Partially.

A couple of weeks ago, I wrote that Scottrade, my long-time stock broker is about to launch its own flexible dividend reinvestment program, which the brokerage firm says will be different from the traditional dividend reinvestment program (DRIP) that automatically reinvest dividends after they have been received without investors’ intervention. In fact, none of the dividend reinvestment programs as far as I know, whether they are for stocks, ETFs, or mutual funds, require manual action from investors. So when I first read “flexible” in Scottrade’s short description of the program, I was suspicious and became even more so when it appeared that the program may not offer the option to automatically reinvest dividend payouts after all. However, I still wanted confirmation from Scottrade before making any change on how I will continue to invest in dividend-paying stocks. My long standing position on dividend reinvestment when it comes to Scottrade, which is a rare exception because it doesn’t allow dividend reinvestment for stocks and ETFs, is that I want a traditional DRIP that automatically invest payouts without fees. I felt very disappointed when I sensed from their announcement that I may not get what I have been waiting it for years after all.

So the next day after that article, I tweeted Scottrade with my question on whether the flexible reinvestment program will allow automatic dividend reinvestment for free. This is how I asked my question:

“Your flexible reinvestment program, can I auto reinvest dividend for free?”

Later in the afternoon, the answer from Scottrade came back as

“Hi Sun, no manual trades will be required in the reinvestment program and it is free of charges and commissions”

When I got the response, my interpretation, from how I asked the question, was that the program does not allow automatic reinvestment (I was later pointed out the answer actually meant “no manual trades will be required”, not “no, manual trades will be required” as I read, but it still only solved part of the problem I have with the program, so it won’t change my decision anyway.). Even though it will be commission-free to invest dividends, the biggest problem of the program, from my view point, is that I can’t reinvest all the dividend payment because it only allow the purchase of whole shares.  If the distribution is not enough to buy even one share of the stock, not just the stock issuing the dividend but any stock, which is usually the case at the beginning, then the money will be sitting there doing me nothing good until the next dividend time or new fund is added.

Somehow I felt that by doing this, Scottrade benefits itself more from the program than its customers do. To me, the program is useless and, thus, it’s time to take my dividend paying stocks elsewhere. The destination of my choice is TradeKing because it has a traditional DRIP program that I have been using since became a customer in 2007. The next day, I sent paperwork to TradeKing to transfer all eight stocks that distribute regular dividends from Scottrade to TradeKing.

• China Life Insurance (LFC)
• Bank of America (BAC)
• Las Vagas Sand (LVS)
• PowerShares Golden Dragon China Portfolio (PGJ)
• Apple (APPL)
• Citigroup (C)
• Powershares Water Resource Portfolio (PHO)
• Visa (V)

It’s not my entire stock holdings at Scottrade, but a large portion of it.

The transfer occurred rather quickly, but not without a glitch. To transfer a, brokerage account to TradeKing, an ACAT form needs to be submitted and that’s basically the only thing I need to do for the transfer. However, since I was doing a partial transfer, I needed to list all the eight stocks. TradeKing’s ACAT has one page for partial account transfer, but it has only space to list four securities, so the rest has to be listed on a separate page that also came with the ACAT form. I submitted the entire ACAT form including the additional page with four stocks to TradeKing on May 10th to initiate the transfer.

Last Friday, when I logged into my TradeKing account, I saw only the first four stocks were transferred. The last four are still with Scottrade. I then called TradeKing to ask why, the representative on the phone, after did his research, told me the clearing office might have overlooked the additional page because that page is not normally used. Of course, I was not very happy with the answer because that page was not that I inserted myself, rather it was part of form. I was even more annoyed when he kept saying he was there to help me and asking me whether I want to request the rest four stocks being transferred.

Well, the instruction was very clear on what to transfer and what not. If they did their job, then there wouldn’t be the opportunity for him to help me on the phone in the first place. And instead of telling me that they will go back and fix the error they made, he kept asking whether I want to transfer the other four. Of course, I wanted to transfer all eight. Isn’t that the instruction?

Even though this stock transfer was completed rather quickly, I was not that satisfied about how it was handle. 

Original Post on www.thesunsfinancialdiary.com

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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

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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

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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

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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;
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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

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