Posted on 05 March 2015.
By Dino Thompson-Sarmiento
According to CNN http://money.cnn.com/2015/02/04/pf/money-stress/ , money is at the top of the list causing a hyper-stressed society and it includes the LGBT population. I went out in search of a solution that could potentially provide some relief and I found it in New York City.
As I stepped inside the elevator of a converted warehouse space in NYC’s Chelsea neighborhood, I couldn’t help but wonder if banker turned consumer advocate and co-founder of MagnifyMoney Nick Clements would be more banker or entrepreneur.
Chelsea is home to a great number of the latter while the former mostly cluster further downtown in Wall Street. I was greeted at MagnifyMoney’s door by their four-legged receptionist Goofski, the dog Nick rescued while working in Moscow for Citigroup. The workspace is light and airy with dry erase boards lining the wall and minimalist office furniture scattered throughout. In addition to Nick and the dog, MagnifyMoney’s team includes co-founder Brian Karimzad, Nick’s his best friend from Stanford and Erin Lowry wunderkind and BrokeMillennial. Given the evidence before me, it was clear that Nick had left the stuffy bank world behind for the start-up path, but why?
Dino: Two years ago you were the Managing Director of the UK Consumer Credit Card Business of Barclaycard where you led the business to re-claim its position as #1 by assets. Why leave so young, at the top of your game?
Nick: While living in the UK, I witnessed a movement in the UK, led by Martin Lewis and a new breed of unbiased and transparent UK price comparison businesses that held themselves to a higher standard. These sites found ways to make money without selling their souls to the banks and misleading the consumer for profit. I reflected on how much we needed this in the US. I was amazed at how low the standards had become in America. I had become increasingly restless, and realized that my purpose was to start working on the side of the consumer and ignite a pro-consumer movement in the US. So, I quit my job, moved to New York, and set up MagnifyMoney.com with my best friend from college.
Dino: So how is MagnifyMoney different from sites like Bankrate or CreditCards.com?
Nick: We created MagnifyMoney because we felt that consumers were being poorly served by existing price-comparison businesses in the financial services sector. Most web sites display products based upon the commission received. And, the order of the results are generally based upon displaying cards that pay commissions first, rather than displaying the best deals first. So, when searching for the best credit card, you shouldn’t be surprised to see the same 10 – 20 credit cards appearing at the top of every website, because they pay the highest commission.
MagnifyMoney was founded because we believe that:
- A price comparison website should review all financial products, not just the ones that pay commissions. To-date, we have reviewed over 3,500 products (across checking, savings, personal loans and credit cards), and we will continue to expand our database over time.
- The order of the results displayed should be based upon the savings/value to the consumer – not the size of the commission. On all of our product tables, we calculate the savings/value, and rank the products from best to worst (and you can see exactly how much you would save for each product). The only way to get to the top of our table is by creating the best product.
- Banking should be simpler, more transparent and cheaper. We have created a Magnify Transparency Score which ranks products based upon set criteria. A product with a lot of hidden fees and traps could get a C (or an F), whereas a simpler product with fewer “gotchas” would receive an A.
Dino: How do you avoid selling your soul to the devil, while also paying the bills and keeping the lights on?
Nick: We raised money to fund the first few years of our existence. We did that on purpose – so that we could build the best possible comparison database without worrying about the commissions paid. In the future, we will have to generate revenue. But we think we will be able to find other ways (for example, optional fee-based premium services). And we will always be transparent about where and how we make money. Right now it is simple: we don’t generate any revenue.
Nick Clements recommends four ways that we can find big savings in boring places, freeing up money for retirement, vacations or just a rainy day.
- Switch to an online savings account
Most financial advisors recommend keeping three to six months of living expenses in a savings account as an emergency fund. However, most savings accounts pay almost no interest. Bank of America, Chase, Citibank and Wells Fargo all pay 0.01% interest on their basic savings account, which is laughable.
Meanwhile, there is a deposit war heating up online. Internet-only banks have been increasing their interest rates, and it is now easy to earn at least 1%. If you have more than $25,000 in your account, you could easily earn 1.25%. While you won’t get rich with a savings account, the interest does add up. If you have $20,000 in a savings accounts, that is the difference between earning $2 or $200 of interest. And over your lifetime, that is thousands of dollars in your pocket, rather than the banks.
There is one other benefit of opening an online savings account: you are much less likely to raid the funds than if you had easy access from your basic checking account. You can find the best savings account deals at MagnifyMoney, which updates the rates daily.
2. Switch to cash back or rewards credit card
Learn how to harness the power of rewards credit cards by maximizing their spending habits for cash back – or other rewards. A die-hard credit card rewards seeker strategizes to have the best card in each category of his or her spending habits: gas, grocery, travel, entertainment, eating out etc. Others look to take advantage of upfront bonuses, like 30,000 miles for spending $3,000 in three months.
If constantly looking for the best reward card and keeping track of a dozen or more cards doesn’t sound appealing, then identify the best flat-rate cash back card. Currently, Fidelity Investment Rewards and Citi Double Cash Card both offer two percent cash back on all spend. If you spend $30,000 a year on a credit card– that’s a simple $600 in cash back for purchases you’re already making.
You can find the best cash back credit card deals at MagnifyMoney and the best travel accruing credit cards at MileCards.com. Both sites update the rates daily.
- Make sure you aren’t paying high fees on your retirement funds
Fees on mutual funds can eat up a big chunk of your retirement funds. Actively managed funds can charge 1% or more on an annual basis. Vanguard led the investment fee revolution keeping costs low and tracksingthe market index. You now have a wide range of low-fee options out there, and Vanguard isn’t always the cheapest. The folks at FeeX created an easy tool that can help you understand how much you pay in investment fees now (it is not obvious), and then they look for the lowest cost mutual fund that can help you achieve the same goal.
- Shop around for a better deal on your auto insurance
Adds for auto insurance companies seem to be all around us. I think we know that 15 minutes can save us 15%. However, to find the best deal, you shouldn’t go straight to an auto insurance company directly. Rather, you should use a price comparison service to find the best rate. I recommend TheZebra, which uses publicly available information to reverse-engineer the pricing of auto insurance companies.
User friendly MagnifyMoney.com is an excellent and free resource to beef up your wallet and help you have a financially stable life. Check them out today.