Consumer News & Views
Published twice monthly
December 15, 2015
In this Issue…
- 10 Year-End Tips to Help You with Your Income
- How a Fed Interest Rate Hike
Could Hurt Your Credit Card Debt.
- Your Credit Card’s Hidden
Benefits and Perks for Consumers.
- ACC Annual Meeting Scheduled for June 10,
2016 in La Jolla, CA
- ACC’s Friend of the Consumer
Recognizes Consumer-Friendly Companies.
- Apply for the 2015 Green CSM
10 Year-End Tips to Help You with Your Income Tax.
Earlier this year, NerdWallet surveyed Americans and found that the average
adult gets a 50 percent, a failing grade, on personal finance questions related
to income tax. Sure, the tax code is convoluted and April seems so far away, but
consumers should seek out expert advice and learn as much as they can about tax
basics and how financial products and decisions impact liability. With 2016 just
around the corner, don't forget that there is still time to make some smart
moves that will help you come tax time next year. Here are 10 simple year-end
income tax tips to help you organize your finances and set yourself up for the
- Make 401(k) contributions by the end of
the year. Many people wonder what to do with their year-end bonuses or
cash gifts from family. Using a portion of it to help max out retirement
contributions for the year can be a great way to bolster investments or
savings especially if you haven't been good at those regularly. For 2015,
the limit was raised to $18,000.
- Over the age of 50? Take advantage of
catch-up contributions. In addition to the $18,000 401(k) maximum, any
individual over age 50 by the end of the calendar year can make a $6,000
catch-up contribution to their 401(k). Check out the IRS website for
- Maxed out 401(k) contributions? Consider
a traditional or a Roth IRA. While the deadline for last year's
contributions is technically April 15, make contributions to an IRA
throughout the 2015 tax year and take advantage of the tax benefits:
- Federal-tax-free growth and tax-free
withdrawals for Roth IRAs
- The ability to deduct contributions on
income taxes now and pay the taxes upon qualified withdrawals in
retirement with traditional IRAs.
- Note: AGI limits apply for
deductibility for both Roth and traditional IRAs.
- Invest in a child's future. Consider
opening and/or investing in a 529 account, Coverdell or custodial account.
Some 529s have tax benefits depending on the state of residence. And parents
can take advantage of the American Opportunity College Credit if they are
currently paying their child's college tuition. (Note: AGI limits apply).
And a new account or contribution to an existing account, even a small one,
can be a great gift alternative for young ones.
- Pay down high-interest debt. Doing so
can save money in the long run. The annual interest rates on some credit
cards can be as high as 19 percent. If only the minimum amount is paid each
month, a seemingly small purchase could take months to pay off and over time
could cost significantly more in interest.
- Donate to charity and write it off. 'Tis
the season of giving back, after all.
- Adjust your W9 and pay yourself instead
of Uncle Sam. For 2014, the average tax refund was slightly more than
$3,000. Rather than loaning Uncle Sam that money, consider adjusting
withholdings to invest the extra money throughout the year.
- ebalance your portfolio; take into
consideration if anything has changed -- i.e. time horizon, objectives, risk
tolerance, etc. Some investors will sell some winners and reallocate cash,
others will take some losses for tax purposes. While these moves may or may
not be right for you, and will certainly have tax consequences, consider the
implications of the tax year on your portfolio.
- Save for a rainy day. Use that bonus
to get a head start on an emergency fund. Many financial commentators,
advisors, and others in the personal finance world say it's a good idea to
have six to nine months' worth of expenses set aside for unforeseen
- Review all contributions and portfolio
allocations as well as beneficiary designations to help start off 2016
on the right financial foot.
Whether you take one of these steps or all of
them, the most important thing you can do now is plan. Plenty of questions can
accompany tax season, given the complex factors at work. Taking time to
understand your financial situation, tax liability and any federal or state
changes can help simplify the process and ensure you meet the April deadline.
After all, it's not so far off.
A version of this article originally appeared
on Fresh Accounts and the Huffington Post.
How a Fed Interest Rate Hike Could Hurt Your Credit Card Debt.
This article appears courtesy of Bloomberg News.
It’s the anti-holiday gift: As consumers rack up credit card charges on
presents, vacations, and dinners for the holidays, card issuers are poised to
raise the annual percentage rate on their cards.
Card issuers are waiting to see if the Federal Reserve’s policy-setting
committee bumps up the federal funds rate this week, as many expect. If it does,
the hike will flow through to many credit card holders as soon as they receive
their next bill.
That’s because the peg for most variable-rate consumer borrowing, whether credit
cards, adjustable-rate mortgages, or home equity lines of credit, is the prime
rate. And that rate moves with the federal funds rate. Prime is 3.25 percent
today, and card issuers add a certain percent on top of it to set the annual
percentage rate (APR).
A 0.25 percent increase in an APR is a nonissue for people who pay off balances.
But for those who carry a balance month to month, it affects the entire balance,
not just new purchases. If this is the start of a series of rate hikes, it could
make paying off a big balance take longer—and cost more. The Consumer Financial
Protection Bureau estimates in a recent report that a quarter-point rise in the
federal funds rate would cost cardholders $1 billion annually, and a full
percentage-point hike almost $6 billion.
The good news? In most cases, if you got a promotional rate on a balance
transfer, that rate is fixed. So anyone who’s taken advantage of such offers
wouldn’t see their transferred balance affected by rate increases until the
promotional period ends.
If you’re carrying a big balance on a card with a double-digit APR, there are
still plenty of offers out there to transfer balances at a zero percentage rate,
fixed, for a year or more. The average length for zero percent offers is a year,
although Citi has a 21-month offer, said Brian Riley, principal at research and
advisory firm CEB TowerGroup.
The length of offers could shrink, or the fees could climb, if there’s a series
of hikes in the federal funds rate. It will take more than a quarter-point rise
to bring much change, though, said Odysseas Papadimitriou, chief executive
officer of cardhub.com and wallethub.com. “I’d expect those zero percent fixed
introductory rates to stay the same—unless the Fed goes aggressive and raises by
50 basis points,” he said.
Consumers with strong credit records can always call their card’s issuer to see
if they qualify for a lower rate. Just be sure your credit is currently as good,
or better, than it’s been in the past. If issuers find your financial situation
has deteriorated when they check your record, they can cut your credit limit, or
decide they don’t want you as a customer anymore. And that would not make for
11 Credit Card Benefits and Perks for Consumers.
When it comes to your credit card, "Read the fine print" is usually code for
"Warning: you're about to get some very bad news."
But your card's terms and agreements aren't
always out to get you. In fact, hidden in there is often a range of perks, from
car rental collision insurance to return protection to concierge services, that
can save you both time and cash.
Years ago, card issuers introduced such bonus
perks to prove their value in the face of a hefty annual fee and to
differentiate themselves in a sea of competitors. Over the years, the extra
benefits stayed tacked onto cards but were mostly forgotten in the sea of fine
print. But now, "financial institutions have decided to highlight these benefits
more at certain times during the marketing cycle," rebranding or re-emphasizing
existing features, says Chuck Christianson, group vice president of Connexions
Loyalty, a division of Affinion Group.
For instance, in November 2012, Citi launched a
marketing blitz to tout its Price Rewind feature, a price protection service,
even though the benefit has been on millions of cards for 20 to 30 years. "These
type of products are not yet in the mainstream," says Christianson. "Not
everyone knows about them, but they're certainly more visible."
While credit card companies slowly aim to make
card benefits more transparent and easily accessible, for now you may have to
sift through your card agreement or request a list of benefits from your issuer
before you know what you're entitled to. But if you ever need to take advantage
of one of the perks, you'll consider it time well spent.
That's how it played out for Harry Campbell, a
San Diego-based personal finance blogger at YourPFPro.com. A month after buying
a new iPhone, he dropped it at a gas station, shattering its screen. Faced with
ponying up $200 for a replacement, he remembered reading something about damage
coverage offered by his American Express Gold card. He called up, filed a quick
claim with a third-party insurer contracted by American Express, sent in the
broken phone and the receipt for his new one, and was quickly reimbursed in
full. "AmEx is one of the best companies in offering perks and rewards," says
Campbell. "It was actually a really simple process."
Now Campbell says he usually charges all his big
purchases to his American Express card or a Visa Signature card with similar
benefits, just in case. "I wouldn't sign up for a credit card based on any of
those specific fringe benefits," he says. "The odds of [needing them] are pretty
unlikely. But it's definitely a nice added benefit."
When you scour your own card's fine print, here
are some perks to look for, how much they could save you and how to take
Perk 1: First crack at concert tickets.
- How it works: Don't have a prayer of
scoring great seats at the Jason Mraz concert? Some card issuers offer
presale or preferred seating tickets to hard-to-get-into concerts and
sporting events; others offer super-cheap seats. When Citi rolled out its
Private Pass feature, it sold select concert tickets to cardholders for $5 a
- What it’s worth: While it may simply
save you the stress of trying to nab tickets when they go on sale to the
general public, a $100 ticket through your credit card could save you a
scalper's $100 to $200 markup.
- What's in the fine print: The deals
come through a third party such as Ticketmaster, so you'll still have to pay
their service fees. Plus, don't expect a discount, just a chance to buy
tickets before your friends do.
Perk 2: Rental car insurance coverage.
- How it works: According to a 2007
survey, one-third of drivers spring for extra collision insurance when they
rent a car, and 56 percent either don't think their credit card would cover
it or don't know for sure. But most credit cards offer collision insurance
for rentals, covering whatever your primary auto insurance won't.
- What it's worth: Prices vary, but a
loss-damage waiver when you rent a car usually costs between $10 and $20 a
day. Taking a pass on a one-week rental could save you up to $140.
- What's in the fine print: You may not
be covered for long-term rentals or rentals in some foreign countries, such
Israel or Ireland. Certain kinds of cars -- including trucks, campers and
often SUVs -- are excluded. Plus, while your credit card may cover damage,
you may be on your own for "loss-of-use" fees while the rental is out of
- See also: Renting a car? Know whether
your card adds insurance
Perk 3: Guaranteed returns.
- How it works: If you're feeling
serious buyer's remorse but it's too late to return an item to the store,
some cards will refund your purchase.
- What it's worth: Card issuers put
their own dollar cap on the perk: Discover cardholders can get back up to
$500 per item; $250 for Visa. With American Express, it's $300 per item up
to $1,000 a year.
- What's in the fine print: No broken
stuff. The item has to be in tiptop shape and you'll need the original
packaging and receipt.
Perk 4: Extended warranty coverage.
- How it works: When you drop your new
gadget three days after the manufacturer's warranty expired, your credit
card will cover the cost of replacing or repairing it.
- What it's worth: Because spendy
appliances and electronics -- refrigerators, laptops, big-screen TVs -- are
usually covered, the savings can be big: up to a maximum of $10,000 for
repair or replacement for most card issuers.
- What's in the fine print: You'll need
to fill out some extensive paperwork to provide proof that what you bought
got destroyed. Plus, card issuers maintain a long list of products that
aren't covered, everything from antiques and jewelry to DVDs and computer
software. And don't expect instant turnaround. Even with cellphones and
laptops, you'll likely have to wait a few weeks.
Perk 5: Cellphone replacement insurance.
- How it works: If your phone gets
damaged or stolen, your credit card will buy you a new one.
- What it's worth: Up to $250 for some
cardholders; that's the amount that Citi will pay for your new phone. But
you'll have to kick in a $50 co-pay, so unless you're using a high-end
phone, it may not be worth it.
- What's in the fine print: To be
covered, you have to pay your monthly cellphone bill with your credit card
and you'll have to file a police report or other paperwork to prove that
your phone is gone. Plus, loss isn't included, so if you left it behind at
the movie theater, you're out of luck.
Perk 6: Trip cancellation coverage.
- How it works: While only 15 percent
of cards offer it, travel cancellation insurance reimburses you the cost of
nonrefundable flights if an emergency or illness derails your travel plans.
A handful of cards offer protection against travel delays, too.
- What it's worth: You can get back up
to $2,500 from Discover if illness forces you to cancel your trip and $125
per day if your trip is delayed. American Express, meanwhile, gives you up
to $250 to cover your meals and hotel while you were stranded during a
snowstorm, but you'll first have to pay a $9.95 fee per person, per trip.
- What's in the fine print: Only a few
reasons are considered just cause to cancel: the death of an immediate
family member, a serious illness or an injury. You won't be covered if a
pre-existing condition flares up or if your destination turns into a war
zone. You'll also have to provide a doctor's note to prove your case.
Perk 7: Cash without an ATM.
- How it works: Discover's Cash-Over
program lets cardholders essentially use their credit card as a debit card.
You can add an additional $40 (or whatever amount you choose) to your
purchase, then pocket the difference in cash. It's not a cash advance, so
there are no fees.
- What it's worth: While it's mostly a
time-saver, you could avoid a few bucks in ATM fees.
- What's in the fine print: It feels
like a debit card, but it's not. Your cash will still be subject to the same
APR you're paying on other card purchases and the service is only available
at certain stores.
Perk 8: Emergency travel assistance.
- How it works: If you get into a bind
while out of the country, some credit cards will step into the fray, whether
you need help finding an American doctor or replacing a stolen passport.
Discover even offers 24-7 translation services in more than 60 different
languages over the phone.
- What it's worth: An on-the-ground
guide could run you $75 an hour or more, depending on where you are, and
Discover, for instance, promises to help you with things a local couldn't,
such as political or medical evacuation.
- What's in the fine print: Some
services, such as translation, are free, but this isn't insurance. You'll be
charged for costs involved in, say, getting you a new passport or finding an
Perk 9: A low price on a car.
- How it works: With American Express's
car-buying program, you use an online interface to build your dream car,
then get a target price based on what others have paid, plus a list of
certified dealers -- before you even enter your contact info.
- What it's worth: According to
American Express, customers save an average of $2,678 off the suggested
retail price, without the stress of negotiating. Some used car dealers have
even agreed to a money-back guarantee, which takes away the potential stress
of getting a lemon.
- What's in the fine print: That
special cardholder price doesn't include tax, title, licensing or processing
fees, a loophole that dealers could use to jack up the price. And the number
you have is a "target price," not a guaranteed price. The dealer you contact
doesn't have to honor it.
Perk 10: Price protection.
- How it works: If you use your credit
card to buy anything from a stereo to a sweater, then find the same thing
for a lower price elsewhere within 30 to 60 days, your credit card will
refund the difference. No more shopping anxiety!
- What it's worth: Your credit card
sets the limit, but with Citi's Price Rewind feature, you can get back up to
$250 a pop, or $1,000 a year.
- What's in the fine print: Most credit
cards have a list of excluded items, such as cellphones, cars and
refurbished items. With most cards you'll have to provide the ad proving
that the exact item you bought is on sale for a lower price. (With Citi's
cards, you can track purchases and monitor sales prices online.) Some cards
exclude online sales, seasonal sales and close-outs, and eBay is out.
Perk 11: Roadside assistance.
- How it works: If your car breaks
down, simply call your card's customer service line and it will arrange to
send a tow truck your way. Jump-starts, tire changes and locksmith services
are usually included too.
- What it's worth: Depending on what
help you need, roadside assistance could save you $50 to $100 by charging
you only a flat fee for the service call; with a Visa Signature, it's
$59.95, or $69.95 with Discover. Others charge a pre-negotiated price for
each service you use, which could save you more hassle than cash.
- What's in the fine print: With many
cards, you're merely getting an over-the-phone tow truck referral, not any
discount on services.
And, compare credit cards here -
ACC Annual Meeting Scheduled for June 10, 2016.
The American Consumer Council will hold its annual membership and business
meeting on Friday, June 10, 2016 at 10:00 am at The Lodge at Torrey Pines
located in La Jolla, CA. The meeting is open to all members of ACC and there is
no charge to attend the meeting. The business agenda for the meeting will be
published in May 2016. For more information, please contact ACC’s meeting
department at 1-800-544-0414.
The Lodge at Torrey Pines, La Jolla, CA
ACC’s Friend of the Consumer Award Recognizes
Outstanding Businesses in 2015.
Is your business consumer-friendly? Does your
business deserve greater recognition for its service to consumers? If so, you
should apply for the American Consumer Council’s Friend of the Consumer Award.
Now is the time to apply!
Throughout the year, ACC presents its "Friend of
the Consumer" Awards. This prestigious award recognizes manufacturers,
retailers, and other businesses that produce or sell products in the United
States that meet or exceed federally-mandated standards and are touted by
consumers as “consumer friendly.”
Each year, ACC awards numerous "Friend of the
Consumer" Awards to deserving companies and organizations because they have
"demonstrated a commitment to American consumers by providing a specific product
or service that fosters consumer confidence and market acceptance."
To apply for the "Friend of the Consumer" award,
complete the online application and return it to ACC with the application fee.
Applicants will be notified within 5 days of receipt of their application.
Thereafter, a panel of independent judges will review your application and make
a formal recommendation within 20 days of receipt of your award application.
For more information, visit:
Certification Accepting Applications for 2016 Spring Cycle:
If your company or organization would like to
increase its credibility with consumers, you should consider applying for the
Green CSM Certification.
Applications for the 2016 Spring cycle are now being accepted through April 1, 2015.
It's a proven fact that consumers want to do
business with companies that are eco-friendly and practice Corporate Social
Responsibility (CSR). The process is straight-forward and all applicants are
recognized by ACC and the Green USA Institute.
All applicants complete the criteria and submit
their responses to ACC's Green Consumer Council for review, assessment and
feedback. Program details and the Green CSM
Certification criteria can be viewed at ACC's website located at: