Many Services Just Aren’t Worth the Money
It is hard not to get bludgeoned these days with offers for any number of financial services that will supposedly save you time, irritation or money. In many cases, the offer is made by a reputable firm that will cheerfully deliver the service that’s promised, too.
There’s only one problem. Although many of these services look attractive at first glance, they’re just not worth the money. Here are a handful of legitimate offers that you can probably do without:
Credit card protection
Some minuscule percentage of Americans will have to deal with unauthorized charges on their credit cards because of a lost or stollen wallet, or, perhaps, a more sophisticated fraud.
Banks and credit card companies, nonetheless, would like to sell us all credit card “protection.” What does this protect you from? Paying for those unlikely unauthorized charges, of course.
Typically, the fee for such protection runs about $2 a month. But what makes it such a bad deal is that federal law limits cardholder liability to $50 for unauthorized charges made before the cardholder notifies the issuer. Any charge made after such notification is the issuer’s problem, even if it’s for less than the $50 limit. Paying $25 annually to protect against the chance that you’ll lose $50 clearly doesn’t make a lot of sense.
Credit insurance
Now here’s a deal. One big bank offers credit card insurance for only $39 a month. For that fee, the bank promises to pay itself back if you die or become disabled and cannot keep your payments current.
It’s hard to imagine that a marred credit record would haunt you when you’re dead. Although, a clean credit history is valuable if you are still around to enjoy it. Still, simple life or disability insurance is cheaper to buy and is far less limited.
Credit repair services
Many people who have had credit problems in the past pay between $200 and $2,000 to so-called credit repair clinics that promise to erase negative remarks on their records. In reality, legitimate credit repair services can do no more than you could accomplish with a little time and effort.
Often all these services do is order a copy of your credit record and then “dispute” all the negative remarks. By law, the credit company must then go back to the bank or finance firm that reported the payment problem and ask them to verify that the remark was accurate. If the bank does not return with an adequate response, the credit reporting company must erase the negative remark from your record.
Sometimes banks fail to respond within the required time, so accurate complaints are eradicated. But that’s not the norm.
Occasionally these firms will also meet with you and your creditors to work out your payment problems. However, a similar service is often provided for free through Consumer Credit Counseling Service offices around the country. A few CCCS offices charge minimal fees, usually between $15 and $20, but that’s still far less than the credit repair clinics.
Credit check services
Some credit reporting companies now offer subscription services where you can get a copy of your credit record as often as you like for less than $40 a year. The problem is, few people need more than one such report annually. And that would cost roughly $10.
The credit reporting companies say they’ll also tell you any time someone has requested a copy of your credit report. However, this is also of limited value. Normally, any time you apply for a loan or a credit card, the issuer will get a copy of your credit history. In other words, they would be telling you something you already know.
Automated teller charges
Most big California banks are now members of a variety of automated teller networks. These networks provide bank customers with the ability to get cash from electronic machines owned by competing banks. That can be very helpful to cash-strapped individuals who are miles away from their own bank’s nearest branch.
But consumers pay for this convenience in a big way. Commonly, it costs between $1 and $4 every time you withdraw funds from another bank’s automated teller, compared to a few pennies--if anything--when the withdrawal is made from your own bank.
900 numbers
You want a low-rate credit card? One with no annual fee? Need auction information or stock market tips? Chances are, there’s a 900-number designed for you.
Unfortunately, many of these 900 numbers do not provide what they promise.
Several that advertise credit for the uncreditworthy provide nothing but a credit card application. You pay $9 or $10 for the call, and may have to pay another $40 to apply for the card. The credit card company might then require a deposit to secure your card. Others give you what you’ve paid for, but often at an exorbitant cost.
For example, several 900 lines promise information about government auctions, where you can supposedly buy exotic cars, vacation homes and office supplies for just a fraction of their real value. For details about these auctions, the service usually charges between $30 and $100.
Generally, however, consumers can get information about government and private auctions by simply reading the classified advertisements. The U.S. government also lists its auctions in free pamphlets available through most government printing offices.
Kathy M. Kristof welcomes readers’ comments and suggestions for columns but regrets that she cannot respond individually to letters and phone calls. Write to Personal Finance, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.
