Looking around I see intelligent, industrious people. Usually being intelligent and industrious means being very busy. Life is moving so fast that anything that saves time and money is welcome. We are all looking for convenience. According to Ted Gladson in an article written in 1990 and still remarkably relevant today, "Consumers expect to pay for convenience." We do pay for it, sometimes we don't realize just how much we pay.
The cost of convenience is expensive. Marketing strategies include making us feel the pain of having no time to deal with whatever situation that they are going to save us from. Then they solve our dilemma and behold a light from heaven shines down and we have more time/money. Hallelujah! Three examples of expensive convenience are;
1. The convenience of not thinking for yourself.
2. The convenience of prepackaged preprocessed favorite foods
3. The convenience of avoiding late fees to pay your credit card by phone.
According to Mr. Gladson, we evaluate individually whether or not the cost is worth pursuing.
Some of the hardest work we do is thinking. My goodness everyone expects me to have an opinion on everything. Thinking takes time. I know how to avoid weighing the pluses against the minuses. I really do not need to think at all when I can google or yahoo or even bing any subject. I will get the top ten reasons to... or three ways to ...(You fill in the blanks). I can be told how to think thus saving me time and energy to apply somewhere else.
I searched for opinions regarding:ECONOMICS, PET CARE, GOVERNMENT ISSUES and GLOBAL WARMING. The average amount of opinions available was 84,525,000. I will have to decide between the top three listed because I am trying to save time. I hope those opinions make me look intelligent.
The most popular result regarding the cost of convenience search was in the realm of nutrition. An article from the Arizona Republic called, oddly enough, "The Cost of Convenience" explained that the general public was essentially unaware of what convenience actually cost us. It was unclear by the posting who actually wrote the article, which is too bad because I learned a thing or two from reading it. For example sliced apples cost $74.84 per hour for someone else to cut them. Did you know that cooked frozen sausage costs more but required the same preparation time as fresh sausage? I didn't.
The article went on to explain the differences in cost versus time ratio when comparing prepackaged prepared items to items made from scratch. The results were mixed but the bottom line showed consumers were willing to pay greater than three times more for the convenient versions of their favorite items. These prepackaged items had less nutritional value and less flavor. The cost for this convenience was in dollars, taste and nutrition for more time.
What else takes time? Paying bills takes time. This isn't even enjoyable time. We already established that we are way to busy to think or cook, let alone pay our bills. There is no time to waste. Luckily for us, the credit card companies have found a way to make paying them convenient, especially if you are going to be late. These fine companies have found a solution for instant gratification, the over the telephone payment option.
Imagine that you have waited until the last minute to pay your credit card bill. If you send it now, it will cost another $40.00 in late charges. You can avoid that by calling in your payment. It will cost you only $15.00. You will save $25.00, isn't that wonderful? Your creditors going the extra mile to make life a little bit easier for you. For more information regarding creditors and fees visit billshrink.com .
The question is, Is convenience cheap? No way, we pay a very high price when something comes with the label convenient. Most of the time the true price of convenience is hidden in the consequences of not paying attention. We are drifting aimlessly and reacting to life instead of planning appropriately. As long as we are distracted the marketing of convenience will be effective.
It is not convenient to think for yourself or prepare your own food or even plan your finances. It is up to you to decide whether the cost of convenience is a fair price to pay.
Monday, November 23, 2009
Wednesday, November 18, 2009
Tips on saving dollars…
Retail Banks will market convenience and you will pay dearly for one stop shopping. It is wise as consumers to be a customer at more than one bank. The big banks offer free checking and that is really all they are good for. Their savings accounts don’t pay interest worth mentioning. In fact, none of their interest bearing accounts will amount to much as far as interest is concerned.
I have been in the banking industry for many years. The customers with the most money saved actually took the time to shop interest rates. They moved their money around to the banks that offered the most attractive rates. No one at Wells Fargo wants to discuss CD rates with you because they are so terrible. Their savings accounts are the same way. However there are community banks that are paying better interest for savings accounts, money markets and CDs.
Here is a tip on saving money that works every time. Have a savings account in a community bank that is separate from the bank that has your checking account. Also do not get online access to these funds. I think a savings account should be inconvenient to access, that way you won’t touch those funds unless it is absolutely necessary.
If you have been saving and want the money for a future event such as a wedding, put the money into a CD at a community bank. The interest will be more attractive and you will have access to the funds at maturity. If you time it right, you will have the funds available right when you need them. If things change in your life and the funds are not needed you can go ahead and reinvest into another attractive interest bearing CD.
A little bit of effort will pay much better than convenience. $100.00 in a savings account at a large retail bank will cost you $4.00/month because it is less than the required minimum of $300.00. The same amount at a community bank with a $100.00 minimum presently pays about 1.0% compared to 0.15% at the big banks. So doing the math; $100.00 deposit at a large retail bank will cost $48.00/year in below minimum fees then pay you 0.15% interest on your balance which would be about $0.07 for the year. Compare that to earning $1.00 for the year at a community bank.
Let us figure the minimum $300.00 payoff at the large retail banks. You would earn $0.45 for the year, As opposed to the $3.00 annual interest payout for the smaller community bank. I know 1% isn’t a lot of interest. However these banks historically have higher interest rates than your national McBank. The super banks say it is because their deposits reserves are so high. They really don’t need or want your savings accounts unless you keep them below the minimums and they can take your money.
Over the years, I have watched people turn modest amounts of money into substantial sums by shopping interest rates and putting their funds into the banks or credit unions that are paying the best return. Sometimes interest rates are not so good like today, but doing the best you can with what you have is a worthwhile practice. Start today, call your local banks and see what they have to offer. Then move your funds to the best account that is available. Every six months check around. You will be surprised at the offers that are available.
This is a wonderful lesson for children. If you have a savings account for your children or grandchildren then time is on your side. You really can get good deals on savings accounts. The payoff is worth the effort. Good luck.
I have been in the banking industry for many years. The customers with the most money saved actually took the time to shop interest rates. They moved their money around to the banks that offered the most attractive rates. No one at Wells Fargo wants to discuss CD rates with you because they are so terrible. Their savings accounts are the same way. However there are community banks that are paying better interest for savings accounts, money markets and CDs.
Here is a tip on saving money that works every time. Have a savings account in a community bank that is separate from the bank that has your checking account. Also do not get online access to these funds. I think a savings account should be inconvenient to access, that way you won’t touch those funds unless it is absolutely necessary.
If you have been saving and want the money for a future event such as a wedding, put the money into a CD at a community bank. The interest will be more attractive and you will have access to the funds at maturity. If you time it right, you will have the funds available right when you need them. If things change in your life and the funds are not needed you can go ahead and reinvest into another attractive interest bearing CD.
A little bit of effort will pay much better than convenience. $100.00 in a savings account at a large retail bank will cost you $4.00/month because it is less than the required minimum of $300.00. The same amount at a community bank with a $100.00 minimum presently pays about 1.0% compared to 0.15% at the big banks. So doing the math; $100.00 deposit at a large retail bank will cost $48.00/year in below minimum fees then pay you 0.15% interest on your balance which would be about $0.07 for the year. Compare that to earning $1.00 for the year at a community bank.
Let us figure the minimum $300.00 payoff at the large retail banks. You would earn $0.45 for the year, As opposed to the $3.00 annual interest payout for the smaller community bank. I know 1% isn’t a lot of interest. However these banks historically have higher interest rates than your national McBank. The super banks say it is because their deposits reserves are so high. They really don’t need or want your savings accounts unless you keep them below the minimums and they can take your money.
Over the years, I have watched people turn modest amounts of money into substantial sums by shopping interest rates and putting their funds into the banks or credit unions that are paying the best return. Sometimes interest rates are not so good like today, but doing the best you can with what you have is a worthwhile practice. Start today, call your local banks and see what they have to offer. Then move your funds to the best account that is available. Every six months check around. You will be surprised at the offers that are available.
This is a wonderful lesson for children. If you have a savings account for your children or grandchildren then time is on your side. You really can get good deals on savings accounts. The payoff is worth the effort. Good luck.
Tuesday, November 17, 2009
Do banks have your best interest in mind?
Only if your making your interest payments. The sole purpose of the retail banking industry is to take your money from you. This purpose has caused the failures of some banks. They became greedy and over extended themselves with creative bookkeeping. Other banks such as Wachovia, Wells Fargo, US Bank and Bank of America have been more subtle with their approach to taking your money.
The marketing will always say just how much these banks care about you and your finances. I have personally witnessed many horrendous acts of the banks stealing from their customers in the name of convenience. All kinds of people such as the elderly and single mothers working very hard just to survive have had excessive overdraft fees applied to their account. This is the bread and butter of the retail banking industry.
What is excessive? How about the fees incurred when the available balance goes below zero, then when the actual balance goes below zero these fees are applied again. The banks hope you will not notice and if you do they may refund a portion of those fees.
The fees are applied per transaction, for instance if you went below zero by $10.00 but it was $2.00 at a time you could be charges upwards of $175.00 and that could equal $350.00 with the double overdraft fee accounting system in place. If you complain the banker will do you a favor by refunding half the fees because after it was your fault for over drafting your account. So that $2.00 cup of coffee actually cost you $2.00 plus $35.00 for the privilege of banking with you friendly retail bank.
Bonuses are paid to bank managers for retaining fees. The skill required to work as a branch manager is to be able to look someone in the eye and tell them, “Your money is now our money.” Bonus money paid from excessive fees. The banks are raking in our dollars by the bucket loads. This is a main reason why a retail bank can boast a profit while the rest of the economy is falling apart.
If you complain about these excessive fees, well you could apply for overdraft protection. It sounds like extortion to me. Overdraft protection is a line of credit that charges 21-29% interest for your balance. The fee for the transfer can run anywhere from $2.00-$10.00 depending on the bank. That is the selling point. The transfer is always an excessive amount. If you overdraft $50.00, well you will get $100.00-$200.00 advance. If you keep a balance on your overdraft line of credit for one year then you will have paid the bank $23.00 at the minimum. This is the protection offered from banks to protect you from their creative bookkeeping.
The creative ways in which the deposits are credited against the debits generally favor the likelihood that you will be charged an overdraft fee. The ways the debits and credits are applied are not uniform across the board. If you are in a “Metro” market the debits are removed before the deposits are credited. However a “community” market will credit the deposit before applying debits. It’s nice to know that these banks are looking out for our best interest.
The marketing will always say just how much these banks care about you and your finances. I have personally witnessed many horrendous acts of the banks stealing from their customers in the name of convenience. All kinds of people such as the elderly and single mothers working very hard just to survive have had excessive overdraft fees applied to their account. This is the bread and butter of the retail banking industry.
What is excessive? How about the fees incurred when the available balance goes below zero, then when the actual balance goes below zero these fees are applied again. The banks hope you will not notice and if you do they may refund a portion of those fees.
The fees are applied per transaction, for instance if you went below zero by $10.00 but it was $2.00 at a time you could be charges upwards of $175.00 and that could equal $350.00 with the double overdraft fee accounting system in place. If you complain the banker will do you a favor by refunding half the fees because after it was your fault for over drafting your account. So that $2.00 cup of coffee actually cost you $2.00 plus $35.00 for the privilege of banking with you friendly retail bank.
Bonuses are paid to bank managers for retaining fees. The skill required to work as a branch manager is to be able to look someone in the eye and tell them, “Your money is now our money.” Bonus money paid from excessive fees. The banks are raking in our dollars by the bucket loads. This is a main reason why a retail bank can boast a profit while the rest of the economy is falling apart.
If you complain about these excessive fees, well you could apply for overdraft protection. It sounds like extortion to me. Overdraft protection is a line of credit that charges 21-29% interest for your balance. The fee for the transfer can run anywhere from $2.00-$10.00 depending on the bank. That is the selling point. The transfer is always an excessive amount. If you overdraft $50.00, well you will get $100.00-$200.00 advance. If you keep a balance on your overdraft line of credit for one year then you will have paid the bank $23.00 at the minimum. This is the protection offered from banks to protect you from their creative bookkeeping.
The creative ways in which the deposits are credited against the debits generally favor the likelihood that you will be charged an overdraft fee. The ways the debits and credits are applied are not uniform across the board. If you are in a “Metro” market the debits are removed before the deposits are credited. However a “community” market will credit the deposit before applying debits. It’s nice to know that these banks are looking out for our best interest.
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