.  As long as a seat is available for sale you can use your miles towards it.  There are no restrictions or blackout dates.

Bonus: Earn up to 40,000 bonus awards miles!

You earn 25,000 bonus awards miles after your first purchase.  This can be any purchase or balance transfer.  The one-time bonus will hit your account 6-8 weeks later.

Earn an additional 5,000 bonus awards miles when you add an authorized user to your account within the first 2 months of opening the account (you must also make a purchase).  Who makes a good authorized user?  Perhaps your spouse or a child who’s away at school?

Get an additional 10,000 bonus awards miles when you make $25,000 in purchases in a calendar year.  A calendar year is from the time you signed up until December 31 of that same year.  What’s nice about this particular bonus is it’s good for every calendar year you make $25,000 in purchases.

Check Your First Bag Free

When you use your card to purchase United flights, you and your companion get to check your first bag for free.  That’s a $50 savings per person round trip right there. (Both people must be on the same reservation.)

I’m not a fan of airlines charging for checked bags but if they are I’d like to do what I can to avoid that charge.

Priority Boarding

Here’s a sweet perk – you and everyone else on your reservation get to board the plane before the general boarding.  Ever miss out on close space in the overhead bins?  Yeah, priority boarding can be nice.

Two United Club^SM Passes Every Year

After you open your account (about 8-10 weeks after) and every anniversary after, you will receive two United Club passes free.  Before your flight, relax with free wifi and complimentary beverages and snacks.

More Features

In addition to features that benefit your flights you also get some other cool features:

Luxury Hotel & Resort Collection benefits – when you make a reservation through an LHRCollection travel specialist, or their website, you have access to special guest privileges and amenities at more than 700 of the finest hotels, resorts, and spas.

Concierge services – you have access to concierge services through Visa Signature Concierge.

Mileage Plus Travel Protection and Services – enjoy purchase protection and primary auto rental coverage as well as other travel protection services.

Access to exclusive events – through Chase’s Inside Access from Chase you will have the opportunities to purchase once-in-a-lifetime experiences.

The United MileagePlus Explorer Card is free for the first year (following years have a $95 annual fee).

Finally

As you can see, if you fly United Airlines then having their United MileagePlus Explorer Card offers up a good number of benefits to make your flight more comfortable (like priority boarding and checking your first bag free) as well as earning you free flights.

Remember though, if you aren’t paying off your credit card balances every month then you start to cancel out any benefits the card offers in the interest you pay.

Visit the United MileagePlus® Explorer Card page to apply or for more information.

*As you always should, make sure you read through the card details to make sure this card fits your needs and you understand the terms and conditions. Be aware that the terms may change after this article’s publication.

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United MileagePlus® Explorer Card Review

Most of us commonly think of Social Security as almost synonymous with retirement — but it was never planned to be.

When it was established in the 1930s it was set up to be primarily an anti-poverty program—or “social insurance”—dealing with old age, poverty, unemployment, and the burdens of widows and fatherless children.

The stock market crash of 1929 and the onset of the Great Depression collapsed incomes across the board and wiped out the savings of many of the elderly.  The government responded by implementing Social Security to remedy many of these economic ills.

Strictly speaking, it was never intended to be a retirement plan as much as a supplement for lost wages.

The Depression is now deep in the history books and with it, the original intent of Social Security.  Today it’s mostly seen as a retirement plan.

But is it really?

Why you can’t rely on Social Security alone

For millions of people, Social Security will be either the biggest portion of income they will receive in retirement, or even the only income they have during their retirement years.

Can we rely on it to that degree?

According to the Social Security Administration the maximum social security benefit is $2,513 a month.  The minimum benefit–are you ready for this—is one dollar!

Most people will fall somewhere in between, and that doesn’t sound at all like a plan that can be relied upon to insure a comfortable retirement.  That’s why we all need to have other sources of income in place.

Think of Social Security as just one part of your retirement planning

What do you think of social security as a retirement plan?

We should never ignore Social Security as an income source in retirement—we just shouldn’t count too heavily on it for planning purposes.

Once again, according to the Social Security Administration, the the average monthly benefit is $1,230, or just about exactly halfway between the $1 minimum and the $2,513 maximum.

With the cost of living being what it is today that’s a true supplement and little more.

One of the complications we have with developing a more balanced approach to retirement planning is that relatively few employers have traditional defined benefit pension plans any more.  That eliminates what was once a reliable component of retirement income.

In a very real sense when it comes to retirement planning, we’re truly on our own.

Even though retirement is an event that’s decades away for many, when it comes to retirement planning, there’s a definite element of carpe diem, or seize the day.  As in this day—we need to be working now to be ready for a retirement that will be mostly the product our own efforts.

Building other sources of retirement income

Since we know that we can’t rely on employers and the government to provide even the majority of our retirement income, we should have all the incentive we need to make our own arrangements.

The two primary alternate income sources can be either self directed retirement plans or some form of post-retirement employment or self-employment.  The combination of both would be ideal.  (Work in retirement sounds like an oxymoron, but I’ll show you why it could be important in a moment).

Self-directed retirement plans have become a retirement planning necessity, and for a number of reasons they can be even better than traditional company pensions:

• They’re generally tax deductible, which is an outstanding benefit while your saving;
• Employer sponsored plans often include an employer match that’s like found money;
• Since they’re self-directed we can take on as much risk—or risk avoidance—as we choose;
• Unlike traditional pensions, we always know what we have in self-directed plans;
• There’s less chance that a 401k plan will be squandered or poorly invested as sometimes happens with pension funds;
• By maximizing contributions it’s possible to build a plan that dwarfs a traditional pension plan.

When it comes to self-directed retirement plans, we need to plunge in with all the financial resources we have.

Now, let’s get back to that working in retirement thing.

There are several strong reasons why you might want to have a work plan for your retirement years:

• Working past retirement age is a way to preserve and extend retirement savings for years;
• Working can provide some insurance against a less than expected retirement portfolio, or even a post-retirement stock market slide;
• Employment income can form the third part of a retirement plan that includes Social Security and retirement investment income;
• By working and delaying collecting Social Security until age 70 you can increase your monthly benefit by up to 32%.

Most of us think of retirement as a complete end to work, but as you can see there are compelling reasons why you might want to delay full retirement by at least a few years.  At a minimum, having some sort of post-retirement employment/self-employment will keep open some options that will be good ones to have.

The low numbers on Social Security benefits shouldn’t be seen as a source of concern nearly as much as we should use them as a wake up call to make our own arrangements for retirement income—as if we need any more incentive…

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Is Social Security Really a Retirement Plan?

We all want to make more money.

And, for many, the dream is to make money quickly and with a minimal amount of work.  This is why investing is such a popular method of making money.

If you take a measured approach, you should be able to regularly invest in carefully chosen stocks, index funds or some other boring investment, and, over time, amass a reasonable amount of wealth as you receive returns on your investment.

Many people, though, don’t want to take the measured approach.

There are stories of people making money fast by choosing the right investment, at the right time.

How many of us regular folks harbor the dream of, perhaps, taking $10,000 in capital and turning it quickly and painlessly into ten times that amount?

The unfortunate truth is that investments that promise such riches, fast and easy, are usually scams.

Does that Investment Send Up Red Flags?

Watch out for investment red flags!

Before you embark on an investment journey, you need to see if it raises red flags.

For the most part, a straightforward investment that you find via a legitimate online broker, or as part of your company’s retirement plan, probably isn’t a scam (although it may not be the best investment for you).

Here are some red flags that indicate that you could soon be the victim of a scam:

Promises of high gains with low risks

This is one of the biggest red flags in the world of investment scams.

Anyone who tells you that you can see huge gains, especially in a short amount of time, without being exposed to risk, is probably a huckster.

Watch out for the words, “sure thing.”  There is no sure thing when it comes to an investment.  Even the most boring index funds — even U.S. Treasuries — have an element of risk.

Someone who shows a history of no losses, or almost no losses, is probably making up information, or using shady accounting practices.  Remember Bernie Madoff?

You are getting access to “inside” information

If you are told that the information you receive is “special” or “inside,” it could be a sign that you are dealing with a scammer.

Also, be wary of those who keep telling you that you are “elite” or “exclusive.”  The point is to make you feel special.

The truth, though, is that most of the legitimate investment opportunities are accessible, in some way, to almost anyone.  Watch out, too, for those who say that you have passed a special “screening” process to be approved.  That’s one more trick to make you think that you are dealing with something legitimate.

You have to make a decision quickly

Anytime you are pressured heavily to make a decision quickly, especially within the next 24 to 72 hours, you are staring at a red flag.

The truth is that you will still be able to invest in legitimate ETF, bond or REIT next week.  And if you can’t buy that foreclosure this month, there will be other attractive properties, not being hawked by someone shady, available next month.

If someone is putting undue pressure on you to decide right now and get together a large amount of capital within a couple of days, you might want to reconsider.

You have to be on the alert for investment scams.

Instead of expecting that you can make a great deal of money by following someone else’s “hot tip,” it pays more in the long run to formulate your own, more stolid, investment plan.

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How to Avoid Investment Scams

Years ago, children graduated from high school, got a job and shortly thereafter got married, bought a home and had children.

This pattern may have been delayed a few years as more and more people obtained college educations, but the pattern remained basically the same.

Now, however, the number of adult children living with their parents has skyrocketed.  In fact, as recently as 2010, Calculated Risk shared that nearly 13.5% of individuals ages 24 to 35 lived at home with their parents.  This group has even been given their own name—Boomerang Children–because they leave the nest for some time but then return back home, sometimes for years.

If your adult child has moved back in, should you charge them rent?

Why Do Adult Children Move Back Home?

There are a variety of reasons why adult children move back home.

Sometimes it is because they can’t find a job in today’s economy, or they do have a job but the salary isn’t enough to allow them to live on their own.  Perhaps they have student loan debt or credit card debt and can’t afford debt repayment as well as living expenses.

Even if your child is not in debt, she may choose to live at home to save money for a down payment on a house.

Sometimes it is because they are simply lazy and can’t beat the free ride at mom and dad’s.

Often it can be a combination of reasons.

To Charge Rent or Not To?

Should boomerang kids be charged rent?

Whether or not to charge adult children rent seems to be a polarizing issue.

On one hand, some parents are firmly against charging their adult children rent because they see it as their parental duty to continue to care for their children no matter how long it takes for them to become independent.  They may feel as if they are taking advantage of their children by taking rent money from them, especially if the child is living at home to save for a house of her own.

On the other hand, many parents believe that charging rent helps their children mature and learn responsibility.

My mom fell into this camp.

Fifteen years ago when I lived at home for two years between undergraduate and graduate college, she charged me a nominal rent, about $100 to $150 a month, to live at home.  At the time, I was working at a low paying job making roughly $15,000 a year and also paying back student loans from my undergraduate career.  Still, I happily paid my rent because I knew what she was charging me was much less than I would have to pay living on my own.  What I paid her probably just covered my portion of food and utilities for the month.

Even experts are conflicted about what to do with boomerang kids.

Walter Updegrade of Money Magazine believes that there are times when you should be lenient with your children and not charge rent, stating, “If your son is living at home out of economic necessity — perhaps his salary is just too skimpy to allow him to make it on his own or he’s grappling with a huge load of student loans — then maybe you want to cut him some slack. You could just ask him to chip in for household expenses rather than charging him rent.”  (cnn.com)

On the other hand, no nonsense financial expert Gail Vaz-Oxlade of Til Debt Do Us Part fame boldly states, “If you don’t take rent, you’re a bad parent. Yep! You are! You’re abdicating your responsibility to teach your kids (adults) about what life is really like. And you’re letting them get used to indulging themselves way more than they should.” (gailvaz-xlade.com)

An Alternative for Parents Who Feel Uncomfortable Charging Rent

If you want your child to learn responsibility but feel conflicted about charging rent, there is an alternative.

You could charge them a nominal rent of perhaps $200 and, unbeknownst to them, save the money.  Then, when they are ready to move out on their own, you can give them that money for a security deposit on an apartment or an emergency fund or partial down payment if they are looking at buying a house.  If the child stays with you for 24 months and you charge $200 a month that you set aside, by the time she leaves, you will have $4,800 to return to her to help her achieve her own financial independence.

As you may guess from my own background, I do believe in charging grown children who are living at home rent. 

It can help teach your child appropriate money management and budgeting techniques, and it helps them realize that their parents are not giving them a completely free ride.  It may even serve as incentive to nudge your grown children out of the home if they simply are too comfortable living there.

However, the decision is ultimately yours as a parent.  Just make sure when your adult child moves back in that the ground rules and financial expectations are clearly outlined.

Do you have Boomerang Kids or where one yourself? What was your situation?

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Should You Charge Your Boomerang Kids Rent?

It used to be revolutionary to hold your money with a bank that didn’t have any brick and mortar locations for you to visit.

Now high yield online savings accounts are more common and the decision comes down to which online bank you should open an account with.

There are many key factors in that decision — high interest rate, customer service, and account fees — that Ally Bank’s online savings comes out on top if you compare to other accounts.

What is Ally Bank?

Ally Bank’s story sounds eerily familiar to the mythical firebird phoenix that is rebirthed out of its own ashes.

That might sound strange for a bank, but Ally Bank is the new edition of GMAC or General Motors Acceptance Corporation.

GMAC was originally founded in 1919 and grew over the course of time, but like many banks a few years ago, got caught up in the financial crisis due to loose mortgage lending standards.  The bank had to take on TARP funding from the government and was rebranded to shed some of the bad image associated with the financial crisis.  A significant portion of the company is still owned by the US government, although the company is actively repaying on the funds it received.  (And a majority of the problems are on the mortgage side of the business, not on the personal banking side that Ally is on.)

Why on earth would I open an account with a bank like that?

We try to be honest with the reviews of companies we perform at Free From Broke.  We won’t sugarcoat bad news just to spin a positive review.  But in this case, Ally Bank does seem to be a good place to open an online savings account.

For starters, Ally Bank as it exists now is significantly different from the GMAC bank of old.  Some of the changes are so significant that they’re the main drivers that you should be interested in opening an account.

We’ll talk about that in a moment.

Secondly, any bank you deposit funds into needs to be covered by the FDIC limit of $250,000 per depositor at a bank.  Even if you opened an account with Ally today and three years from now they disappeared, as long as your total deposit with the bank is less than $250,000, you wouldn’t lose any money.  (Not to mention the likelihood of that is very slim!)

You’re not risking anything by saving money with an FDIC insured bank.  So why not take the one with some of the best perks in the industry?

Why Open an Online Savings Account?

Online savings accounts are one of the best places for you to store your money for a future goal.

The savings account at your local brick and mortar bank is fine, too, but you won’t earn hardly any interest on it.  Online savings accounts will always pay a higher interest rate on your savings than a brick and mortar bank.

Why?  Because online accounts don’t have the overhead cost of all those branches.

Plus, when you use an account with a brick and mortar bank it becomes very easy to dip into your savings for every small emergency that pops up.

With an online savings account you must transfer money to an account that is linked to the online account.  That transfer usually takes 2 or 3 days.  It can be inconvenient when you find yourself in a money pinch — but it forces you to come up with cash or suddenly decide those concert tickets didn’t qualify for digging into savings.  It’s like having a built in pause button on a money transaction.

In the long run that’s a very good thing.

What Makes Ally Different?

What makes Ally Bank so great?

Think of your old bank: you can never get a live person on the phone to help you.  Your interest rate is at or close to 0% on your savings.  And they keep introducing new fees.

Ally Bank was formed to specifically avoid all three of those issues.

No Monthly Fees

One of the first things that makes Ally different is you can earn an industry leading interest rate on your savings without paying a monthly fee.  When the bank was reborn one of its core focuses became having no monthly fees to trap customers with.  There is no account balance fee (in fact, no minimum balance requirement at all), no monthly fees for the honor of having an account with the bank, none of that.

Highest Interest Rate Available

As of the time of this writing, Ally Bank offers the highest online savings account interest rate available of the major bank options.  The other contenders are close (within 0.04%), but Ally is still at the top.

With Ally you’re combining no fees with the best interest rate available, all under the umbrella of FDIC insurance on your deposits.

Scan Checks to Deposit Them

One of the cool things you can do with your account is to scan in a check that you need to deposit with Ally’s eCheck Deposit^SM.

One of the frustrations of users in switching to using just online accounts is there is no where to deposit checks that you get from time to time.

With Ally, you don’t have to worry about that.

Just scan your check in and it will be deposited in your account for you.  (Just make sure you remember to void and shred the check when you’re done!)

Bank From Your Phone

Need to check your balance while you’re out?  How about make a transfer?  Yup, there’s an app for that!

Ally introduced their mobile banking app that allows you to check your balances, make transfers between Ally accounts, arch transactions, and search for ATMs.  All from your iPhone® or Android™ device.  They have more features in the works as well.

Live Human Beings in Customer Service

The company isn’t kidding when they say you will be able to access a live human being in customer service 24 hours per day, 7 days per week.

Getting to that human being is easy, too.

There isn’t a 17 step phone tree that you have to press 1, then 2, then 1 again to try and reach someone.  You’ll get a live customer service agent on the phone quickly to help resolve your problem.

Give Ally Bank Online Savings a Try

At the end of the day, as a saver, I’m looking for the best interest rate that has the least amount of hassle to it.

That’s what you’re getting with Ally.

You don’t have to worry about your balance getting too low and getting hit with a big fee.  You get the best interest rate available, great online access, live customer service, and maximum savings potential.

Open up an account and try depositing a little bit of money each week into the account.  You’ll get to test drive the bank, earn some interest, and if you end up not liking it, you can always close the account.  I bet if you’ll try it, you end up liking what you find.

Visit Ally Bank and open up an online savings account today.

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Ally Bank Online Savings Account Review

Facebook is set to have its formal IPO this week and trading will likely begin on Friday.

It is one of the most anticipated initial public offerings in history and will make Mark Zuckerberg quite the wealthy individual.

His employees won’t turn out so bad either — although they’ll likely pay about 45% in tax on the shares they sell.  That’s okay though, since the average tax hit is anticipated to be $1.1 million per employee.  ($1.1 million is 45% of $2.44 million, which would leave the average employee with $1.34 million.  Of course we know how averages work: some employees will have much more, some will have much less.)

One interesting tactic to avoid paying taxes on the IPO?  Renounce your US citizenship.  That’s what one of Facebook’s four co-founders just did.

While most of us won’t have to worry about selling our shares of Facebook at million dollar profits, here are some tactics to help you manage the money you do have:

Good Financial Cents | Don’t Pay Late! Different Ways to Set Up a Bill Reminder
Bloomberg | Tax Cheats Troll Public List for Dead Kids’ Identities
Five Cent Nickel | Seven Ways to Make Big Bucks at Your Garage Sale
Credit Card Smarts | Credit Cards 101: What is a Credit Card?
NPR’s Planet Money | How an Investor’s Gain Can Be Your Loss
AAAMP Blog | Money Proverbs – Funny Quotes and Sayings
The Simple Dollar | Unexpected Abundance and Clutter
CNN Money | Bye, bye unemployment benefits
Wealthy Turtle | 7 Mother’s Day Gifts That Will Guarantee You’ll Spend the Night on the Couch
Reuters | Bond funds globally see $8.55 billion, most in a decade
Consumerism Commentary | Wealthy Families Apply for Private School Financial Aid
Get Rich Slowly | How to Do a Wallet Audit

Free From Broke was featured in the following carnivals:

Carnival of Financial Camaraderie – Mother’s Day Edition | One Smart Dollar
Tax Carnival #102: May Tax Flowers – Don’t Mess With Taxes
Festival of Frugality #336 – Bee In Your Bonnet Edition | See Debt Run
Totally Money Blog Carnival #65 – Success, Wealth & Happiness Edition
Carnival of Personal Finance: The Color Wheel Edition | Money Talks
The Carnival of Financial Camaraderie #32 – Young And Thrifty

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Facebook Goes Public This Week and Links

Having a line of credit handy is extremely important for a small business.

Honestly, you never know what kind of expense may creep up that you can’t cover with your cash flow at the moment.  But it’s not easy or practical to get a business loan in a tight jam.  What to do?

Enter small business credit cards.

Not only do they provide credit, you can also find benefits such as cash back, rewards, flexible payment terms, separate tracking for business expenses, and more!

Is a business credit card always the best option for you?

No.  The CARD Act of 2009 put consumer protections in place for consumer cards but those protections aren’t mandatory for business cards.  Also, if your business expenses don’t justify a line of credit then you may be fine without a business card.  You may also find that you would be better off with a specific airlines miles card or travel rewards card that gives you better suited benefits than a card for your small business.

But if you are looking for a line of credit that’s separate from your personal cards or you are looking for a card that offers small business tools that will benefit you, like discounts or employee tracking, then a small business credit card can be a great choice.

Below are some of the best small business cards.  See which one best suits your business needs.

SimplyCash® Business Card from American Express OPEN

The SimplyCash card gives you cash back on your purchases and it is automatically credited to your following statement each month.

You get 5% cash back wireless services and office supply purchases; 3% back on automobile gasoline; and 1% back on all other purchases.  There is no limit to the cash back you can earn with this card. Add employee cards to your account and earn cash back on their purchases as well.

Besides cash back, you can also save up to 10% automatically on your business expense purchases at FedEx, Office Max®, Hertz®, and more with OPEN Savings® (this is automatic meaning you don’t have to buy through a special online store, you can buy anywhere for participating retailers).

You also get American Express’ protection when you shop and travel (when using the card for purchases).  There are online tools to help you manage your expenses and track exactly where, when, and how company dollars are spent.

There’s also a 0% introductory APR on purchases.  The term will be one of 6, 9, or 12 months based on your creditworthiness.

As this is a credit card you have the ability to pay over time.  There is no annual fee for this card.

Ink Cash(SM) Business

The Chase Ink Cash Business card offers up 5% cash back on eligible purchases in the categories office supplies, cable services, and cellular/landline services (limited to the first $25,000 spent annually); 2% cash back on gas and dining (for the first $25,000 spent annually); and all other purchases earn 1% cash back and the points are unlimited and do not expire.

You can earn up to $250 bonus cash back.  Spend $5,000 in the first three months of having the card and get a bonus 25,000 points, which can be redeemed for $250 cash back (cash advances, balance transfers, and checks drawn on your account do not count towards the $5,000).

If you shop through Chase Rewards Plus you can earn up to 10% back (you must enroll to make sure your points go through).

There’s a 0% introductory APR for 6 months (for purchases and balance transfers) and there is no annual fee for the card.

Have employees?  Add cards for them and earn points on their purchases as well (employee cards are free).  You can also track expenses easily with alerts.

Starwood Preferred Guest(R) Business Credit Card from American Express OPEN

The Starwood Preferred Guest Business Card is a great card for those who travel.

Why is it a great travel business card?

You earn Starpoints towards free stays in the Starwoods Preferred Guest program.  Right now you can receive 10,000 bonus points after your first purchase and another 15,000 bonus points after you spend $5,000 in your first 6 months in the program.  That will get you 6 free nights at a category 1 or 2 hotel.

Starwoods Resorts has over 1,000 hotels and resorts in nearly 100 countries.  And the points aren’t just for hotel stays.  You can also redeem your Starpoints for free flights on over 350 airlines, mostly on a one point to one airline mile basis.  And the hotels and flights you choose all have no blackout dates.

New to the Starwoods program is you get the 3rd night free when you stay 2 nights at participating Sheraton® hotels and resorts worldwide.  You can earn at least 4 Starpoints for every dollar spent on hotels and resorts participating the the SPG program and 1 point for every other eligible dollar you spend with the card.

Do you frequently fly for business?  If you transfer 20,000 Starpoints to your favorite airline miles program (there are more than 30 you can transfer to) you can get 5,000 bonus Starpoints.  Starpoints transfer on a one-to-one rate for airline miles.

As part of the American Express OPEN program, with this card you get 3-10% discounts, automatically, on purchases made at retailers like FedEx and Hertz®.

All this and I haven’t even mentioned that you also get American Express’ superb travel protection (like Car Rental Loss and Damage insurance) as well as their purchase protections and online account management (to track your expenses).

This card has no annual fee the first year ($65 per year thereafter).

Ink Bold(SM) with Ultimate Rewards

The Ink Bold with Ultimate Rewards card is actually a charge card, meaning you pay in full each month (you have up 30 days to pay in full).  This means you aren’t paying interest.  There’s also no pre-set spending limit (you limit is based on your spending and payment patterns as well as other factors).

This is also a rewards card.  You get 50,000 bonus points after you spend $5,000 in your first three months.  This can be redeemed for $500 in rewards or $625 towards airfare if you use Chase’s Ultimate Rewards booking tool.  You can earn 5x points on eligible purchases at retailers such as wireless/telecommunications services (excluding equipment such as phones and fax machines), cable and satellite television and radio services, office supply stores and wholesale distributors of office supplies (up to the first $50,000 spent annually).  You get 2 points for every $1 spent on airfare purchased online with your card through Ultimate Rewards.  All other purchases earn 1 point for every $1 spent with the card.  There are no rewards caps or expiration on your points.

With the card comes enrollment in Ultimate Rewards which is a site that can help you with every step of your travel plans.  You can redeem your rewards points for airline tickets for any class or destination with no blackout dates or restrictions.  You can also redeem for gift cards, merchandise, cash back, and more.  Speaking of airlines, you also get complimentary airport lounge access with  Priority Pass™ (see card for details).

This card also had no foreign transaction fees.  This is great if you travel internationally.

Dedicated Ink Business Advisors are at your disposal 24/7.  Extra cards for your employees are free.  Not only can you earn rewards faster with employee cards, but you can set spending limits on individual employee cards and you have access to customizable reports to track spending.

This card has a $95 annual fee, which is waived the first year.

The Plum Card(R) from American Express OPEN

Has your business been around for two or more years?  Do you have a strong credit history?  Do you have a positive cash flow?  If you answered yes to those questions then take a look at what the Plum Card has to offer you.

With the Plum Card, your business gets trade terms on purchases.  This means that if you pay in full within 10 days of your statement you get a 1.5% discount on your eligible purchases (you see the discount as a credit on your next statement).  Need more time to pay?  Pay 10% of your current balance (and any previous deferred balance) and take until your next billing cycle to pay in full without interest.  As this is a charge card, there is no pre-set spending limit.  Your purchasing power adjust with your spending habits (and other factors).

The annual fee on this card is waived the first year ($185 thereafter).

Along with attractive trade terms, you also get American Express’ travel and buyer protection services, their Global Assist hotline, and small business benefits such as savings through OPEN Savings.

AT&T Universal Business Rewards Card

The AT&T Universal Business Rewards card is issued by Citibank and is intended for businesses with an established credit history. As such, you will earn points on your spending in Citi’s ThankYou Points rewards point program. In fact, you earn 5 points for every one (1) dollar spent on eligible AT&T products, 3 points for eligible purchases at select office supply stores, gas stations, and professional services (like tax preparation and legal services). You earn 1 point for every dollar on all other purchases. You can earn up to 100,000 point in a year.

You can redeem your points for air travel, statement credits, gift cards, merchandise, and more.

New account members will get 0% APR on purchases for the first 6 months, with a reasonable variable APR when your 6 months is up.

You can get additional card for employees and you are able to set the limits on the cards they get.  You are able to track their cards, and all of your expenses, online.

This card has no annual fee.

Gold Delta SkyMiles(R) Business Credit Card from American Express OPEN

Fly Delta or Northwest for business?  Take a look at the Gold Delta SkyMiles business card.

You start off with the opportunity to earn 30,000 bonus miles.  That’s already enough for a domestic roundtrip award ticket.  Just make $500 in purchases within the first three months of your membership.

Here’s how you earn miles: 2 miles for every eligible dollar spent on Delta and Northwest flights (with your card) and 1 mile for all other eligible dollars spent.  When you redeem your miles, you can use them for any Delta or Northwest seat with no blackout dates or restrictions, just use your Pay with Miles feature.  There is no limit to the amount of miles you earn and your miles do not expire as long as you use the card.

Here are some other features to the card: Check your first bag free on every Delta flight (this is good for up to 8 people on your reservation).  You get priority boarding with this card.  Every year you renew your card you can receive a $99 companion certificate.  As this is an OPEN card, you can save up to 10% automatically on purchases with retailers such as FedEx, Hertz® Hyatt Hotels & Resorts®, and more with OPEN Savings®.  You also get American Express’ travel protection as well as their online management tools to hep you manage your cards.

There is no annual fee for the first year ($95 savings) and additional cards have no annual fee.

Business Gold Rewards Card(R) from American Express OPEN

American Express’ Gold Card – it’s what you think of when you hear “gold card.”

This business card from Amex is part of American Express’ Membership Rewards® program.  Your rewards points are unlimited, meaning there’s no limit to how many you can earn.  There’s also no expiration on your points.  You’ll earn 3X points on airfare; 2X points on advertising (pretty cool choice for a business card), gas, and shipping (nice to be able to earn a little something on shipping costs); and 1X points on everything else.  There are over one million rewards to choose from over 500 brands.

And there’s a limited time bonus - Earn 5X points on shipping and advertising for the first 3 months of Card membership.

Do your employees need cards for expenses?  You earn points on virtually all of their purchases when you add them to your account.  Points can be redeemed for things like office supplies, gift cards, travel, charity donations, and more.  If you need additional cards, you can get unlimited additional gold cards for an additional annual fee of $50 (which is waived the first year).

The Business Gold Rewards Card is actually a charge card.  This means you pay the balance off every month.  This allows you to avoid and interest charges on balances and also gives you a flexible credit limit based on your spending and credit history.

As this is an OPEN card, you also save up to 10% automatically on retailers that are part of the program.  OPEN also provides networking opportunities and answers via their online forum as well as updated expert content on running a business.

You also get the features of American Express’ travel assistance, purchase protections, and preferred entertainment event access.  Use the included tracking tools to see what your expense charges are and track employee cards on your account.  You also have access to 24/7 support for anything from identity theft (nice to have help, if needed) to travel emergencies.

There is no annual fee for this card the first year ($175 thereafter).

The Business Platinum Card(R) from American Express OPEN

The Platinum Card is a great card to have if you travel on business.

On top of all of the benefits you get in having an American Express card you get elite benefits such as getting up to $200 in airline fee credits to cover incidentals with the airline of your choice (when you enroll and choose an airline).  Your Membership Rewards points get bumped up by 20% on travel when you pay with points.

Talking about points, for a limited time you can earn 25,000 Membership Rewards points if you spend $5,000 in the first three months of opening your account.

If you are flying, you get complimentary airport club access (including American Airlines Admirals Club® lounges).  There are over 600 partner lounges you have access to.  This benefit has a value of $950 a year.

You have access to Business Platinum Concierge service to help with your business needs such as gift giving or dinner reservations (really just about anything personal or business you can throw at them).  There’s complimentary enrollment in the Business Platinum Car Rental program with enrollment in Hertz #1 Gold Club®, Avis Preferred®, and Emerald Club from National® car rental.  You’ll have access to the Platinum Office Program, with access to over 1,000 internet-equipped business lounges in 450 cities worldwide.

You see, if you travel for business this can be a great card.

And of course you have access to OPEN Savings®, purchase protections, and more from American Express.

The annual fee for this card is hefty at $450 a year but if you travel often this fee is made up quickly with all of the benefits you get.

What’s your favorite small business credit card?

*As you always should, make sure you read through the card details to make sure this card fits your needs and you understand the terms and conditions. Be aware that the terms may change after this article’s publication.

“Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.”

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The Best Small Business Credit Cards