Friday, August 06, 2010
Debit Card Education - That movie cost me how much!?
Here comes more news based on changes implemented by the CARD Act of 2010.
Before the change:
The banks used to automatically treat your debit card transactions like checks. What this means is
that if you used your debit card and didn't have enough money in your account, the bank would "cover"
the payment. Their incentive was to charge you a standard overdraft fee that (for most banks) is
around $29 per transaction.
After the change:
Banks must ask you if you WANT them to cover the debit card
transaction (option 1) or simply decline the transactions that overdraw your account (option 2).
What this means to you...
Option 1 - Cover Me
Please cover my $12 movie ticket and charge me $29 for saving me the embarrassment in front of my
friends. Remember, that they will charge you another $29 for the $6 bucket of popcorn you will be
buying about 3 minutes later. In the end, that will probably be the most expensive movie you have
ever seen. Be sure, their notices will try to convince you to continue letting them "help you out".
Option 2 - Decline Me
Please tell me that I don't have the money in my account and give me the chance to use a credit card
instead. The $29 charge is a high rate of interest to cover a $12 movie ticket for a day or two when
your next paycheck is deposited. This could even save you in the case you simply forgot to transfer
some money from your savings account to your checking account.
There are only a couple of tips I can offer:
- You should decline their generous offer.... and ONLY use your
debit card when you know you have enough money in the account to cover discretionary transactions!
- If you are NOT sure, use a credit card which won't cost you.
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Saturday, April 17, 2010
Fuel Perks Unwrapped
(Part 2 of 2)
(or insert the name of your shopping perks program here)
"My grocery store is giving away gasoline discounts just for buying the things I already buy. They are such
a great place to shop."
If you read Part 1, you probably want to know how to win at this game? And I'm going to tell you!
Gift Cards!
If your store program works like mine, you can earn fuel discounts by buying gift cards.
This turns the game into a simple money exchange while earning you a discount AND earning a true benefit. The
store still earns a small marginal profit on the sale of the card, but you don't contribute to that profit!
Now that is a true WIN - WIN !
Here is a short list of the most common gift cards I have purchased:
- Marriott Hotels
- Best Buy
- Applebee's Restaurants
- Regal Cinemas
- Red Robin Restaurants
- Pizza Hut
- Staples (office supplies)
- iTunes Cards
- Barnes and Noble Bookstores
And my favorite... Home Depot (think about how fast the perks add up when you do a $5,000 bathroom
remodel!)
For a full listing of what my store (Giant Eagle) carries, click here
As always,
Thanks for listening and stay tuned for more upcoming insight!
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Friday, April 09, 2010
Fuel Perks Unwrapped
(Part 1 of 2)
(or insert the name of your shopping perks program here)
"My grocery store is giving away gasoline discounts just for buying the things I already buy. They are such a
great place to shop."
You'll probably want to file this issue under: "If it sounds to good to be true, it
probably is..."
If you've lived long enough, you know that businesses have to make a profit and if they give things away, they must
make up for it somewhere else. Frequent shopper programs are no different than any other discount. The "perks"
program is only giving you back a portion of the profit from the over priced items that you are buying in their
store.
At first glance, it appears to be a win-win proposition. For them, you are over paying for everyday items you could
buy cheaper in the discount store down the street (they win). You earn a few cents off per gallon of gas (you feel
like you win).
Everyone is happy!
IMPORTANT: For those who like that last statement, stop here as there are spoilers after this point!
Here's the math to help understand the customer side of the "win" scenario:
I'm going to use a fairly short shopping list, but you can multiply it to approximate your own weekly grocery bill.
Example Grocery List
| Item | "Perks" Store | Discount
Store |
Milk |
$2.99 |
$2.49 |
| Eggs | $1.99 | $1.69 |
| Cheerios | $4.29 | $3.69 |
| Ground Beef | $4.89 | $4.59 |
| Laundry Soap | $12.99 | $10.99 |
| Dryer Sheets | $3.99 | $3.59 |
| 12 pack Pepsi | $3.49 | $2.99 |
| Vanilla Ice Cream | $5.49 | $4.69 |
Total Bill |
$40.12 |
$34.72 |
So, now we need to know if the $0.10 per gallon "fuel perk" on my next fill-up is worth more than the savings by
shopping at a discount store?
-
Value of "fuel perk" (for 25 gallon fill-up) = $0.10 x 25 gallons = $2.50 savings on gas
-
Value of discount store (versus "fuel perk" store) = $40.12 - $34.72 = $5.40 savings
Final Result: It looks like the discount store had a $2.90 better deal at the end of the
week.
My opinion:
I saved an extra $2.90 this week by shopping the discount store and paying the regular price for gas. Over the
course of 1 year, this weekly savings adds up to a little over $150 on a grocery bill of $40 per week.
If you spend more than me...
If your average grocery bill is 4 times my example ($160 per week), you would save more on both calculations and the
final result would be a little over $600 per year (probably more than 1 monthly car payment)
It may look like this is all just a win for the stores. Stop by next week and check out Part 2 of this article.
I'll show you how to actually "win" at this game.
Thanks for listening.
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Friday, April 02, 2010
Budget vs Value .... What's the difference?
We have all heard about the iPhone, but is all the hype and "WOW" factor worth it and can you afford it? Here is some insight that can be applied to any purchase, but it applies even more to anything that has an on-going monthly cost.
First we need a couple definitions:
- Budget - "can I afford this?"
- Value - "will I use this?"
Budget is the easier question because it is pretty objective. If the cost is a one-time payment, then you question is "do I have the money in the bank to pay for this?". These days it is not a good idea to just put it on the plastic.
Value is the tricky question. Will I use this item today, next week and maybe even next month? This question is important if you are buying something with a monthly cost (like a cell phone, gym membership or HBO).
My advice is more about the "next month" portion of the value question. As a habit, I try to look at all of my "elective" monthly bills at least 3-4 times a year. Be honest and ask yourself "Have I used the product, service or item in the last two weeks?" If you haven't, you need to consider cancelling the monthly service part of that item.
It is a simple process, but we sometimes avoid it for some reason or another. For me, I used to avoid it because I might have to admit that I made an impulse purchase without thinking it through. Today, I think it is better to admit the initial error than to continue to pay for that mistake each month.
I hope you consider using this philosophy too! Thanks for listening.
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Friday, March 26, 2010
UPDATED: Checking your credit card statements every month? (of course you do!)
You have all heard the stories about how credit card companies are thinking up new ways to get $ from you. Well here is a latest story directly from my own experience. I call it the "paper statement fee". Yes, your credit card company may have already implemented this or at least warned you of it coming soon.
Here is how it works:
- You get your monthly statement as usual.
- Take a look at the minimum payment and current APR % (don't want them to sneak a rate increase through).
- Write out your check for your payment amount of choice.
- Mail it off like any good customer would do.
Now comes the subtle part that I found by reading all the way to the last page of the statement.
"We are waiving this month's one-dollar processing fee to give you more time to register for paperless statements. Act now to save..."
First question: How long will they waive it before they start charging it?
Second question: When they do start charging it, how much will it cost? Answer: $1 per month
More details to follow after I call the 800 customer service phone number....
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