by Broderick Perkins
(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.
The still-leaderless, Federal Reserve-run consumer protection agency was created as part of the recently enacted Restoring American Financial Stability (RAFS) Act of 2010 , to ensure consumers get clear, accurate information necessary to shop for mortgages, credit cards, insurance, investments and other financial 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.
• 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 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 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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