Here's why credit trumps debit almost every time
A very savvy, sharp-eyed reader of this column called me and told me that according to Dave Ramsey, a well known personal finance guru, the consumer who uses a debit card has the same protection as a consumer who uses a credit card to make a purchase. We talked for a few minuets and then after getting off the phone, did our own research.
She called me back. It turns out that federal protection, in terms of putting a charge in contest, does also apply to debit card transactions WHEN YOU ASK THAT IT BE USED AS A CHARGE CARD. Unfortunately, the bad guys are NEVER going to admit that you asked it to be used as a charge card.
MY ADVICE: Use a charge card whenever you can, and pay off your balance, all of it, every month. A big “thank you” to the reader for helping all of us understand consumer law a little better.
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PUBLISHERS CLEARING HOUSE: PCH is like buying a lottery ticket, but worse. The odds of me winning the lottery are about the same as me going outside today, standing in a snow drift and being hit by a lightning bolt! The odds of winning the PCH Sweepstakes are worse, except if you enter the PCH Sweepstakes your name will be put on more junk mailing lists than you can shake a lightning bolt at.
If you’re really unlucky, you’ll buy some of the junk their associated companies sell, and then have a devil of a time returning it when you realize it’s junk. If you’re super unlucky, you will inadvertently sign up for “junk of the month club” and will have your credit card billed every month.
MY ADVICE: Go ahead and enter the PCH Sweepstakes, but don’t give them your email address, and if you win, call me! If you can afford it, buy ONE lottery ticket. If you’re planning your retirement around winning the lottery, you need to readjust your plan.
That reminds me of a cartoon. The “financial counselor” was giving advice to a couple close to retirement. After reviewing their finances, he had just one question: “Which one of you is going to wear the mask and which one is going to drive the getaway car?”
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BOYS TOWN: Boys Town is a great charity. The problem is, there are some pretty bad people out there using the words “Boys Town” in their charity name. The real one is simply named “Boys Town.” There are a number of charities that attempt to “surf” on a good organization’s names. Be careful. Always go to www.charitynavigator.org and check out any charity to which you’re thinking of making a donation.
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CAR REPAIR INSURANCE: Don’t be misled. Most of the products are sold over the phone from a call center and are junk. If they call you — hang up. It’s expensive, often hard to collect on, and very often has a very high deductible (the amount you pay) and other terms and conditions that make it next to worthless.
MY ADVICE: Take some money each month and set it aside for car repairs.
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‘DONATING’ TO A HOME BUILDERS CHARITY: A consumer called me last week and asked about the homebuilder she had selected to build her new home, requiring her to sign a written agreement, stating that if she sold the home, she would promise to donate to a specific charity named by the builder.
I have all kinds of problems with signing an agreement like this: First, if you are “required” to pay money – IT’S NOT A DONATION. Donations are voluntary. Secondly, if it’s part of a contract, and in this case a separate document, from a legal standpoint, “consideration” is an essential part of every contract. Thirdly, is requiring a “donation” as part of a contract even legal in Idaho? These are all legal questions. Since I am not an attorney, I am not qualified to proffer an opinion. On the other hand, the whole thing smells a little stinky to me. “Stinky” sounds much better in Latin legalese!
MY ADVICE: Consult with a licensed attorney BEFORE you sign any important contract.
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WOOD FLOOR WOES: A consumer contacted me about a problem she agreed to have with a small local company she had install wood floors in her home. The company required her to pay around $10K for the job and now, according to her, she can’t get the job completed. Again, according to the homeowner, there have been numerous fits, stops and starts, but the bottom line is, the job is still unfinished.
I have attempted to call the business owner for their side of the story. (As they say, “There are always two sides of the story.”) Hopefully the company will contact me and the situation will be resolved. A couple of questions come to mind: 1. Is there a contract in writing and what does it say? 2. Was the $10K a 50 percent deposit or did the consumer pay the entire amount up front?
All my regular readers know, ALWAYS HAVE A WRITTEN CONTRACT (remember an estimate is NOT a contract), signed by both parties and NEVER put down more than 50 percent of the cost of the entire project. I’m waiting to hear from the company. Hopefully, I’ll let you know the rest of the story soon.
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SELLING LIFE INSURANCE POLICIES: Selling your life insurance policy is generally a bad idea. The companies that buy life insurance policies are usually NOT the companies that advertise. The companies that advertise are “referral” agents that get paid a percent commission of the amount of the insurance that the policy is estimated to yield upon your death. The price you will be paid, like all insurance policy products, is arrived at using underwriting and actuarial tables. DON’T SELL YOUR POLICY. You won’t get much, and there are alternatives if you need money.
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REMEMBER BILL BROOKS: “He’s On Your Side”
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I have many more tips and interesting cases that I’m working on. Call me at (208) 699-0506, or email me at BillBrooksAdvocate@gmail.com or fax me at (866) 362-9266. You can follow me at www.billbrooksconsumeradvocate.com. I am available to speak about consumerism to schools, and local and civic groups.
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Bill Brooks is a consumer advocate and the Broker and Owner of Bill Brooks Real Estate in Coeur d’Alene.