Personal Budget - Sweating the Small Stuff

2006-12-18

Zero APR, no upfront fees, great premiums – you think you’ve got the best deal ever. But if you aren’t careful, you end up being the sucker. With intense competition for credit cards, cable, phone services and the like, providers are finding it necessary to figure out ways to make money; and it usually comes out in the small print.

Banks

• Missed out on a payment to your credit card? Your interest rate skyrockets immediately, and between late charges, interest rates and annual rates, you could end up paying a huge penalty. It’s estimated that the average family will pay more than $1,100 in additional charges after missing one payment

• Want an increased credit limit? Your provider is willing to oblige – but only with a new card, not a raise on the old one. And have you noticed how that comes with another set of fees, a different due date, and another set of terms?

• Using your cards abroad? Count on getting hit with a foreign exchange conversion fee, on top of the exchange rates being the worst you can get.

• Using your ATM card at an independent ATM, instead of the bank’s own? Or even using the ATM card instead of an online transfer? You’ll get hit with a “surcharge” or “convenience charge”. No, it isn’t an ATM fee, it’s just what the independent provider charges.

• Another hidden expense is the “minimum balance” – if your account drops below a certain amount, you get hit with a fee. It can be costly if you rarely use the account, and don’t monitor it for a few months.

Shopping

• Got taken in by one of the “mail in” rebate offers? If you’ve thrown out the box, bought on the wrong date, sent a photocopy instead of the originals, or even sent it by certified letter or Fedex just to make sure – count on NOT getting the rebate.

• Or bought that online bargain to find that it doesn’t include taxes, shipping, or a miscellany of handling charges that you didn’t bargain for?

• Or the upsell deal – where you get lured in by a bargain price, just to find that there’s no stock, or a display piece – but the next item up costs a lot more?

Phone and Cable

• Picked up a cheap prepaid or regular plan with a fixed number of minutes? Watch out for the overusage charges; quite often, discount plans have a disproportionate charge for extra minutes.

• Calling long distance? Make sure your carrier doesn’t switch it through the most expensive option, instead of the normal. Or even letting your account be switched by a third party without your knowledge.

• Just got the latest camera phone? Sending photos or multimedia messages add hefty charges to your usage. Think before yielding to the impulse.

• Lured by a cheap cable TV plan? It looks great, until you realize that it doesn’t give you the channels you watch regularly – and it costs an arm and a leg to get it tacked on.

• Or the great broadband deal that has a low rate for the initial preset usage – with hefty charges for every minute or megabyte over.

Yes, there are bargains out there. But not every deal is a bargain; and the provider isn’t there to make it easier or cheaper for you. In a dog-eat-dog world, make sure you don’t get bitten.

Related Articles:
» Budgeting: Creating a Personal Budget for you or your family
» Filling the Holes in Your Budget
» Managing the Spender / Saver Marriage

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