Posted: October 27th, 2009 | Author: Joe | Filed under: Scam | Tags: Opinion, proflowers, Rant, Scam, spending | 25 Comments »
I can’t believe it and I’m a bit embarrassed to admit it, but I was scammed. I used Proflowers.com recently to send flowers to my wife (our anniversary) and my mother (her birthday) and thought I got a great deal. The flowers were beautiful, and they seemed to last forever. It wasn’t until two months later that I realized I was scammed!
Here’s how it happened.
At the end of my order process, I was asked if I wanted to sign up for additional coupon offers from a 3rd party service. Since I make it a rule to try to spend as little as possible at all times (ask my wife), I selected “No thank you” and continued with my order.
Despite my having selected “No thank you”, I was enrolled in this bogus program anyway.
The program is called “Easy Saver“, and as near as I can tell they charge you $14.95 a month to grant you access to a web site that contains coupons.
The problem is that not only was I being billed for a service I wasn’t using, I was being billed for a service I didn’t even know about! I was never contacted by the 3rd party (Easy Saver) to congratulate me on my enrollment, much less notify me of how to make use of their program. They seem to exists solely for the purpose of skimming $14.95 off unsuspecting proflowers customers.
I’m lucky I noticed the $14.95 charge on my credit card with an odd business name next to it:
“$14.95 ezsver rw 1-800-355-1837″
It was only after I went back to the previous month that I really became suspicious. There I saw a charge for $3.95 – and that was the month after my proflowers purchase appeared on the credit card.
I called the 1-800 number to talk to “ezsver” and that’s when I discovered they were really “easy saver rewards”. I asked the customer representative who easy saver is and how they got my credit card number. She told me that they partner with a number of popular Internet and 1-800 companies, like proflowers…
All in all, there were 2 unauthorized purchases beginning 1 month after my proflowers purchase – 1 charge was a small, almost unnoticeable $3.95, and after that came the monthly $14.95.
I must say that the customer rep at easy saver was very pleasant and very helpful, and I was able to cancel my “subscription” as well as have the previous charges reversed without any problem. But the way the whole thing went down is what bothers me the most.
The fact that proflowers signed me up when I explicitly opted out, and the way that easy saver never sent any correspondence to inform me that I had been entered into a subscription service bothers me so much that I will not be using proflowers again, nor will I be recommending their services to others.
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Posted: October 26th, 2009 | Author: Joe | Filed under: Credit | Tags: Credit Cards, Debt, Mistakes | 4 Comments »
CreditCards.com has an article (by way of Yahoo finance) that rates 10 common credit card mistakes on a scale from 1 to 10. I’ll let you read the full article for all the details of why each is rated the way they are, but here’s the list and my thoughts about each.
Paying Late
How bad is it? 6
My thoughts: I’m not sure why they only gave this a 6. Perhaps because it can be reversed by timely payments for a consistent length of time. I would personally give this about an 8 since one late payment is usually enough to trigger usury level interest rates and fees.
Paying Only the Minimum on Your Card
How bad is it? 4
My thoughts: 4 seems about right to me, after all, it’s not going to cause irreparable damage to your finances, or put you so far under you’ll never get out, the way a 30% interest rate could. But it’s not something that you should do and it can easily rack up thousands in extra interest payments. Still, it’s one of the easiest mistakes to fix, provided you have the funds to pay more.
Buying On a Card Just For Rewards
How bad is it? 1
My Thoughts: This one is kind of silly, provided you pay your balance every month. They seem to agree, since they only gave it a 1. Still, I’m not sure this is really a “mistake”.
Missing a Payment
How bad is it? 9
My Thoughts: This is easily a 9, if not a 10. Missing a credit card payment is like setting off a dirty bomb in your kitchen – it’s likely to ruin your life in the immediate future, and for a long time afterward. It’s the nuclear version of the first mistake (paying late).
Having Too Many Cards
How bad is it? 6
My Thoughts: This one feels right to me, unless it’s a store card. Somehow, applying for a store card to get the initial 15% off on your purchase that day just seems more wrong than a 6.
Maxing Out a Card
How bad is it? 7
My Thoughts: Again, 7 feels right. It’s going to negatively impact your credit score, but it won’t necessarily cost you more than the stated interest on the balance. This is more of a problem because it leaves you with less options, less extra cash and creates the potential for serious damage if you should miss a payment.
Playing the Balance Transfer Game
How bad is it? 5
My Thoughts: Also known as Credit Card Roulette. This is probably middle of the road in risk. It really depends on 1 thing: Do you have a plan to pay off this debt, or are you just move it to another card to max out the original one again? If you do, then it can be an excellent tool to help get a jump on higher interest debt. If you don’t have a plan, then you’d better not get caught holding the bag when the transfer offers run out and the interest rate climbs. And that’s not to mention the transfer fees. 
How bad is it? 9.5
My Thoughts: Yeah, this one is pretty bad. Most of the time, you just end up paying more for something you can do yourself, and you could do damage to your credit score in the process. See Debt Consolidation and Your Credit Score. for more.
Getting a Cash Advance?
How bad is it? 8
My Thoughts: It’s up there in the 8-range. You’re basically admitting you have no money management skill if you use this. It’s a symptom of a much bigger problem, and a costly one too.
Using a Card in a Pinch
How bad is it? 2
My Thoughts: This is a much smaller version of the cash advance. It’s not the outrageous interest and payment terms of the cash advance, but it’s still a symptom of poor budgeting and spending habits. 2 feels about right. If you don’t have it, don’t spend it.
What do you think, did they miss any mistakes or completely blow the rating?
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Posted: October 25th, 2009 | Author: Joe | Filed under: Retirement | Tags: 401(k), Opinion, Rant, Retirement | 2 Comments »
I originally wrote this article back in January for the Saving Advice Blog, but I’ve seen a lot of chatter recently about it again – including this issue of Time magazine – and I feel very strongly about protecting individual retirement savings from the government, so I thought I’d go on the record here and post my thoughts about it on Simple Debt-Free Finance. 
And now, without further ado, the article.
With the death of defined pension plans, 401(k) retirement plans have become a staple for many employees, but the recent financial turmoil has put these once infallible savings vehicles under the microscope. There have been numerous news articles detailing the stunning losses of the stock market since October of last year. Such stories usually offer a profile of some victim around 55 years old who was preparing to retire in the next few years, only to have 25% or more of his 401(k)’s value wiped out over night.
This has led to calls for the government to step in and fix the problem. Economist Teresa Ghilarducci has put forth a plan to do just that, and congressmen George Miller and Jim McDermott support it. Under Ghilarducci’s plan, contributions to a worker’s 401(k) plan would no longer be tax deferred. This would effectively tax the contributions twice – once when you earn the income that you then contribute to the plan, and again when you withdrawal the money in retirement. Under such conditions, why would anyone continue contributing to a 401(k)?
Ghilarducci’s plan also proposes implementing a government provided “guaranteed retirement account” to be administered by the Social Security Administration. Under this plan, worker’s would be required to invest 5% of their pay, and would receive a guaranteed return of 3%, adjusted for inflation.
This is the wrong way to fix the problem.
First of all, why would we want to reinvent social security when it’s been documented to be unsustainable? The government has already tapped the money many times over that was supposed to be set aside for the program. Isn’t this just recreating that problem? Secondly, the stock market has returned, on average, roughly 10% per year since WWII. How would worker’s be better off earning 3% per year? Thirdly, it doesn’t address the real reason 401(k) plans have left people short on their retirement funds.
The 401(k) plan did not fail. The stock market did not fail. This person simply had too much invested in the stock market for his age and retirement goal. The problem lies with the individual, and the lack of information and education provided to the individual, not with the 401(k) plan itself.
401(k) participants are investors, whether they know it or not. The problem is that most do not. The real reason 401(k) plans fail to the extent that people perceive them to is because the participant often lacks the education to make appropriate decisions. Many 401(k) participants don’t want to be investors, they just want to do their job and live their life. Another problem with 401(k) plans is that the individual is often entirely in charge of their investments, and have no safety valve in times of extreme panic or greed. Just look at the recent economic turmoil and see how many have pulled everything out of their 401(k) because they don’t trust the market. Once the loss has happened, pulling out is the worst thing they can do, but these people are simply reacting emotionally. They don’t have the background to approach it rationally.
The real way to fix this problem is education. Employers could provide professional assistance by way of making an impartial financial planner available to employees in the plan. Most plans provide life cycle or target date funds where employees choose the fund with their target retirement date, and the plan manager gradually adjusts the allocations between stocks and bonds over time. This is essentially a set it and forget it approach that has been proven to work over time. But so many employees are ignorant to their existence and their use. If that 55 year soon-to-be retiree had a proper asset allocation in his 401(k), he would still be on course to retire, though he might still choose to work a little longer for a better post-retirement lifestyle but the choice wouldn’t be so drastic as losing a quarter of your retirement.
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Posted: October 23rd, 2009 | Author: Joe | Filed under: Credit | Tags: Credit, Credit Cards, Opinion | 2 Comments »
Here’s a report to make your blood boil:
Citigroup, meanwhile, has started charging annual fees to card holders who don’t put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don’t use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.
I no longer have a citibank credit card, since Bank of America bought the card I had from Citi. But BofA is in on the fee game too:
Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99.
Fees are not surprising, but annual fees are. I never understood why people had credit card accounts that charged an annual fee. I don’t understand charging fees to people who pay off their balance either. I’ll switch to using cash or debit, thank you very much. The day I see an annual fee on my credit card is the day I cancel the account.
It’ll hurt a little. After all, I do get rewards for using my card for most of my major purchases. And closing the account will have a negative impact on my credit score, but fees will have a negative impact on my savings.
I’m fortunate enough to have gotten my financial house in order a while ago, so I really don’t need a credit card and haven’t carried a balance in years. But what about those that do? Let this be an added incentive to pay that debt off quickly!
This is, of course, the result of the recent consumer credit legislation that limits the credit card companies ability to raise interest rates and charge late fees.
The USA today article suggests the following as potential actions if you’re faced with new fees, or sudden fee hikes:
- Weigh the benefits of rewards against the annual fee.
- Call and complain.
- Leave.
Calling and complaining might help if you have a good payment history, and solid credit score. Leaving is really only an option if you don’t have a balance, or you can get a better offer (i.e. the same or lower rate, and no fee) some place else.
I said above that I’d choose “Leave”, but I suppose I’d try the complaint route first and see if BofA would be willing to work with me.
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I must say that the customer rep at easy saver was very pleasant and very helpful, and I was able to cancel my “subscription” as well as have the previous charges reversed without any problem. But the way the whole thing went down is what bothers me the most.
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