TIME Spending & Saving

Budget-Minded Travelers Have to Look Harder for Deals

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Consolidation means would-be deal hunters must turn to new sites for savings

One of the ways the TV show The Americans makes it clear that it’s a period piece is by showing its Soviet spies working at a travel agency. Yes, those were indeed different times when a family could support a decent lifestyle by booking trips for tourists. When the web emerged in the 90s, travel agencies were one of the first to fall by the wayside.

A generation of web startups emerged helping travelers to quickly find the cheapest fares on their own PCs: Expedia, Travelocity, Orbitz. Priceline offered its distinctive “name your own price” model before giving in and adopting the basic discount business model of the others. Meanwhile, independent travel agents in North America and Europe closed up shop.

After a while, consolidation became inevitable and it grew harder to differentiate between the myriad travel sites. A generation of younger startups like Kayak and Trivago emerged to improve on things, by offering meta-search engines that searched the travel search engines for deals that were getting harder to find. Airlines and hotels wised up to the game, inserting add-on fees onto their posted fares or offering deals available exclusively through their own sites.

In time, consolidation gobbled up the young startups: Priceline bought Kayak and Expedia acquired Trivago. Many of the older sites are still around , for anyone loyal to them–Travelocity, Hotels.com, Cheaptickets.com–only they’re owned by either Expedia and Priceline.

And earlier this month, when Expedia said it would pay $1.3 billion for Orbitz, it left basically two major online-travel sites. There are a few mid-sized travel companies remaining but some, like TripAdvisor, have seen their stocks rise on speculation that its shares could soon be in play.

For consumers, the trend probably isn’t a positive one. It may well make finding the best travel deals that much harder, now that there’s less incentive for Expedia and Priceline to compete with others for the best deals. The Justice Department may review the proposed Expedia-Orbitz deal for antitrust concerns. If regulators act to derail the transaction, Expedia will owe Orbitz $115 million, so Expedia has a strong incentive to see the acquisition go through.

In the meantime, competition from other web giants hasn’t really emerged. There have been reports that Amazon would enter the online-travel space in January, but they haven’t panned out yet, and Amazon’s plans may be as modest as some package deals as part of Amazon local. Google’s purchase of ITA hasn’t made it a huge presence in online travel, but it allowed it to create a spiffier interface for the same flight data that can be found on Kayak, Orbitz and others.

If there’s any hope for bargain-hunting travelers, it may come from the ever flowing emergence of new travel startups. The clearest example is Airbnb, the accommodation-rental marketplace that more than any other startup of the past decade has shown there’s still growth for new entrants. Airbnb was recently valued around $13 billion, or slightly less than the combined market value of Expedia and Orbitz and about a fifth of Priceline’s.

For airfares–or for hotels and vacation rentals that can’t be found in the lodging-sharing economy pioneered by Airbnb–there are mostly smaller players. HomeAway, which offers through VRBO.com and other sites vacation rentals that avoid Airbnb, has a $2.9 billion market cap. CheapOair and Skyscanner represent a new, more-meta kind of airfare engine that scours fares available to online travel agents.

In the end, consolidation may simply push budget-minded travelers away from the biggest companies and toward new startups that are figuring out new angles for finding travel values. Vayable, for example, connects travelers with locals who can act as tour guides, while Gogobot uses a social model to help tourists plan trips based on their interests.

And then there’s Flightfox. The San Francisco-based startup, sensing the difficulty of finding the best travel deals online in an era of consolidation, uses crowdsourcing to tap the expertise of others who know the tricks of finding deals. In a way, Flightfox has brought the online-travel industry back full circle to the traditional travel agent. After two decades of online travel sites, having a human book your itinerary may be the once again the best option.

TIME Spending & Saving

How to Get Free Krispy Kreme Donuts Today

Krispy Kreme donut production line
Lightworks Media—Alamy Krispy Kreme donut production line

The chain is celebrating with free treats. Here's how to get yours

If you are one of the first 1,000 customers at a Krispy Kreme donut shop on Feb. 24, you can lay claim to one glazed donut, free of charge. The promotion is being held to celebrate the opening of a new Krispy Kreme location in Kansas City, which will be the chain’s 1,000th location.

If you’re near Kansas City, that location opened at 6AM. The first person in that particular line will get one dozen donuts for free, once a week for a year. The next 99 people in line will receive a dozen free donuts once a month for 12 months. Elsewhere, all participating stores are giving away 1,000 donuts to the first 1,000 customers.

[Money]

TIME Spending & Saving

This Is What Keeps Rich People Up at Night

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This is what keeps high earners up at night

When it comes to retirement, Americans’ biggest fears are that they’ll run up huge medical bills, or that they’ll outlive their savings and run out of money. But what’s surprising is which Americans worry about these things the most.

According to a new Bankrate survey, people who earn more than $75,000 a year worry more about healthcare costs in retirement than the population overall. Perhaps surprisingly, they also worry more than those who earn less than $30,000 a year.

That’s probably because while people at the low end of the income spectrum might expect to fall back on Medicaid as a safety net, this isn’t an option for more affluent Americans, points out Bankrate senior investing analyst Sheyna Steiner. “The more assets and savings one has, the more difficult it will be to qualify for government assistance,” she says. “Certainly, the thought that your entire nest egg could be wiped out due to illness or injury is chilling.”

Rich Americans don’t think they’ll be getting much help from Uncle Sam, either: More than three-quarters say they think Social Security will provide less than half — or none at all — of their income in retirement, the highest percentage of any income bracket and higher than the 66% overall who share this view.

People who earn more than $75,000 also have a greater fear that they’ll run out of money in retirement. Overall, 23% of survey respondents say their top worry is that their savings will run out, but 29% of those in the $75,000-and-up income bracket say the same.

Some of this is just a fear of the unknown — and possibly the realization that they have further to fall if they outlive their savings. “A major change of life like retirement is especially daunting,” Steiner says. “People with high incomes have the opportunity to save more but they can also spend more as well which is a trap too many people fall into.”

These fears persist despite the fact that about half of high-income Americans say they’re happy with the amount they’re socking away for retirement, compared to the 29% overall who say they’re happy with their current retirement savings. And even among those earning more than $75,000 a year, more than a quarter say just keeping up with basic living expenses is hampering their retirement savings.

“There’s definitely a contingent of high earners who are not saving enough for retirement,” Steiner warns. “Their current lifestyle may not allow them to save much which may force them to cut back as they get older.”

Steiner says that’s because the people who do have disposable income might not be able to resist spending it today rather than banking it for retirement. “People often spend above their means or right up to the limit,” she points out. “People who maximize their lifestyle without saving for the future run the risk of severely downsizing in retirement or running out of money.”

 

TIME Spending & Saving

5 Weird Reasons Your Credit Card May Be Declined

American Express, Discover, MasterCard and Visa credit cards are displayed for a photograph in New York, U.S., on Tuesday, May 18, 2010. Credit-card firms caught off-guard by U.S. Senate passage of curbs on debit fees are facing what one executive sees as a "volcanic" eruption of legislation, including possible limits on interest rates. Photographer: Daniel Acker/Bloomberg via Getty Images
Bloomberg/Getty Images

You might never see these major headaches coming your way

When President Obama mentioned that he’d recently had his credit card declined at a New York City restaurant, the news was kind of funny. The leader of the free world getting his card rejected? But all joking aside, it can happen to anybody, for any number of reasons. “I guess I don’t use it enough, so they thought there was some fraud going on,” the President said.

That’s actually a pretty common reason issuers will freeze a card, experts say. Here are some other unexpected reasons your card could be declined. Here are some others they say you should watch out for, so you’re not stuck standing at a payment terminal trying to explain, like Obama, that no, you really do pay your bills on time.

You hit the road. “[If] you make purchases the same day in distant locations — you buy breakfast in Toledo and then you’re shopping in New York that evening — your card issuer may not know you’re traveling and could decline the purchase,” says Gerri Detweiler, director of consumer education for Credit.com.

You’re paying a foreign company. If you’re traveling overseas, especially in a country where card fraud is more prevalent, or if you’re making a payment to a business based overseas, that could get your card flagged, experts say.

Your limit was cut. If you got a limit decrease on a credit card that you forgot about, or if you missed the notification, you could be denied if a purchase would push you over that new limit, says Odysseas Papadimitriou, founder and CEO of Evolution Finance. On a related note, if your card has expired and you’re not using the new one, you could be declined.

Your funds are tied up in a hold. Businesses including gas stations, hotels and rental car companies often put a hold for a certain amount — which can be hundreds of dollars — onto your card when you initiate a purchase, warns Edgar Dworksky, founder of Consumer World. “If you are near your limit before this, these temporary charges could put you at your limit, and subsequent purchases elsewhere will be denied,” he says.

You’re spending big. “A large purchase like electronics, appliances or an expensive vacation all could trigger a decline if it’s outside your normal spending pattern,” Detweiler says. Likewise, if you’re spending big bucks on luxury goods popular with credit card crooks like jewelry or electronics, your issuer might suspect fraud.

TIME Spending & Saving

Finally, Some Good News About Your Credit Score

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FICO announced on last week a new version of its credit scoring model will debut this fall. This new version, FICO Score 9, throws a lifeline to borrowers indebted by medical bills or those saddled with old collections actions.

FICO characterizes the change as “a more nuanced way to assess consumer collection information.” It says people with unpaid medical debt but no other “major derogatory references” could see a median score increase of 25 points.

Medical debt is no joke — it’s responsible for almost two-thirds of bankruptcies, according to a study by the American Journal of Medicine — so a credit scoring model that doesn’t punish people for having the bad luck to be get sick or injured while uninsured (or beyond the limits of their health coverage) is a change for the positive.

“It’s almost like there’s a credit scoring arms race taking place, and consumers are benefiting,” says John Ulzheimer, president of consumer education at CreditSesame.com.

FICO’s main competition is VantageScore, a scoring model created by the three big credit bureaus. Last year, a version of VantageScore that minimized the impact of old collections on a person’s score was rolled out, a step FICO’s new scoring model also takes.

“I do like the consistency between VantageScore and FICO,” Ulzheimer says. “Both credit scoring giants seems to agree that collections that have a zero balance have lost importance to risk assessment and can now be ignored.”

This is important because a new study from the Urban Institute finds that more than a third of Americans have a debt collection action in their credit file. Although some of these debts are likely to be too old to collect or have been paid off, just having that black mark there can tarnish your credit.

FICO says its new scoring model will also do a better job determining the creditworthiness of people who have little credit history, promising a “more refined treatment” of people who have so-called “thin files.”

VantageScore took a stab at people who flew under the radar of older scoring models in its version released last year, too. “The VantageScore 3.0 model provides scores to 27-30 million adults who are invisible to traditional scoring models,” it said at the time.

One drawback to FICO’s announcement, Ulzheimer warns, is that it could take a while for these benefits to trickle down to borrowers. “The new model will take years before it is the standard FICO score used by lenders as it takes time for lenders to convert from older versions,” he says. The other rub: “Until Fannie Mae and Freddie Mac endorse the newer version, it will not be used for mortgage lending,” he says.

TIME Spending & Saving

Why You Have to Start Paying Down Your Credit Cards Right Now

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Federal Reserve meetings aren’t high on most people’s list of interesting things, but if you have a credit card and carry a balance, you should probably start paying attention to what America’s top money policymakers are talking about, because it’s going to affect your monthly bill.

During last week’s Federal Open Markets Committee meeting, analysts were listening closely to tease out a sense of when the central bank will raise interest rates — always an endeavor that’s one part math, one part reading tea leaves.

A rate hike might not come right away: CNN points out that Fed chair Janet Yellen wants to see higher wages along with lower unemployment. Although unemployment is ticking down, wages are stuck in a rut.

“There are no such signs evident yet, but we expect that to be the big story in the second half of this year,” Capital Economics chief U.S. economist Paul Ashworth tells CNN.

But a hike might come sooner than expected, CNBC argues, if either the labor market gets better faster or if Fed members get spooked about inflation. “I think pressure is really growing to do something in January,” Peter Boockvar, chief market analyst at the Lindsey Group, tells CNBC. .

Bottom line: It’ll probably happen sometime next year. This means you have, at maximum, maybe a year and a half before your credit card bills jump.

The reason why is because most of us these days have variable credit card interest rates, with our APRs tied to the prime rate. The prime rate is the Federal Funds rate plus 3%, and today, prime is a mere 3.25%. Then the card issuers tack on a percentage they determine, and we swipe away.

Banks dropped fixed interest rates en masse in advance of the CARD Act kicking in a few years ago because the law prohibits them from hiking fixed rates on existing balances except with a few exceptions. Banks wanted to be able to raise what they charge us when interest rates rise, so they switched over to variable rates.

After the Fed makes its move, rate increases will happen quickly. “Within a few months after the prime rate eventually starts going up, card holders will also likely see their APRs going up,” says John Ulzheimer, president of consumer education at CreditSesame.com.

Ulzheimer says it’s most likely issuers will adopt a straight pass-through of any hike in the prime rate; in other words, if the rate goes up by 0.5%, your APR will, too. And credit card companies aren’t required by law to give you a 45-day heads-up that a jump in your interest rate is coming.

Obviously, the bigger your balance, the more this will affect your monthly payment, so it’s a good idea to start chipping away at that debt now.

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