Tag: consumers

Dr. Roubini says rising oil prices will stifle any possible recovery

You have to follow CNBC to get the straight talk from the master seer:

“Oil could be closer to $100 a barrel towards the end of this year, this could be a negative shock to the economy.”

Or you could have gotten the much less publicized version of the relatively same opinion almost two months ago:

No matter – if oil continues its march, consumers won’t be joining the summer of love. And any chance of the recovery the powers that be are trying to convince them is well in hand will be swirling in a tanker parked off the Gulf Coast.

How this all plays out is anyone’s guess, but with interest rates also on the rise it seems unlikely that we are going to see burgeoning demand for goods in the near future. There’s just too much out there, and given the choice between a widescreen TV and filling up the tank, the latter is going to win hands down. Heck, even yard sales are hurting for business.

Bank of America isn’t going to get out of trouble by making trouble for its customers

bofaYou would think that a bank that has received tens of billions in taxpayer funds to avoid death would learn from their mistakes. Not Bank of America. Like the rest, they are not only suffering from the housing debacle, but they’ve now got the issue of revolving credit defaults sucking life out of them. Their solution? Raise rates, and obscure credit terms as much as possible.

I received some of those ‘balance transfer’ check thingies the other day. I have a credit line at B of A, but I barely use it. It’s kept primarily to cover the medical deductible after I break a leg fly fishing. I don’t have balances on any other cards because those other cards are American Express – you pay that off monthly or you don’t get to use it anymore. I can’t use these checks, and in fact I’ve requested that they don’t send them to me at all. Those requests have not been honored.

Nonetheless, what bothers me about these balance transfer devices isn’t that someone could nab them from my mailbox and transfer their balance to me (the reason I don’t want to receive them to begin with), it’s the terms within. They suck. The form they come attached to is labeled with “Promotional Offer 0.99%” in big bold letters, but as everyone probably knows by now it’s the fine print you have to worry about. Unfortunately, B of A screws that up as well. The bank spits out the standard jargon regarding balance transfers…

* Promotional Offer ID FXNH-ZKJDR: The Annual Percentage Rate (APR) for this offer is a promotional corresponding ANNUAL PERCENTAGE RATE of 0.99% (.002712% Daily Periodic Rate (“DPR”)) and applies only to new Balance Transfers, Direct Deposit Cash Advances and Check Cash Advances bearing this Offer ID (each an “eligible transaction” for this offer)…

It goes on to say that if you are late paying, or if your balance exceeds your credit line, that the offer ends immediately and an APR of 9.9% kicks in immediately. Pretty typical. But then, after all the normal legalese is spewed, the terms stop, a line is printed across the page to separate the next set of paragraphs, which continue as follows…

Non-promotional Check Cash Advances and non-promotional Direct Deposit Cash Advances are subject to the variable APR for Cash Advances, which as of March 31, 2009, this APR is 19.99% (.054767% DPR). In addition, we may increase the APRs on your account up to the Default Rate without giving you notice. As of March 31, 2009, the variable Default Rate is 27.24%.

The average person without a law degree immediately assumes that ‘non-promotional’ label means the following terms don’t apply to the ‘check’ they are about to write to themselves. Then they sneak this in…

The standard transaction fee for Check Cash Advances, Balance Transfers and Direct Deposit Cash Advances is 3% of each transaction, Min. $10. Effective as of June 1, 2009, the standard transaction fee will be 4% of each transaction, Min. $10.

So it’s really not a 0.99% APR – it’s a little over 4% (or 5%, depending on when you write your ‘check’) after tacking on the upfront fee and compounding it.

Again, all this comes from a bank that has taken tens of billions of taxpayer funds to stay afloat, and is going to need billions more to stay that way. But I guess when you have the government perpetually covering your behind it doesn’t matter if your revolving credit portfolio falls further in the tank. We can’t subsidize the banks forever, but B of A clearly has other ideas.

And by the way…

We will allocate your payments to balances (including new transactions) with lower Annual Percentage Rates (APRs) before balances with higher APRs.

That’ll be trouble for B of A soon too.

MG signing off (to shred those ‘checks’)

Ignoring threats hits consumers’ wallets

But how much do they really care?

As Jeff Fox, techology editor of Consumer Reports noted (via MarketWatch):

“Consumers are really on their own. It’s really up to people to protect themselves. That’s why consumer education is so important. If you don’t protect yourself, chances are nobody’s going to do it for you.”

Translation: Reliance on one software vendor, one pre-installed bundled, one person’s product review, just doesn’t cut it anymore. You have be in the know, and willing to take the time to implement solutions.

This creates a quandry for computer and software manufacturers alike. As the price of computers continues to fall, will people realize the value of their system is the data within, or brush off the warnings, thinking it is relatively too costly to bother properly securing their machinery?

It is hard to educate people on the value of the intangibles.