As you may already know, you can no longer buy paper U.S. savings bonds. The Treasury phased out the paper certificates and now sells all bonds only online.

As we enter the graduation time of year, many may be wanting to buy savings bonds as gifts for high school and college graduates. Ann Carrns over at the New York Times Bucks blog recently wrote about some helpful tools put out by Treasury Direct to guide you through the gift bonds buying process.

Specifically, Treasury Direct has put together a helpful demonstration video that walks you through the process. The above diagram may make it look more convoluted than it really is. Watch the video. But as a reminder–

To buy bonds as a gift, you’ll need the following:

• a TreasuryDirect account
• the recipient’s name and Social Security Number
• eventually – the recipient’s TreasuryDirect account number to deliver the gift

For minors, you’ll need to open your own Treasury Direct account and then add a linked account for the minor.

And if you’re wondering what you’ll actually hand your graduate since the bond is digital, Treasury Direct has several printable gift certificates suitable for most gift-giving occasions.

When it comes to free flights from an airlines rewards credit card, one free bonus flight for new card members is standard. From time to time, you’ll find a special bonus of two free flights (these deals usually don’t last long). With the Virgin America Visa® Signature Card, you get bonus points worth up to three free flights. So I thought it would be worth reviewing this card.

How to Get the Bonus Points

Let’s start with the 15,000 bonus points. The first 10,000 are easy. Simply make a single purchase with the card, and you’ll receive 10,000 bonus points. These points by themselves are worth up to two round trip tickets (one-way award tickets start at 2,500 points).

The remaining 5,000 bonus points are awarded if you do a balance transfer of $5,000 or more within the first 90 days. If your balance transfer is for less than $5,000, you get one point for each $1 of transfer.

The transfer offer is reasonably good. You get 0% for 15 months, but must pay a 4% balance transfer fee. The best 0% balance transfer offer today is for 18 months with a 3% transfer fee (from the Citi Simplicity card). But to get an extra 5,000 points, it’s not a bad deal.

Other Perks

Beyond the bonus points, you also get $150 off a companion ticket each year. You earn 3 points per $1 spent on Virgin America, and 1 point on all other purchases. You can also earn an additional 300 Bonus Points for every $5,000 in net purchases per year, up to a maximum of 1,200 annual Bonus Points. Finally, there are no blackout dates for reward flights.

Interest Rates and Fees

Hopefully you’ll pay off your balances in full each month so you don’t have to worry about interest rates. But just in case, the interest rate on the card is 15.99% to 24.99%, based on credit worthiness. And there is a $49 annual fee (they offer a no annual fee version, but it doesn’t come with the same bonus points).

Summary

• Earn up to 15,000 Bonus Points on qualifying transactions
• Enjoy 3 Points per $1 on Virgin America purchases
• Earn 1 Point per $1 spent everywhere else
• Low Intro rate on balance transfers for the first 15 months after account opening
• Redeem for flights starting at 2,500 points each way
• $150 off a companion ticket every year
• No blackout dates on any seat, at any time for reward flights
• Please see terms and conditions for complete details

For more information or to apply online, visit the Virgin America Visa Signature Card website.

The Wall Street Journal had a report this weekend on how to snag the best mortgage rates. While some of the tips you’ve probably heard before, I thought it was worth sharing. With rates at historic lows and real estate prices ready to rebound, it seemed like a good time to review the basics.

Repair Your Credit

We’ve talked about this before. Improving your credit score is the single best way to save money on everything from home loans to car loans to credit card rates. With a mortgage, a good credit score can easily save you tens of thousands of dollars over the life of the loan. The best mortgage rates go to those with a FICO score of 760 or better.

Improving your score is a matter of paying bills on time and keeping the amount of credit you’re using to a minimum. That’s sometimes easier said than done, but over time your score should improve. You can check out a list of tips to increase your credit score for more details.

Consider Shorter Loan Terms

The WSJ article suggested that you can opt for a 25-year mortgage as a way to get a lower rate. I actually tried that with my last refi, but the rate wasn’t any lower. In fact, the rate was the same even for a 20-year mortgage as compared to the 30-year loan we ultimately chose.

You do, however, save on interest when you go down to a 15-year mortgage. The downside of course is a much higher payment. There are other factors to consider when deciding on a 15 vs. 30-year mortgage, but it is worth considering as a way to lower your rate.

Get Several Quotes

This one is simple. It’s easy to compare mortgage rates online. In addition, if you are refinancing, it’s always worth checking with your current bank to see what they can offer. It pays to get at least three quotes, if not more.

Increase Your Down Payment

While the WSJ didn’t mention this one, I think it’s an important consideration. You’ll typically get the lowest rates if you have at least a 20% equity cushion. Anything less than this and your rates go up and you’ll pay private mortgage insurance (PMI). We paid PMI on our first home, and the extra cost just goes right out the door. Saving a 20% down payment isn’t easy, but it will save you a lot of money in the long run.

Additional Resources

Here are some additional resources you may find helpful:

• Looking for the Best Mortgage (via the Federal Reserve)
• How to Find the Best Mortgage Rates (via Moolanomy)
• Mortgage Shopping Worksheet (via FTC)

Once a year my wife and I each receive in the mail our Social Security Statement. It shows us our earnings record for both social security and medicare. And it gives us an estimate of our future social security benefits depending on when we decide to retire.

Recently the Social Security Administration made these statements available online. It took me about 2 minutes to register. The process is a lot like getting your credit score online. For example, you have to answer a series of multiple choice questions about your finances (e.g., mortgages you may have, old car loans, age of your home) to verify your identity. Once registered, you get access to all the same information you receive in the mail once a year.

In my case, my earnings record goes all the way back to 1982. I made $673 that year. It’s important to check your earnings statement for errors. And SSA has a way for you to report errors online.

The estimated social security benefits depend on when you plan to retire. The online statement shows three benefit levels, based on early retirement (62), full retirement (67), or late retirement (70). For me, the difference is significant, with nearly a $1,500 difference in benefits per month between age 62 and 70.

If you want to get your statement online, you can do so at the following social security website.

I’m still amazed when I read a news report lambasting prepaid debit cards. The main beef with these banking alternatives is high fees. Five years ago that was a legitimate complaint. But today, there are a number of low fee prepaid cards.

I’ve written about a number of these cards in the past. Today I thought I’d share one with you that I’m betting you’ve never heard of–the KAIKU® Visa® Prepaid Card. It has some of the lowest fees available in a prepaid debit card.

Fees

With any prepaid card, there are four main fees to watch out for: (1) activation fee, (2) monthly maintenance fee, (3) transaction fees, and (4) ATM fees. Of these, the activation fee is the least important, in my view, because you only pay it once. The other fees, if there are any, occur every month. So how does the KAIKU Visa Prepaid Card stack up?

• Activation Fee: None
• Monthly Fee: $1.95
• Transaction Fees: None
• ATM Fees: None for in-network ATMs

And in case you’re wondering, KAIKU has about 43,000 ATM locations in its network. It’s part of the Allpoint ATM network. I live in Northern Virginia and there are dozens of Allpoint ATMs within a few miles of my home.

So at $1.95 for the core features of the prepaid card, KAIKU is very competitive with other low-fee prepaid cards and even most checking accounts.

Features

Like any prepaid card, the KAIKU Visa Prepaid Card works much like a bank debit card. Beyond the basics of using the card for purchases and ATM withdrawals, however, it does offer some additional features.

For example, you can have your paycheck or benefits check deposited directly onto the card for free. Money can be transferred from one KAIKU card to another for free. You can receive free text alerts when money is deposited onto the card or your balance is running low.

If you want family members to have a card, you can get up to three additional cards for just a $2 fee per card. And you can call customer service for free. That may seem like a given, but many prepaid cards actually charge you for calls to customer service.

Mobile

Finally, you can access your account with your smartphone. The KAIKU Visa Prepaid Card has an app for the iPhone and Android smartphones. The apps let you load money from your bank account, send money to any KAIKU cardholder, check your balance and transaction history, or find surcharge-free ATMs.

For more information or to get a card, visit the KAIKU website.

If you’ve ever applied for a mortgage, you know just how convoluted the whole process can be. Just trying to read a HUD-1 statement is enough to send you over the edge. And then there are origination fees and discount points.

Discount points are fees charged that generally result in a lower interest rate on the home loan. These points are a percentage of the loan amount and generally range between 0% (no discount points) to 3%.

An origination fee is a fee charged by a brokerage firm to originate your loan. You can think of it as a processing fee, although your loan may also come with a processing fee separate and apart from the origination fee. This fee is sometimes confused with discount points because it too is often a percentage of the loan amount (1% is not unusual). But unlike discount points, an origination fee does not lower the interest rate on your loan.

Enter the Consumer Financial Protection Bureau. Earlier this month the CFPB announced that it would be proposing new regulations this summer to simplify discount points and origination fees.

Here’s what the CFPB plans to do:

• Require an interest rate reduction when discount points are paid: This one surprised me. Apparently there are mortgage loans out there that charge discount points but don’t actually reduce the interest rate on the loan. The CFBP will mandate that consumers receive a minimum reduction in their interest rate for each discount point paid.
• Require lenders to offer loan options with no discount points: Comparing different home loans that have different discount points can be difficult. It’s always a tough call as to whether you should pay discount points, and if so, how much. Under the CFPB rules to come out later this year, lenders would be required to offer a no-discount-point option to make it easier to compare loan offers.
• Ban origination fees that are based on the size of the loan: To prevent consumers from confusing origination fees with discount points, the CFPB plans to prohibit mortgage companies from charging an origination fee as a percentage of the loan.

So are these good changes?

I think the requirement that discount points actually result in a lower interest rate is a good change. Frankly, I had never heard of discount points that didn’t lower the rate, but apparently there were some shady mortgage companies engaging in this practice. It was probably fraudulent anyway, so making it clearly illegal is a good step.

The other changes, however, have me concerned. Whenever the government comes in and tells a business they can’t do something that is perfectly legitimate all in the name of “consumer protection” I get nervous. Recall the Durbin Amendment that capped fees that could be charged on debit card transactions? It sounded like a great consumer protection, until you realized that all it did was line the pockets of big retailers and force banks to pass on more fees to their customers.

In the case of origination fees, if banks can’t charge more for larger loans, those getting smaller loans may end up paying more. I don’t see the fairness in that. And why force a bank to offer a no-discount-points option when consumers can use APR to easily compare loans?

If you are not familiar with APR vs. APY, check out our mortgage rates table. You’ll see APY and APR listed. APR factors in fees, making it really easy to compare loans.

So what do you think–are these new regulations good or bad for consumers?

A former boss of mine had travel down to a science. He bought the most expensive luggage and could pack a week’s worth of clothes into a single, carry-on roller. He had elite status on just about every airline and rental car company. But it was his premier status with hotels that really caught my attention.

The scenario always went something like this. We’d both check in at the same time and then head to the elevator. I’d push the button for my floor, which was usually on a lower floor. But he’d have to insert his room key to activate the button for his “executive” floor, which was almost always one of the top three floors. I still remember his sheepish grin every time this happened. I hated that grin. (John, if you’re reading this, yes, I’m talking about you.)

So today I decided to pull together a list of the top hotel rewards credit cards. The idea here is to find cards that can not only help you get free hotel stays, but also the elite status that my boss enjoyed. One of the great benefits of hotel credit cards is that they help you qualify for elite status without having to spend a gazillion nights at a hotel every year.

We’ll start with my favorite hotel card, which I’ve carried for about a year.

Starwood Preferred Guest® Credit Card from American Express

The Starwood Preferred Guest® Credit Card from American Express is my favorite card for several reasons. First, the bonus rewards for new card members are first rate. Second, rather than being stuck with one hotel, Starwood covers a number of hotels including the Westin, the Sheraton, and W. Third, and this is a big one, you can transfer your Starwood points to most airlines to purchase reward plane tickets.

Here is a summary of the card’s benefits:

• Starpoints® Bonus: 10K with your first purchase and another 15K when you spend $5k within 6 months – enough for up to 6 free nights at a Category 1 or 2 hotel
• Free nights, free flights: Redeem Starpoints with over 350 airlines through SPG Flights and more than 1,000 hotels and resorts worldwide. No blackout dates .
• 2011 SmarterTravel® Award for “Best Travel Rewards Card”
• $0 introductory annual fee for the first year, then $65

For more details or to apply online, visit the Starwood Preferred Guest® Credit Card from American Express website.

Marriott Rewards® Credit Card

Although I’ve never carried this card, the Marriott Rewards® Credit Card has several perks. First, the card is not limited to just the Marriott. Rewards can be used at all Marriott properties, including Renaissance Hotels, Courtyard, Residence Inn, and Fairfield Inn & Suites. Second, with the card you get enough bonus points for four free nights. Finally, you immediately qualify for Silver elite status and 10 nights credit toward Elite status.

Here are the details:

• Earn 30,000 Bonus Points after your first use, redeemable for up to 4 free nights; plus receive 2 free night stay e-certificates upon account approval
• No Annual fee for your first year – that’s a $45 value*
• Earn 3 points for every $1 spent at Marriott® locations
• Earn 1 point for every $1 spent on other purchases
• Cardmembers achieve Silver elite status with 10 nights credit toward Elite status
• Redeem Marriott Rewards® points at Marriott properties including Renaissance Hotels, Courtyard, Residence Inn, and Fairfield Inn & Suites

For more details visit the Marriott Rewards® Credit Card website.

Marriott Rewards® Premier Credit Card

If you spend a lot of money on your credit card each year and love Marriott properties, it’s worth stepping up to the Marriott Rewards® Premier Credit Card. The annual fee is a bit higher, but you get 20,000 more bonus points and earn more points based on your purchases.

Here are the details:

• Earn 50,000 Bonus Points after your first use
• Receive 1 free night stay upon account approval and each year upon account anniversary
• Earn 5 points for every $1 spent at Marriott® locations
• Earn 2 points for every $1 spent on qualifying airline, dining, and rental car purchases
• Earn 1 point for every $1 spent on other purchases
• No foreign transaction fees
• Cardmembers achieve Silver elite status with 15 nights credit toward Elite status
• Redeem Marriott Rewards® points at Marriott properties including Renaissance Hotels, Courtyard, Residence Inn, and Fairfield Inn & Suites

For more details, visit the Marriott Rewards® Premier Credit Card.

Hyatt Credit Card

I have fond childhood memories of the Hyatt Regency. Growing up just outside of Columbus, Ohio, the downtown Hyatt was THE place to stay in Columbus. Our church youth group would hold an event there every year, which was the only time as a kid I ever stepped foot in a Hyatt.

If you like the hotel chain, then the Hyatt credit card is a must. At the very least you get two free Award Nights with your first purchase. And you earn Hyatt Gold Passport points with every purchase.

Here are the details:

• Begin with 2 Award Nights at Hyatt properties worldwide, after making your first purchase with the Hyatt Credit Card
• Receive 1 Anniversary Award Night each year in category 1-4 properties
• No foreign transaction fees and Smart Chip protection on international purchases
• 3 Hyatt Gold Passport points for every $1 spent with your Hyatt Card at all Hyatt properties
• 1 Hyatt Gold Passport point for every $1 spent on purchases elsewhere
• There are no limits to the points you can earn
• Award nights with no resort, Internet or redemption fees

For more details visit the Hyatt Credit Card official website.

Citi® Hilton HHonors® Visa Signature® Card

This card is ideal if you stay at Hilton hotels regularly, although its perks are not industry leading. You can earn 40,000 Hilton HHonors bonus points, but you must first spend $1,000 in purchases within the first four months. You do get HHonors Silver status just for carrying the card.

Here are the details:

• Earn 40,000 Hilton HHonors Bonus Points after spending $1,000 within 4 months of account opening*
• Earn 6 Hilton HHonors Bonus Points for each $1 spent at a participating hotel within the Hilton Worldwide portfolio*
• Earn 3 Hilton HHonors Bonus Points for each $1 spent on purchases at supermarkets, drugstores and gas stations.*
• Earn 2 Hilton HHonors Bonus Points for each $1 spent on all other purchases.*
• No Annual Fee.*

For details visit the Citi® Hilton HHonors® Visa Signature® Card website.

Disney Premier Visa® Card

In some ways I saved the best for last. Our vacation to Disney World was one of the best trips we’ve ever taken. If you love Disney, the Disney Premier Visa® Card is a great way to shave the cost off of your next vacation. You can use rewards not only at Disney resorts, but also at Disney stores. Can you get special financing even on Disney cruises.

Here are the details:

• Get a $100 statement credit after first use
• New: Earn 2% in reward dollars on card purchases at gas stations, grocery stores, restaurants and most Disney locations. Earn 1% on all your other card purchases
• Redeem toward Disney treats at home and on vacation, such as Theme Park tickets, hotel stays, DVDs, toys and more
• New: Enjoy the flexibility to redeem toward airline tickets on any airline to any destination, anytime
• Save 10% off on select merchandise purchases of $50 or more at DisneyStore.com and Disney Store locations
• Disney Theme Park Perks including a Character Meet ‘N’ Greet at our private Cardmember locations
• Save with 0% promo APR financing for 6 months anytime you use your card to book select Disney vacation packages, after that a variable 14.24%
• New: Choose from 8 Premier-only card designs

For more information visit the Disney Premier Visa® Card website.

Surveys are worthless. SmartMoney just released its 2012 survey of the best and worst brokers.

Let’s be honest here. I don’t trust movie reviews, so why would I put stock in a survey of investment brokers?

Part of the problem is that even the best surveys are of limited valued. For example, here are the categories SmartMoney used to rate brokers: commissions and fees, mutual funds and investment products, banking services, trading tools, research, and customer service.

Now there is nothing wrong with this list, per se, except that several categories are completely useless to me. And I suspect they are useless to most investors. For example, I don’t care about banking services. I don’t bank at my broker. And I also don’t care about research; there’s a ton of research available online.

While we can just ignore the rating categories that are of no interest to us, it skews the results. For example, the most important category to me is cost. Yet SmartMoney rated Fidelity as the #1 broker, even though it scored just 3 out of 5 stars on commissions and fees. Apparently its banking services and research are top shelf.

Still, I find it interesting to see how the “experts” are ranking the various brokers. As the internet has taken over, brokers have become more of a commodity, with price being the most significant factor for many investors. But there are some differences beyond price that are worth considering (e.g., Scottrade has offices everywhere, Sharebuilder makes small monthly investments possible at a reasonable cost).

So with my rant out of the way, here are the top ten brokers according to SmartMoney:

1. Fidelity
2. Scottrade
3. TD Ameritrade
4. E-Trade
5. Charles Schwab
6. TradeKing
7. Zecco
8. Merrill Edge
9. ShareBuilder
10. WellsTrade

Here are the details of the rankings (click to enlarge):

This morning I read an article on CNN with the headline, “Seniors clamoring to invest in Facebook IPO.”

Of all the silly articles written about Facebook’s impending IPO in an effort to draw readers to news websites, this one has to be the lamest. So of course I read the article.

It turns out the article’s headline is not lame–it’s completely misleading.

Apparently 79-year old Alvan Sweet told CNN that Facebook’s IPO is “one of the hottest topics” in a retirement community in Boyton Beach, Fla. It’s so hot, in fact, that three (yes, three!) of Sweet’s friends have been badgering Sweet to help them get in on some IPO shares. Sweet, as it turns out, has been investing in IPOs for some time.

But Sweet has no intention of investing in Facebook this week. According to Sweet, recent IPOs like Groupon may rise at first, but then have difficulty maintaining their price. So Sweet ain’t “clamoring” for Facebook shares. And his three friends who do want in on the IPO refused to speak to CNN or identify themselves.

So maybe the article headline should have read, “Three unidentified seniors in south Florida are clamoring to invest in Facebook, but their friend who is an IPO investor won’t touch the social media giant with a ten-foot pole.” Probably too long.

And if ridiculous articles like the one on CNN weren’t enough, Facebook has actually raised the price of its IPO shares (with the press pumping the stock, why not?). This Friday Facebook will begin trading under the ticker ‘FB’ on the Nasdaq. It prices its shares the night before. Recall that I wrote last week about how Facebook is not worth $100 billion. Well now they’ve decided to raise the price of the shares from a range of $28 to $35 to a new range of $34 to $38. I assume CNN does not get a commission.

And that brings me to 11-year-old Jade Supple. The WSJ reported that the IPO “excitement has drawn in fledgling stock buyers such as 11-year-old Jade Supple of Rockville Centre, N.Y., whose father plans to bet money saved to put his daughter through college on Facebook shares, although he has doubts about the price.”

Think about that. Of all the possible investment choices, this poor girl’s father is going to “bet” his daughter’s college fund on Facebook even though he has “doubts about the price.” I hope she pays attention, because this investment could be the best education she gets in a long time.

And for those of you still thinking of buying into the IPO, I’ll leave you with the words of Warren Buffett:

We never buy into an offering. The idea that something coming out…that’s being offered with significant commissions, all kinds of publicity, the seller electing the time to sell, is going to be the best single investment that I can make in the world among thousands of choices is mathematically impossible.

Here are three facts about mortgage applications that at first glance are difficult to reconcile:

Fact 1: Mortgage rates are at historic lows.

Fact 2: Real Estate prices have fallen substantially over the past few years.

Fact 3: The number of mortgage applications over the past 2 months are DOWN.

So what’s going on here? Well, according to the WSJ, part of the problem is persistent unemployment. Rates and prices can be low, but if you are looking for work, you won’t be buying a home or refinancing a mortgage.

But there is a second problem that has persisted for several years–low credit scores. According to Fair Isaac, the creator of the FICO credit score, about 25 percent of consumers who have active credit files (about 43 million people) have FICO scores of 599 and below. Here’s a chart from FICO Banking Analytics Blog showing the shift over time:

And for most mortgages, a score of 599 won’t qualify you for a mortgage.

Now, we’ve already covered what credit score you need to get a mortgage. But there are still two unanswered questions. First, what credit score do you need to qualify under Fannie Mae’s guidelines (which most mortgages must meet)? And second, even if you qualify, how does your credit score affect what you’ll pay for the loan?

Let’s take a look at both of these questions.

What credit score do you need to meet Fannie Mae’s guidelines?

Fannie Mae publishes a series of matrices setting out fairly complicated rules on pricing loans. These rules include not only credit score requirements, but also loan-to-value (LTV) rules. LTV is important because in combination with your credit score, it can result in higher or lower interest rates and in some cases determine whether you will qualify for a mortgage at all.

Perhaps the most common mortgage is for the purchase of a single-family home. Subject to some exceptions, your credit score must be at least 620 if your LTV is equal to or less than 75%, and 660 if your LTV is greater than 75%. The same guidelines apply for what is called a limited cash out refinance (LCOF).

How does your credit score affect the closing costs of the loan?

This is where things really get interesting. Fannie Mae breaks credit scores into eight categories. For each category, it then provides varies LTVs. For each credit score/LTV combination, Fannie Mae provides what it calls a Loan-Level Price Adjustment (LLPA), which ranges from -0.25% to 3%. This means that depending on your credit score, down payment, and other factors, you could be paying up to 3% more on your loan.

The “good” news is that you can choose how you pay these additional costs. You can choose to pay the fees at closing in the form of points. Or the costs can be baked into your loan, increasing the interest rate you pay. If you choose a higher interest rate over points, each 1 percent in LLPA will increase your interest rate by 0.250%. Either way, if you trigger a LLPA, you’ll pay the price.

There are several charts published by Fannie Mae showing the various credit score/LTV combinations. Here’s an example of one (click to enlarge):

So what’s the takeaway here? First, as we’ve said many times before, your credit score is really important. A good score of at least 720 (and preferably higher) will save you thousands of dollars in mortgage interest. Second, there is no reason to worry about a “perfect” credit score. The chart tops out at 740.

Third, don’t be fooled by advertised mortgage rates. The ads always show the lowest possible rates. Depending on the terms of the loan and your credit score, however, your rate could be higher. And finally, the Fannie Mae guidelines are extremely complicated. We’ve only scratched the surface here. So if you are in the market to buy a home or refinance, check with a mortgage broker who can walk you through all the rules and let you know the best mortgage rates available for your specific circumstances.