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Think You Can Trust Credit Card Reviews? Think Again.

By Frugaling 10 Comments

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Advertising in New York City. Flickr photo by Pascal Subtil

These ads are everywhere!

The multinational, multibillion-dollar bank, JP Morgan & Chase, spent about $1.9 billion on advertising in 2013. That was down from a peak of $2.35 billion in 2011, but still one of the largest amounts by any bank. With that kind of money, you should be curious what they get in return.

Advertisements for companies like Chase, Citigroup, Barclays, and others are plastered over billboards, magazines, newspapers, and websites. You’ve likely passed by one of their ads today if you live in a modest size city. Heck, there could be one next to this article, due to the Google ads running on Frugaling!

That money is spent to attract new “customers” of credit. Their hope is to entice people with signup bonus offers, and keep them for life. After they click an ad, sign up online, and begin to swipe, the banks begin to profit. From credit card transaction fees to late payment fees to cash advance fees to interest rate fees, companies enjoy lucrative profits. For every new customer, banks trust they’ll make hundreds of dollars over the next few years – if not more.

Personal finance writers are easily influenced

Those advertising pressures and interests can trickle down. Websites that aim to address personal finance concerns and offer advice might succumb to the fire hose of potential profit available to them. With my hat in hand, I must admit I was one of them.

I made thousands of dollars in about 1.5 years by marketing credit cards. By placing links to select offers, I was able to make $50, $75, and even $150 per person who signed up. The affiliate money helped me radically change my life and pay off my debt. But as it helped me pay off my debt, I began to see how I had been duped.

In financially unsound and uncertain situations, people do things they’d rather not do. Frankly, society sometimes encourages us to put our heads down and work through the pain and ethical dilemmas – ignore your internal compass for the good of the company, profit, and revenue. I had become one of those people.

When reviews are really advertisements

Reviews aim to feature both the pros and cons of certain products. Readers want honest feedback and advice from authors, but they weren’t getting it. Visitors to my site were coming droves to see my “reviews.” But that’s not what they were really getting.

Unfortunately, moneyed interests in banking have a tremendous sway on the rating of products. Look through many websites that market credit and banking products, and you’ll begin to notice an overwhelming pattern of 4- and 5-star reviews – across the board. With this positivity, you’d expect credit cards to wash your dishes, clean your laundry, and chauffeur you to work.

How could any company’s product be rated this highly? There’s a reason for optimism and it all comes down to money. Those advertising dollars – billions from banks – trickle down to the simplest of bloggers, directly influence the content, favorability, and overall reviews.

Visitors who are interested in honest, open advice might be shocked to know that when they click that link to sign up, they are crediting that blogger hundreds of dollars in the process. Even more, that the entire review was fabricated to drive more clicks to the bank’s site. When I wrote these articles, I suppressed the negatives to encourage clicks. I was advertising products, and framing them as reviews.

Credit cards aren’t the devil, but they’re not for everyone

We live in a world where big banks spend billions to get at us. Their money travels onto TV, print, and diverse digital media. Eventually, it even lands into the pockets of personal finance websites. That’s when the magical influence occurs, and people end up following the manipulated “advice” of trusted sources.

With revenue pouring over the Internet from companies, my real advice is simple: be skeptical. My hope is that no one gets tricked into thinking that a writer completely – and out of his or her own volition and without profit motive – decides to write a credit card review.

Here are 9 important questions you should ask yourself before following any credit card review:

  1. Do the reviews link directly to the bank’s sign up forms?
  2. Are there affiliate tags embedded in the links?
  3. What makes the writer optimistic about the company and card?
  4. Do they personally use all of these cards that they recommend?
  5. What income bracket is the reviewer in?
  6. What’s their credit score?
  7. What was their experience with customer service representatives?
  8. How long has the reviewer been providing advice?
  9. What makes them an expert in credit cards?
  10. How might incentives influence the quality of this review?

Credit cards aren’t the devil, and they don’t tend to be the sole contributor to debt. Usually, it’s a lifestyle of spending more than you can afford, with little income to pay the bills. That doesn’t mean excessive purchases at Burberry and Hermes; rather, that any amount over what you take in will lead to debt (groceries included). Credit cards just facilitate that process – faster – as the fees quickly compound.

When personal finance writers begin to weigh in, it’s vital that their advice be accurate, fair, and balanced. Unfortunately, it’s frequently manipulated by advertising revenue potential. I learned how the money could influence what I ultimately write, and I no longer want to lobby for an industry that sometimes preys off of people that genuinely need help. If you see a review article from me, it’s my hope to be as analytical as possible.

Filed Under: Social Justice Tagged With: ads, advertising, Banks, Barclays, Chase, Citigroup, credit, credit cards, dollars, Google, Marketing, money, Personal Finance, writers

I Have Zero Business Degrees

By Frugaling 13 Comments

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My Graduation Day 2011

What are my credentials?

Frugaling is a personal finance website where I regularly talk about financial concerns. I provide advice to save and make money, editorialize social justice issues, and argue in favor of minimalism over consumption.

But you might be wondering what credentials I have to proffer this help. Well, that’s a funny thing: I don’t have any. I didn’t get a business-related degree — there’s no formal finance education or economics indoctrination. My words are informed by something greater, and my hope is that they’re not the rote, memorized drivel that many financial advisors spout.

As a kid, I always thought I’d pursue something in finance. In fact, I want to tell you a little story from high school. It was there that I decided that to pursue a financial career path would leave me deeply unsatisfied, but my passion for personal finance never stopped.

Sam, you’re on the line!

I was giddy, but tempered in my high school science course. In about 10 minutes I’d ask my teacher to step outside and make a phone call.

My battery was fully charged, but I had to find a better signal. There was a field, away from the building, that provided a comfortable amount of strength. I dialed the number; I believe it was somewhere in New Jersey. I stayed on the line for what seemed like an abominable amount of time.

Occasionally, a pre-recorded voice piped up, that encouraged me to stay on the line. Then, I heard Jim Cramer’s — host of Mad Money on CNBC — voice and he shouted in my ear, “Sam from Golden, Colorado…” I melted with nervousness, but miraculously stated a ticker symbol (which I cannot remember) for a stock I was interested in.

Stocks were more important than classes

My latter high school days were filled with these moments. While fellow students studied diligently for their ACTs and applied to elite schools such as Duke and Stanford, my time was spent reading, trading, and watching the stock market. Because I was under 18, I forced my mom to co-sign and create a custodial account on an online trading site. I was hooked, and I loved the adrenaline.

Numbers pulsed through me, and I would binge on stock charts for hours. I hogged library computers and printer time to map them. In hallways and breaks, I drew lines on the charts, and practiced what I saw in books and television.

As an autodidact, the stock market provided an endless supply of data to be analyzed and understood. And the spoils went to the most educated people. I wanted to be one of them.

One form changed my degree, life

College was the path I was expected to follow. While my parents and grandparents never “forced” that path, it was strongly encouraged. The university life was where people went from good to great. I was open to that potential.

I applied to two colleges. The one I wanted to go to, Colorado State University, accepted me, but didn’t directly admit me into business. My less-than-stellar grades and contempt of mathematics meant that I would be an “open-option” business student until I proved my competence via good grades.

Prior to departing for Colorado State, there was an open house session. I attended one event geared specifically towards open-option students. For one hour, an advisor talked about academic success and finding your purpose in college.

I remember rolling my eyes, as the cynic in me dreaded the activity to come. We were split up into groups and then given about 10 minutes to complete a form and talk among the members.

The form asked us some simple questions, but one stuck out; it read, “How would you use your degree?” Despite the stupidly simple question, I had not really thought about this question before. I saw a response, “I want to help others.” Then I thought about my business degree — something wasn’t quite right.

I went to my advisor as soon as school started and asked to switch to psychology. There, I envisioned being able to listen and talk with others through their problems. That would be a degree to “help others.”

The psychology of money, spending, and society

After undergrad, I applied to graduate school and got into a counseling psychology doctoral program at the University of Iowa. I still wanted to follow the goals set forth in that open-option day. But in the back of my mind I recognized that investing and money issues still held great interest.

I still invested and read everything I could get my hands on regarding the stock market and business. I changed career paths, but my intrinsic passion for personal finance lingered.

As my own debt and spending spiralled out of control, I started Frugaling to right my course. It worked. I paid off about $40,000 of debt in about a year. I completely revamped my life — now incompatible with wanton spending and extravagances.

But I also started Frugaling as a perfect combination to meld my converging interests. I found that people’s (me included) monetary issues were closely linked to psychological concerns, distress, and stressors.

Psychology and business weren’t divergent topics. Additionally, I realized that most financial gurus blamed personal responsibility and character flaws on poverty, bankruptcy, and inadequate financial planning. There was room for a different voice — informed by psychological concepts and real counseling work with people suffering.

I’m not a financial-affiliated spokesperson

Over the nearly two years that Frugaling has been around, I have become an increasingly more passionate advocate for the underdogs. Financial markets are deeply unforgiving and unequal. People need to stand up and help others across diverse, multicultural backgrounds.

I ask you not to trust me for my financial degrees and letters after my name. I ask you not to trust me for how much money I’ve made for other people. I ask you not to trust me for being personally wealthy. I ask you not to trust me for my reputation (or lack thereof).

All I ask is that you consider the possibility that financial voices of reason come from those outside that insular world. I’m here to stand up for those who’ve been drowned out for too long. And I’m excited to continue building an audience (you included) that is inspired into action over social justice concerns and reducing consumption.

Filed Under: Social Justice Tagged With: Advice, Business, college, Finance, graduate school, investing, Personal Finance, Psychology, school, Social Justice, Stock Market, stocks, university

Social Justice Before Personal Finance

By Frugaling 6 Comments

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Martin Luther King Jr Memorial MLK Day
Photo: Ron Cogswell/Flickr

Today feels different.

Perhaps it’s because today we honor a fallen hero of the civil rights movement.

Perhaps it’s because today I watched a new film — Selma — chronicling Martin Luther King’s work in Alabama.

Perhaps it’s because last year we lost so many black and brown minorities to police brutality.

Perhaps it’s because, presently, black and brown minorities represent about 58% of all prisoners, while only being about 25% of the total population.

Rather than writing another article about saving on laundry, coffee, or toilet paper, today I wanted to recognize and remember those who we’ve lost or are currently struggling.

Financial concerns are closely tied to these issues of social justice and multiculturalism. The closer we come to equal opportunities, the more democratic society we’ll have.

That’s worth fighting for, isn’t it?

Filed Under: Social Justice Tagged With: Martin Luther King, Minorities, MLK, Multiculturalism, Personal Finance, Prison, Social Justice

Looking Back At 2014

By Frugaling 5 Comments

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Fireworks photo by Scott Cresswell
Photo: Scott Cresswell/Flickr

This holiday I had the fortunate opportunity to celebrate Christmas with my family and New Year’s Eve with lots of old friends. I couldn’t have asked for a better few days. And now, with 2015 upon us, I wanted to take a quick look at the triumphs and highlights of 2014.

More visitors and pageviews

It was an incredible year for website traffic and visitors. There were over 330,000 visitors and nearly 500,000 pageviews. Incredibly, one of my articles went viral. I never really knew what that meant until I saw over 1,000 visitors on my site at one time. Frugaling became so busy that I couldn’t edit, visit, or change the site!

When I first started the website I questioned whether anyone would read it. And if anybody did, I wondered whether it would just be my mom and dad. In my first year, I constantly thought about my audience and building a following. In 2014, I shifted this priority to publishing regularly and meeting a certain journalistic standard.

It’s not that building a following isn’t important, but I realized I was concentrating in the wrong areas. The old adage of “Content is king” is true. By publishing thought-provoking articles and seeking debate, the traffic grew naturally.

More revenue, momentarily

At the beginning of the year I was making staggering amounts of money. Frankly, I wasn’t sure how to talk about it. In both January and February, I made over $5000 per month. With that kind of money, I was able to pay off my student loan debt in record time.

From the very beginning of Frugaling, I knew that I would try to make a little side income from the site. I never expected to make enough to pay off the loans. But it all came at an ethically dubious cost: hawking affiliate banking products. I never felt completely satisfied or confident in sharing about these products, as many suffer tremendously from easy credit opportunities. Credit debt can be nightmarish, and lead to the illusion of “success.”

Over time, the revenue began to fall. Affiliate companies reduced commissions until they were a small fraction of what they once were. Eventually, they pulled individual cards and requested that I constantly update marketing points. I felt tied to another job — one of updating and tidying up credit companies’ messages. The aftertaste was unsettling. Out of this discontent, I decided to pull the remaining articles about credit card companies. Maybe at some point later, I’ll revisit it, but with my debt paid off, I don’t feel desperate enough to be hawking these products.

Top articles from this year

I was repeatedly humbled by the amount and quality of visitors this year. People increasingly participated in the comments section and shared via social networking. It was a pleasure to be able to write with this audience in mind. The following are the top 5 most popular articles from Frugaling all year:

  1. Destroy The 40-Hour Workweek
  2. 5 Tricks To Save Money At Starbucks
  3. Too Poor To Protest: How Income Inequality Silences Your Voice
  4. Debt Is The Illusion Of Success
  5. 8 TED Talks That Will Inspire You To Become A Minimalist

Most popular referrers of traffic

When people start blogging and writing, they often ask me where traffic comes from. It’s both a simple and difficult question to answer, as visitors and readers come from all parts of the globe — finding your site in different ways. Sometimes word of mouth and personal recommendations lead to the most pageviews. Sometimes sites like Reddit and Facebook are best for viral sensations. The following are the top 5 referrers of traffic to Frugaling in 2014:

  1. Reddit
  2. Facebook
  3. Twitter
  4. Becoming Minimalist
  5. Hey It’s Free!

A special thanks to you, my reader!

2014 was a standout year for me. Graduate school has been challenging, but I’ve been able to keep writing articles and participating in the personal finance world. It’s been an honor to share my voice with you, and receive your support.

Thank you for making this an incredible year, and I hope you’ll follow along in 2015!

-Sam

Filed Under: Make Money Tagged With: 2014, annual review, articles of the year, Income, money, pageviews, Personal Finance, revenue, social networking, traffic, Visitors, Website

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