Full Show: Why Big Bank Savings Accounts Stink and Surprising Alternative to Small Business Loans

it's my pleasure to welcome you here to the Clark Howard Show our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life so the giant monster megas have decided oh people are leaving us so we're going to offer them more interest is it worth it I'm going to give you some updated info on your money later speaking of money small business owners are having a hard hard time borrowing money and I just heard a story from a friend about what happened to his son and it's an important lesson for any small business owner or entrepreneur that I'm going to share with you straight ahead so the four giant monster Mega Banks Bank of America Wells Fargo Chase and city were proud for years to continue to pay the princely sum on your savings of 1 100 of 1% and is saving rate savings rates kept climbing with regional Banks and local banks and credit unions and online banks and today generally in the range of 5% more or less the giant monsters were telling Wall Street hey this is great our customers are such creatures of habit they're just leaving their money here earning one/ 100th of one% we're stealing from them reverse bank robbery in place so now most recent quarter the banks were whining to Wall Street that they're having to pay people as much as 2% interest now in order to keep people from migrating their money in savings and CDs to other places all the way from 1 100 to 1% to 2% and that seems to have been enough to stem the outflow of money that people that are with the four giant monster megas that account for a little bit more than half a banking in the United States that these four were like yeah well you know we offer people crumbs little more crumbs they'll stay with us with their money okay so you can do that and maybe you're earning two instead of one 100th or 1% but why would you do that when you could earn five or four and a half or 4.4 or 5.25 or whatever it is it's your money or if you have accounts with one of my three favorite children with Schwab Fidelity or Vanguard you can put money in a US Treasury fund which I mean they're all uh bank accounts sh to 250 by the feds and then you've got uh money market accounts that are US Treasury funds government securities funds that are paying fiveish percent and they're even uh a hair safer than having money with one of the four giant monster megas and your money is available to you whenever you want it so the thing I want you to think about is why why would you after you worked hard to make your money to set money aside to save and not spend to have it in a savings account or have it in a CD with one of the four giant monster megas when instead you can move it somewhere else and earn so much more yeah it's great there now paying as much as 2% not enough when inflation is higher than that you're falling behind with every dollar you save so you want to out earn inflation anywhere else you can make that happen other than the four giant monster Mega Banks Christa okay an in California says my daughter has an internship in the fall in in August for four months months she's going to be in Cape Canaveral Florida she wants to drive across the country to California so she can use her car while she's there from California too yes sorry to Cape canaval Florida is there a better option such as purchasing or renting a car while there okay four months no you don't want to rent a car you don't want to purchase a car there so there's a toss up here um one thing you can do there's a big business in the United States that first came about years ago because of eBay Motors that now the way the car business works is so different than it used to be and dealers now acquire Vehicles anywhere in the country from each other from auctions uh and all that there's a very large Market where you can move an individual vehicle through a bid process and there's a big car mover company called monway m o ntwa y uh there there are people who have a bad time with mon most people are happy with it and then there's usip which is a uh a bid site for moving stuff the letter ship.com so Ann I would see what would it cost to just move the car across the country not put all those miles on the car and depending on how competitive a market is going east coast to West Coast tends to range between ,000 and $1500 one way to move a car if you think about putting uh 2,000 miles on the car effectively that's $1,000 in cost now it means that your daughter would fly from California to to Florida that's a pretty cheap flight that's a very competitive market and fly back and not have to be on the road for 4 days each Direction so remember you got hotel costs and fuel costs and cost cost uh doing that plus you're worried about her being on the road by herself for four days crossing the country on uh the 10 on I 10 going across the country so that's what I would look at is a bid for moving the car instead of driving the car Goran in Georgia says Hey Claren team has started religiously listening to you after graduating from college a few years ago and I can't thank you enough for all the advice you provide my soon to be wife has a great opportunity with her employer which would have us and our dog move from Atlanta to San Francisco for a couple of years we're going to take this opportunity to spend a week driving across the country stopping at national parks and cities along the way we plan to sell off most of our furniture before we move I've got a few questions we plan to sell via Facebook Marketplace place but wanted to know if there were other sites or to advertise or sell on we are between renting a U-Haul and towing our car or getting a pod and driving our car we're nervous about hiring a moving company what are your thoughts on the apartment hunt mostly independent landlords we have a friend who is a local and has provided some advice on locations we won't have a chance to go out in person which is ideal before finding a place how can I vet listings online and Trust postings I see okay can I possibly keep up with all those things so I'll go in reverse order um first things first I would reorient your schedule to make the time to go out there to look at places I just don't feel you're going to be able to get a good feel for the safety of a neighborhood the quality of a place whether you're going to feel secure in that area without having Eyes On The Ground your eyes on the ground so uh you're talking about a round trip that's probably somewhere $400 to $500 round trip plus your expenses on the ground plus the time going around and looking spend it because once you sign that lease you're in a position where you're you're stuck and I've heard this too many times to tell you that you cannot adequately scope a major metro area like the San Francisco Bay Area without being on the ground second thing I really like your idea of on a move that's uh 206 2800 miles that you do something like those pods and you have you pack them your you pack it yourself goes on their longdistance truck and dumps at the other end instead of you pulling your car behind a U-Haul driving that all the way across the country or any other brand of truck and into national parks and everything yeah I I just I think you just go enjoy the trip across the country and your own vehicle enjoy the national parks and get your stuff on the road did I miss any of the questions no I don't think you did I would also suggest oh the selling stuff oh yeah selling stuff see I knew I forgot something see I'm flaky too we just said that the other day so no I said I'm flaky so the Facebook Marketplace uh is not as good as it used to be because it's been Infested by a lot of con artists so you have to be careful um also next door may be an outlet depending on the next door in your area of Atlanta right MH yeah so you can you could try next door any others those are the two I would use I mean you could do Craigslist but I've had great luck with next door and Facebook Marketplace for sure yeah but uh Facebook Marketplace somebody says oh we're going to send you a check site unseen or whatever that's leading into a scam uh know that somebody wants to well this sounds like the theme of the apartment somebody wants to see your stuff before they're making you an offer usually on Facebook Marketplace or next door because they're buying used stuff they want to see the condition and so if somebody says oh I'm just going to send you the money and friend's going to come pick it up uhuh that's going to be a scam and I would also the apartment thing if they really can't get out there and they're in a pinch I would look at renting an Airbnb for one month and then finding an apartment since they're going to be there so long so then you'd have to store your stuff for a month but I like that uh that's a good suggestion anything other than renting a place sight unseen and a metro area Atlanta is a big metro area the sancisco Bay Area is a bigger metro area and is more inconsistent as a metro area more complicated than the Atlanta metro area and that's why you need Eyes On The Ground all right this came in from Tony in Texas Clark just wanted to share a reminder for your listeners to be cautious about giving out their information to vendors at festivals I was recently at a festival provided info for someone trying to grow a new quote unquote neighborhood app they said they were entering me in a raffle and that I could invite my neighbors I assumed this was optional and would be prompted by me to my surprise they mailed Letters Out addressed from me with my name and Street they didn't promoting their app what an app I had never even used additionally I found out they also sent letters with my name but other with other streets trying to imply that I lived on your street this is Shady marketing at best and outright forgery at worst just wanted to share an embarrassing lesson learned and if you want to share the name of the company app and they gave it to me if you Google you will find at least one other article where they did the same to others so we'll look into this okay that's wild uh I never ever when we're at a festival street fair whatever and they have those Raffles I never fill them out and usually it's not as sneaky sneaky as this one they're just using as a lead generator and then they call you and they say oh you didn't win the big prize but you won whatever and by the way let us tell you about our whatever you have to come to our place to claim your winnings and then they do some kind of sales pitch or whatever you win a chance to get a time share pitch that does happen so uh if for many reasons if you're out and about your guard's kind of down you're having a good time music's playing the weather's beautiful you're in some Park walking around a festival and somebody says oh enter a raffle to win or whatever and you're like oh wow and you just do it because uh you just have lost your sense of caution because of what a great day you're having don't do it don't do it uh coming up ahead there's something I never want you to do if you own your own business and it's spreading like a plague a friend called me with a tail of Woe that his son owned a business and and his son realized he didn't have enough money to pay a current payroll at his business and in a panic borrowed money from one of those lenders that said uh we'll lend you money in minutes and this is an absolute curse on entrepreneurs and small business owners because there are not the same legal disclosures acquired on a loan to a business is there is a loan to a consumer loan to a consumer if you read the documents it has to tell you the interest rate and the terms and what fees business loans don't have to do that so there are all these lenders out there call them lenders they're really sharks that are offering quick loans to businesses I get solicited as a business owner I get solicitations every single week and I look through all of them because I want to be prepared to answer questions about it and with almost without exception they never disclose an interest rate all they're talking about is you can get money for your business in you know just a blank in minutes or days and so if I'm a business owner I've worked hard I'm an entrepreneur I've established something and I've hit a wall cash flow wise I'm tempted I'm GNA want to save my business and here's somebody throwing me a Lifeline that's actually an anchor that will drown me in the case of my friend who called me about his son his son paid took out a that had fees and interest that effectively were over 150% 150% and the son's business was going down the tubes and the dad's like wait wait wait they can't do this can they and I explained to him what I just explained to you that these last minute up to the second lenders to businesses actually are legal loan sharks in Most states they can do this and charge you whatever and all different kinds of fees and junk fees and uh huge interest payments and all of the the above this has become a big business because the small community local banks that serve small businesses overwhelmingly closed in a 2-year period from 2008 to 10 and although small local banks are forming again it's really a hollowed out sector so small business owners have a really hard time when they need money you can't go to a big Regional bureaucratic Regional Bank or big bank and just say hey I need money for payroll can you give me a loan and they'll give you a stack of forms to fill out or tell you electronically to do it and they'll make a decision in three months that doesn't solve anything so what I recommend for a small business owner is that you use you're going to be stunned what I'm going to say I mean like how could I be saying this you want to have credit cards that you have for your business because even though on business credit cards you may be paying 20 to 35% interest it's going to be so much cheaper for you if you need to to take a cash advance even if you have to do that to meet payroll or pay rent and service alone at 20 to 35% it'll be so much cheaper than going to one of these distressed lenders that all they do is make the problem worse for you by charging you these three-digit interest rates so the time to get those is when your standing is good and you need to get one now there's two ways to do it I've got a guide at clark.com to the best small business credit cards we've updated the best ones for 24 and go through what makes them best with a business credit card you don't have the same protections doesn't this sound like the same story again you don't have the same protections with a business credit card about grace period and all that you do with a consumer credit card so you can there's no reason you couldn't have consumer cards you do that you use for your business uh you're liable in either case even if you get a business credit card you're personally liable for it just as you are with a consumer card but credit cards have become the most viable replacement for a small business owner or an entrepreneur for having what we had before the ongoing relationship with a small locally owned bank Christ all right Aaron has a question he's in New York and says I'm debating how to pay my weekly daycare bill in New York City I'll let you know that we found weekly daycare bill in New York City what is that 6,000 a week how much is it in New York I'll let you know that we found one of the more affordable spots in New York City here are the two options in their weekly cost $610 by ACH or 625 by credit card I calculated that I need a Rewards Card of at least 2.46% to break even using a credit card but I don't think that exists I also have seen in the news daycare is just closing without notice is paying only the credit card fee worth the insurance of knowing I won't ever be totally out of any potential payments made thanks for any advice about this daycare in general so Aaron yeah this is an interesting thing if you were to get one of the 2% cash back cards that you can get no annual fee uh we have a list of them again in our credit card section at clark.com you would be losing 046 which uh is not a terrible amount of money per week 046 on 625 come on can't you do that that quickly that would be $3 a week approximately quick math um I think it's worth the $3 a week as a miniature insurance policy with one of those 2% cash back cards we do have one on there that pays two and a half% as an annual fee and has all kinds of other requirements with it so I think if you just get a simple uh 2% cash back card and use it to pay you're good Stephen and Nebraska says several times on your podcast you've mentioned the problem with gift cards and the potential for receiving one that has been emptied I tend to pay attention to Consumer Affairs locally and never heard of this as an issue I buy gift cards to replenish my Amazon account on almost a weekly basis buying them from various local stores and I've never had a problem to better put this problem into context are there certain areas of the country where this is a bigger problem all right so Stephen what's called card draining is a really fast growing crime and where it's happening overwhelmingly is on store display racks of gift cards that are out on the sales floor or at the register but not behind the register criminal uh grabs those surreptitiously they take them home they use a pretty simple process to remove the White Strip from the cards they record the information in a computer program and then they uh recover the strip where you can't tell it's been played games with it goes back on the Shelf you buy it and then the second is activated the register the criminal is given an alert by the software program and they drain the card that's why it's called card draining when you go to use it it's empty you were really lucky buying cards every almost every single week that you've never been hit by a card drain uh so that is very unusual thing maybe you're buying them behind a counter instead of exposed out on a sales floor at a retailer gas station uh convenience store whatever um so you're playing with time and fire so I'm curious and I'm sure you have your reasons but if you buy from Amazon that much that you're buying Amazon gift cards all the time why wouldn't you get Amazon's credit card doesn't it pay 5% back um in your case if you were like a dedicated Amazon Prime Shopper it would be very much to your advantage to just have the Amazon credit card keep it simple and you get your 5% back on every purchase maybe you don't like credit cards I don't know but the gift cards are a serious risk area for you because of the card draining scams Charles and Texas as I wanted to pass along another tip to the claries I shop at a specific online retailer frequently I recently got the price of a very nice shirt down from an original price of $119 to $39 just by entering the website in a different way for instance I originally clicked on a link in a promotional email from the retailer which got the price to $79 then I closed that window and just Googled the Retailer's name and the product I was looking for I clicked on one of those links which gave me the $39 price I've saved so much money at various retailers doing this over the years do some extra clicking and never p f pay folk price for clothing okay I love this Charles this is great I mean people have so many different strategies and you just using different routes to get to the price um I use some of the the shopping Bots that pop up in the corner of my Chromebook and a lot of times they're really annoying than other times it's like how did it get me that price and that recently happened with something where um I got a much lower price through a third-party shopping thing than I did direct with it you did it through a Google search so this is a real thing that the more you play hard to get online the more you might save money do you have any other strategies you try um no I go to Clark deals and see what they have often I like to check out and see if they have any ex coupons or anything like that um but I also do this I will if I find a product I like I'll search for that specific item a clothing item and look at different stores and then I look at the used I always look on like eBay and other places to see if somebody's reselling that clothing item that I like yeah okay so the eBay angle is really interesting by the way I was teasing about Clark deals Clark deals is fantastic um I can't wait every day for our daily newsletter and a lot of times we'll have uh discount codes you need to get the lower price you don't know is there is a way to save money Clark deals.com yeah thank you our team works hard I just want they do work hard promote what they do they do a great job um but when when I'm shopping around for things it's amazing how the price is not the price is not the price that there are so many different strategies and try them all but one area I want to give one word of caution you mentioned doing a Google search to find the $39 deal for a shirt the problem you can have with a Google search is you end up at a phony site it looks exactly like the real one you think you're buying it and instead you've given your credit card information to a crook so be really uh aware with those go Google searches in this case it worked out fine you saved a fortune I've never paid $39 for a shirt I'm sure it's gorgeous it's way above my price range I don't like to go past single digits for a shirt those of you watch our YouTube show you know that I don't spend any money on my clothes at all why are you shaking your head at me I'm just laughing at you it's so true isn't it it's true for sure you walk oh we got in trouble for that walk the walk it's supposed to be walk the talk talk I don't know there was a Clark stinks that came no we got it somehow I got it's walk the talk or talk the walk was what the explanation was it I'll I'll find it walk the talk whatever whichever way it was that we had in the Clark stinks uh but the uh clothing thing is a real differentiator between my wife and me my wife uh dresses uh ridiculous L beautifully and overwhelmingly buyser clothes used and they're all these really uh nice labels I don't know of and I wear my very very lowquality lowcost clothes and I really wear them till they become Rags so it's just not one of those things that's a priority for me I was with my one of my brothers-in-law yesterday and uh he was wearing these just beautiful loafers and I was like those are so goodlooking and it turned out they were custom loafers how much he wouldn't tell me oh my goodness he wouldn't tell me because the other day I was on the Rockport site they were having a special sale my loafers have holes in the sols mhm and they're too old and too beat up to recover again I mean they just and when it rains recently I was I was at an event where I had to wear loafers I was walking in the rain and my feet were soaked that's time to replace and so I'm on Rockport and the loafers were $69 on sale I couldn't do it well you could resold your shoes couldn't you no they're they're really too old and beat up they need they need to be replaced I've had these loafers since 2008 I wow and they're the only pair of loafers I have and so basically I've worn them out and I have no other dress shoes and I just have not replaced them because I just they're always so expensive and I used to be able to buy loafers in the kids department at Sho Carnival and uh years ago kids department at Sho Carnival because kids feet are so much bigger than they used to be wow and they used to sell Mass weian kids loafers and they were a real deal and and they don't sell them anymore you know Costco needs to come out with a KS loafer I did have I did have Kirkland Signature loafers they did make them they did like 20s something years ago I had Kirkland Signature loafers where those have gone to I I probably left them somewhere who knows they may have been donated in a move by your mentioned beautifully beautiful she really does dress beautifully Lane is beautiful inside and out and she wears beautiful clothing okay so this is a true story um whenever we move stuff of mine just kind of disappear disappears in uh donation bags to a thrift store M and I don't know where they are they just got lost in the move funny how that happens she's so right but uh someday I'll open up the wallet and I should have done it after I got my feet your birthday's coming up so you just gave me an idea you can't spend that kind of money I'm not going to tell you what size loafers I wear you can't you think I can't figure that out all right I think we should go on yeah I think we should people go on with their days but anyway I hope you have a great rest of your day remember what we're about you learning ways to save more spend less and avoid getting ripped off and see you tomorrow

Channel: Clark Howard: Save More, Spend Less

Views: 10,615

Keywords: clark howard, clark, money, financial literacy, finances, money podcast, podcast, financial podcast, consumer, consumer advocate

Id: NXwbCBv01fU

Length: 31min 36sec (1896 seconds)

Published: Wed May 29 2024