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Americans may be slipping back into money-wasting habits
I admit, I’ve been getting lazy when it comes to penny-pinching. Turns out, I’m not alone. Americans might be slipping back into old, expensive habits, according to a recent poll.
Since 2009, Harris Interactive has been asking Americans what they’ve done to save money in the past six months. This week, it released the results of its latest survey. For almost the first time since 2009, the number of Americans making small changes to save money has dropped. That could mean that saving money has become the norm (so fewer are reporting it as new behavior). Or, it could mean that Americans are upping their spending.
Surveyors asked more than 2,200 Americans about a variety of money-saving strategies, and I saw my own behaviors (and misbehaviors) in many of the results. For example, in June 2009, 48 percent of Americans said they were brown -bagging their lunches. Today, that percentage has fallen to 42 percent.
I am definitely one of those who fell off the brown-bag wagon. Just a year ago, it was my policy to eat lunch out once per week. I planned out my meals on weekends, cooked them on Sundays and brought leftovers to work. I was averaging about $2 to $3 per meal. Yet a busy schedule and weekends out of town have tripped me up, and I’m back at Panera and Wendy’s.
Buying coffee instead of brewing it? Falling for my hair stylist’s insistence that I must see her every eight weeks? Guilty. And so are many others, according to the poll. I am, however, proud to say that I am one of the 21 percent of Americans who has cut cable TV, and I don’t miss it (much).
With practicing good money habits in mind, here are some of the best personal finance blog posts of the week:
$5 Dinners shares a recipe that can be stretched out for multiple meals.
MasterCard Announces Rollout of “Chip and PIN” Cards
U.S. credit card holders just got one step closer to using cards with chips instead of magnetic stripes. MasterCard has announced a plan to transition to the "chip and PIN" technology that is already the norm in Europe.
By the end of April 2013, MasterCard plans to have replaced its existing magnetic stripe infrastructure with one ready for chip-based technology. That means every credit card will have a small silicon chip embedded in it, much like a cell phone’s SIM card.
Instead of swiping, customers can just wave the cards at the reader to make purchases.
Visa made a similar announcement in August and said, by April 1, 2013, it would require firms that handle credit card transactions for retailers to accept merchant chip transactions.
“We’re moving toward a world beyond plastic, where consumers will shop and pay in a way that best fits their needs and lifestyles with a simple tap, click or touch in-store, online or on a mobile device,” said Chris McWilton, president of U.S. markets for MasterCard, in a statement.
Europeans and consumers in other countries have been using the 12-year-old Europay, MasterCard and Visa (EMV) technology for years, but it has been slow to come to the U.S. Retailers haven’t wanted to spend the considerable cash on new payment systems until card companies adopt the new technology, and card companies haven’t wanted to use the chip cards until merchants agreed to accept them.
MasterCard’s plans include incentives for merchants, integrated customer loyalty programs and support for dynamic authentication technologies. The dynamic authorization is a huge step in eliminating fraud because each transaction is unique and uses encrypted information, whereas a signature can easily be faked repeatedly. The chips are also more difficult to clone than magnetic stripes.
Randy Vanderhoof, executive director of the Smart Card Alliance, said MasterCard’s announcement solidifies the path for next-generation payments that will be based on a global EMV standard – one that includes emerging technologies like mobile phones and more secure eCommerce payments.
“It is time for the four sides of the payments ecosystem — issuers, processors, merchants and consumers to collaborate on the opportunities for innovation that MasterCard’s announcement enables,” he says.
Can You Buy Happiness? Depends on What You’re Buying
"Retail therapy" can offer an instant mood boost. A new outfit, new furniture, a new TV — with the swipe of a credit card, you’ve just bought yourself a quick injection of optimism at the end of a rough week.
But will it bring you long-lasting happiness? A study published this week in the Journal of Positive Psychology tackled that very question. It found that, while hitting the mall won’t make you happier in the long run, you can, in fact, buy happiness — you just have to buy the right things.
Researchers at San Francisco State University found that those who spent money on experiences, rather than on material possessions, were able to reap lasting happiness from their purchases. So, instead of filling your closets and shelves, you’re better off getting concert tickets, taking dance lessons or splurging for a weekend getaway.
The researchers also looked at who was more likely to buy experiences. They found that study participants who were more extroverted and those who described themselves as "open to new experiences" were more likely to spend their money on adventures than on shopping sprees. This was no surprise, according to the researchers, because, when you buy an experience instead of a new pair of shoes, you have to be willing to do without the safety net of a refund.
With that in mind, here are some of the best personal finance posts from the last week that tackle the topic of saving for what really matters:
Man vs. Debt explains how keeping your family and friends close can help you fight debt.
Budgets are $exy shares the financial challenges of her latest adventure, living on the road.
Frugal Living NW proves you don’t have to go broke to eat delicious food.
Financial Samurai examines why it’s tough to justify quitting a well-paying job and living a life of leisure, even if you can afford to.
SavingAdvice recommends buying a few quality items rather than a lot of cheap ones when shopping for clothing.
New Free ATMs Turn Users Into a Captive Audience
A company in Brooklyn, N.Y., has developed a new model for ATMs that offers an alternative to highly unpopular ATM fees.
The concept for Free ATMs NYC is that there’s no fee for transactions. But there is a catch — you have to watch a series of ads to complete your transaction. At the end, you get a coupon on your receipt with more advertising. The third-party advertisers are charged a flat monthly fee and are essentially covering what it would have cost you to use the ATM.
The stakes are high in finding an alternative, as Americans spend about $7 billion in ATM fees each year. According to the Bankrate 2011 Checking Survey, the average cost for using an out-of-network ATM is $3.81, which includes charges from your bank and the outside institution.
Free ATMs NYC was founded by 25-year-old Clinton Townsend. In December, he began testing a no-fee machine at the Brooklyn Knitting Factory, a concert venue and bar, and he told CNNMoney that he hopes to have thousands of them operating throughout the U.S. by the end of 2012.
Townsend plans to place no-fee ATM machines in cafes, supermarkets, hotels, bars and malls and other spots where banks aren’t located. Every no-fee ATM will feature a slideshow of ads on a regular display screen while some will have an additional screen above the ATM for a 24-hour stream of video ads. The ads play while the transaction is being completed, so it won’t increase the time you’re standing in front of the ATM.
So far, Townsend is alone in this kind of venture. Its success will depend on whether customers are willing to make the tradeoff — being spared a fee in exchange for watching more advertising. And there is one problem with price control. The company can’t stop your bank from charging you for using an out-of-network ATM.
But the ATMs can offer assurances to advertisers that their product is being seen. While it’s hard to say who’s really viewing ads on billboards, in newspapers or on coffee sleeves, the Free ATMs NYC model can calculate exactly how many people are exposed to the ads by the number of transactions.
If it does catch on, it could be further bad news for big banks who may be looking to ATM fees to help make up for what they’re losing under financial reform. After big banks withdrew their attempts to charge debit card fees in 2011, they will surely look for other sources of revenue to stem the bleeding.
This Week in Personal Finance Blogging: Keep a Calculator Handy When You Shop
It happens every time. I live a few blocks down from a high-end grocer and every once in a while, I’ll spend a lazy weekend afternoon wandering the aisles ogling “deals” for swanky items like “single source organic cacao chocolate bars,” “olive oil tortas” and “black cherry all natural soda.”
Usually, I can stop myself from splurging. At this point in my life, it’s hard to justify paying $13.99 for a jar of pasta sauce. However, this particular grocer is also notorious for weekly specials – and I always fall for them.
The deals usually go something like this: Buy four Greek yogurts for $5. Or buy seven gourmet frozen dinners for $3.99 each. Often, the deals will also be paired with a sampler, making it even harder to pass up once you’ve tasted how delicious something like locally produced hatch chile jam really is (I once bought three jars of the stuff on special, then had to give two of the jars away).
At the time, I’ll convince myself that I’m getting a deal, especially since I’m only buying luxury goods that are “on sale.” But when I look at my receipt later on, it’s always clear I overspent – by a lot.
Apparently, this happens to a lot of shoppers. According to a new study due to be published in the Journal of Consumer Research this summer, shoppers are more likely to jump on a deal if the number of items is presented before the price. This is especially true, say researchers, if a large number of items are presented in a package, making it difficult to mentally calculate how much you’re actually going to have to pay.
Study authors Rajesh Bagchi and Derick F. Davis of Virginia Tech say that we fall for these deals, in part, because of a psychological phenomenon called “anchoring.” When we’re presented with two values for a deal (such as 20 boxes for $12), we tend to focus more heavily on the first value and think less about the price. If grocers presented the price first, in contrast, we’d be more likely to focus on how much we’d have to pay for the items rather than how much we’d like to take those items home.
“Consumers may encounter a large package where item quantity is presented first and believe they are receiving a great deal,” say the authors in a press release. “However, our research suggests that they should take a step back and make the relevant unit price comparisons to properly assess the package.”
With cautious spending in mind, here are some of the best personal finance posts from the last week:
4. The Simple Dollar shares how to overcome your addiction to your favorite brands.
6. Mighty Bargain Hunter suggests that some extreme savers are going too far.
7. Frugal Dad regrets not planning ahead on a recent visit to the grocery store.
This Week in Personal Finance Blogging: Debt is Easier to Shed Than Keep Off for Good
Last fall, I finally paid off my credit card bill in full and kept the debt off for a record two months. It was exhilarating.
After months of financial dieting and careful tracking, I had finally achieved my zero debt goal. Then the holidays hit and my newfound financial discipline went AWOL.
Initially, I started out on the right track. I carefully set up a gift budget for my large and rapidly growing family, made a plan for hand-making at least some of my Christmas gifts and managed to save nearly all of my receipts.
But as the holidays inched closer, my stress levels skyrocketed and so did my spending. I started cutting corners and buying more meals out, stopped tracking my food spending and overspent on last-minute Christmas and birthday gifts.
By New Year’s Eve, I had somehow regained all the debt I shed last fall and I’m certain I’ll gain even more by February. My car needs a brake job, my 5-year-old computer is acting up and I’m still waiting on a bill from the emergency clinic I visited Christmas morning when I stepped on a piece of glass.
Like weight, debt is so much easier to shed than to keep off for good. It feels like I’ve been battling the last five pounds of this credit card debt for years, and I’m starting to wonder if I’ll ever be able to keep my balance at zero for more than a few months.
Unfortunately, I’m not the only one battling holiday debt regret. The Federal Reserve reported on Monday that credit card balances shot up more than 8 percent in November — the biggest jump since 2008. And overall debt, including student loan debt and auto loans, rose by nearly 10 percent – the largest increase since November 2001.
After years of careful post-recession spending, it looks like many U.S. consumers are finding you can’t put off the big purchases, like cars and computers, forever.
With post-holiday debt in mind, here our my picks for the best personal finance posts from the last week:
2. Get Rich Slowly offers tips on how to learn from and make the most of regret.
5. WorkSaveLive shares lessons learned from surviving a $70,000 a year pay cut.
Verizon Drops Fees Amid Consumer Protest
Customer outrage has shot down another proposed payment fee, this time just a day after it was proposed.
Verizon Wireless, the biggest U.S. wireless operator, announced December 29 that, as of Jan. 15, it would charge consumers $2 to make payments online or by phone.
That set off a firestorm of protest, including a petition at Change.org which logged 100,000 signatures within hours. That petition, which had more than 164,000 supporters as of January 4, was started by Molly Katchpole, the same woman behind the wildly popular petition to fight the $5 monthly fee that Bank of America proposed for debit card users in late September. Katchpole’s Bank of America petition, which attracted more than 300,000 supporters, was cited by industry insiders as one of the reasons the bank was forced to back down.
Before Verizon backed down from its proposal, the “convenience fee” had captured the attention of the Federal Communications Commission, which regulates telecommunications in the U.S. The FCC said Friday that it was “concerned” about the plan and that it would investigate.
In a press release, Verizon said it made the decision to cancel the fee in response to customer feedback. Verizon originally justified the new charge by saying it was necessary to cover the cost of processing payments. The company wanted to steer people to electronic check payments, which are cheaper, and automatic credit card payments, which are more likely to be paid on time.
“At Verizon, we take great care to listen to our customers. Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time,” Dan Mead, president and CEO of Verizon Wireless, said in a statement.
Twitter comments after that announcement included, “Can you hear us now? Good.” and “We 99 percenters are speaking up against corp greed.” Some tweets likened the proposal to the July move by Netflix to raise prices by 60 percent for customers who wanted to keep getting both online and mail-order movie rentals.
Verizon’s pullback came amid a spate of bad PR for the company, which on Dec. 28, experienced its third outage in a month of its new 4G wireless network. Verizon Wireless is a venture of Verizon Communications Inc. and Vodafone Group PLC.
7 Tips for Taking Advantage of Rebates
The promise can be enticing. Pay full price for an item now, then fill out a rebate form and get a good chunk of that back.
But apathy or confusion or mistakes can get in the way and often consumers never benefit from those rebates. Consumer Reports estimates that 40 percent of rebates are never redeemed – which translates to about $500 million a year in lost opportunity for customers.
That, of course, is great news for sellers, who get credit for having offered you a deal, but then don’t have to make good on it if you don’t redeem it.
More rebates these days are given in the form of prepaid cards. But even though they look like prepaid credit cards or gift cards and usually carry a MasterCard or Visa logo, don’t make the mistake of thinking they are covered by the same federal or state protections. They aren’t, and you may find yourself with an expired card if you don’t use it quickly.
Here are some tips for taking advantage of rebates:
1. Keep the packaging.
Rebates often require UPC bar codes or other information found on the packaging to be included with the paperwork. Some boxes have more than one bar code. If you’re not sure, call the customer service number on the form and ask. Usually, the UPC code has to be cut from the box. This keeps you from collecting the rebate and then returning the product. In some cases, when there is more than one rebate available, copying the UPC is OK.
2. Watch the time.
Some retailers have a certain window that the rebate is good. Also, filing right away means less chance that you will lose the pieces of paperwork or the desire to claim the funds.
3. Follow the directions to the letter.
If the offer says to circle the price, don’t underline it. If it specifies the rebate is for cans of something, don’t try it with bottles. And don’t use a pencil if it says to write it in pen. Don’t give them any wiggle room to decline your rebate. Retailers may not have a big incentive to walk you through the particulars since the rebate often comes from the manufacturer.
4. Keep a copy of whatever you send.
It’s your only chance of proving you really sent it in if the company says they never got it.
5. Buy only things you can afford without the rebate.
Some rebates can be held up for months.
6. Stay organized.
If you’re a serial rebater, develop a system for keeping track of them. This could be as simple as a folder or as serious as a spreadsheet.
7. Contact the company if it misses the promised date.
Rebates can typically take six to eight weeks. And if it’s late or never comes, you can report the merchant to the Better Business Bureau at www.bbb.org. You can also register a complaint at the Federal Trade Commission’s website or call the FTC consumer response center at (877) FTC-HELP.
Chase, Two Credit Unions Opt for Simpler Disclosures
Chase bank and two large credit unions have taken the lead in voluntarily adopting a more concise, easy-to-understand checking account disclosure form proposed by a division of Pew Charitable Trusts.
The Pew Safe Checking in the Electronic Age Project found that the typical checking account disclosure form was more than 100 pages long and full of dense, jargon-filled language that made it very difficult for consumers to understand their own contract, let alone compare it to others.
Pew released a one-page model in April that highlights the key terms of a checking account, including ATM withdrawal fees and overdraft policies.
“Often times, hidden fees drive people out of the banking system,” Frank Pollack, President and CEO of Pentagon Federal Credit Union said in a press release. "Our more than 1 million members, many of whom are serving in the armed forces, now have the benefit of our disclosure document that fully lists our fees when they open their accounts.”
Chase’s form is three pages instead of one, but a huge improvement over the industry norm. Its first section states the monthly fee followed by how you can avoid the monthly fee.
It eliminates terms unfamiliar to most consumers, such as “posting order.” That refers to the order in which checks are deducted from your account which can affect whether you overdraw the account.
Some banks process debit transactions and checks in order of the highest amount to the lowest amount, which can raise your chances of overdrawing. Some process the checks from lowest to highest or in the order in which they occur.
In Chase’s new form that process is explained under “how deposits and withdrawals work” and it’s broken down into what happens first, second and third during each business day.
Pew is urging the new Consumer Financial Protection Bureau, the new go-to agency for consumer credit complaints, to require that all banks adopt a simplified, standardized form, a proposal gaining support among some legislators.
This month, the CFPB unveiled a simplified credit card agreement that it plans to test at the Pentagon Federal Credit Union. The agency is also working to improve mortgage disclosure forms as mandated by the Dodd-Frank financial reform act. But it is not yet targeting checking accounts.
Consumers Say They’d Buy More Online If Checkout Was Safer
There’s big money to be made by online merchants if they could just make payments easier and more secure.
That’s one of the messages from a new survey by Javelin Strategy & Research commissioned by direct carrier biller PaymentOne.
The survey found that four out of five consumers would spend more online if offered a more secure way to pay – a no-credit-card-required option that means you don’t have to disclose personal information. Shoppers said they would spend an average $89 more with such an option, which represents $109.8 billion in untapped online revenue, the survey found.
Some shoppers get all the way to checkout and then get uneasy about security. More than half of consumers surveyed said they bailed at checkout because of concerns about privacy, further evidence that online merchants are missing out on potential revenue.
It’s credit cards and debit cards that inspire the bulk of the security fears. By nearly four to one, people who responded to the survey said they thought m-payments are more secure than using their cards when shopping online.
Ninety-five percent of the 2,000 who responded have mobile phones, yet just 36 percent have used them to make a payment. The Online Payment Poll finds strong interest for using a mobile phone for payments on a wide range of items. Among consumers who have used their mobile devices for payments, nearly one in four have purchased digital entertainment; one in three bought entertainment tickets; and about one in four paid for travel and clothing.
“Consumers’ concerns around the security and privacy of online payment transactions are staring digital merchants in the face and demanding attention,” Brad Singer, executive vice president of PaymentOne said in a statement.
Here what consumers said worries them most about using a credit card to shop online:
- Concern that a merchant or website will start sending junk mail (55 percent).
- Fear that personal information will be sold to other merchants (54 percent).
- Concern that information will be intercepted (51 percent).
- Concern that unauthorized parties will access personal information stored by merchant (51 percent).
Singer said the message for sellers is clear: “The implementation of new consumer-friendly alternative payment options may well be the single most important step merchants and publishers can take to grow their customer bases and their revenues.”
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