Daily Dose of Common Sense

This is an example of smartness:

Bank of America will no longer let you spend what you don’t have. Revolutionary, I know. The bank is not allowing customers using accounts linked to debit cards to spend more than in their checking accounts.

Customers making a purchase without sufficient funds will be rejected at the cash register, the Charlotte, North Carolina-based bank said today. Those seeking to withdraw more than their balance from automated teller machines must agree to a $35 fee before they can get the money, spokesman Don Vecchiarello said.

$35 is pricey, but at least you can’t spend yourself (and us) into debt. Living within your means can be hard (who are we kidding–it sucks!) but, it’s a good way to avoid financial disaster down the road.

Photo

Thanks to George P. for the link!

Want to know how banks are making up the money they lost in the economic crash? Off you, that’s how.

Despite the current recession, banks are charging record fees to checking account customers. The costs are sneaky: higher non-bank ATM fees, higher bounced check fees, and higher monthly service charges.

ATM fees have risen for three-consecutive years. In 2009, consumers paid an average fee of $3.54 to use another bank’s ATM, up 16% from 2004. This includes the fee charged at the ATM, as well as the fee charged by the customer’s bank.

This year, consumers are paying a record charge of $12.55 per month for an interest-bearing checking account, up 3.5% from 2004, Bankrate’s data show. The average bounced-check fee was $29.58 this year, near the inflation-adjusted high of $29.73 reached in 2005.

Also, banks are increasing their credit card interest rates and penalties for late payment. They are finding any way they can to make up for the housing mortgage debacle of ‘08. And, don’t look for it to get any better any time soon.

BankRate.com has a good list of ways to avoid checking account fees. Some tips are common sense, like don’t bounce checks and only use your bank’s ATMs, but others may be new information on how to avoid paying more.

Most banks offer three or four checking account options. Visit the Web sites of several banks and see the differences between accounts. Do you really need free checks if you’re going to have to pay a fee for the account? If you pay most bills online, perhaps you only need a couple of paper checks per month and it would be cheaper to buy them yourself. Carefully review what each account offers and see if it’s worth the price of admission, or if you’d be better served by a free account.

So, read your statements and shop around. Don’t let your bank stick it to you.

Photo courtesy of Flickr: The Consumerist

Forbes had a great article this past week about how being lazy can actually cost you money. Their experts looked at the hidden costs of sloth. Some of these include:

• Not shopping around for the best rate on a savings account.
• Not sending in rebates. (Guilty here!)
• Not bothering to negotiate a better deal.

These days countless businesses make hay by taking advantage of our collective indolence–everything from not bothering to spend 15 minutes surfing the Web for a better rate on a savings account to not taking half as much time to mail a $50 rebate on a new laptop computer.

So, don’t let them get you, too!

The band Oasis played a recent gig in Manchester, England that didn’t go so smoothly. The group had to leave the stage twice for technical difficulties and the show was disrupted for more than 30 minutes. Fans were clearly disappointed, and the band’s guitarist, Noel Gallagher, offered refunds to anyone who wanted one.

At the end of gig, Noel said: “Thank you very very much, this is a free gig – let’s have it.

“Anybody who has kept their ticket will get a full refund.”

Nice, huh? 20,000 of the 70,000 at the show followed up to get their approximately $74 back.

Only, it doesn’t appear he meant what he said. Later, Noel called the refund-seekers “cheeky” (which is Brit-speak for “ballsy”) on his blog. He expressed surprise that so many concert attendees wanted their money refunded.

Really? You give a less-than-perfect show, offer refunds, and are shocked when people take you up on it? It seems pretty straight forward.

When you buy a concert ticket, you don’t expect to get your money back for any reason other than a cancellation. Oasis didn’t need to give refunds because the show did continue. (The organizers likely had heart failure upon hearing Noel’s promise.) But, the refund offer was made. Hardly seems fair to criticize people for taking advantage of it.

It’s a good example that even rock stars should think before they speak.

If you don’t think our health care industry needs a major overhaul, consider the facts from a new study just released: more than 60% of bankruptcies filed are the result of families unable to cope with overwhelming medical bills. And, this percentage is expected to rise since the study was completed before the recession.

Interestingly, the majority weren’t folks without health insurance. 78% of the people had insurance, but were crippled by co-payments, holes in their coverage, and deductibles.

“Unless you’re a Warren Buffett or Bill Gates, you’re one illness away from financial ruin in this country,” says lead author Steffie Woolhandler, M.D., of the Harvard Medical School, in Cambridge, Mass. “If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy…”

And, when people are forced to declare bankruptcy, you know who ends up paying in the long run. So, it makes more sense to find a way to make medical care more affordable for people before they sink into financial ruin.

You may think you have a chance at winning the lottery. And, you do. A really, really, really, really, really, really small chance. Just how small, you ask? According to ConsumerEducation, the odds of hitting the MegaMillions jackpot are 175,711,536 to 1. The chances of winning a state lottery are around 18 million to 1.

If you still think these odds are worth riding out, consider what has a better chance of happening to you:

• Being killed by lightning (2,650,000 to 1 odds)
• Dying from flesh-eating bacteria (1 million to 1 odds)
• Receiving a fatal bee sting or snake bite (100,000 to 1 odds)
• Being killed in a car accident (18,585 to 1 odds)

The odds aren’t the only thing stacked against you with regards to the lottery. It was discovered recently that some clerks were stealing winning tickets from customers. They would scan the ticket, see a big payout, then tell the customer the numbers were losers. Sometimes a clever ticket switch-a-roo was pulled.

If you play the lottery for fun, with money you can afford to lose, and don’t expect to win, then please continue. However, if your lottery money would go to better use elsewhere in your family budget, please remember the odds and put your wallet away.

…to get ourselves a treat. So went the movie theater jingle from a bygone era. Nowadays, you have to think twice before ordering from your cineplex’s concession stand. The prices of the snacks, not to mention the ticket itself, have steadily climbed in recent years. When I went to the theater in New York City today, I paid $4.50 for a small drink. That was on top of $12.50 for the movie ticket. Yeee-ouch! I could have kicked myself for not sneaking in a soda. Stupid thirst.

We know the theater chains make their money at the snack bar. However, in this economy the theaters had better wise up. As disposable income dries up, so will snack budgets. People will bring in their own treats and forgo the concession stand altogether. Charging $6.25 for ten small pretzel bites? That just seems crazy. Perhaps not selling as many Goobers will make the cineplexes lower their prices.

If you are a steadfast supporter of the snack bar, sign up for the theater chain’s frequent movie watcher club. Most of the big chains have some version of a customer loyalty club. Then, you might receive discounts and offers on tickets and snacks. And that means more popcorn for less money.

In this economy, almost everyone is looking for a good tip on how to cut corners. I saw an interesting blog post last week by Recession Mama over at MomLogic. It appears you can fund a reasonable vacation for a family of four by skipping soda in restaurants for one whole year.

It sounds crazy at first, but it makes sense after you see her math. If your family sticks with only water every time you eat out, you can save around $1,500 a year. If you don’t put the money toward a vacation, this change may make eating out more affordable for your family.

On a recent flight, my daughter fell asleep in her seat at an uncomfortable angle. I quietly asked the flight attendant for a pillow. She replied, “Sure. We have them available for $7.” What?! For a pillow? Um, no thanks. I’ll use my jacket instead.

As we know, the cash-strapped airlines are nickel-and-diming passengers to death. How to avoid paying those extra fees? Start by packing lightly to avoid a checked bag fee. Also, bring your own food on board. A few airlines charge an additional amount for the exit-row seats, which usually have a bit of extra leg room. So, sit in a regular row instead.

According to this article, some airlines now charge for advance assignment of window and aisle seats. Some day, we’ll all be stuck in middle seats.

Way to go, airlines. You’re making that proposed high-speed rail system look better and better all the time.

As summer draws near, thousands of committees are wrapping up plans for their high school class reunions. Parties, BBQs, bonfires, brunches, and parades will take place to gather classmates that we have forgotten. Or, have we? Facebook has made it easy to reconnect with old school chums. So easy, in fact, there’s almost no need to make a pilgrimage to your reunion in order to find those folks you lost touch with.

Facebook claims it has more than 200 million active users, more than two-thirds of which are outside college. Not only that, the fastest growing demographic is the 35 and over crowd. Chances are, if you’re on Facebook, you’ve already been “friended” by old pals you lost touch with, an ex-girlfriend or boyfriend, people you never talked to in school, and people you hardly remember. And now, thanks to the ever-changing status updates, you know every detail (important and mundane) about what’s going on in their lives.

Some say that a virtual connection isn’t as meaningful as chatting in person. However, airfare is expensive and an internet connection is cheap. (And really, you do most of your Facebooking at work anyway.)

If you still want the intimacy only face-to-face can provide, use your reunion budget to spend time with the friends you’re closest to. Most graduating classes have two to four hundred people. How many of those graduates do you really want to hang out with? Instead, get together with friends and rent a beach house or go to Vegas. You’ll probably have more fun than you would if you were listening to the same old yarns around the reunion punch bowl.