What's "purchase acceleration," you wonder? It's the common practice among credit-card holders of spending more as they get closer to a reward milestone. As described in a U.S. News & World Report article, some credit-card companies encourage purchase acceleration by alerting customers when they're getting close to a "free" airline ticket or other reward. The article noted that people also tend to spend more after receiving a reward.
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Do credit-card companies have us figured out, or what? In addition to encouraging people to overspend, the article went on to point out that many reward cards come with annual fees that easily negate the value of their rewards. And of course, paying interest by carrying a balance doesn't help either.
Here's the rocket science for practicing safe charging: Use credit to buy only pre-planned (budgeted!) items and pay the balance in full each month. For those who can stick to such guidelines, there are plenty of no-fee reward cards out there where the rewards really are free.
Debit cards have become extremely popular, mostly because they're more convenient than writing checks. However, users beware: They do not provide the same liability protection as credit cards. According to a Chicago Sun-Times article, federal regulations limit credit-card holder liability to $50 of fraudulent charges. With PIN-based debit-card transactions, the same $50 limit applies only if fraudulent use is reported within two days. Any later than that and the cardholder's liability rises to $500 or even higher.
It's the "PIN-based" part that makes matters confusing. Many debit cards can be used two ways. People can enter their personal identification numbers or they can sign for their purchases. Transactions involving a signature come with the same liability protection offered by credit cards. Debit-card issuers prefer that customers sign for their purchases because that generates more fees from retailers. Retailers, of course, prefer that customers use their PINs.
Matt's View
From a safety standpoint, signing for your debit-card purchases is the better way to go. If you prefer to make PIN-based purchases, it's a good idea to review your checking account balance fairly frequently to look for fraudulent activity.
Environmentally safe products often come with premium prices, but an article on Kiplinger.com offered several ideas for doing right by the environment without doing wrong by your wallet. Assuming you're now using compact fluorescent light bulbs (you are using CFLs, aren't you?), here are a few other ideas. Buy produce from local farmers
. If more people did that it would reduce the need for produce to be shipped across the country, and that would mean less fuel use and less pollution. Also, replace standard 4.5 gallons-per-minute showerheads with those that use 2.5 GPM
. Making the switch can save up to 20,000 gallons of water per year.
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One other idea is to replace car trips with walking or bike riding. I read recently that Americans use cars for 82 percent of their trips. By comparison, Germans use cars for just 48 percent of their trips. Could you replace at least one car trip per week--perhaps to the library or the grocery store? If we all did so we'd save money, ease the strain on the environment, and get in better shape.
The next time you have trouble sleeping, and counting fluffy white animals doesn't do the trick, try contemplating the wonders of insurance. You'll be out in an instant. But within the legalese of our boring insurance contracts are some things we need to know. And according to a Wall Street Journal article, too many of us know too little about our insurance. For example, a recent survey found that many people don't know whether their homeowner's policies would cover the entire cost of rebuilding their homes. In some cases, the cost of rebuilding can exceed the value of a home. Similarly, many people don't know whether their insurance would pay to replace their car. New cars depreciate quickly and many policies only pay up to the current value of the car.
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Rather than slog through the sleep-inducing paragraphs of your policies, just call your agent and ask him or her to talk you through these provisions. You might end up opting for additional coverage. At very least, you'll know what to expect from your insurance should you ever need to make a claim. And that might just help you sleep better as well.
