Schwab returns to courting the little guy

Good news out of Charles Schwab: the discount brokerage is lowering the expenses ratios of its equity index funds and reducing the minimum investment required to $100. (Hat tip to Flexo at Consumerism Commentary.)

That makes Schwab’s S&P 500 Index fund expense ratio cheaper, at .09%, than the famously frugal Vanguard S&P 500, at .15%. Vanguard’s fund also comes with a $3,000 minimum investment requirement.

When stocks were booming, Schwab unfortunately followed the trend of most other brokerages in desperately pursuing the “high net worth” crowd while making it harder for the little guy to get started investing with higher minimums and various fees.

The change in tactics is good news for anyone who wants to get started investing and who doesn’t already have a fortune.

Help your kids save

I’m a big fan of the Money Savvy Pig, a four-chamber plastic piggy bank that helps kids set aside money for saving, future spending, sharing and investing.

The pig’s creator, Susan Beacham of Money Savvy Generation, also has a good product for older kids–the Cash Cache Organizer. The binder comes with a 36-page handbook to familiarize teens with basic concepts of budgeting, saving and investing, plus pouches to organize cash and a padlock to keep it all private.

Susan and the Cash Cache Organizer were recently featured on Dr. Phil. To watch her segment, CLICK HERE.

For more on kids and money, check out these columns:

• Why your kids expect to be rich
• Teach your kids how to handle credit cards
• Stop your kids’ whining!
• Gifts that help kids fill their piggy banks
• Why allowances don’t work

Credit card issuers aren’t racing to comply with Fed rules

If card issuers didn’t understand the difference between fair play and foul, the Fed made it pretty clear last year.

The Fed and other banking regulators banned several common industry practices but gave issuers until mid-2010 before they had to comply.

Credit card lenders aren’t exactly rushing to beat the deadline.

BillShrink.com has been tracking which issuers have voluntarily complied with the eight biggest changes. So far, exactly none have complied with two biggies:

• banning arbitrary rate increases (so-called “any time, any reason repricing”) and
• fairly allocating payments, instead of putting 100% of your payment toward the lowest-rate portion of your balance first, extending the time you pay the higher-rate portion.

Other Fed provisions are getting somewhat better compliance. Here’s BillShrink’s synopsis:

No more universal default. Universal default allows card issuers to raise interest rates on customers based on the customer’s behavior on another unrelated account. For example, if you’ve missed a payment on your utility bill or have your credit score lowered, a card issuer may increase the interest rates on your account. This policy and practice would no longer be permitted.
Issuers that meet this requirement: American Express (14 cards),  Capital One (14 cards),  Citi (14 cards),  Discover (5 cards),  Wells Fargo (5 cards)

Sufficient time to pay bill. Credit card holders will be provided with reasonable time to pay their bills. Card companies would be required to mail billing statements 25 calendar days before due dates (sometimes referred to as the “grace period”), eliminating the current minimum notification of 14 calendar days.
Issuers that meet this requirement:  Capital One (14 cards),  Discover (5 cards),  First Premier Bank (3 cards),  Pulaski Bank (1 cards),  Wells Fargo (5 cards)

Proper and timely notification of rate increases. Credit card companies are now required to provide cardholders with a minimum 45-day notice of any pending interest rate increase, thereby allowing consumers sufficient time to consider their options. Issuers that meet this requirement: Citi (14 cards),  Discover (5 cards),  Wells Fargo (5 cards), Bank of America (41 cards), HSBC (3 cards)

Right to set limits on credit. Credit card companies will have to provide consumers the option to have a fixed credit limit that cannot be exceeded. This would help the consumer to avoid over-the-limit fees being applied to their account. Issuers that meet this requirement: American Express (14 cards),  Capital One (14 cards),  Citi (14 cards), Discover (5 cards), First National Bank of Omaha (8 cards), U.S. Bank (13 cards)

No more double-cycle billing. Double-cycle billing allows for credit card companies to compute finance charges base on purchases made in current billing cycle rather than previous billing cycle. This policy hurts consumers who pay off their balances in full in one statement period but not the next. Credit card companies will now be prohibited from using this double-cycle billing practice. Issuers that meet this requirement: Bank of America (41 cards),  Capital One (14 cards), Citi (14 cards),  First National Bank of Omaha (8 cards),  First Premier Bank (3 cards),  Pulaski Bank (1 cards),  U.S. Bank (13 cards),  Wells Fargo (5 cards)
Protection from due date gimmicks. Payments made by a cardholder by 5 P.M. EST on the due date would be considered on time, and therefore would allow the consumer to avoid incurring late payment fees and possible interest rate increases.
Issuers that meet this requirement: Bank of America (41 cards),  Capital One (14 cards),  Citi (14 cards),  Discover (5 cards),  HSBC (3 cards),  Orchard Bank (2 cards),  U.S. Bank (13 cards),  Wells Fargo (5 cards), First National Bank of Omaha (8 cards)

To check out BillShrink.com’s interactive tool and see which cards comply, CLICK HERE.

Manhattan group is like Weight Watchers for money

You could call “Simply Money” a course, an investment group or the financial equivalent of a Weight Watcher’s meeting that helps women “count coins instead of calories.”

Simply Money meets once a week in Manhattan, and it’s run by my friend and fellow MSN columnist M.P. Dunleavy along with Galia Gichon, author of “My Money Matters.” The pair help women:

• Pay down debt (M.P. just retired $35,000 of her own debt)
• Create budgets that work
• Save for retirement
• Choose the right insurance

To watch a CBS News story on the group, CLICK HERE.

What if you’re not in Manhattan? You can still find a community of women to help you learn about money. I recommend M.P.’s Women in Red message board on MSN Money as a great place to start.

What if you’re not a woman, or not in debt, but still want to learn more about money? Check out the Your Money message board, which I moderate.

How would you survive a quarantine or other disaster?

Swine flu quarantines in Mexico and the U.S. got me wondering: how would we cope with being “confined to quarters” for two or three weeks?

Quarantine preparation is a variation of the disaster preparedness each of us should do anyway, to make sure we can:

• cope on our own without basic services for at least three days (and preferably a couple of weeks) in case of disaster and
• promptly evacuate our house if necessary

Unlike other disasters, a quarantine wouldn’t cut us off from electricity, water supplies or other services, and we probably could get necessities delivered. But it still would be smart to keep a two-week supply of food, medicine, pet supplies and hygiene items in the house at all times. (Check out my column “The emergency fund you can eat” for details about preparing your pantry.)

If you don’t have a general disaster supplies kit, here’s a list of items the Red Cross recommends keeping in an easily-accessible place:

• Water for at least three days (one gallon per person per day)
• Food that won’t spoil or need much cooking (replace this food every six months)
• A change of clothes, comfortable shoes, and blankets or sleeping bags
• Battery-powered radio or television, flashlight, extra batteries, lighter or matches, sanitation supplies, basic tools, and a few dishes and kitchen utensills
• An extra set of car and house keys
• A basic first-aid kit
• A manual can opener
• Personal hygiene items to last at least three days
• A reminder to grab your prescriptions (or include copies of prescriptions)

I would add a few additional items:

• Work gloves (for dealing with broken glass and other debris)
• A pry bar (for debris and opening doors warped shut in shifting structures)
• A wrench (for shutting off gas and water supplies if necessary)
• A wad of cash sufficient to last at least three days