Insufficient funds: Decline the transaction or pay an overdraft fee?
March 10, 2010
By now, most people are probably aware of the new credit card rules that took effect last month.
One of the new rules involves overdraft fees. Many banks allow credit and debit card transactions to go through, even if the card user is over their credit limit or has insufficient funds in their checking account. The transaction would process, and the card user would get hit with an over-limit fee. These fees are typically around $36.
Some people would go over the limit with a small transaction, like a latte. Add the over-limit fee to the cost of the drink, and you’ve got yourself once expensive latte!
The banks contended that this was a service to their customers and that customers would rather pay an overdraft fee than face the embarrassment of having their transaction declined at the register.
The new regulations require that banks have their customers “opt-in” if they want to continue to make purchases with insufficient funds and pay the overdraft fee. First, I would recommend that everyone keep careful records and know exactly how much they have left in their bank account or on their credit limit, so that overdrafts or declined purchases are never an issue to begin with. I would also recommend people suffer a little embarrassment rather than create even more debt with overdraft fees.
Bank of America has announced that they are going to stop courtesy overdrafts altogether. There will be no opting in. According to an article about this in the New York Times, “In the case of overdraft, 93 percent of the fees are generated by just 14 percent of the customers who exceed their balances five times or more a year, according to a 2008 study by the Federal Deposit Insurance Corporation.”
The article also said, “Last year alone, banks generated about $20 billion from overdraft fees on debit purchases and A.T.M. transactions, and $12 billion more by covering checks and recurring bills, according to Moebs Services, an economic research firm.”
That means a relatively small amount of people are paying a lot of money as a result of keeping poor financial records and making poor financial choices.
What do you think of Bank of America’s new policy? Would you rather pay an overdraft fee or have your purchase declined?
Great hair on a budget
March 1, 2010
When it comes to the cost of beauty and personal care, things can get pretty pricy. That’s often especially the case for women and their hair.
Hair care is probably the thing I spend the most on. Between hair cuts, colorings, shampoo and conditioner and other hair products, the cost can add up quickly. But there are ways to be in style and look great without breaking your budget.
Choose a hairstyle that is low maintenance. The shorter your hair, the more frequently you need to get a hair cut in order to maintain the style. If you can wear your hair long, you can get away with a trim every 8 to 10 weeks. If your hair is very short, like a pixie cut, you will probably need a trim every four weeks to keep up the look. Bob hair cuts are really in style right now. If you go with a longer bob, you can go about 8 weeks without a cut.
Don’t forgo haircuts altogether, or for more than 10 weeks. Getting regular trims keeps your hair looking its best. If you wait too long between trims, your hair will start to look shabby. If you’re an adventurous person, check out local cosmetology schools in your area. Students need to practice, and you can often get a hair cut for a very low price on days when the school salon is seeking customers.
Obviously, not coloring your hair saves the most money. If you must color your hair (I know that some of us want to hide those grays. Yikes!), pick a color that is close to your natural shade and preferably a shade darker rather than lighter. If you go lighter than your natural hair color, your roots will show quickly. If you choose a hair color that’s just a shade darker, your roots won’t be nearly so noticeable. And, if you do color your hair, skip the highlights. Highlights quickly add a significant amount to the cost of a color.
Skip the salon brands of hair products. There are a lot of really good, really affordable shampoos, conditioners and other hair products on your grocery store shelves. Try out different products to see which you like the best. I mix and match products from different lines, depending on which I like the best. If you have a favorite, yet expensive, salon brand, only buy it once a year as a splurge.
By choosing a cut and color that are low maintenance and watching how you spend money on hair products, you can look stylish without busting your budget.
New credit card rules take effect today
February 22, 2010
You’ve probably heard about the new credit card rules that are officially in place as of today under the CARD Act of 2009. These new laws are meant to offer protections to consumers like you who use credit cards.
Here are some of the highlights on the new law:
- Creditors can no longer randomly raise your interest rate. The law says the new act puts a stop to “unfair” rate increases, though I haven’t found a definition of what’s fair or unfair.
- Creditors must give 45 days notice before raising your interest rate.
- If your interest rate is increased, you can opt out of the increase. If you choose to “opt out,” your account will be closed and you will pay off your existing balance under your current interest rate.
- If you do accept the rate increase, your creditor cannot make the increase retroactive to your old balance. The new rate will only be applied to new charges going forward, not what you’ve already charged.
- The language on your credit card has to be plain and visible.
- Your creditor must show you on your monthly statement how long it will take you to pay off your balance if you pay only the minimum payment each month.
I think that last point is really going to grab the attention of a lot of people. Some people think as long as they are paying the minimum payment that they’re doing fine. In reality, paying the minimum is not a good idea, especially if you have a high balance and a high interest rate. In some cases, paying the minimum on your credit cards means you’re barely covering the interest payment and doing little to nothing to chip away at your principle balance.
It’s important to stress that, while these new rules offer protections for the consumer, it’s still up to the consumer to take responsibility. Consumers have to open and read their mail and their credit card contracts. Consumers also have to be cautious about using credit cards and only charging what they can afford to pay off each month.
There are many more consumer protections in the new law. You can learn more about the new act at CreditCards.com. The White House also put out a Fact Sheet about the new act. And you can find tons of information by Googling “CARD Act.”
Dress your children well without breaking your budget; Baby clothes on the cheap
February 17, 2010
Children grow out of clothes quickly. It can get very costly to keep your child in clothing, but there are ways to save.
If you have a pretty good idea of what size your child will be during future seasons, buy their clothing off-season. This time of the year, stores are putting their fall and winter clothing on deep discounts to clear the racks and make room for the new spring and summer clothing. You can find name brand clothing at very low prices. I recently bought my baby pajamas and pants for next fall for $3 each at a department store. And, if you can combine the sales with coupons, you can really save a bundle. I’m buying everything on clearance now to get a jump start on next year.
Likewise, last summer I bought clothing for this coming summer. Around July and August, the stores start to really discount their summer merchandise. By September prices were drastically lowered.
Do you have friends, family or co-workers to give you hand-me-downs? Children grow out of clothing so quickly that often times clothes are still like new. If you don’t know anyone with older children to pass clothing along, start shopping at yard sales. The same principle applies as with the hand-me-downs, clothing that is like new for yard sale prices. Keep an eye on your local classified ads. Often times people will specifically say if they are selling baby clothing and gear.
Check out your local consignment shops. There are some stores that carry only baby and children’s clothing, furniture and gear. Some of these stores even deal in high-end apparel at thrift store prices.
With a little thought and planning ahead, you can keep your kids dressed to the nines, even on a tight budget.
Do you pay attention to grocery store prices?
February 15, 2010
How much do you really pay attention to grocery store prices?
I will admit that I am not a particularly frugal shopper when it comes to groceries. (I love to bargain hunt for clothes and household items, but not food!) In our house, we know what we like and what we need. We buy what we like and need. I do try to get coupons for the things we buy frequently. And if our grocery store has things on sale — like roasts that are Buy One, Get One Free — I’ll buy extra and freeze it. But, on the whole, I don’t pay much attention to prices.
I realized this today when I checked out The Dollar Stretcher web site and saw a link to an article titled “Homemade Laundry Soap: Are you revolted by the cost of laundry soap?”
That’s when I realized that I can’t be revolted because I have no idea what laundry soap costs. I don’t view this as a good thing. Even if I’m willing to pay whatever price they’re asking, shouldn’t I at least know what that price is? At the very least if I know the regular price of an item and it’s advertised as a special, I could determine if it’s a good sale price and stock up on extras. I do shop at different stores. If one store carries an item that is considerably less expensive, I should always buy that product at the store with the better price.
This reminds me that there is one item that I do know the price of, and I do look for sales: baby formula. Formula is the single most expensive thing I purchase, or have ever purchased, at the grocery store. I know which store has the best price, and I collect as many coupons as possible. A good price on baby formula is a must.
Do you pay close attention to prices? Do you use coupons? Do you have tips to help me, and our other readers, become more frugal shoppers?
- SEARCH:
