Date Filter: 2015/02/

Case Study: 401(k) Plans Under the Microscope

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Feb 27, 2015
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Investing, Current Events
The recent news that the Supreme Court will be taking on a lawsuit involving a company’s 401(k) plan is sending shockwaves through the investment field. Let’s start with the basics first.  A 401(k) plan, also known as a defined contribution plan, is a retirement plan administered by companies on behalf of their employees.  The employer selects the menu of investment options available to employees and also may offer to match an employee’s contribution to the plan.  The employee sets...

Chart of the Week: What Do Credit Card Perks Tell Us About Credit Card Industry?

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Feb 27, 2015
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Research, Credit Cards, Current Events, Chart of the Week
From the Economist: Credit Cards often provide perks to convince cardholders to sign up with them.  Two common incentives are balance transfer offers which allow new cardholders to transfer existing credit card balances over and not pay interest for a period of time.  The other perk is the bonus airline miles offered for signing up. The Economist noted that this chart indicates the stresses being felt by the card companies as they compete for customers:  Other woes are a function of broader...

Question: Can Credit Card Companies Change The Interest Rate You Pay?

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Feb 25, 2015
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Credit Cards, Current Events
Answer:  Yes. A good reminder today that they can. American Express announced that it will be raising interest rates by an average of 2.5% on over 1 million of their customers (Bloomberg): AmEx told more than a million customers this month that their annual rates will climb an average of 2.5 percentage points, following a review last year, said people briefed on the move. The firm sent letters saying it’s making adjustments after finding their rates were below those for rival cards held by...

New Products: Making Savings More Automatic

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Feb 25, 2015
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Savings, Checking Accounts, New Products, Current Events
Plenty of start-ups working on ways to make saving even more automatic.  From American Banker: The Digit product’s debut comes as consumer advocates are encouraging the financial sector to develop technologies that help people save. American Express, for example, has created an initiative to reimagine savings for its reloadable prepaid card Serve. Even, which is in pilot mode, will automate deposits to savings accounts on weeks when users have earned more money than they do on average....

What Can SchoolHouse Rock Teach Us About Money?

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Feb 25, 2015
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Budgeting, Investing, Savings, Video Resource
I am going “retro” on you with this post. Hat tip to my good friend, Andy Kavulich, who has a better memory than me recalling the School House Rock series, which had a few videos pertaining to money (I only remembered “I am a Bill” and “Conjunction Junction”).  While these videos may seem targeted to a younger audience, I think that they can be used at the high school level too by asking students to watch them more critically, apply the advice given to their own situation and even...

Chart: What is the Value of A College and Graduate Degree By Major?

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Feb 23, 2015
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Career, Paying for College, Question of the Day, Chart of the Week
This is going to take some explaining (from Georgetown’s Center on Education and the Workforce)… First, let’s provide some context for the chart: Measures average earnings based on college major, degree attainment (high school, college, graduate) and level of experience. Examples: The average earnings for recent high school graduate is $24,000 (about $12/hour) and for an experienced high school graduate is $36,000 (dotted lines on the chart). For engineering majors, the average pay for...

NGPF Featured Activity: How To Open A Checking Account

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Feb 23, 2015
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Activity, Lesson Idea, Checking Accounts, Featured NGPF Lesson
We continue to add to our growing list of engaging activities in the Next Gen Personal Finance’s Activity Bank.  In this post, I want to highlight “How To Open A Checking Account.”  In this activity, students proceed through a five step process: Identify checking accounts with the best features (e.g., low/no fees, convenience, ATM locations) Select a checking account after analyzing these features Identify forms of identification and other items needed to open a checking account Develop...

Question of the Day: What is the Average Annual Cost of a Checking Account (and Other Trends in Bank Fees)?

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Feb 23, 2015
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Question of the Day, Research, Checking Accounts, Current Events
Answer (from Bank Fees Survey EOY 2014):  Over $154 Headline for this survey could be “Bank Fees Continue Rise to Record Levels.”  Assign this reading to your students during your banking/checking unit to help familiarize them with checking terminology, the fee structure of checking accounts and the importance of comparison shopping. Survey background: Banks in survey set:  “A sampling that includes the 50 biggest retail banks by deposits, plus an equal number of smaller financial...

Chart of The Week: Who Is Having The Most Trouble Paying Off Their Student Loans?

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Feb 23, 2015
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Paying for College, Research, Student Loans, Current Events, Chart of the Week
This chart might surprise you (from NY Federal Reserve): First some background information on the chart before we think about takeaways: The 2009 cohort in the title of the chart refers to the set of borrowers who entered repayment in FY 2009 (October 1, 2008 to September 30, 2009). You are considered to be in default on your student loan obligations if you have not made a payment in 270 days (per Dept. of Education website) School-leaving balance refers to the amount of student loan debt owed...

Analyze This: What’s the Value of Comparing Mortgage Lenders On A Per Hour Basis?

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Feb 23, 2015
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Credit Scores, Mortgages, Activity, Research, Current Events
As an educator, it is easy to tell students that before they buy any financial product (or any product for that matter), they should comparison shop.  Far better, in my mind, to have students discover on their own the dollar and cents impact of spending a little extra time comparing alternatives, which is why I love this new “Check Interest Rates for your Situation” tool from the CFPB. The tool allows consumers to see the range of interest rates on home mortgage loans available based on...

Question of the Day: What Percentage of Mortgage Borrowers Don’t Shop Around?

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Feb 23, 2015
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Mortgages, Behavioral Finance, Question of the Day, Research, Purchase Decisions, Current Events
Answer:  Arguably, it is the biggest purchase that most people will make in their lifetime and yet 47% don’t shop around for their home mortgage. Amazing statistic from CFPB report: Buying a home is a big purchase, but it’s just that: a purchase. When it comes to spending money on our daily expenses, we have lots of options to help us find the best deal possible. Take, for example, digital gadgets. To get a good deal you can search for sales, find coupon codes, and research whether it’s...

Trends: More Americans Getting Access To Free Credit Scores

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Feb 23, 2015
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Credit Scores, Current Events, Credit Reports
Good Reuters article for your credit report/credit score unit; describes how more companies are providing consumers with free access to their credit scores on their monthly statements.  For some time, consumers have had free access to their credit reports from each of the three reporting agencies (TransUnion, Equifax and Experian) through annualcreditreport.com.  While helpful to consumers, ultimately lenders were making their decisions based on credit scores (of which there are dozens with...

Question of the Day: What is The Average Credit Card Balance for American Consumers?

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Feb 23, 2015
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Question of the Day, Credit Cards, Current Events
Answer:  $5,327 Interpreting data is a critical 21st Century skill.  This recent TransUnion research report (first six paragraphs are probably sufficient) would be useful in your credit card unit as it provides details on credit card usage and will help familiarize students with key terms including delinquency (not paying a bill on time), subprime (borrowers with lower credit scores), access to credit and credit card balances (the amount that credit cardholders currently owe on their credit...

Video Resource: What Makes People Feel Financially Secure?

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Feb 23, 2015
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Research, Credit Cards, Savings, Current Events, Video Resource
This video will be useful in your savings unit and exposes students to key terms including emergency savings, credit card debt and financial security. As you watch this two minute video from Bankrate.com, note the factors that their survey measures to determine whether consumers feel financially secure: http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1 Here are a few questions to get the conversation started: What are the recent trends around consumer financial security?...

Question of the Day: What Are Five Good Credit Card Habits?

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Feb 23, 2015
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Credit Scores, Question of the Day, Research, Credit Cards, Current Events
Good kick-off question to your credit card unit; we often focus too much on the negatives of credit cards vs. the ways they can be used responsibly.  See how many of the five that your students can come up with. USA Today story on the credit card habits of successful people gleaned from research from Tom Corley.  Here are the five habits he found in his research: Simplicity:  In Corley’s research, he found that only 8% of rich people used more than one card, while 77% of poor people did....

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