(9/3/2010) You don't really need the new Consumer Financial Protection
Bureau to be your watchdog for a certain group of financial products and
services.
But it's already pretty clear, if you just take the time to do the math,
there are certain financial products you simply don't need, according to Consumer Reports.
Most of these services are some form of insurance professing to protect you from
financial disasters waiting to befall you. Consumer experts say the
potential for such disaster is slim to none, but if you are a worry wart,
you can protect yourself without opening your wallet to hawkers selling the
financial products.
For example:
• Collision coverage on older vehicles costs about
$300 a year, but the point at which that cost approaches or exceeds the
maximum the policy would pay on the claim, is a point at which to consider
another tact.
Consumer Reports (CR) suggests dropping collision once the cost is equal
to 10 percent of you car's book value and self-insuring for collision by
putting those premiums to work in an interest-bearing account. Consider a
similar approach for comprehensive coverage.
• Extended warranties on everything from toasters to Toyotas
can cost you from a few bucks to a few thousand bucks to stretch the
product's existing warranty. The problem is, the warranties are heavily
laden with restrictions and often cost more than they'll pay out.
Today's less mechanical and more digital technology means that products
that aren't going to last, typically fail right away -- or at least well
within the product's original warranty period.
Also, purchases made with certain credit cards automatically extend the
warranty on some products so you don't need to pay for extra coverage.
Finally, look for CR's top recommended products -- of which there are
many -- and don't shirk from manufacturers' use and maintenances
recommendations to get products worth what you pay, without extra coverage.
• Fee-based checking can cost you from $36 to $600 a year, plus
per-check fees, unless you consider checking accounts that come with no
minimum monthly balance requirements and those that even pay interest,
however small.
For customers who regularly use debit cards for purchases and can set up
direct deposit or automatic billing, a high-yield checking account could
actually earn cash. CR and other consumer groups recommend checking out CheckingFinder.com
or Kasasa.com.
• Every month, credit-card insurance, costing 18 cents to $1.35
for every $100 of your balance, promises to make your minimum payments for a
certain period or erase your entire credit-card debt in case of
unemployment, injury, disability, or death.
Known as "payment protection" and "credit safeguard," this coverage may
already be available in your life or disability insurance and you can set up
your own savings fund to cover your bills if you lose your income.
•Identity-theft protection services that cost
$120 to $240 a year often do less than they claim and some of them are under
investigation by federal and state authorities. To protect your identity for
free, keep tabs on your credit report at no charge through AnnualCreditReport.com, place a security freeze on your
credit report and otherwise take cost-free steps to protect your identity.
• Cell-phone insurance for $48 to $96 a year with deductibles
as high as $100 comes with small print exemptions that can render the
coverage useless. You can buy a new cell phone for about the same annual
cost of insurance and some phone plans come with free phone upgrades after
you've had the account for some time. Also, keep the old phone as a backup
should you lose the new one.
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