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The world is full of evidence that when something’s heavily advertised it should be heavily scrutinized. In this story we cover five of countless examples.
1. Frequent flier cards that don’t fly anymore
Credit cards that offer frequent flier miles used to be great deals, but with rising expenses and decreasing fliers airlines have had to cut back wherever they can. And in many instances, frequent flier programs took the hit. These days, they’ve raised the number of miles needed to cash in on free seats and lowered the number of free seats available, so it’s really not such a good deal anymore.
Better idea? Get a cash-back credit card and use the extra money to shop for cheap airline seats.
2. “Interest bearing” checking accounts that aren’t bearing interest.
Many interest bearing checking accounts are only paying 0.25%… 1/4 of a percent! A measly $12 a year on a $5,000 account and a rate far below even today’s meager inflation rate.
Better idea? Find a free checking account (credit unions are a great place to look), then shop for the best savings account you can find. Some are up to 3%… still not much, but 12 times what you were earning with “free” checking.
3. Extended warranties that extend your expense
Extended warranties may sound like a good idea, and they could be… if they didn’t cost so darn much. As it is, most aren’t worth the money. Sure, there’s the occasional thing that breaks, which you get repaired for free with the warranty. But add up all your extended warranties and they’ll likely cost more than you would’ve spent on repairs for the one thing that actually broke. There are exceptions, and exceptional situations (I’ve got a puppy in my house right now, and wish I’d purchased an extended warranty on pretty much everything within her reach,) but by and large these things are profit centers for the dealers that sell them more than they are profitable protection for you.
Better idea? See if your credit card offers a buyer’s protection plan, check for a good manufacturer warranty before you buy, or just take your chances. Oh, and don’t get a puppy.
4. Free credit reports that aren’t free
There’s a heavily advertised website with a jingle so pervasive that it’s likely the first place we all think of when hearing the phrase “free credit report”, but that site doesn’t give you a “free” credit report unless you sign up to use a service that isn’t free. That shouldn’t even be legal. But legal or not, it’s definitely dumb.
Better idea? Get a free credit report by going to the site where you can actually get one: annualcreditreport.com. You’re entitled to one free credit report from each of the big three credit reporting agencies (Experian, TransUnion and Equifax) once every 12 months. Which means that you can get one free report from one agency every four months, thus looking in on your history several times throughout the year.
5. Paying money to repay money
Mortgage service companies have for years offered special “plans” that promise to retire your mortgage years early by essentially having you pay half your mortgage every two weeks rather paying the full amount once a month. Since the year has 52 weeks, doing this will cause you to make 13 payments rather than 12, which in turn will reduce your mortgage principal and result in retiring your mortgage early. Paying extra principal on your mortgage? Great idea. Paying some company that’s already making a ton off of you to use a “system” that you can use anytime you’d like for free? Dumb.
There’s certainly no shortage of dumb products and services out there. Those are five of our ideas. Tell us yours!
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