Financial Beat

By Yvonne Chilik Wollenberg

Credit Cards: Don't fall for dirty tricks

Next time you're tempted by one of the low-interest-rate credit card offers that flood your mailbox, read the fine print. Most credit card marketing is deceptive, and the deals are booby-trapped with hidden fees and escalating interest, according to a study by the US Public Interest Research Group. The typical household gets eight credit card offers a month.

Low introductory rates, which average 4 percent, are usually "teasers" that last about seven months. The rate for most cards then jumps dramatically to about 15 percent—and can zoom to 23 percent if a penalty rate kicks in. In addition, credit card companies often charge fees ranging from $15 to $35 if your payment is late or your balance exceeds your limit. Some companies even set their deadline for payment for 8 am on the due date; since mail isn't delivered that early, late penalties kick in a day early.

Stocks: Online traders persist

Market volatility has chilled the enthusiasm of some online investors, but most plan to keep trading stocks on the Web. While investors who use online brokers have declined by about 20 percent, the rest say they aren't giving up, according to a survey by J.D. Power and Associates. In fact, 30 percent of those still trading online say they plan to do even more of it.

Web-based investors say they value customer service over low fees and commissions. Among 14 online brokers rated for customer satisfaction, Fidelity Brokerage Services ranked highest. Following closely were Charles Schwab & Co. (www.schwab.com ), Datek Online Brokerage Services (www.datek.com ), Morgan Stanley Dean Witter (www.morganstanley.com), and Scottrade (www.scottrade.com). The survey gave low marks to AmericanExpress Brokerage (www.americanexpress.com), E*trade (www.etrade.com ), and TD Waterhouse (www.tdwaterhouse.com).

Retirement: Most folks just want to keep working

When you hang up the stethoscope, do you plan to kick back? According to a survey by Rutgers, the State University of New Jersey, and the University of Connecticut, only 10 percent of people plan to stop working at retirement. Most say they want to work part time, either for enjoyment or to supplement their income. Nearly 20 percent hope to start a new business. Another 11 percent plan on doing volunteer work.

Most folks are so eager to get their postretirement plans under way that they don't want to wait. Three-fourths of those surveyed want to retire before 60. Forty percent of Generation X workers (ages 18 through 34) want to retire before 50. But most also worry about saving enough to follow through on their dreams. Fewer than a third are very confident that they'll be able to retire when they wish.

Retirement plans:

Source: John J. Heldrich Center for Workforce Development at Rutgers, the State University of New Jersey, and Center for Survey Research and Analysis at the University of Connecticut

Child Safety: Is your little passenger well protected?

Most states do little to make sure that children are adequately protected in the family car, and got either a D or an F in a nationwide survey of child-occupant protection laws. In many states, kids can legally ride without wearing any kind of seat belt if the car is too crowded. Some places allow youngsters to ride in the back without a belt all the time. Only California received an A from the National Safe Kids Campaign for passing a strong law requiring that youngsters age 5 and under be restrained by either a car seat or booster seat.

The National Safe Kids Campaign wants states to require that all children through age 15 be protected in motor vehicles with either a seat belt or child safety seat. The group believes that children through age 8 should ride in either a car seat or booster seat. Nationwide, only 5 percent of 4- to 8-year-olds ride in booster seats, and about 30 percent of children 4 and under ride without any kind of protection.

Nearly 1,800 children aged 14 and under die in motor vehicle accidents each year, and more than 274,000 are injured. Riding unrestrained was the greatest risk factor for these injuries and deaths.

Real Estate: Looking for a good fishing hole?

Boise, ID, is one of the new hot spots for vacation homes; so is Nags Head, NC. That's because buyers often want to be near skiing or golf areas, according to EscapeHomes, which has compiled a list of the 10 most popular vacation home locations. In addition to Boise and Nags Head, they include Ashland, OR; Cabo San Lucas, Mexico; Kiawah Island, SC; Killington, VT; Martha's Vineyard, MA; Santa Fe; Scottsdale, AZ; and St. Thomas, US Virgin Islands. The list was put together by tracking requests for information about various locations from the EscapeHomes Web site (www.escapehomes.com).

Vacations: What to do if your trip's a bust

With the airline industry antagonizing so many travelers these days, the performance of travel agents seems to have largely escaped scrutiny. But vacation disappointments are hardly uncommon. So, what to do if you're dissatisfied with the resort, hotels, or sightseeing excursions your agent steered you to?

Most reputable agents are members of the American Society of Travel Agents (www.astanet.com), whose code of ethics requires them to respond promptly and directly to complaints. If the dispute isn't resolved to your satisfaction, call ASTA at 703-739-2782 and speak with a consumer affairs representative.

Didn't use a travel agent? Register your complaint at PassengerRights.com (www.passengerrights.com). The site has an electronic form that allows you to file complaints against airlines, hotels, car-rental companies, and cruise and tour operators. PassengerRights then forwards the form to the appropriate person at the target company. Complaints about air travel, however, are fowarded to the US Department of Transportation's Aviation Consumer Protection Division.

Don't get your hopes too high, however. Resolution sometimes takes months of back-and-forth, and satisfaction seldom comes in the form of a full refund. It's more likely you'll get a partial refund or some other sort of compensation, such as a discount coupon or a voucher.

Students: Undergraduates hazy on what loans cost

Most college students don't realize how much debt they're assuming when they take out loans to pay for their education.

Nearly 80 percent of undergraduates surveyed by the State Public Interest Research Groups underestimated the total cost of their loans. The average amount borrowed was $17,390. They estimated the loan would cost them $20,863 by the time they'd repaid it, though the actual average total cost was $25,709.

Among students in their first or second years, 84 percent underestimated the total cost of their loans, compared with 72 percent of students in their third and fourth years.

Loans now make up nearly 60 percent of all aid, as compared with 41 percent in the 1980-81 school year, according to The College Board. The federal government sponsors two popular education loan programs. Stafford Loans are available to students, with a variable interest rate capped at 8.25 percent; repayment begins six months after the student leaves school. PLUS Loans are available to parents of college students at a variable interest rate capped at 9 percent; repayment begins within 30 days after the first disbursement.

The author is a freelance writer in Teaneck, NJ.

 

Yvonne Wollenberg. Financial Beat. Medical Economics 2001;10:12.