OK - it’s summer time and I guess vacation season will preoccupy our minds. Mrs Credit Card and myself will be taking a short three day vacation by ourselves without the kids (location will not be disclosed!). But travelling during peak season is always more costly. But this is where using travel rewards credit cards. This is how we will be using our reward points.

Airline tickets - For this, I am going to use my American Express Companion Ticket scheme. What happens with this is that I buy a ticket and I will get one for free. The ticket has to be at least $299. If not, then I’ll still have to pay $299. We have to pay taxes for both tickets and a ticketing fee for the companion ticket as well. But hey, buy one get one free is great. Plus, we can also get air miles even for the companion ticket.

Hotels - Well, both Mrs Credit Card and myself are marriott rewards members. We figure we will use some points and also exchange 10,000 points from our Chase Flexible Rewards Card for a $100 Marriott Rewards check. In fact, we can use 20,000 points and exchange it for a $200 marriott check.

Car Rental - We’ll be using our membership rewards points for I believe the Avis car rental. Plain and simple.

I think by the time we use our points for our airline ticket and hotel rooms, we would have no more points for auto rentals. So for this short getaway, we would save on one airline ticket, a couple of days on the hotel bill. That is probably worth about $500.

We’ll probably end up spending a few more hundred bucks on food and other stuff. I have been using reward points for my annual vacations every year and I think it is such a great money saver. Regular readers of this blog will know that I use both cash back credit cards and reward credit cards. Though I like getting cash back from using my credit card, not having to pay for an airline ticket or hotel room feels very good psychologically. Don’t forget to use your reward points and save money on your summer vacation.

It has never been clear to we common folk what mortgage-backed securities look like when Wall Street sells them. A pessimist would say something like, "Those guys would sell ANYTHING regardless of its investment merit."  One trick seems to be to come up with a clever name, like Bear Stearns High-Grade Structured Credit Strategies fund.  Do you know what that means? Neither do I.  High-Grade is a nice sounding name but high-grade compared with what? And what is a structured credit strategy?

What it means is whatever it says in the prospectus that was given to investors, and that may not have much similarity with its name. A relatively small specialty in the legal profession creates these many-paged documents that the average investor never reads.  Even professional investors are probably relying more on what the salesman tells him about the safety of the product than in specific wording in the prospectus. Yet, when the fund heads south and investors want to sue to get their losses covered, you can bet the Wall Street firm will say, "This was properly disclosed in the prospectus."

Then comes along the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund. What this means is that the fund can go borrow more money than just what investors put into the fund and buy more mortgages.  Word has it that these kinds of funds routinely borrow $9 for every $1 in equity. That means that a fund can start out with $100 million in investor money, borrow $900 million and buy $1 billion in mortgages.

Now let's assume for the moment that each mortgage does not exceed 90% loan-to-value, more conservative than the 100% financing widely available.  That means that the equity behind those mortgages is only $100 million. It doesn’t take a rocket scientist to tell that a modest decline in property values and an increase in the foreclosure rate can destroy most of the equity in the fund. 

And then there's that $900 million of money that some lender probably wants back. Depending on what the credit agreement says, the lenders might have some ability to step in and TAKE enough mortgages to cover its loans, and that may mean the investors get wiped out.

At this point, Bear Stearns has indicated that it will put $3.2 billion (gag!!) into the first fund mentioned, hoping to stave off collapse. But it looks as if the leveraged fund investors are on their own and that they will suffer significant losses.

That's another shoe, and I think that there are still others around.

Stay tuned.

For more information, check out http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aYDTeHYnV3ms 

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

We've covered credit card tips for students and graduates several times here at CreditBloggers. In one post, we made a case for not having any credit in college. In another, we had three warnings for college freshmen. We even have a whole section of Credit.com devoted to helping college students start on the right foot financially.

But none of our advice is quite as funny as Demetri Martin's in his latest Trendspotting segment for The Daily Show. Click on the photo below to watch for yourself:

Happy Friday!

How do you exactly choose the best 0% balance transfer credit card? Well, it depends how long is the introductory offer? What is the rate thereafter? But more importantly, does it charge any balance transfer fees?

But there’s more to balance transfer fees that meets the eye. If you are not careful, that 0% teaser deal may not work out so well. A typical term for a balance transfer fee goes like this :

3% of balance transfer, mininum of $10, maximum of $75.

But, some credit card issuers have become sneaky. These are the tricks they use :

No Cap on Maximum Fees!

Yes, some credit cards offer great 0% teaser deals for balance transfer. They charge a fee, but do not cap it. Bank of America credit cards at the moment have no cap on their balance transfer fee. When there is no cap, then you are essentially not getting a 0% deal, but you are paying them 3% interest instead! Plus, it is all UPFRONT FEE! Below are Bank of America credit cards that seem to offer great 0% balance transfer deals for 12 months, but do not put a cap on the balance transfer fee.

Different Maximum Fees for Different Credit Cards

Citibank is guilty of this practice. Almost all of their credit cards have different balance transfer fee arrangements. Hence, every 0% teaser deal for 12 months is different. This is really irritating when I’m reviewing citicards and I would suspect really confusing for consumers as well. I think most consumers would not read the fine print and end up either getting a good balance transfer deal or a bad one by luck or chance! To prove my point, below is a list of citicards with 0% for 12 months balance transfer offers and their fees :

Citi Diamond Preferred Rewards Card - 3% of BT, minimumn of $5 and maximum of $250

Citi PremierPass Card - 3% of BT, minimum of $5 and maximum of $250

Citi Platinum Select Card - 3% of BT, minimum of $5 and no maximum!

Citi Diamond Preferred Card, Citi Upromise Card, Citi Home Rebate Platinum Select Card and Citi Drivers Edge have no balance transfer fee for the introductory period.

As you can see, what citicards is doing is plainly confusing. Some cards have higher caps for their balance transfer fees, and some have no balance transfer fees. I bet they are simply doing test marketing.

The low down on balance transfer fees among issuers

Bank of America - No cap to the maximum fees. Do not get Bank of America credit cards just for a balance transfer deal.

Chase - has a standard 3% of balance transfer, minimum of $10, maximum of $75 BT fee. But just recently, Chase has stopped offering 0% balance transfer deals for 12 months and cut them down to six months. So I am not recommending ant Chase credit cards simply for balance transfer.

Discover Cards - Discover Cards have the same balance transfer fee policy as Chase. 3% of balance transfer, minimum of $10 and maximum of $75.

HSBC - If you are a HSBC bank customer, the balance transfer fee is waived if you apply for a HSBC card and do the balance transfer upon application or during the introductory window. If you are not a HSBC customer, the balance transfer fee is 3% of balance transfer, minimum of $5, and a maximum of $99.

Citicards - Well, as mentioned above, they have different balance transfer fees for different cards. Some have no balance transfer fees during the introductory. The one good feature about citicards is that you are allowed to do your first balance transfer during the first 12 months and the 12 month introductory period starts from the date of balance transfer (not account opening date).

So which are the Best 0% Balance Transfer Credit Cards

Well, to make life simple, these are the cards I recommend after reading every one of these fine prints.

Citi® Diamond Preferred® Card - 0% for 12 months (purchase and balance transfer), no balance transfer fee. Can do your first transfer within 12 months and intro period starts from date of transfer.

Citi® Home Rebate Platinum Select® MasterCard® - 0% for 12 months (balance transfers), no balance transfer fees. Can do your first transfer within 12 months and intro period starts from date of transfer.

Citi® Driver’s Edge® Platinum Select® Card - 0% for 12 months (balance transfers), no balance transfer fees. Can do your first transfer within 12 months and intro period starts from date of transfer.

Citi® Upromise® Card - 0% for 12 months (balance transfers), no balance transfer fees. Can do your first transfer within 12 months and intro period starts from date of transfer.

Longest Introductory Period

But my best recommendation would be to get the Advanta Platinum BusinessCard with Rewards. It has a 0% balance transfer deal for 15 months, the longest introductory period at this moment. It has a balance transfer fee. But a 3% of BT, minimum of $5 and maximum of $50, this is still worth doing a balance transfer if you have a large amount to transfer. Though it is a business card, you can apply even if you do not have a business. You will simply be treated as a sole proprietor. Just enter “business individual” under “business type” and “owner” under “position”.

I hope you found this post helpful. Share any balance transfer stories you have.

When I first started working, I had always wanted to have an adequate emergency fund. It was tough in the beginning. I had to buy suits for work, a laptop, some stuff for the place I was renting. But eventually, I got around it. Here are some of my thoughts and experience.

How much to have? - How much should your emergency fund have? This is a very tough question. Conventional wisdon says you should have anywhere between three to six months of living expenses. Well, I personally saved up to one years worth of living expenses. Why? Because I’ve seen friends got laid off and were out of work for over a year! But I think there are a few things you have to consider….

1. How stable is your job? - Do you work in the public sector? How stable is your job? If you in real estate sales, then you’d better have a bigger emergency fund because your earnings may be very volatile and unpredictable. If you are a teacher, you may need less of an emergency fund.

2. How adequate is your health care policy? - Assuming you have health insurance with your company, how comprehensive is the coverage? How high is the deductible? These are questions you have to know. Make sure you have enough in the bank for any unexpected medical expenses.

3. Do you have disability insurance? - This is a very important thing. If you are in sales and on a 1099, chances are that the firm you work for does not provide for any disability insurance. Make sure you have adequate disability insurance. I’ve seen people without them suffer financially because of an unexpected major illness. If you do not have any disability insurance, then you definitely need a much larger emergency fund.

Other sources of liquidity

But aside from having an emergency fund, you should also have other sources of liquidity. You should have a home equity line of credit, an adequate line of credit from your credit card.

Have an adequate emergency fund and insurance coverage before you invest

Having an adequate emergency fund and insurance coverage is like setting the foundation of your house (your financial house). Only when the foundation is in place should you think about having a systematic savings plan.

If you stumbled across the Brookfield Lending website while searching for a loan, you probably wouldn't think twice.

It's nicely designed, with flash navigation and lots of photos. There's all sorts of warm and friendly text, including a reference to them being "one of the fastest growing credit brokers in North America."

But if you were to apply with this seemingly authentic lender, it would be a nightmare. Brookfield Lending is a cover for an advanced-fee loan scam. If you contacted them, they supposedly approve your loan and would ask you to wire a deposit or insurance payment. After you sent your hundreds or thousands of dollars, you'd never hear from them again.

We heard about this latest loan scammer directly from a branch manager with the Better Business Bureau. He had called our offices to warn us about this particularly convincing scam. A quick Google search turns up the real story of Brookfield lending. The Ripoff Report has 13 reports from consumers about these fraudsters. 

The Brookfield website offers a rare opportunity to study an advanced-fee loan scammer up close. When you start digging around the site in more detail, it is easy to spot some warning signs:

• No VeriSign or Trust-e security seals at the bottom of the page. Check out the bottom of E-loan or Credit.com for an example. Nearly every authentic online retailer posts these important online security certification.
• No physical address. They don't even refer to being in one state or area.
• Typos in the text of the website.
• Not compatible with Firefox internet browser.
• No meta tags on the website. The page has no title in the top left of your browser window, a basic web marketing element used by established companies.
• No application. Most online lenders have actual online applications to process your request. Always check to see that these applications are on secure (https) pages.
• Only email contact. A real lender would offer multiple ways to contact them, not just an online email form.
• Better Business Report. Brookfield has a report with the BBB. It is only when you read the details that you realize the BBB is trying to warn you that they're a fake company. A closer reading shows that "It is the position of the Bureau that Brookfield Lending Service's advanced fee loan offer is deceptive and misleading."

Take a look at the Brookside Lending website for yourself. Hopefully, it can help you learn how to avoid other scam lenders in the future. And tell your friends and family about this dangerous loan fraud. If you want to read more about advanced-fee loan fraud, this FTC article is a great place to start.

And if you are contacted by a lender asking you to send money in exchange for a loan, DON'T DO IT! Instead, immediately report your case to the Federal Trade Commission, Consumer Affairs and Phone Busters in Canada (usually where the funds are sent). You may also want to share your story with your political representatives, state attorney general, local news media, friends and family.

Update: Here's another bad lender to add to the list: Kennedy Advantage Plus. We received a call from a customer who had sent these fraudsters $1,600 for a $10,000 loan.

The Wall Street Journal recently ran an article on the pros and cons of using balance transfers on 0% credit cards as a source of investment capital. It raised more questions for me about what I'll call "Free-Credit-Card-Capital" (FCCC) than it answered, so I did some research and spent some time thinking about this investment idea, which can be as easy or complicated as you want to make it, if you're cut out to have anything to do with it at all.

Before you read any further … if you aren't good with details or deadlines, if you owe money on your credit cards, if you live paycheck to paycheck, if your credit picture isn't pretty … then this is not a good investment option for you. Don't ask for trouble.

If it's any consolation, FCCC wouldn't work for me, either! I have a knee-jerk negative reaction because I'm disorganized and feel it's likely that I'd mess up. I'm also a worrywart, so even if I set up automatic payments for the required monthly amounts, I'd fret that something would go wrong and my interest rates will go up across the board, while my FICO score would tumble. But that's me.

How You Can Benefit from Free-Credit-Card-Capital
The first step is finding some FCCC. It's important that you choose the right card. You want one that offers the 0% balance transfer come-on -– and does not limit your use of those handy convenience checks for transferring balances from other credit cards. You want to be able to cut a check to yourself for FCCC purposes with no strings or fees. If there's a balance transfer fee associated with the transaction and/or if the card issuer will treat it as a cash advance, it's not worth considering the card for investment purposes. Similarly, if the introductory term is short, find a card with a longer term, ideally a year.

Even if the fine print doesn't raise any red flags, I recommend calling the customer service number to ask about the convenience check policy before you apply for the piece of plastic. Assuming everything checks out, if you choose carefully, you'll soon get the card and the check.

Once you get the check, invest your FCCC in a low-risk savings or money market account, where you can earn in the range of 5%, say at an online bank or via your credit union. Don't put the money in the stock market, because you won't be able to keep it there long enough to weather any economic storms that might sink the Dow.

Key, of course, is remembering to make required monthly minimum payments on the credit card and to pay back the total of what you've borrowed before the card's introductory rate expires.

Don't use your FCCC card for purchases. Why? Because they're quite likely to be billed at a high rate. Even if you intend to pay off the balance right away, and even if you send in enough to cover the purchases, the lender will credit your payment against what you owe at  0% … while the debt at the higher rate grows by a hefty amount, month after month.

As for the interest you earn in the process, that's yours to keep, minus the assortment of dear old income taxes you have to pay. The more FCCC you can access, the more you'll earn. This has led some folks to use a strategy known as "App-O-Rama," where you apply for multiple credit cards at the same sitting, hoping that your applications will be approved and your credit limits will be high … before your FICO score reflects the increased lines of credit in your name and the multiple applications. On the assumption that your FICO score is high, you may be able to amass a larger pot of FCCC than you thought possible. But please watch out!

"App-O-Rama" Warnings

1. Be sure you know what you're getting yourself in for with each card before you apply. Cards that treat FCCC balance transfers as cash advances should be ruled out. Ditto for cards that charge balance transfer fees.
2. Take advantage of automatic payments or come up with another way to be certain that you'll never be late or miss a payment. For some, a spreadsheet might do the job. Whatever. You want to make sure nothing will go wrong. Otherwise, you'll end up paying a lot in fees and a higher interest rate –- across the board, for years to come.
3. Don't build up an FCCC fund if you'll need additional credit in the near future, for example, to buy a home. You don't want your FCCC mucking up the works and making your mortgage more costly.

If you want more information about FCCC, I highly recommend "0% Daredevils Chase 'Free' Cash," by MSN Money's personal finance columnist, Liz Pulliam Weston.

Have you used free credit card capital to make money? Please tell us about your experiences!

The Privacy Rights Clearinghouse is recommending you dump your debit card. Their main concern is that if your debit card is used fraudulently, your card issuer can take up to two weeks to get the stolen funds into your account while they investigate. In the meantime, you may bounce checks or be unable to pay other bills. Their fact sheet goes into great detail as to the dangers of debit cards, especially for those purchases where no Personal Identification Number (PIN) is required.

If you're vigilant and catch fraudulent use of your debit card, you're not likely to be held responsible for the purchases under the card associations "Zero Liability" policies. With Visa's Zero Liability policy, for example, you won't be responsible for fraudulent charges to your Visa Debit card unless by chance the thief used your PIN number and the transaction was processed on a network outside Visa's network. Even then, you would still be protected under the Electronic Funds Transfer Act rules which limit your liability to $50 if you report a loss or theft promptly. 

Visa also requires its card issuer members to provisionally credit your account within five business days, rather than fourteen, and reports that many issuers will credit the victim's account within 24 -- 48 hours. Bank of America, for example, offers credit within the next business day if your card is lost or stolen and used by a thief.

Mastercard also offers Zero Liability for most transactions, though I don't have any more details than those listed on its website, since my calls to clarify its requirements for provisional credit were not returned.

I respect the PRC a great deal, and their fact sheets (some 50 plus) are excellent, but I'll confess I still use a debit card for some purchases. They do have a point, though, if you can use a no-fee credit card and pay it in full each month, do you need a debit card?

If you do use a debit card, I recommend you:
1. Talk to your issuer and find out their policy for provisional credit if it is lost or stolen, and
2. Monitor your account online and set up alerts for unusual activity on your account (most issuers offer this service these days).

What do you think? Do you use your debit card or dump it?