Q: I have several five gallon cans of gasoline in my garage that are to be used in a generator in case of a power failure. They have been there for several years as well as a tank full in the generator. Can this gas go stale?
-- C. S. Legum,
Norfolk, Va.
A: Gasoline does degrade or become "stale" during storage. How long it remains viable depends on several factors including the container and conditions in which it has been stored. The gas in your garage is long past its due date, though, especially if it was stored without the addition of a chemical stabilizer.
[Me and My Car storing gasoline]
Associated Press
Many folks store gasoline, as seen here after Hurricane Katrina. But gas can go stale after a few months.
I know it is tempting to use the fuel, especially with prices so high at the pump. Indeed, many times I have poured gasoline of questionable vintage into the tanks of cars, motorcycles and of course, the lowly lawnmower. Several years ago I inherited a roto tiller with a tank that had been half full for years. Of course, it started on the first pull and has run well ever since. Still, the instructions for outdoor power equipment like mowers, snow blowers and chain saws often recommend draining the tank if you don't plan to use the machine for a several months.
The American Petroleum Institute recommends taking old gas to an approved disposal facility after, at most, two years of storage. But the gas may have degraded beyond safe use by then. To be safe, the trade group says, you should avoid storing gasoline from season to season. For example, if you fill the gas can in the spring you should use its contents before the end of the year.
I haven't had any fuel-related problems. But I have heard enough tales of woe from people who have that I now avoid storing gasoline for more than a few months and always add a stabilizer to the container.
Wednesday, June 18, 2008
Monday, June 9, 2008
How to choose a pineapple
Nobody really knows how to tell if one is ripe — you see people sniffing and pressing them, and listening to how they sound when thumped.
Now comes Jean Paul Polo of San Juan, Puerto Rico, in the "Quick Tips" feature of the latest issue (July/August 2008) of Cook's Illustratedmagazine, with the following advice:
"With one hand, gently tug at a leaf in the center of the fruit. If the leaf releases with little effort, the pineapple is ripe. If the leaf holds fast, choose a different pineapple. Conversely, avoid pineapples with dried out leaves and a fermented aroma — the fruit may be overripe."
FunFact: Pineapples do not continue to ripen once they've been picked.
Now comes Jean Paul Polo of San Juan, Puerto Rico, in the "Quick Tips" feature of the latest issue (July/August 2008) of Cook's Illustratedmagazine, with the following advice:
"With one hand, gently tug at a leaf in the center of the fruit. If the leaf releases with little effort, the pineapple is ripe. If the leaf holds fast, choose a different pineapple. Conversely, avoid pineapples with dried out leaves and a fermented aroma — the fruit may be overripe."
FunFact: Pineapples do not continue to ripen once they've been picked.
Monday, June 2, 2008
Credit card rewards are a real rip off
What has your rewards card done for you lately? Not much most likely.
NEW YORK (CNNMoney.com) -- You got burned with frequent flier miles, which were nearly impossible to redeem and hardly worth the hassle, so credit card issuers turned to other kinds of incentives to entice you to charge more. But most rewards programs aren't much better, and consumers are still eager to sign up for them despite the same old traps.
About 85 percent of U.S. households participate in at least one rewards program, according to a study released Monday by Consumer Reports. And though rewards do spur consumers to spend more, the study found that confusing rules and restrictions make most reward cards more trouble than they're worth.
"They make it 100 times more complicated," said a former marketing executive at CitiCards, referring to the popular rewards programs. For example, when you read the fine print, you might find that some rewards are limited to certain brands, or expire if not used within a certain timeframe.
Of the different reward cards available, the most popular programs are cash back, where customers receive a percentage of expenditures back in either a check or money off of their next bill. Other reward cards rack up "points" which can be redeemed for various items, or offer people discounts at certain hotels, stores, restaurants and gas stations.
And while cash back, gas and grocery rewards credit cards can offer some relief for costly essential items, they often carry higher annual percentage rates than traditional credit cards, Consumer Reports said. Looking at some of the more generous credit card rewards programs, the study found that rates varied from 9.74% to as much as 19.99%.
What do you think of your credit card rewards?
"If the rates are high, the cost to carry a balance will often erase any savings the rewards program may offer," said Amanda Walker, senior project editor at Consumer Reports.
Some reward cards also carry annual fees, making it even less likely that consumers will come out ahead. And even the more generous programs have limits on how much consumers can earn in rewards, not to mention looming deadlines by which the rewards must be used.
And in addition to the complicated rules, fees and higher interest rates, customers are leaving unused rewards on the table. More than 41 percent of reward cardholders either rarely or never even bother to use their rewards, said a 2006 survey by GMAC Mortgage and Harris Interactive.
To avoid the pitfalls and get the most back from your card, Consumer Reports offers these tips:
Consider where you shop. Opt for cards that will earn rewards at stores and services you use most often, or offer savings on items that you actually buy regularly. Airline and hotel discounts, for example, are not particularly useful for those who aren't frequent travelers.
Project your spending. Figure out how much you're likely to spend, and translate that into cash back or points, depending on which program your card uses. For points, figure out how many you need to get the rewards you want. Make sure to subtract the annual fee, if your card has one. If you realize that you'd have to spend a small fortune to earn only a tiny reward, try another card.
Favor cash back. Points often end up unused - a plus for the credit card companies who got you to spend more without having to give you anything in return. But cash back accumulates without you actually having to do anything. Plus, Consumer Reports found that cash back cards tend to offer better rewards than point equivalents.
Skip credit if you carry a balance. If you don't pay your bills of in full, you may want to pass on the rewards cards altogether. Because rewards cards often have higher interest rates, you may end up paying much more in interest than you reap in rewards.
Do the math on do-good programs. Do-gooders might be enticed by cards that give rewards to charity. But they usually pay very low rates - about 25 to 50 cents for every $100 you charge. You're probably better off going with the cash back, and then sending money to a charity yourself. You'll end up with a larger donation - and a tax deduction.
Use airline miles fast. If you do still use airline miles and manage to save up enough for a trip, make sure to use them right away. Airlines are always changing their redemption rules, and considering how much the big carriers are struggling these days, holding onto unused miles can cost you.
Avoid temptation. Research has shown that credit card customers are tempted to charge more in order to earn points toward a reward such as new digital camera or set of golf clubs. But overspending for a "freebie" often doesn't pay.
NEW YORK (CNNMoney.com) -- You got burned with frequent flier miles, which were nearly impossible to redeem and hardly worth the hassle, so credit card issuers turned to other kinds of incentives to entice you to charge more. But most rewards programs aren't much better, and consumers are still eager to sign up for them despite the same old traps.
About 85 percent of U.S. households participate in at least one rewards program, according to a study released Monday by Consumer Reports. And though rewards do spur consumers to spend more, the study found that confusing rules and restrictions make most reward cards more trouble than they're worth.
"They make it 100 times more complicated," said a former marketing executive at CitiCards, referring to the popular rewards programs. For example, when you read the fine print, you might find that some rewards are limited to certain brands, or expire if not used within a certain timeframe.
Of the different reward cards available, the most popular programs are cash back, where customers receive a percentage of expenditures back in either a check or money off of their next bill. Other reward cards rack up "points" which can be redeemed for various items, or offer people discounts at certain hotels, stores, restaurants and gas stations.
And while cash back, gas and grocery rewards credit cards can offer some relief for costly essential items, they often carry higher annual percentage rates than traditional credit cards, Consumer Reports said. Looking at some of the more generous credit card rewards programs, the study found that rates varied from 9.74% to as much as 19.99%.
What do you think of your credit card rewards?
"If the rates are high, the cost to carry a balance will often erase any savings the rewards program may offer," said Amanda Walker, senior project editor at Consumer Reports.
Some reward cards also carry annual fees, making it even less likely that consumers will come out ahead. And even the more generous programs have limits on how much consumers can earn in rewards, not to mention looming deadlines by which the rewards must be used.
And in addition to the complicated rules, fees and higher interest rates, customers are leaving unused rewards on the table. More than 41 percent of reward cardholders either rarely or never even bother to use their rewards, said a 2006 survey by GMAC Mortgage and Harris Interactive.
To avoid the pitfalls and get the most back from your card, Consumer Reports offers these tips:
Consider where you shop. Opt for cards that will earn rewards at stores and services you use most often, or offer savings on items that you actually buy regularly. Airline and hotel discounts, for example, are not particularly useful for those who aren't frequent travelers.
Project your spending. Figure out how much you're likely to spend, and translate that into cash back or points, depending on which program your card uses. For points, figure out how many you need to get the rewards you want. Make sure to subtract the annual fee, if your card has one. If you realize that you'd have to spend a small fortune to earn only a tiny reward, try another card.
Favor cash back. Points often end up unused - a plus for the credit card companies who got you to spend more without having to give you anything in return. But cash back accumulates without you actually having to do anything. Plus, Consumer Reports found that cash back cards tend to offer better rewards than point equivalents.
Skip credit if you carry a balance. If you don't pay your bills of in full, you may want to pass on the rewards cards altogether. Because rewards cards often have higher interest rates, you may end up paying much more in interest than you reap in rewards.
Do the math on do-good programs. Do-gooders might be enticed by cards that give rewards to charity. But they usually pay very low rates - about 25 to 50 cents for every $100 you charge. You're probably better off going with the cash back, and then sending money to a charity yourself. You'll end up with a larger donation - and a tax deduction.
Use airline miles fast. If you do still use airline miles and manage to save up enough for a trip, make sure to use them right away. Airlines are always changing their redemption rules, and considering how much the big carriers are struggling these days, holding onto unused miles can cost you.
Avoid temptation. Research has shown that credit card customers are tempted to charge more in order to earn points toward a reward such as new digital camera or set of golf clubs. But overspending for a "freebie" often doesn't pay.
Five Secret Japanese Tricks to Make Life Better
In Japan, there's an organic, non-commercial cure for almost anything. It's a tradition that blossomed in the post-WW2 era when people had to save money and space for economic reasons. Today, this habit of utilitarian thriftiness paired with a quirky national sensibility has spawned a phenomenon called urawaza—a collection of offbeat life hacks and unmapped shortcuts. It's also the subject of my new book, Urawaza: Secret Everyday Tips and Tricks from Japan. Keep reading for excerpts on how to silence a crying baby, get rid of splinters, swim backward, make grass greener, and easily clean up egg yolk... all using common household objects.
1. How to make a baby stop crying
Dilemma: Sure, the baby's cute. But why won't he stop crying?
Solution: The secret to stop a crying baby lies in making the sound you produce during the mouthfeel stage of wine tasting.
Why this works: When babies are still in the womb, the noises they can hear are limited to those in the 6000-8000mHz range. The sound you make when you slosh the liquid behind your lips during wine tasting takes place at about 7000mHz, reminding the baby of a time when the world around was peaceful and the whirs and stirs inside Mommy's tummy soothed him back to a sleepy state.
2. How to get rid of surface splinters
Dilemma: You have dozens of little splinters in your hands and arms from helping your little brother with his secret wooden fort. Isn't there a way to get rid of them without having to pluck each and every one out with tweezers?
Solution: Dip your finger in a tub of liquid glue and smear it all over the problem area. Once it dries, peel it off, just the way you used to when you were a bored little kid in arts-and-crafts class. The splinters will come right out along with the peeling glue!
Why this works: Surface splinters are hard to get out not because they're deeply embedded but because they're tiny and hard to grasp even with the daintiest of fingers. The sticky glue serves a function similar to a lint roller when the glue is applied evenly across the splintery surface of your skin. Plus, it's super fun to peel glue off your hands.
3. How to clean up spilled egg yolk
Dilemma: The egg was supposed to crack in the pan—not on the floor. Now there's gook all over the linoleum.
Solution: Sprinkle some table salt on the spilled egg and wait ten minutes for it to soak in, then sweep the egg yolk right off the floor with a broom.
Why this works: The salt dissolves the lipoproteins in the egg yolk, which changes its texture from gooey to nongooey, making it easier to clean. (Bonus: Brian Lam of Gizmodo shows us how.)
4. How to make the grass green again
Dilemma: You got a new puppy, and now your once beautifully green lawn has bare brown patches all over it from dog pee.
Solution: Pour some beer on the problem areas, making sure the foam's covering all the naked spots. The grass will be greener in no time.
Why this works: Beer has fermented sugars in it, which can act as natural fertilizer. The dying grass will feed on these sugars, detrimental fungi will die, and your lawn will start looking normal again.
5. How to swim backward
Dilemma: Your breaststroke is weak, your dives all end up as belly flops, and you can't even do half a somersault without getting water up your nose. You need some kind of skill that will set you apart from the rest of the pool party this summer—but what?
Solution: Learn how to swim backward! When you flex your feet instead of pointing them while holding onto a kick board, your body will chug through the water in reverse gear.
Why this works: The direction you advance in the water depends on which way you're kicking. When you kick away from your body—which is essentially what you appear to be doing when you flex your feet—you reverse the body's inclination to go forward. It takes a little bit of practice, but once you perfect it, the whole party will be wide-eyed with wonder at your newfound skill.
1. How to make a baby stop crying
Dilemma: Sure, the baby's cute. But why won't he stop crying?
Solution: The secret to stop a crying baby lies in making the sound you produce during the mouthfeel stage of wine tasting.
Why this works: When babies are still in the womb, the noises they can hear are limited to those in the 6000-8000mHz range. The sound you make when you slosh the liquid behind your lips during wine tasting takes place at about 7000mHz, reminding the baby of a time when the world around was peaceful and the whirs and stirs inside Mommy's tummy soothed him back to a sleepy state.
2. How to get rid of surface splinters
Dilemma: You have dozens of little splinters in your hands and arms from helping your little brother with his secret wooden fort. Isn't there a way to get rid of them without having to pluck each and every one out with tweezers?
Solution: Dip your finger in a tub of liquid glue and smear it all over the problem area. Once it dries, peel it off, just the way you used to when you were a bored little kid in arts-and-crafts class. The splinters will come right out along with the peeling glue!
Why this works: Surface splinters are hard to get out not because they're deeply embedded but because they're tiny and hard to grasp even with the daintiest of fingers. The sticky glue serves a function similar to a lint roller when the glue is applied evenly across the splintery surface of your skin. Plus, it's super fun to peel glue off your hands.
3. How to clean up spilled egg yolk
Dilemma: The egg was supposed to crack in the pan—not on the floor. Now there's gook all over the linoleum.
Solution: Sprinkle some table salt on the spilled egg and wait ten minutes for it to soak in, then sweep the egg yolk right off the floor with a broom.
Why this works: The salt dissolves the lipoproteins in the egg yolk, which changes its texture from gooey to nongooey, making it easier to clean. (Bonus: Brian Lam of Gizmodo shows us how.)
4. How to make the grass green again
Dilemma: You got a new puppy, and now your once beautifully green lawn has bare brown patches all over it from dog pee.
Solution: Pour some beer on the problem areas, making sure the foam's covering all the naked spots. The grass will be greener in no time.
Why this works: Beer has fermented sugars in it, which can act as natural fertilizer. The dying grass will feed on these sugars, detrimental fungi will die, and your lawn will start looking normal again.
5. How to swim backward
Dilemma: Your breaststroke is weak, your dives all end up as belly flops, and you can't even do half a somersault without getting water up your nose. You need some kind of skill that will set you apart from the rest of the pool party this summer—but what?
Solution: Learn how to swim backward! When you flex your feet instead of pointing them while holding onto a kick board, your body will chug through the water in reverse gear.
Why this works: The direction you advance in the water depends on which way you're kicking. When you kick away from your body—which is essentially what you appear to be doing when you flex your feet—you reverse the body's inclination to go forward. It takes a little bit of practice, but once you perfect it, the whole party will be wide-eyed with wonder at your newfound skill.
Friday, May 23, 2008
Become the Memorial Day Grill Master [Grilling]
Memorial Day marks the start of the serious grilling season, and there's no better weekend to try your hand outdoor cooking, or bolster your established grill master game. Luckily, mastering your outdoor culinary skills is a lot more simple than it seems, given the right tools, a little preparation, and a few tips on technique. Take a look at some tips on getting the right gear, turning out great meals, and even preparing for uncooperative weather, after the jump. Photo by Another Pint Please....
Get the right tools
* chimney_starter_scaled.jpgLump charcoal or briquettes?: This is one of those endless, both-sides-are-right-and-wrong debates (kind of like Mac vs. PC), but there is some fairly common ground. As The Virtual Weber Bullet puts it:
The general consensus is that lump tends to burn hotter than briquettes, but not as long or as consistently. Some lack of consistency is to be expected, given that the content and piece size varies within an individual bag and between bags.
Personally, I recommend briquettes for anyone just starting out with their grill, as lump can be finicky in lighting. Of course, you can save yourself a lot of effort and frustration by investing in a chimney starter, which you can also use for flash-cooking. Photo by Joshua Thompson via WikiMedia.
* Choosing a gas grill: Ignore the BTUs and heat for the most part—unless you really need to cook a whole bird or roast this weekend, most grills have got your steaks and burgers covered. Consumer Reports' blog recommends bringing a magnet with you to gauge the quality of steel used to contain the heat. If the magnet sticks, it's likely a cheaper grade that will rust more easily. Feel free to give a test model a few shoves and shakes, as an unstable grill is a recipe for serious problems.
* grilling_tools_scaled.jpgMulti-use utensils: The three-tool grilling sets you see at big-box stores have all you'll need for basic grill work, with long-handled versions of a spatula, tongs, and a carving-type poker. A long-handle brush would be your next purchase, and then a grilling basket and skewers when you start branching out. Make sure your tools feel heavy and firm in your hands, as clumsy handling create the kind of BBQ stories you don't want repeated. Photo by rick.
Getting ready
* Clean that grill: If there's black crust on the grill bars, you need to get it off to ensure no-stick cooking and easy food flipping. If you're feeling strong, wad up some aluminum foil and go to town on that stuff. For seriously stuck grime, you could also try popping the grill in the oven to bake off the stubborn bits.
* homemade_sauce_scaled.jpgMake your own sauce: Most of the pre-bottled sauces you see on grocery shelves are over-sweetened, and none match the taste of homemade. Making your own isn't that difficult, either. Use one BBQ Recipe Secret's three sauce bases as a starting point, and build your own flavor ideas into them. It'll give you something to talk about while you're waiting for the ribs to finish. Photo by Jason McArthur.
Hone your technique
* Use a cheat sheet: Experience is the best indicator for knowing the precise moment to yank your food off the rack, but Real Simple offers a super-helpful cheat shet you can print and bring to this culinary test (Original post). Here's a sample that covers the basics of red meat and sausages:cheatsheet_scaled.jpg
* grilled_chop_scaled.jpgBBQ Chicken: As my fellow editor Adam can attest, eHow's technique for grilling whole or partial chicken results in some juicy bird. The basics: Oil the grill, cook the chicken uncovered slightly off the heat center, and, for Pete's sake, don't put your sauce on until the last few minutes.
* Perfect burgers: Our commenters don't necessarily agree on cooking great burgers, but they do have some common wisdom to share. Use meat that's as close to room temperature as possible for even cooking. Don't press them on the grill, unless you like your meat dry. And the best "secret" to great burgers is buying good meat, preferably ground by a butcher while you watch.
* steak_osmosis.jpgSeriously salt your steak: Got filet mignon dreams for the weekend, but only a Quarter-Pounder budget? Buy a cheap cut of "choice" meat, then salt, salt, salt the heck out of that thing—for only one hour before grilling, and then pat it dry. By doing so, your salt is breaking into your meat and loosening some of its protein strands, making it hold flavor better and cut like the steakhouse commercials of your dreams (Original post).
* Let it rest: You'll be eager to slice open your tender steak or succulent chicken, but you'll lose a lot of juicy flavor if you do so. As the food techies at Cook's Illustrated point out, cutting into your food right off the grill releases a significant amount of juice, which would be re-absorbed for better succulence if you let it sit a few minutes.
Recover from a rain-out
All that planning, cleaning, and purchasing, and Mother Nature calls an audible on your perfect grill day? You're not finished yet. As the New York Times' food guru and cookbook author Mark Bittman points out, your oven broiler can sub in for your grill with a little prep-work, with results almost as satisfying. Brown your meat in the pan, roast or braise it slowly, then use the broiler to give it that grill-like finish. Check out his oven-based pork ribs or brisket recipes if you need convincing.
Document your success
grilled_chop_scaled.jpgWhen you've put all this effort into creating a great fire-cooked feast, you'll want more than just compliments to remember it by. Break out your digital camera (or pass it off to a trusted friend) and follow these tips to take some great grilling shots
Get the right tools
* chimney_starter_scaled.jpgLump charcoal or briquettes?: This is one of those endless, both-sides-are-right-and-wrong debates (kind of like Mac vs. PC), but there is some fairly common ground. As The Virtual Weber Bullet puts it:
The general consensus is that lump tends to burn hotter than briquettes, but not as long or as consistently. Some lack of consistency is to be expected, given that the content and piece size varies within an individual bag and between bags.
Personally, I recommend briquettes for anyone just starting out with their grill, as lump can be finicky in lighting. Of course, you can save yourself a lot of effort and frustration by investing in a chimney starter, which you can also use for flash-cooking. Photo by Joshua Thompson via WikiMedia.
* Choosing a gas grill: Ignore the BTUs and heat for the most part—unless you really need to cook a whole bird or roast this weekend, most grills have got your steaks and burgers covered. Consumer Reports' blog recommends bringing a magnet with you to gauge the quality of steel used to contain the heat. If the magnet sticks, it's likely a cheaper grade that will rust more easily. Feel free to give a test model a few shoves and shakes, as an unstable grill is a recipe for serious problems.
* grilling_tools_scaled.jpgMulti-use utensils: The three-tool grilling sets you see at big-box stores have all you'll need for basic grill work, with long-handled versions of a spatula, tongs, and a carving-type poker. A long-handle brush would be your next purchase, and then a grilling basket and skewers when you start branching out. Make sure your tools feel heavy and firm in your hands, as clumsy handling create the kind of BBQ stories you don't want repeated. Photo by rick.
Getting ready
* Clean that grill: If there's black crust on the grill bars, you need to get it off to ensure no-stick cooking and easy food flipping. If you're feeling strong, wad up some aluminum foil and go to town on that stuff. For seriously stuck grime, you could also try popping the grill in the oven to bake off the stubborn bits.
* homemade_sauce_scaled.jpgMake your own sauce: Most of the pre-bottled sauces you see on grocery shelves are over-sweetened, and none match the taste of homemade. Making your own isn't that difficult, either. Use one BBQ Recipe Secret's three sauce bases as a starting point, and build your own flavor ideas into them. It'll give you something to talk about while you're waiting for the ribs to finish. Photo by Jason McArthur.
Hone your technique
* Use a cheat sheet: Experience is the best indicator for knowing the precise moment to yank your food off the rack, but Real Simple offers a super-helpful cheat shet you can print and bring to this culinary test (Original post). Here's a sample that covers the basics of red meat and sausages:cheatsheet_scaled.jpg
* grilled_chop_scaled.jpgBBQ Chicken: As my fellow editor Adam can attest, eHow's technique for grilling whole or partial chicken results in some juicy bird. The basics: Oil the grill, cook the chicken uncovered slightly off the heat center, and, for Pete's sake, don't put your sauce on until the last few minutes.
* Perfect burgers: Our commenters don't necessarily agree on cooking great burgers, but they do have some common wisdom to share. Use meat that's as close to room temperature as possible for even cooking. Don't press them on the grill, unless you like your meat dry. And the best "secret" to great burgers is buying good meat, preferably ground by a butcher while you watch.
* steak_osmosis.jpgSeriously salt your steak: Got filet mignon dreams for the weekend, but only a Quarter-Pounder budget? Buy a cheap cut of "choice" meat, then salt, salt, salt the heck out of that thing—for only one hour before grilling, and then pat it dry. By doing so, your salt is breaking into your meat and loosening some of its protein strands, making it hold flavor better and cut like the steakhouse commercials of your dreams (Original post).
* Let it rest: You'll be eager to slice open your tender steak or succulent chicken, but you'll lose a lot of juicy flavor if you do so. As the food techies at Cook's Illustrated point out, cutting into your food right off the grill releases a significant amount of juice, which would be re-absorbed for better succulence if you let it sit a few minutes.
Recover from a rain-out
All that planning, cleaning, and purchasing, and Mother Nature calls an audible on your perfect grill day? You're not finished yet. As the New York Times' food guru and cookbook author Mark Bittman points out, your oven broiler can sub in for your grill with a little prep-work, with results almost as satisfying. Brown your meat in the pan, roast or braise it slowly, then use the broiler to give it that grill-like finish. Check out his oven-based pork ribs or brisket recipes if you need convincing.
Document your success
grilled_chop_scaled.jpgWhen you've put all this effort into creating a great fire-cooked feast, you'll want more than just compliments to remember it by. Break out your digital camera (or pass it off to a trusted friend) and follow these tips to take some great grilling shots
Friday, April 25, 2008
Monday, April 14, 2008
Try Brokered CDs for Higher Rates
Try Brokered CDs for Higher Rates
By Mark P. Cussen on certificates of deposit
By Mark P. Cussen
First Interstate Bank
Thanks to the FDIC, millions of Americans are able to sleep peacefully at night, knowing that their savings are protected by government-backed insurance. Since the thirties, certificates of deposit have become synonymous with safety of principal. Bank customers who shop for CDs concern themselves only with the rates and terms that are available.
Unfortunately, the safety that comes with FDIC insurance comes with a price. Will Rogers once said, “It’s not the return on my money that concerns me, it’s the return of my money.” This famous saying exemplifies the attitude of many bank customers. While CDs are among the safest types of investments available, their rate of return is correspondingly low. If interest rates are around 5%, then that is about what you can expect a short term CD to pay. While longer term and jumbo CDs can pay slightly more, it is very difficult to see much real growth from them over time.
However, there is another option available for those seeking higher rates on their guaranteed investments. Unbeknownst to many CD buyers, many brokerage and investment firms offer CDs that are every bit as safe and secure as those found in banks. While these CDs do differ from their cousins in the banking system in some respects, they are still FDIC insured up to $100,000 per CD owner. Furthermore, this type of CD generally pays a higher rate than bank CDs, and they often contain other features, such as put or call options that allow either the buyer or the issuer to redeem the certificate prematurely without penalty. For example, a brokered CD with a 20-year maturity could be “puttable” at a premium, such as $105, after five years, if the buyer so desires. That means that five years from now, if rates have gone up and the buyer wishes to move the money in this CD to another one, then he or she will receive $1,050 in return for each thousand dollars that was originally invested. Therefore, a $100,000 CD holder will see a return of $105,000 on the principal-in addition to the five years of interest the holder received. Call features give the issuer the same privilege. Brokered CDs can also be bought and sold in the secondary market like any other type of bond. However, the FDIC guarantee will only apply for investors that either hold their certificates to maturity or redeem them in a put or call transaction. If the certificate is sold prematurely in the secondary market, then the owner may receive more or less than his original investment, depending on market conditions. But those who hold their CDs to maturity or call will be safe.
By Mark P. Cussen on certificates of deposit
By Mark P. Cussen
First Interstate Bank
Thanks to the FDIC, millions of Americans are able to sleep peacefully at night, knowing that their savings are protected by government-backed insurance. Since the thirties, certificates of deposit have become synonymous with safety of principal. Bank customers who shop for CDs concern themselves only with the rates and terms that are available.
Unfortunately, the safety that comes with FDIC insurance comes with a price. Will Rogers once said, “It’s not the return on my money that concerns me, it’s the return of my money.” This famous saying exemplifies the attitude of many bank customers. While CDs are among the safest types of investments available, their rate of return is correspondingly low. If interest rates are around 5%, then that is about what you can expect a short term CD to pay. While longer term and jumbo CDs can pay slightly more, it is very difficult to see much real growth from them over time.
However, there is another option available for those seeking higher rates on their guaranteed investments. Unbeknownst to many CD buyers, many brokerage and investment firms offer CDs that are every bit as safe and secure as those found in banks. While these CDs do differ from their cousins in the banking system in some respects, they are still FDIC insured up to $100,000 per CD owner. Furthermore, this type of CD generally pays a higher rate than bank CDs, and they often contain other features, such as put or call options that allow either the buyer or the issuer to redeem the certificate prematurely without penalty. For example, a brokered CD with a 20-year maturity could be “puttable” at a premium, such as $105, after five years, if the buyer so desires. That means that five years from now, if rates have gone up and the buyer wishes to move the money in this CD to another one, then he or she will receive $1,050 in return for each thousand dollars that was originally invested. Therefore, a $100,000 CD holder will see a return of $105,000 on the principal-in addition to the five years of interest the holder received. Call features give the issuer the same privilege. Brokered CDs can also be bought and sold in the secondary market like any other type of bond. However, the FDIC guarantee will only apply for investors that either hold their certificates to maturity or redeem them in a put or call transaction. If the certificate is sold prematurely in the secondary market, then the owner may receive more or less than his original investment, depending on market conditions. But those who hold their CDs to maturity or call will be safe.
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