MONEY credit cards

Can You Buy Marijuana With a Credit Card?

Conte's Clone Bar & Dispensary in Denver, Colorado
Craig F. Walker—Denver Post via Getty Images Conte's Clone Bar & Dispensary in Denver, Colorado

Despite legal uncertainties, some pot dispensaries accept plastic.

It’s been more than a year since legal recreational pot sales started in Colorado, and as much as dispensary owners enjoy the booming business, they’re sick of swimming in cash. Though the Department of Justice released regulations last year allowing banks to accept money from legal dispensaries, it’s still a federal crime — the announcement that the DOJ won’t pursue institutions that process legal pot money hasn’t been enough to make everyone comfortable.

It seems some Colorado business owners have run out of patience waiting for the banking industry to get on board with legal cannabis sales. According to a poll of 78 state-licensed dispensaries in the Denver area conducted by FOX31, 27 (or 47%) of them would be “willing to accept Visa or MasterCard as payment.”

Some of them may be working with financial institutions that have decided to accept money from legal cannabis sales, despite federal laws, but they’re probably trying to downplay or conceal the nature of the business, FOX31’s investigation suggests. Credit card transactions conducted at legal dispensaries produced receipts with company names like “AJS Holdings LLC” and “Indoor Garden Products.” Even though the federal government has said it will stand by and let legal dispensaries use the banking system and the credit card transactions it enables, that hasn’t erased the concerns over Drug Enforcement Agency audits for money laundering.

Given that credit card processing at marijuana dispensaries remains risky, it’s interesting that nearly half of the companies polled by FOX31 said they’d accept credit cards. (It was unclear from the story if the dispensaries polled actually have the ability to process such payments or if they’d merely like to.)

If it’s becoming more common for dispensaries to accept credit card payments, that’s both good and bad for consumers. The good thing is the ability to pay as you prefer and allow you to walk into a dispensary without a bunch of cash in your wallet. On the other hand, using a credit card may lead consumers to spend more than they can afford, potentially accumulating credit card debt. Then again, all consumer goods pose that threat — the important thing is to spend within your means, whether you’re buying indoor gardening products or “Indoor Gardening Products.” What you put on your credit card doesn’t matter to your financial and credit stability, but how much you charge and how you manage that balance does.

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This article originally appeared on Credit.com.

MONEY stocks

The Hidden Danger in Apple Stock

150409_INV_AppleDanger
China Stringer Network—Reuters

Apple's mountain of cash—which is generally considered a safety net—actually comes with risks.

Investing in Apple APPLE INC. AAPL -0.14% today seems like a smart bet by many measures.

The company broke records for the most profits for any business in a single quarter—ever—earlier this year. With nearly $180 billion in cash, management has plenty of cushion against setbacks—like, say, if the new Apple Watch doesn’t sell as well as projected. And while Apple has been criticized for not sharing that cash with shareholders as much as peers like Microsoft do, recent signals from company leaders suggest they may announce a hefty dividend hike as early as this month.

Certainly, there’s plenty of cause for investors to favor cash-rich companies like Apple, says Thomas McConville, co-portfolio manager of the Becker Value Equity fund, which holds Apple stock.

“A company having lots of cash is like a person having lots of savings,” McConville says. “If a person loses a job, savings help to weather the storm. Cash helps a company protect itself from shocks and keep investing in value-creating activities.”

But, he says, the devil is in the details of how exactly a company invests in activities—and whether those enterprises actually add value.

New projects and products can make or break a company, and it can be especially risky for a business to step out of its wheelhouse. Apple’s wheelhouse is making the best-looking and best-functioning advanced consumer tech products, says McConville.

That’s at least partly why some critics are skeptical about whether the rumored Apple car is the right new venture for the company.

“As an investor, I want to see that any product extension they announce fits under their umbrella,” McConville says. “If they get into vehicles, creating onboard technology and displays is a good fit, since visual appeal and functionality are top concerns. But if they were going to try to design seat brackets? Well, that’s probably not the perfect fit.”

That makes sense. Then again, traditional automakers already seem enthusiastic to team up with Apple—and with all that cash, the tech giant could easily just buy a company with more experience creating car parts like seat brackets. So what could go wrong?

Well, cash-rich companies have lots of buying power, says Don Wordell, portfolio manager of the RidgeWorth Mid Cap Value fund. And, as the saying goes, with power comes responsibility.

“Companies that are simply too big to grow organically can grow inorganically by buying others,” he says. “But that creates risk. Cash can be as much of a liability as an asset.”

So, for example, it worked out well when Disney bought Pixar for $7.4 billion nine years ago. That acquisition led to a spate of successful movies, a stronger brand, and happy investors who have seen total returns of more than 300% since 2006.

But when Quaker bought Snapple for $1.7 billion in 1994, it bungled the brand’s marketing campaigns and relationships with distributors; after just 27 months, Quaker sold Snapple to a holding company for about $300 million—less than a fifth of its purchase price. The whole affair left Quaker with a damaged credit rating and dragged its stock price flat during a period when the rest of the market was on fire.

Hindsight is, of course, 20/20. But a key quality investors should watch for is how patient and thoughtful a company’s leaders seem to be before deploying resources.

“Too much cash can burn a hole in management’s pocket and cause them to make a bad acquisition,” says McConville.

Apple’s record of acquisitions and product launches is not without flops. Among other failed products, there was Apple’s 2007 Bluetooth headset, which was discontinued after two years because it couldn’t compete with third-party devices. And although the company has invested millions over the years in acquiring mapping companies, like Placebase and Poly 9, Apple has still not succeeded in creating a mapping application that competes with the likes of Google Maps.

Of course, Apple’s top executives have made plenty of successful moves on behalf of the company in recent years, and sales of core products like the iPhone are still breaking records. But strong is not invincible, and if its new wristwatch doesn’t take off, Apple will soon be looking to throw cash at developing its next big product.

Investors would be wise to keep an eye on how, exactly, that cash is spent.

 

MONEY cash

You Could Get $1 Million for Busting Software Pirates

CDs labeled in Sharpie marker
Jan Miks—Alamy

If you happen to know a software thief, you could earn some serious money for turning them in.

When you were a kid, you may have heard that nobody likes a tattletale. That isn’t true. BSA The Software Alliance loves tattletales.

If you report software piracy to BSA and your information directly results in a legal settlement between the alliance and the offending party, you can get a significant cut of that settlement. BSA advocates for the software industry, and some of its members include tech giants like Adobe, Apple and Microsoft. It encourages people to report companies using unlicensed versions of software, incentivizing these reports with the possibility of getting thousands of dollars in return.

No Piracy, the BSA initiative to compel reports of unlicensed software use, markets the program as a way for people to get extra cash and even pay off debt. A No Piracy post to Facebook on March 3 reads, “Looking to pay off your credit card debt? If you know a company using unlicensed business software, file a report today to be eligible for a cash reward.” In fact, most of the No Piracy Facebook posts from the past few months appeal to consumers’ need for “extra cash,” whether it be for holiday gifts, a vacation or spending money.

BSA receives about 2,500 reports in the U.S. each year, said Roger Correa, BSA’s director of program coordination for the Americas. Only about 40% of informants request a reward. Last year, BSA awarded about $250,000 total, the smallest award being about $500 and the largest about $22,000.

A report has to meet certain terms and conditions in order to be eligible for a reward. BSA defines piracy as when a company or organization “installs unlicensed software on computers that it owns or leases for its employees to use in their work.”

Because payment is contingent on BSA reaching a settlement with the company, it may take several months to receive a reward, and there’s no guarantee you’ll get anything:

“The decision to pay a reward based on your report and the amount of that award shall be within BSA’s sole discretion. A reward may be payable only if BSA pursues an investigation and, as a direct result of the information provided by you, receives a monetary settlement from the reported organization,” the No Piracy terms and conditions read. Correa said BSA needs to get at least $10,000 in settlement revenue to be able to give a reward, and it takes an average of 6 months from report to payout in the U.S.

“It’s not fast cash,” he said. “These are very thorough investigations.”

While reporting piracy may not be your ticket out of debt, it’s a strategy you can consider if you happen to know about a company using unlicensed software. The online report form says all complainant information is kept confidential.

Should your anti-piracy fight not result in a windfall (the commission is determined on a sliding scale up to $1 million, depending on the settlement amount), you’ll have to figure out how to face your debt somehow. There are many strategies, but the most important thing is to start tackling the debt as soon as possible, avoid adding to it and keep it from growing.

The lifetime cost of debt is staggering, especially if you have bad credit. You can see where your credit scores stand for free on Credit.com.

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This article originally appeared on Credit.com.

MONEY Gas

Here’s What Americans Are Doing With the Gas Money They’re Saving

Gas nozzle and money
Tim McCaig—Getty Images

The government's Energy Information Administration estimates the average household will spend $750 less on gas this year. So where's that money going?

Americans are enjoying a nice raise at the moment, in the form of dramatically lower gas prices. The government’s Energy Information Administration estimates that the average household will spend $750 less on gas this year, which is like getting a roughly $1,000 raise, since the savings aren’t taxed. For a little perspective, the 2008 economic stimulus package passed by Congress designed to save America from the worst of the recession sent a maximum of $600 to American households.

The gas price drop means even more to struggling lower-income earners: the bottom fifth of earners spend 13% of their income on gas.

That’s the good news. The bad news? Retailers aren’t seeing much, if any, of that money.

Americans spent $6.7 billion less on gas in January than November, but retail spending actually fell slightly during that span. That means lower gas prices are not acting as a surprise stimulus plan for the economy.

So where is the money going? To the bank.

The Federal Reserve Bank of St. Louis recently reported that Americans’ notoriously low personal savings rate spiked in December, to 4.9%, from 4.3% the previous month. The cash that’s not going into the gas tank is going into savings and checking accounts instead.

Few Americans save enough money, and many have insufficient rainy-day funds. With the recession fresh in their minds, many Americans appear to be more concerned with restoring their severely damaged net worth than buying stuff.

But Logan Mohtashami, a market observer and mortgage analyst, suspects something else might be at play.

“People don’t think the gas price (drop) is a long-term reality,” Mohtashami said. Despite government predictions to the contrary, he says, consumers aren’t adjusting their spending to a new normal, and instead they’re holding onto their cash for the next rise in prices.

Again, that kind of pessimism is sensible, and it’s good for personal bank accounts, but it’s not so good for growing the economy.

How much are you saving thanks to lower gas prices? What are you doing with the “raise?” saving or paying down debt? Planning a better vacation? Driving a gas-guzzler more often? Let me know in the comments, or email me at bob@credit.com.

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This article originally appeared on Credit.com.

TIME Lottery

The Powerball Jackpot Is Set to Reach $450 Million

A store clerk hands a customer his Powerball ticket at a local grocery store in Hialeah, Fla., Wednesday, Feb. 4, 2015
Alan Diaz—AP A store clerk hands a customer his Powerball ticket at a local grocery store in Hialeah, Fla., Wednesday, Feb. 4, 2015

But you're far more likely to play in the NBA than win this haul

The odds of winning the Powerball Grand Prize are 1 in 175,223,510. For this week, however, you can keep believing.

No one claimed Powerball’s estimated $394 million jackpot over the weekend, meaning the prize for the next draw will be around $450 million (or $304.1 million for a cash payout) according to the Powerball website.

That’s $140 million short of the record $590.5 million — won on May 18, 2013 by 84-year-old Gloria Mackenzie of Zephyrhills, Fla. — but who’s complaining?

The next draw will be held on Wednesday, Feb. 11.

MONEY Odd Spending

Drivers Snatch Cash Flying Out of Armored Truck Near D.C.

Flying Money
Kyu Oh—Getty Images

Thanks to a broken door, a gust of bills spilled out of a truck onto I-270 this morning.

At around 8 am Friday it was raining cash on a Maryland section of Interstate 270, about 40 miles north of Washington, D.C., after a malfunctioning lock on an armored vehicle caused a bag of money to scatter onto the highway. Early reports claimed the broken lock resulted from a collision with a dump truck.

Unsurprisingly, so many drivers stopped to grab the cash that traffic on the northbound lane came to a virtual standstill, and by the time troopers got there, most of the bills were gone—leaving only a little more than $200 for police to collect.

While authorities are still figuring out how much money was taken, at least $500 flew out, according to the Maryland State Police. Other reports say thousands are still missing and one good samaritan has already returned more than $1,000.

Anyone with the good fortune to have picked up the flying cash might want to think twice before spending it: State police told the Washington Post that those caught on traffic camera grabbing the money can be charged with theft.

MONEY the photo bank

I Raised $1,500 On Kickstarter—Then Gave It All Away

It took 31 days for Santa Fe–based photographer Matthew Chase-Daniel to raise $1,500 via Kickstarter. In addition to the money that came through the website, people handed him singles, a lump sum of $150, even a jar of pennies. They thrust cash at him when they saw him around town, at the post office or the market. Then, once Chase-Daniel had amassed all the funds, for 24 days starting in late August, he gave it all away, at a rate of 40 to 50 one-dollar bills a day.

Now, if you happened to read MONEY reporter Jacob Davidson‘s article earlier this week, “Kickstarter Backers Are Investors, and It’s Time They Got Used To It,” you may be tempted to write off the whole thing as another potential Kickstarter scam. How dare someone in the art world solicit donations when he didn’t even appear to need the money—not like, say, the L’ouvre, the Musée d’Orsay (as reported by the New York Times this week) or even the curatorial program for Portland’s Newspace Center for Photography. Heck, he didn’t even keep it! Take a breath. Chase-Daniel did exactly what he promised his backers: “If you give a dollar, I will smile when I hear about it. Then I’ll give the money away.”

The $1,500 that he raised was for an art installation entitled “Dollar Distribution” for the “Economologies” series exhibited in Axle Contemporary, a 1970 aluminum stepvan custom retrofitted as a mobile art gallery. After meeting and surpassing his goal (even after Kickstarter and Amazon Payments took their cuts), Chase-Daniel made a trip downtown:

I went to the bank and withdrew the money, all as 1-dollar bills. I wasn’t clear how much space that would take. I brought a zippered duffel bag into the bank. It turns out 1,500 bills can be quite compact. 1,000 of them were handed to me fresh from the vault, in a nice brick: 10 banded bundles of 100 ones, sealed in a plastic bag, straight from the Federal Reserve in El Paso. That brick has power. Holding it made me a little giddy and giggly.

Then, he took the brick of bills to Axle Contemporary, where he proceeded to use them to carpet the floor of the stepvan. Chase-Daniel put the final touch on the piece by installing a sheet of glass over the back door, after which he drove the gallery-cum-vault around town, parking in random locations to show the pile of money to interested passersby. (By sheer coincidence, the Axle Contemporary stepvan is not so dissimilar to a Brink’s truck—the distinction becoming even less so with its new cargo.)

Following the viewing, the artist dismantled the piece and distributed it around town. He tossed, slipped, hid, tucked, folded, crumpled, rolled, floated, and buried dollar bills in locations around Santa Fe for anyone to find. Sometimes they were “discarded” haphazardly, sometimes they were strategically placed.

Chase-Daniel recounted the impetus for the project—he was driving into town in 2013 when the breeze blew a dollar bill past his windshield. As he continued, a rolling tumbleweed of bills drifted across the road. The knee-jerk reaction of the drivers around him was to brake and swerve:

It doesn’t matter if you are rich or poor, the sight of cash blowing down the road gets attention and provokes reactions and thoughts and reflection of all sorts, positive, negative, joyous, angry, liberated, stressed-out. I decided I wanted to replicate my experience for others, to spark associations and reactions in others by simply leaving some cash around Santa Fe for others to happen upon by chance.

The Kickstarter approach came later. “Since my idea was to distribute the money randomly to a large ‘crowd,’ crowdsourced funding seemed like the logical way to raise the money,” said Chase-Daniel, who made no money from the project nor gave any credit to contributors.

In some ways, Chase-Daniels’ “Dollar Distribution” is similar to Jody Servon’s “I ____ a dollar” installation. Both used money they had been given (for Servon it came from a grant) to create their installations and then disseminate the money again, circulating it to a new group of people. Chase-Daniels makes a further distinction between his project and the illustrious @HiddenCash, this summer’s social media treasure hunt:

From what I understand of @HiddenCash, people are given clues and then search for the cash and are rewarded for their intelligence, problem-solving and determination. ‘Dollar Distribution’ gives money out to anyone, without discrimination. It is found by rich and poor, intelligent or not, with no warning or even knowledge of the project by the vast majority of ‘participants.’

What Matthew Chase-Daniels hopes will result from the project is that people will experience a visceral reaction to the surprise of discovering a dollar bill at some unexpected point in their day, in the same way he did while driving last year. He likens it to “a feeling of joy or luckiness or good fortune” that comes with finding even such a small denomination as a penny on the sidewalk.

Chase-Daniels tried to remain unobserved while distributing the dollars, but he also felt compelled to document some of the placements photographically. Those photos (which he shared on social media) were—for the most part—cropped too tightly to clue anyone in to a specific location, but they did help to spread the word about the project. That led some people to respond by sharing photos of the bills they had found.

While Chase-Daniels didn’t plan out where he would “drop” the dollars, he did happen upon some locations—a Brink’s truck, a one-dollar table at a yard sale, a book on Dada art in the library—that were too perfect to resist. Over time, he began refining the compositions of the photographs as well as the placement of the money. Chase-Daniels is compiling the images and writing about the project in a book that will be out later this year.

Chase-Daniels emphasized that the most important part of the piece was the distribution of the money; the installation and the photos, he said, “are almost incidental.” If, as he noted, “the money IS the project,” then the 1,500 people that happened upon one of the lucky bills each acquired a limited edition intaglio print—valued at exactly one dollar.

This is part of The Photo Bank, a section of Money.com dedicated to conceptually-driven photography. From images that document the broader economy to ones that explore more personal concerns like paying for college, travel, retirement, advancing your career, or even buying groceries, The Photo Bank will showcase a spectrum of the best work being produced by emerging and established artists. Submissions are encouraged and should be sent to Sarina Finkelstein, Online Photo Editor for Money.com:sarina.finkelstein@timeinc.com.

More from The Photo Bank:
FREE MONEY! (If You _ _ _ _ It)
Looking at ‘Rich and Poor,’ 37 Years Later
When the DynaTAC Brick Phone Was Must-Have Technology
Inside the ‘Pay What You Want’ Marketplace

 

MONEY credit cards

The Spending Mistake that Millennials Are Making

millennial holding credit card
Dimitri Vervitsiotis—Getty Images

Millennials prefer to pay with plastic over cash, a new CreditCards.com study finds—but all that swiping may be unravelling their budgets.

Millennials don’t shop like their parents—and increasingly, they don’t pay like their parents either. Studies have already shown that many of them have chucked the checkbook (if they’ve ever had one); and they’re more likely to forego cash as well, a poll released today by CreditCards.com found.

Asked how they typically pay for purchases under $5, 77% of people over 50 surveyed preferred cash to debit or credit, while just 48% of people between 18 and 29 use paper money. The fact that millennials are using cards to pay for even such small expenses suggests they’re probably using plastic for most purchases.

And when they’re swiping, this group also uses debit (37%) vs. credit (14%) by a larger margin than any other cardholder group.

What millennials may not realize is that choosing plastic—even if it’s debit—over paper could be costing them.

Research has suggested that we’re inclined to spend more when we swipe. A 2008 study published in the Journal of Experimental Psychology found that physically handing over bills triggers an emotional pain that actually helps to deter spending, while swiping doesn’t create the same aversion. As a result, the study found, cash discourages spending whereas plastic encourages it.

In addition, a 2012 study from The Journal of Consumer Research found that shoppers who pay with plastic focus more on the benefits of the purchase than the price, while those who pay with cash focus on price first. In other words, we’re more likely to make the decision to purchase an item when we know we’ll be charging it.

Further fueling our natural tendencies to spend more with plastic—a.k.a. “the credit card premium”—is the fact that many shops and bars mandate that you spend a minimum amount to use your card. So if you were planning to use the card anyway, you might pad your purchase to get to the minimum required.

All this spending on plastic also can cause you to rack up debt or overdraft fees, if you’re not swiping mindfully. And many members of Gen Y are not, it would seem.

For example, millennials are more likely than any other age group to overdraw their checking accounts, the Consumer Financial Protection Bureau found. About 11% of millennials overdraft more than 10 times a year, and these overdrafts were typically for small purchases under $24 and were paid back within three days. With the median overdraft fee equaling $34, borrowing $24 for three days is like taking out a loan with a 17,000% annual percentage rate, the study found.

Of course, we can avoid paying the credit card premium by just using cash. But if you won’t remember to go to the ATM, at least take a second to close your eyes the next time you’re about to buy something using plastic: Think about the price of the item and how it will impact your bank account. You might even give yourself a 24-hour cooling off period to think over any nonessential purchases.

Avoid overdrawing or getting in over your head in debt by reviewing your bank and/or credit card account online once per day, or by using an app like Mint.com, which lets you track all your accounts in one place. Also, consider setting alerts at your bank or credit card website to let you know when you’re approaching a certain balance—this can keep your spending in check.

Related:

Money 101: How Do I Figure Out My Financial Priorities?

Money 101: How Do I Create a Budget I Can Stick To?

MONEY Savings

Millennials Are Hoarding Cash Because They’re Smarter Than Their Parents

Cash under mattress
Zachary Scott—Getty Images

Sure, young adults could get higher returns by investing in stocks, but many have good reasons to stay safe in cash right now.

Another day another study about the short-comings of Millennials as investors. This time around, Bankrate.com weighs in—data from their latest Financial Security Index show that 39% of 18-29 year-olds choose cash as their preferred way to invest money they won’t touch for least 10 years. That’s three times the percentage that would choose stocks.

“These findings are troubling because Millennials need the returns of stocks to meet their retirement goals,” says Bankrate.com chief financial analyst Greg McBride. “They need to rethink the level of risk they need to take.”

Bankrate.com is not the only group trying to push Millennials out of cash and into stocks. Previous surveys have scolded young adults for “stashing cash under the mattress,” being as “financially conservative as the generation born during the Great Depression,” and more being “less trustful of others”—in particular financial institutions and Wall Street. (You can find these surveys here, here and here.)

These criticisms are way overblown. It’s simply not true that Millennials are uniquely averse to equities—many are investing in stocks, despite their responses to polls. As for cash holdings, keeping a portion of your portfolio liquid is simply common sense, though you can overdo it.

Here’s what’s really going on:

  1. Millennials are not much more risk averse than older generations. In the wake of the financial crisis, investors of all ages have been keeping more of their portfolios in cash—some 40% of assets on average, according to State Street’s research. Baby Boomers held the highest cash levels (43%), followed by Millennials (40%) and Gen X-ers (38%). That’s not a wide spread.
  2. Many Millennials do keep significant stakes in equities. This is especially true of those who hold jobs and have access to 401(k) plans. That’s because they save some 10% of pay on average in their 401(k)s, which is typically funneled into a target-date retirement fund. For someone in their 20s, the average target-date fund invests the bulk of its assets in stocks. Thanks to their early head start in investing, these young adults are an “emerging generation of super savers,” according to Catherine Collinson, president of the Transamerica Center for Retirement Studies.
  3. Young adults who lack jobs or 401(k)s need to keep more in cash. Most young people don’t have much in the way of financial cushion. The latest Survey of Consumer Finances found that the average household headed by someone age 35 or younger held only $5,500 in financial assets. That’s less than two months pay for someone earning $40,000 annually, barely enough for a rainy day fund, let alone a long-term investing portfolio. Besides, that cash may be earmarked for other short-term needs, such as student loan repayments (a top priority for many), rent, or more education to qualify for a better-paying job.

There’s no question that young adults will eventually have to funnel more money into stocks to meet their long-term right goals, so in that sense the surveys are right. But many are doing better than their parents did at their age—the typical Millennial starts saving at age 22 vs 35 for boomers. And if many young adults hold more in cash right now because they’re unsure about their job security or ability to pay the bills, there are worse moves to make. After all, it was overconfidence in the markets that led older generations into the financial crisis in the first place.

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