4 posts from 2008
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- December
Her holiday shopping almost wrapped up, one of Nancy Gustafson’s last purchases was a gift card.
But she was cautious. After hearing about some stores closing or leaving the area, she opted for a gift card from Macy’s, a company she feels will be around to back it up.
“I’m being very careful about some stores, looking for the longer- serving places,” said Gustafson, of Easton, Mass.
Gustafson did the smart thing, consumer experts say.
As the economy slumps, shoppers are trying to make the most of their holiday dollars, so they don’t want to take a chance on a gift card if the store might go belly up.
Consumers are seeing stores like Linen ‘n Things, Circuit City, Bombay Company and Office Depot get into trouble. The closings are largely blamed on the sour economy, the inability of the retailers to get credit and flawed business practices.
While there are state laws that say gift cards must be honored for seven years and many businesses honor them beyond that time, when a business goes under, consumers may be left holding a piece of worthless plastic.
Nancy Howlett, who works at Kingston Town Hall, went for gift cards from Dunkin’ Donuts and Kohl’s. “That’s a safe bet,” she said.
As consumers buy more sale merchandise, gift cards are not as popular this year, according to Ellen Davis of the National Retail Federation.
Gift card sales are expected to drop 6 percent from last year’s holiday season total of $26.2 billion. Overall, holiday sales are expected to increase a modest 2 percent as the economic downturn continues.
But in the final shopping days before Christmas, gift card sales typically increase.
The most popular cards among consumers are for coffee shops, local restaurants and personal services.
Luciano Villani, manager of Westgate Mall in Brockton, Mass., said people are still buying cards from their favorite retailers, but those who are uneasy with a specific store can buy cards that offer flexibility. These range from mall cards to bank cards that may be used where credit cards are accepted.
While retailer, restaurant and personal-service cards do not generally carry a service charge and some may even offer bonuses, there’s most often a service charge — typically $2 to $5 — for mall cards and bank cards.
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The strategy To keep my head above water this Christmas.
How do I do that? There's no doubt many people are finding the financial situation tough. Lower interest rates and petrol prices may have provided some welcome relief but as the economy slows, things are likely to get worse before they get better. The last thing you need is to blow the budget over the silly season and find yourself in strife as a result.
That means approaching this holiday season with a more disciplined approach. Credit Union Australia acting chief executive, Rob Nicholls, says consumers should set a budget for how much they can afford to spend rather than racking up big credit card bills to be paid off later on. Make a list of what you want to buy before you go shopping. Nicholls says people are less likely to impulse-buy if they've written it down first. Try to work out a budget for each item on your list and shop around for the best price. Retailers have been doing it tough too and the odds of finding a better deal have improved as a result.
Be realistic about what you can afford, Nicholls says, especially if you're putting it on credit to be paid for later. In fact, Nicholls says it makes sense to have a strategy in place to manage debt before hitting the shops this festive season.
What sort of strategy? By having a realistic picture of how much you're likely to spend, you can choose the most efficient way of using credit. If you know you can pay off your credit card when it's due, Nicholls says you can make good use of any interest-free period.
But if you're likely to take several months or more to pay off your Christmas spending, it may be better to use a card with no interest-free period but a lower interest rate.
If you're prone to bingeing, Nicholls suggests asking your card provider to reduce your credit limit. It sounds drastic but not having excess credit available removes the temptation to overspend.
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We are a country of spenders who must learn the hard way to practice what our grandparents have always known: A penny saved is a penny earned.
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Scam: To trick or cheat someone out of their possession(s). A ripoff.
The internet is littered with scams such as pop-up ads or e-mail spam ads with "Get Rich Quick/High-Paying Jobs/You Are A Winner" messages. The use of credit cards has become so routine, one does not often think of the dangers.
When entering (Credit Card Scam) on the Google search engine, there are 39,800,000 sites with information regarding fraud. Predators and thieves have preyed on unsuspecting soles, to the tune of an estimated $52 billion this past year.
One such scam, called "triangulation," happened when an unsuspecting customer purchased an item via an on-line auction. The seller required a money order payment. As it turned out, items the original seller purchased on-line from Amazon.com were paid for with stolen credit cards. The thief was able to turn the stolen credit card numbers into cash, by purchasing items using the stolen numbers, then selling them on-line to an unsuspecting buyer for payment of cash.
Another unavoidable scam, is called "card tumbling" with the thief electronically using math variables to generate a sequence of numbers. Much like a locksmith, each number is tumbled until a correct sequence finally falls into place. They test it and the culprit has your card number to go shopping.
The list of scams and the length which predators go to steal your money and or your identity is endless.
In May 2008, U.S. News and World Report reported recent scams which work like this: A fraudster, claiming to be from the security department of a credit card company, tells the consumer he is checking unusual account activity. He may even offer a badge number. Then, he tells the consumer that a fake purchase, such as an $800 television from Best Buy, has been made on the card.
When the consumer says he did not make that purchase, the scammer explains that he is starting a fraud investigation and gives the consumer a "confirmation" number. He says he needs to verify that the consumer has the credit card and asks for the three numbers on the back of the card, known as the card identification number. He may already have the consumer's address and card number and that verification code lets the fraudster ring up charges on the card.
There are news media and Internet reports published almost daily of new inventive ways and the lengths which criminals will go to steal credit card information.
Listed below are some important steps and helpful reminders, which could help be secure with card cards.
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