Personal Finance 
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Five Biggest Legal Ripoffs Ever

Scam SchoolMy wife and I bought our house five years ago. I remember looking over the list of closing costs and seeing a line for title insurance. Title insurance, which costs in the neighborhood of a few thousand dollars, is something that boggles my mind even to this day. It’s an example of something that is a 100% legal and 99% rip off. There are some things in life that are obvious rip offs, like pay day loans, and then there are others that aren’t so obvious. Today, I wanted to point out a few of the biggest legal ripoffs in the financial world. Some of them are completely avoidable. Others, however, are not.

In this article, we take aim at bank fees, extended warranties, title insurance, college textbooks, and car rental insurance.
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 NEWS 
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Vanguard Reduces Trading & ETF Transaction Fees

Vanguard LogoVanguard recently announced a reduction in their fees. For most investors, those with less than $50,000 in their account, their first 25 stock trades each year will cost only $7, subsequent trades are $20. If you have $50-$500k, all trades are $7. $500k- $1M, all trades are $2. If you have over a million, your first 25 trades each year are free, $2 for subsequent trades.

The bigger news is with Vanguard ETFs, all investors now get to buy and sell Vanguard ETFs for free. For Standard accounts (<$50k assets), there is a $20 account service fee. That's waived for those with $50k+ of assets with Vanguard.

This makes Vanguard ETFs very attractive people with Vanguard brokerage accounts. They already have really low expense ratios and when you make them free to buy and sell, it’s almost a no brainer. The Vanguard Total Stock Market ETF (VTI) has an expense ratio that matches its mutual fund Admiral Shares version (to qualify for Admiral Shares of a Vanguard fund, you need $100,000+ invested in that fund).


 NEWS 
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Gartenberg Standard and Mutual Fund Fees

It’s not often that the Supreme Court takes on a case with such a key personal finance subject, mutual fund fees, so when the highest court in the land made a ruling last week, I perked up. The case was Jones v. Harris Associates and it concerned Harris Associates’s Oakmark funds. Shareholders owned Oakmark funds through their employer’s plans and were charged a management fee of 0.88%, versus the 0.45% fee charged to Harris Associates’s institutional clients. The plaintiff’s argument was that they were being charged an excessive fee compared to Harris’s clients, in this case almost twice as much.

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 Credit 
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How to Avoid Credit Card Minimum Annual Purchases Fees

As we wrote about it last year, credit card issuers are instituting annual fees they are willing to refund if you make enough purchases in a year. The first issuer to start doing this is Citibank and recently sent notices out to cardholders about the $60 fee starting April 1st. If cardholders spend $2400 in a twelve month period, the fee will be waived. Consumerist has the full text of the letter cardholders received.

I received an email from a reader asking if I knew what she could do: “I am not sure if you have covered this topic but I got a letter in the mail from Citi cards that they are going to now charge $60 annual fee and that fees is apparently going to be waived at the end of the year if I make a tleast $2400 in a year in purchases. I have had this card for a couple years and used it once to do a balance transfer for 0%. I have a limit of $17,300.00 on this card. I am at a loss on what to do because I may not be able to make the $2400 in purchases because I use my high interest debit card for most of my purchases. My question is – if I were to close this account, how is that going to affect my credit? Will it? What are the factors I should consider before I close the account?”
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 Banking 
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Overdraft Protection Is A Good Thing

The NYT Bucks blog published a post today warning us that banks will start direct mail promotions to get customers to opt into their overdraft protection. While they don’t explicitly say overdraft protection is a bad thing, they do want to help protect against some fear mongering on the part of banks. I think that’s a good thing, we need to keep banks in check, however I also think that opting into overdraft protection is a good thing.

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 Banking 
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Watch Out for New Credit Card Fees

With the Credit Card Act of 2009 looming, its rules will go into effect in February, credit card companies are starting to institute more fees ahead of the rules changes. A new Wall Street Journal article cites several of these new fees including $1 processing fees for printed statements, reduction in rewards programs, and fees for inactive accounts. We first talked about some issuers charging fees if you didn’t meet a certain spending threshold last August.

Much like with banks, leave them if you don’t like it. I thought the comment by Christopher Moss, who holds a card that will start charging $1 for statements, that he was “prepared to cut up the credit card even though he likes the loyalty rewards that come with it” was a little silly. Just get electronic statements and you can keep your rewards and not get charged the fee.

In the end, banks and credit card issuers will need to make money to keep their shareholders happy. If they can’t get it through overdraft fees or some of their other existing fees, they’ll get it somewhere else. Now I can’t wait for the rash of people complaining about how they opted out of overdraft protection and start seeing their checks bounce (banks were making a ton of money on overdrafts for a reason…)


 Banking 
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How to Minimize Bank Account Fees

Bloody Bank Fee MoneyBanks used to make their money by taking customer deposits and lending it out at a higher interest rate. Along the way, they discovered they could siphon off a little bit here or there in the form of “fees” cleverly disguised as “convenience” charges.

Bankrate does annual fee surveys of what banks charge and the fee amounts are absolutely astounding. Overdraft or nonsufficient funds (NSF) fees average $29.58, ATM surcharges average $2.22, and the average monthly service charge on a checking account is around $12.55. That adds up to billions of earnings for banks.

Let’s talk about how to minimize these fees.

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 Credit 
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8 Reasons Credit Cards Beat Debit Cards

Debit Card hologramThis may be sacrilegious to say, as a personal finance blogger, but I’ve never been a fan of debit cards.

I’m biased though. I think I prefer credit over debit because because I’ve never been in credit card debt. I’ve never been on the business end of the tactics used by the credit card industry. I credit to a fear that my mom would be angry with me, rather than my own self-restraint, but either way I have never paid a penny of interest to a credit card company. :)

That being said, here are eight reasons why I think that credit cards are better than debit cards, which I hope you’ll enjoy arguing with me in the comments!

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