© St. Petersburg Times, published February 23, 2003
Lucky enough to get a refund check from the IRS and not sure what to do with it?
Here are five ideas for that or any other chunk of change you might have sitting in your checking account or stuffed under your mattress:
-- Pay off credit cards. If your credit card offers a "low" 9.9 percent rate, paying off your balance is the equivalent of a risk-free 9.9 percent return on your investment. Where else can you get that? If you can't pay off all your cards, pay down the one with the highest interest rate, or pay off one with a small balance that you can eliminate in one fell swoop.
-- Put it into your mortgage. If you're a candidate for refinancing, putting some cash into the deal to cover costs will make your monthly payments even lower. If refinancing doesn't make sense for you, just mail your mortgage servicing company extra money with a note asking that it be applied to principal.
-- Lend it back to Uncle Sam. EE savings bonds currently offer 3.25 percent interest; I bonds, 4.08 percent. The rate adjusts every six months.
-- Park it in a high-yield checking account. Some banks offer tiered checking accounts with higher rates for higher balances. With a balance of at least $5,000, you can earn 2 percent at institutions such as World Savings and Third Federal until you decide what else to do with your money.
-- Give your IRA a cash infusion. Got an old retirement account withering away from the stock market's slump, lack of new contributions or both? If you had earned income, you have until April 15 to make a 2002 contribution: up to $3,000, or $3,500 if you're 50 or older.
Q. I have a mortgage with Household Finance. When will I get my share of the money from the settlement that was announced last fall?
Not any time soon. The good news is that the state of Florida has received about two-thirds of the approximately $23-million it expects to collect from Household as part of a national settlement over the company's lending practices. The rest is due to come in next month.
The bad news is that the state has not yet determined how the money will be distributed to the 14,700 Floridians who took out Household mortgage loans since 1999 and are entitled to a share. Rather than simply dividing the money equally, state officials say they are trying to come up with a formula that takes into account the degree of damages suffered. Among the factors that might be considered are whether a consumer paid points, prepayment penalties or credit life insurance premiums.
The state plans to mail claim forms to those who are eligible to share in the settlement, but this will not happen before the end of next month at the earliest. A private company will be hired to process the claims and distribute checks.
A toll-free number, 1-800-360-4316, was set up to provide recorded information about the settlement, but it had not been updated when last I checked.
Q. My wife and I recently established a trust for our two children. Our attorney suggested a person to govern the trust. We want to know about the credibility of this person and the company where he works. Do any agencies have records of this?
Not really. Federal and state banking regulators oversee trust companies, which are required to file public reports about their financial condition. However, those reports won't tell you anything about what kind of job the trust company does for its clients.
I suggest asking financial professionals and lawyers in your community about the company's reputation and whether they recommend it to their clients. You also may be able to ask customers about their experiences. Perhaps your attorney has recommended this trust company to other clients and might put you in touch with them so you could ask about their experiences.
Q. I am a shareholder in Gevity HR Inc., formerly Staff Leasing, in Bradenton. This is one of the largest companies in our area. Why doesn't the Times include it under stocks of local interest?
The answer is in the definition of "local." The Times defines our immediate neighborhood as Citrus, Hernando, Hillsborough, Pasco and Pinellas counties. Manatee County, where Gevity has its headquarters, is not included.
-- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.