are busy with their daily lives, making it difficult to
keep abreast of all the trends and issues that affect
their wallets — household savings, fine print in
contracts they sign with companies and insurance
shopping, for example.
is a sampling of recent consumer news items to know.
battle. The vast majority of consumers don’t realize
when they sign up for services and financial products,
from wireless phone service to credit cards, they’re
often signing away their right to sue a company in
court. Buried in the fine print of take-it-or-leave-it
contracts, tens of millions of consumers agree to settle
disputes with arbitration, which some claim can be a
kangaroo court rigged in favor of companies. Arbitration
clauses also often kill a consumer’s ability to join
with others in a class action.
new report by the Consumer Financial Protection Bureau
examined how financial services companies use forced
arbitration. It found the practice resulted in a
windfall to financial service companies worth up to
hundreds of millions of dollars each year. It found
three-quarters of consumers have no idea whether their
credit card agreement contains an arbitration clause,
and just 7 percent of those agreeing to an arbitration
clause understand that it squashes their right to go to
the report was released, consumer groups banded together
to ask the consumer bureau to make rules prohibiting
forced arbitration clauses in contracts for financial
services, saying "few practices are as abusive,
unfair and deceptive as the widespread use of forced
arbitration clauses in most consumer contracts."
financial services industry supports arbitration.
makes it possible for American consumers to resolve
disputes in a cost-effective, fair and timely manner
that often benefits all parties involved," said
Richard Foster, senior vice president of legal and
regulatory affairs for the industry group Financial
Services Roundtable, after the report was released.
"This is an important tool for the customers of
financial institutions that helps keep costs down and
keeps financial products, including credit cards and
checking accounts, affordable."
budgeting tool. Tools for creating a household budget
abound, including Quicken and its online sister Mint.com
and YNAB at youneedabudget.com. And a blank spreadsheet
or pencil and paper work too.
new offering comes from money guru Dave Ramsey, author
of "The Total Money Makeover," who has long
advised people to create a household budget to avoid
living paycheck to paycheck. He recently launched his
own online tool.
EveryDollar.com claims to make it easy to set budgets
and track expenses, income and savings. It highlights
Ramsey’s "Baby Steps" method for saving and
basic version is free, but if you want to import bank
transactions, it costs $99 per year.
goal of a budget is to assign every single dollar a
name, on purpose, before the month begins," Ramsey
said in launching the tool. "When you know where
your money is going, you have control over it instead of
it controlling you."
tool. Digit is a service, highlighted recently by money
guru and radio-show host Clark Howard, that claims to
find money in your budget and save it automatically.
at Digit.co, the service promises to use artificial
intelligence to examine your spending patterns. It
automatically withdraws money from your checking account
when you can afford it, usually $5 to $50 every few
days, and stashes it in an FDIC-insured savings account.
will pay overdraft fees if you get hit with them as a
result of the auto-savings service. You can withdraw
money from the savings account with a phone text
message, which transfers money back to your checking
account on the next business day.
points out the minor downside is that the account pays
no interest — Digit keeps it, which is how it makes
money. However, current interest rates are so low that
bank or credit union savings accounts barely pay
savings that require no effort have been shown to be
effective, such as automatic contributions to a 401(k)
retirement plan at work, automatic contributions to a
529 college savings plan or just a monthly bank transfer
from your checking to savings.
insurance? When online behemoth Google enters a market,
people notice. It recently got into the auto insurance
game, offering a comparison shopping site at google.com/compare/autoinsurance.
So far, it’s only available in California, but Google
said it intends to expand to other states and add
ratings and reviews of insurers.
course, Google is not the only online insurance broker.
There is insuranceQuotes.com, CoverHound, Insure.com,
Nerdwallet.com and AccuQuote for life insurance, among
broader point is not which comparison tool you use —
you might use several — but to compare insurance
rates, which can vary widely for the exact same
coverage, whether for home, auto or life. Sticking with
the same company may actually result in higher rates.
complaining. The Consumer Financial Protection Bureau
has invited deeper public shaming of financial
companies, for the first time allowing consumers to
share details of their horror stories publicly if they
file their formal complaint online at its Consumer
Complaint Database, consumerfinance.gov/complaintdatabase.
The CFPB will review the complaint and strip out
personal information, it said. "Making your story
public will give more people, including you, the power
to improve the financial marketplace," the CFPB
companies are none too pleased.
the banking industry is committed to helping consumers
make informed and responsible financial decisions,
public disclosure of unverified consumer complaint
narratives doesn’t advance that goal and raises
significant consumer privacy issues," said Frank
Keating, CEO of the American Bankers Association.
"This risks turning the CFPB database into a
questionable — even misleading — resource and risks
tarnishing the reputation of individual companies
your tax refund. The National Foundation for Credit
Counseling found in a poll that most taxpayers, 68
percent, would prefer to pay down debt with a tax refund
this year instead of growing their personal savings. The
NFCC said that means debt is getting in the way of
personal savings for many Americans, which is true. But
if you have debt, paying it is probably a good use of a
tax-refund windfall, which averages around $3,000,
according to the IRS. Simple math shows the interest you
pay on debt is probably far higher than the interest you
earn on savings.
warranties. Home warranties, which cover a home’s
major appliances, are notorious for being
consumer-unfriendly. For 10 straight years, they were
the most complained about category on Angie’s List, a
members-only review site of service companies. But in
2014, home warranties dropped to No. 3 on the naughty
list, topped for the dubious distinction by furniture
retailers and property management companies. Still, 20
percent of home-warranty companies received a letter
grade of D or F. Angie’s List members rate companies
based on price, professionalism, punctuality, quality