Quickfire: Robbing the Rich, Paying the Poor

It seems credit cards are always in the news for the wrong reasons - so-called rate tarts card hopping to take advantage of 0% balance transfers, insolvent consumers juggling debts from one card to another or irresponsible financial institutions dishing out cards like confetti. However, handled correctly, credit cards can be a tool to turn the table and cream money from financial institutions...twice!

Credit cards typically have an interest-free period of over forty days so as long as the balance is cleared every month, they do not cost anything to use. On the other hand, paying household bills and daily expenses from a bank account continuously decreases the balance and hence the interest earned each month. So, rather than flashing the credit card at every opportunity being financially reckless, it actually makes sense to shift as much expenses as possible to the card and leave the bank balance untouched. That way, maximum interest can be earned on the bank account and zero interest paid on the credit card as long as the balance is cleared at the end of the month.

Given that financial institutions constantly devise new ways of extracting pennies from their customers to boost their multi-billion pound profits, it is about time the spending public went on the offensive and start helping themselves to their institutions' largesse!

Quickfire: MicroPlace

A couple of weeks ago, I had one of my brainwaves (which have been becoming infrequent these days, I might add). I thought about the viability of a P2P finance e-commerce venture; the logic was to create an eBay-like website where ordinary individuals could lend money to each other, with lenders bidding to offer the most favourable interest rates. See, payments could be made and received through services such as PayPal and Google Checkout, and, and, and people could borrow any amount for any length of time, and, and, and they would no longer have to be held to ransome by their banks, and, and, and there would be world peace...

Just as my eyes were lighting up with glee at my newfound goldmine, it crossed my mind that eBay and Google would not be so keen to lend their payment infrastructure to the venture when they could set it up themselves and keep all the profits.

Well, I was right! I just read a BBC News report about MicroPlace, an eBay company that facilitates microfinance investments from everyday investors to the world's working poor. The e-commerce website acts as a broker-dealer linking investors to microfinance organisations across the world, with investments made through PayPal or a regular bank account. eBay are not keeping the profits though; they will be using it to fund their socially beneficial activities. Who says business is all about shareholder value, eh?

I guess my brainwave was not just vapour afterall. Wonder if Google would be willing to play ball...