Christmas is a time of year when we joyously celebrate the birth of Jesus the Christ and God’s giving of His son for us, and many people respond by giving gifts to loved ones, friends, and even to total strangers in need. It is always good that we extend acts of love and charity to others, and to do so seems especially appropriate this time of year.
Unfortunately, some merchants view the extraordinary goodwill and generosity shown by Christmas shoppers as an extraordinary opportunity to take advantage of their goodwill and generosity. In that regard, shoppers need to be aware of certain perils, namely in buying gifts cards and using credit cards, and should shop accordingly.
Gift cards can seem like a very practical way to ensure that those to whom we give get the perfect gift. Last year, U.S. sales of gift cards exceeded $80 billion. Unfortunately, consumers lose nearly $8 billion annually through such cards either by misplacing or forgetting to redeem them, through various hidden fees, or through expiration dates imposed by the merchant. It’s a point worth making that the legal tender used to buy a gift card has no expiration date.
It’s very important for both the giver and the receiver of gift cards to read and remember the fine print. Terms and conditions that accompany these cards can substantially decrease their face value. This fine print may include:
Both the giver and receiver of gift cards should learn about any expiration dates that apply and any fees that may be assessed against the cards. Furthermore, the gift card, a copy of its bar code, and the receipt for its purchase should all be kept in a safe place. But in the end, most losses could be avoided if those who get gift cards use them sooner rather than later.
A second peril for Christmas shoppers exists with using credit cards issued by merchants. Major retailers will frequently ask if you’d like to put your purchase on your store credit card, and if you don’t have one they’ll offer you the opportunity to apply for one on the spot. These offers often include a generous discount for the purchase if it is made with either your existing or a newly applied-for card. Retailers know they will make far more as your creditor than they could ever make by simply selling you merchandise. Some retailers even sell merchandise at a loss knowing that the real profits are made in their lending of money.
Offers for “no payments until next June” or “interest-free payments for six months” are designed to encourage you to carry unpaid balances on your account. Buyer beware. These offers all come with hefty, hidden price tags. One financial advisor illustrates the point with the following example:
The average credit card balance these days is pushing $8,000 and the typical interest rate is about 18 percent, with many folks paying even more. Doing the simple math, an 18 percent interest rate on an $8,000 balance is $1,440 a year.
If you need more convincing, what if rather than paying $1,440 a year to the credit card company, you invested $1,440 every year for the next 20 years and you earned an average return of 8% a year. In 20 years, you’d have accumulated a nest egg of $71,169!
That should make us all think twice when we’re offered credit or we’re tempted to reach for a credit card to make a purchase.
The Christmas season should be a holy and joyous time marked by generosity. It’s a time for giving. But we should be careful that as we give gifts, we give them with our heads as well as with our hearts.
Unfortunately, some merchants view the extraordinary goodwill and generosity shown by Christmas shoppers as an extraordinary opportunity to take advantage of their goodwill and generosity. In that regard, shoppers need to be aware of certain perils, namely in buying gifts cards and using credit cards, and should shop accordingly.
Gift cards can seem like a very practical way to ensure that those to whom we give get the perfect gift. Last year, U.S. sales of gift cards exceeded $80 billion. Unfortunately, consumers lose nearly $8 billion annually through such cards either by misplacing or forgetting to redeem them, through various hidden fees, or through expiration dates imposed by the merchant. It’s a point worth making that the legal tender used to buy a gift card has no expiration date.
It’s very important for both the giver and the receiver of gift cards to read and remember the fine print. Terms and conditions that accompany these cards can substantially decrease their face value. This fine print may include:
Many retailers realize that a significant percentage of gift cards will be lost, forgotten and never used, or if partially used, a small balance may go unclaimed. Very few gift cards allow the recipient to redeem the card for cash, even if after a purchase there is only a small balance remaining on the card.· a fee to be paid upon purchase of the card;
· a fee to be paid if the card is lost or stolen (and even then the lost card’s bar code and the receipt provided the gift-giver may be required before a replacement will be given);
· a monthly maintenance fee to be charged on inactive cards;
· a fee to be charged simply to check a card’s remaining balance;
· a restriction to limit the period of time that a card is valid.
Both the giver and receiver of gift cards should learn about any expiration dates that apply and any fees that may be assessed against the cards. Furthermore, the gift card, a copy of its bar code, and the receipt for its purchase should all be kept in a safe place. But in the end, most losses could be avoided if those who get gift cards use them sooner rather than later.
A second peril for Christmas shoppers exists with using credit cards issued by merchants. Major retailers will frequently ask if you’d like to put your purchase on your store credit card, and if you don’t have one they’ll offer you the opportunity to apply for one on the spot. These offers often include a generous discount for the purchase if it is made with either your existing or a newly applied-for card. Retailers know they will make far more as your creditor than they could ever make by simply selling you merchandise. Some retailers even sell merchandise at a loss knowing that the real profits are made in their lending of money.
Offers for “no payments until next June” or “interest-free payments for six months” are designed to encourage you to carry unpaid balances on your account. Buyer beware. These offers all come with hefty, hidden price tags. One financial advisor illustrates the point with the following example:
The average credit card balance these days is pushing $8,000 and the typical interest rate is about 18 percent, with many folks paying even more. Doing the simple math, an 18 percent interest rate on an $8,000 balance is $1,440 a year.
If you need more convincing, what if rather than paying $1,440 a year to the credit card company, you invested $1,440 every year for the next 20 years and you earned an average return of 8% a year. In 20 years, you’d have accumulated a nest egg of $71,169!
That should make us all think twice when we’re offered credit or we’re tempted to reach for a credit card to make a purchase.
The Christmas season should be a holy and joyous time marked by generosity. It’s a time for giving. But we should be careful that as we give gifts, we give them with our heads as well as with our hearts.
3 comments:
Joy to the world....and good sound advice.
the state paper was ofended by this one as their calling for your job to be elimanated b/c of what u wrote
must have been the spiritual stuff u included that didnt qualify for their demanding standards
i mean does scopee have it out for u or what
Hey anon, we all have our faults, I bet you might too. So realize that, follow the General's style, and enter the joyous and peaceful season of Christmas if you can.
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