Citi Dividend Card Q1 2012 Categories

I had written before that I have a Citibank Dividend MasterCard. One of the benefits of this card is that it offers 5% cash back on rotating categories of merchants. The main problem I have with this arrangement is that I always forget which categories are currently offering 5% cash back when I am at the store. As a result, I often miss out on the bonus dividend dollars. In order to help me remember, I have decided to post the categories which change every three months here.

For Q1 2012, the categories are:

• Health care - doctor's visits, eyeglasses medicine, etc.
• Fitness clubs - memberships and more
• Utilities - gas, electric, wireless services, cable, etc.

Note that "Q1 2012" means from January 1 - March 31, 2012. Also note that even if you have a Citi Dividend Card, the enrollment is not automatic. You have to login and sign up for this offer at the Citibank website.

PFS

Financial Spread Betting

In the United Kingdom, a type of financial trading called "spread betting" is available to investors. Spread betting can be used as a derivatives investment that allows a trader to cash in on the price movements of many financial markets, such as indices, shares, currencies, commodities and more.

Spread bets can be used to speculate on price movements regardless of whether the general market is rising or falling. If you go long (buy), profits rise in line with any increase in that price. If you go short (sell), profits will rise in line with any fall. Similarly, if you go long on the price and the underlying stock price falls, you will lose money.

In order to participate in financial spread betting, you must first open a margin account with a broker such as City Index. When you place a trade, you are required to deposit a small percentage of the full value of your position. The potential for both profits and losses from an initial investment is significantly higher than in traditional trading. The required margin is typically between 1% and 10% of the total value of your position, depending on the market. City Index offers prices on over 12,000 spread betting markets.

In spread betting, two prices are quoted for all spread bets – a buy price (the price at which you can go long if you expect the underlying market to rise) and a sell price (the price at which you can go short if you expect the underlying market price to fall). The difference between the "buy" price and the "sell" price is known as the spread.

A graphic from the City Index website gives additional insight into the spread.

An additional benefit of spread betting is that profits made in spread betting are exempt from UK Capital Gains Tax. This automatically saves you a large percentage of your profits that you would normally have to pay if you were to trade the underlying markets. As spread betting is a derivatives product, it is also exempt from UK stamp duty. Tax laws are subject to change and depend on individual circumstances.

Lastly, as with any leveraged derivative investment, you have the potential to lose more money than you invest. Do not invest with money that you cannot afford to lose, and consult a financial advisor if you are unsure if financial spread betting is suitable to you.

Disclaimer: This material is for general information only. It is not intended as an endorsement, recommendation or sponsorship of any investment. PFStock does not provide investment advice. This post is sponsored by City Index.

Groupon: A Broken IPO

The Internet deal website Groupon (Nasdaq: GRPN) priced its initial public offering (IPO) at $20 per share on November 3, 2011. When the shares began trading the next day, GRPN opened at $28 per share -- a 40% jump. The hype surrounding a new IPO is usually the main driving force behind a rapid run up (or "pop") such as this one.

However last week, the share price of Groupon dropped below the $20 IPO price. Stock traders call an IPO that has dropped below its initial offering price a "broken IPO". So, Groupon is now considered a broken IPO. Could it be that the market for online coupon and deal sites is saturated? Groupon certainly has a lot of competitors, as was mentioned in this post about websites similar to Groupon.

I have written about buying IPOs before on PFStock. While getting into an IPO can be a way to make money quickly, I have warned that not all IPOs go up in price. A point that I will again underscore is that buying an IPO can involve significant risk! This appears to be the case with Groupon.

Disclosure: I do not own any interest in Groupon.

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Get $150 Cashback from Discover Card

Discover Card just sent me an Email offering a $150 cash back bonus for opening a new credit card account. Like every other credit card offer out there, they have certain conditions that you must satisfy to receive your money. For this one, you basically have to charge $1000 to your card within the first 90 days.

Update: The original offer has expired.

It is worth noting that new card members will receive a 0% introductory APR for the first 6 months. This is helpful if you run a balance, but that doesn't matter much if you usually pay off your card every month.

Additionally, I will note that Discover Card offers a 5% cashback bonus on a "seasonally rotating" list of spending categories. For the remainder of 2011, these bonus categories are as follows:

Q4 2011: Restaurants, Department Stores, Clothing Stores




PFS

Get a $1,750 Gift Certificate

Great news! I just received an Email from TD Ameritrade with a remarkable offer. Apparently, I am one of their pre-selected clients who is eligible to receive a $1,750 gift certificate for Ritz-Carlton or Marriott Hotels. All that I need to do is deposit or transfer $1 million dollars into an Ameritrade or Amerivest account. Even if I don't qualify, I could get a $400 gift card for a deposit of only $250,000. What a deal!

I know that most of my readers won't be able to benefit from this, but here is the link to this offer anyway. But seriously, I am not sure what they are thinking over at TD Ameritrade. I was going to make some additional comments, but I think the message from Ameritrade already speaks volumes.

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Flex Spending Accounts for 2012

It is that time of year again when companies hold their annual open enrollment. This is when employees have the opportunity to change medical or dental plans, and to opt into making contributions to a flexible spending account (FSA). In general, a flexible spending account allows one to deposit pre-tax dollars into the account to pay for medical expenses, or to pay for dependent care. (Note that these are two different types of accounts.) The ability to use pre-tax money to pay for expenses is a good benefit that can save you money.

Starting in 2011, there was an important change to FSA plans. Specifically, the rules have changed for the purchase of over-the-counter (OTC) medicines and drugs (such as OTC allergy medicines, pain relievers, antacids, cough medicine, etc.). This change is due to the federal health care reform law, the Patient Protection and Affordable Care Act of 2010 (PPACA). (This was a part of President Obama's health care reform plan.)

Previously, all of these OTC purchases were covered by flex spending accounts. However, starting in 2011 these OTC drugs and medicines cannot be reimbursed through an FSA unless they are prescribed by a medical practitioner to treat a specific medical condition. So, the bottom line is if you plan to purchase these OTC items through a flexible spending plan, you'd better have a prescription first.

One other thing to keep in mind when contributing to an FSA is that most flex spending accounts operate on a "use it or lose it" basis. This means that any balance you have in the account at the end of the calendar year is forfeited to your employer. This is something that I would rather not do, since I never want to leave any money on the table.

Warning:
In the current economy, I also want to warn my readers of one more potential hazard with FSAs. Having been downsized twice in the last decade, I can tell you that the "use it or lose it" provision also applies if you are terminated without cause (i.e., laid off). Any money that you have left in your FSA plan when you are terminated will be kept by your former employer. This may seem totally unfair, but that has been my real life experience.

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Citi Dividend Card Q4 2011 Categories

I had written before that I have a Citibank Dividend MasterCard. One of the benefits of this card is that it offers 5% cash back on rotating categories of merchants. The main problem I have with this arrangement is that I always forget which categories are currently offering 5% cash back when I am at the store. As a result, I often miss out on the bonus dividend dollars. In order to help me remember, I have decided to post the categories which change every three months here.

For Q3 2011, the categories are Airlines, Hotels, and Car Rentals.
For Q4 2011, the categories are Department stores, clothing stores, electronics stores, and toy stores.

Note that "Q4 2011" means from October 1, 2011 through December 31, 2011. Also note that even if you have a Citi Dividend Card, the enrollment is not automatic. You have to login and sign up for this offer at the Citibank website.

PFS