Here’s a twist: Don’t buy anything on Black Friday

By now, many of you have probably polished off your Thanksgiving feast, and are focusing on a big day of shopping ahead. In fact, our most recent holiday poll estimates that 50 million Americans will be descending on the malls tomorrow. 

To most of us, Nov. 28 — Black Friday — is a day to take advantage of blockbuster sales. But there’s another group of folks — I’d call them consumers, but they’d surely take offense — who think all this focus on materialism is bunk, and they’re urging others to live more frugally and buy a whole lot less. 

We’re not talking about a small commune of crackpots here, but an array of environmentalists, social activists, and concerned citizens in 65 countries, according to one of the event’s organizers, Kalle Lasn,  co-founder of Adbusters Media Foundation, which has promoted Buy Nothing Day since 1992. Adbusters is a not-for-profit magazine, based in British Columbia, Canada, that’s concerned about “the erosion of our physical and cultural environments by commercial forces.” 

So for the 17th year in a row, celebrants will mark Black Friday in their usual, unconventional manner, doing things like cutting up credit cards in malls, holding politically charged protests and vigils, and wheeling shopping carts without actually buying anything. Others will mark the occasion less demonstrably, with non-commercial street parties or by just going off on family outings. The idea is to do anything but open your wallet, Lasn says. 

Find the value in your holiday purchases

At Consumer Reports, we’ve been telling you which products to buy for over 70 years, and part of that advice has always been based on whether a product represents a good value. That’s why some of our Recommended products are classified as CR Best Buys; a CR Best Buy™ may not be the top-rated product in its class, but it’s one that we think offers the best combination of performance, reliability and price. 

To make it easier for you to find those products that offer good value, we’re working on a new feature – the Consumer Reports Value Index™ – and we wanted to share this free Beta version with you to help you make the best purchases this holiday season.

The chart displays the “value zones” for recently rated super-zoom digital cameras. Products on the upper right side of the chart offer better values than those further to the left and bottom. For example, the Fuji FinePix S700, which received an overall score of 70 in our Ratings, is a High Value product at a median price of $165. The Kodak EasyShare Z1012IS is the best superzoom camera we tested, with an overall score of 76. But at a median price of $240, it represents a Medium Value, which is a notch below the Fuji’s High. Which one should you buy? That depends on your budget and needs. Based on our Ratings, they’re both Very Good cameras, but the Kodak has some qualities that set it apart from others in this class. And the Fuji has a less effective type of image stabilizer than most other superzooms, which is why it wasn’t selected as a Recommended model, despite fine performance in other respects and its low price.  ConsumerReports.org subscribers can get more information in our Ratings.

To use the Value Index™, first roll your mouse over a circle to find out more about the model it represents. Every camera in this chart scored Good or Very Good overall in our tests, and prices are midpoints derived from a range of online prices for that model. To learn more about a model, subscribers can click on its name to go to its page, which includes our expert review, a detailed breakdown of the model’s overall test results, Reliability data, user reviews, and a link to compare online prices for that model. (The average price shown on the model page may differ from the one in this chart, due to timing.)  Also, remember that the Value Index shown in the chart represents a snapshot in time. It’s based on this week’s median online prices for super zooms. Those prices do of course change, so the models shown might appear in different zones by, say, next week.

Each week through this holiday season, we’ll be providing a Value Index for another product. This is a Beta, and we’re working hard to improve this feature. If you have any feedback – or would like to tell us whether you got any value out of this – please share your thoughts in the Comments, below.

401(k) investors stay the course

Some happy news for those of us who care whether Americans are saving enough for retirement: According to a just-released survey by Hewitt Associates, only 4 percent of 401(k) participants have stopped contributing to their plans as a result of the recent financial chaos. And the rate at which they're saving has declined only slightly.

Whether this speaks to the intelligence, courage, or plain old laziness of investors isn’t for us to judge. But it is probably a good thing, both for the markets and for the long-term financial health of 401(k) participants.

As our Money Lab has noted, underfunding a 401(k) plan and cashing out of one entirely are two of the biggest financial mistakes investors can make.
 

Should you jump for high-interest savings through troubled Citibank?

Of late, very competitive rates for FDIC-insured savings, CDs, and money-market accounts have been offered by troubled banks such as Citibank and GMAC Bank, owned by General Motors. The FDIC says those deposits are covered by the same, super-safe federal insurance as every other insured deposit. Even if an ailing bank is acquired by another bank or the government, the money is still insured. Depositors generally can make deposits and withdrawals the day after the acquisition. (Click here for more information on dealing with banks in trouble.)

But here's a catch: If the government takes over a failing bank, the FDIC doesn’t have to honor the bank's interest rates.  A 1991 law, the result of the last big banking scandal, says the FDIC may lower a bank's interest rates to current market levels to make the bank more attractive to potential buyers. That includes CDs, which you might have considered ironclad contracts.

The good news, such as it is: If accountholders don't like the new rate, they can withdraw their money without suffering early-withdrawal penalties normally associated with CDs. "They can just knock on their bank’s door and the bank will have to honor that," says David Barr, a spokesman for the FDIC. (Folks with CDs in IRAs, take note:  Your early withdrawals are still subject to IRS penalties and taxes if you're not yet 59 1/2.)

The interest-rate-change rule only applies when the government takes over a bank. If one bank buys another, it has to honor that original CD rate, Barr says.

If the specter of losing a great interest rate gives you pause, check with interest-rate comparison sites such as www.bankrate.com to see if a healthier bank is offering as good a rate--or better. Or take your chances, with the understanding that in the unlikely event the bank goes into receivership, you may have to move your money elsewhere.

For more from Consumer Reports Money Adviser on finding safe places for your money, click here.

--Tobie Stanger

E-mail misleads consumers about gift cards

An e-mail has been making its way across the Internet during the past few weeks, urging consumers to avoid buying gift cards from some 30 national merchants, suggesting the companies’ financial troubles could render the cards worthless.

Trouble is, the scare mail is based largely on old news, misleading information, or falsehoods. But there’s enough truth to some of the claims to make the message appear credible, thus discouraging some shoppers from buying the cards, which a recent Consumer Reports poll revealed are among the most-wanted and most-purchased holiday gifts this year. The e-mail cautions consumers about buying gift cards from merchants including Gap, Talbots, Home Depot, and Foot Locker, among others. 

According to ABC Television affiliate WTVD in Raleigh-Durham, N.C., which covered the story, most of the closings cited in the e-mail were announced nine months to a year ago (Sharper Image, for instance filed for bankruptcy protection last February); the e-mail makes no mention that some of the chains are adding stores while shuttering others, nor does it note that many of the companies that are downsizing their brick-an-mortar operations maintain a strong online shopping presence. 

The phantom e-mail urges consumers to use their gift cards “before it’s too late.”

Notes from the underground economy

This week, computer security giant Symantec released a report that details a thriving online underground economy in which stolen goods and information, with a potential market value of about $276 million, are bought and sold. Symantec’s Security Technology and Response (STAR) organization collected the information by combing cybercriminals’ advertisements in underground Web sites, forums, and chat rooms from July 1, 2007 to June 30, 2008.

Not surprisingly, financial data accounted for a nice chunk of the underground inventory. The price for bank account credentials—account numbers with authentication information—ranged from $10 to $1,000, the report said. And credit card numbers, complete with expiration dates and security codes, were priced anywhere from as little as 50 cents to $12 per account. Most credit card information is sold in bulk.

For advice on how to keep your personal data out of the hands of cybercriminals, go to the Consumer Reports Guide to Online Security. —Chris Horymski

This could be a great time to convert to a Roth IRA

If you’ve ever considered converting a traditional, tax-deductible IRA into a Roth IRA for the latter's tax advantages, now could be the time to make your move.

Because the markets have fallen so dramatically, you will probably face a smaller tax bill now if you do a conversion than you would have before. If you convert, you must pay ordinary-income taxes on the money you switch over. You may also be able to turn a SEP-IRA or SIMPLE IRA into a Roth.

Roths have two big advantages. First, the money you withdraw isn’t taxed—neither the principal nor any growth—as long as you’ve kept it there for at least five years and you’re 59.5 or older. Second, you never have to take minimum distributions beginning at age 70.5, as you do with a traditional IRA.

Which way to pay: Credit, debit, check, or cash

 

Find out more about this public education campaign from Consumer Reports.

Whether you shop online or in stores this holiday season, the method of payment you choose makes a difference. Credit cards offer the most protections for consumers, but if you routinely carry a balance you’ll pay more for your purchases once fees and interest charges are factored in. 

Here’s how commonly used forms of payment stack up:

Credit cards. Use a credit card for most large purchases, if you’re not carrying a balance and can pay off the bill each month. If you don’t pay off your purchases each month, you’ll pay interest rates of about 12 to 13 percent on your balance, depending on whether your card has a variable or fixed rate.

Credit cards offer greater protection than other forms of payment. If your account number falls into the wrong hands, you're liable for only the first $50 in charges, and most large issuers waive liability altogether. If you have a legitimate beef with a seller, it's relatively easy to have the charges removed until the dispute is settled, as long as you report the matter to the card issuer within 60 days after the charge appears on your statement.

Debit cards. Use a debit card when you don't mind having the money withdrawn immediately from your checking account. Debit cards are a surefire way to avoid onerous credit-card interest charges, but you could be slapped with burdensome overdraft fees if you don’t have enough money in your account to cover your purchases. Overdraft fees average around $30 for each purchase.

Related: - Credit card rates that jump overnight - Steps to make your card work for you - The dark secrets of debit - Debit rewards: More glitter than gold - With credit cards, a deal is not a deal - CreditCardReform.org - Top 10 credit card traps (PDF)

11 ways to strike gold on Black Friday

Despite the gloomy economy, more than 50 million Americans — roughly one of four adults — are expected to hit the mall on Black Friday, one of the most frenetic shopping days of the year. There’s no doubt you can score some incredible bargains on Nov. 28 by getting up extra early or staying up past your bedtime to take in the midnight madness sales. But are the bargains so irresistible that they’re worth battling massive crowds and losing sleep over? 

To help cut through the chaos, we’ve compiled the following savvy-shopper’s guide: 

• Don’t be desperate.  True, a lot of retailers save their biggest bargains for Black Friday because so many people are out and about and in a spending mode. But competition for your shopping dollar is unusually intense this season, and retailers have been slashing prices aggressively for months. There’s no reason to believe that the wheeling and dealing will stop any time soon. So, if you miss out on one blockbuster, another will surely come along. This year, we’ve seen plenty of so-called one-day sales that were extended.

• Weigh the pros and cons of doorbusters.  Black Friday earned the reputation as a bargain-hunter’s paradise because retailers feature a few high-profile, attention-grabbing toys or electronic items at or below cost to draw you in. Such products are typically sold as “loss leaders” and are usually are offered in extremely limited quantities. Don’t bother to show up unless you’re willing to wait on line, sometimes for hours before the store opens, and even then there’s no guarantee (or rainchecks). Many stores will be working harder this year to coax you inside. As an added inducement, look for unadvertised sales throughout the day. Kmart, for instance, said such sales are a big part of their holiday merchandising strategy.

• Visit the retailer’s Web site. If you sign up for e-mail alerts from your favorite stores, you’ll receive notification of upcoming sales and often be targeted with exclusive coupons not readily available to everyone.  Shoppers can also learn if the products they want are stocked and available. It might save you a trip to the store. In addition, many retailers offer the opportunity to purchase the item online and pick it up locally, also a time-saver.

Related: - Black Friday deals on LCD and plasma HDTVs - Make Black Friday a little brighter - Black Friday HDTV "specials" - Best GPS navigation deals for Black Friday 2008 - Holiday toy shopping hints

Is gift-card spending on the decline?

The National Retail Federation is forecasting that gift-card sales will drop by nearly six percent this holiday season as fewer shoppers buy the cards and those who do spend less on them.

The NRF, which surveyed nearly 9,000 consumers nationwide, estimates that Americans will plunk down $24.9 billion on cards this season, a $1.4 billion drop from last year. Overall, fewer people are expected to purchase gift cards as well — 53.5 percent of shoppers down from 56.6 percent — and the average amount they plan to spend on cards has declined, too, from $156.24 in 2007 to $147.33 this year.

“Since gift cards never go on sale, some price-conscious shoppers will be passing up gift cards in favor of holiday bargains," said NRF President and CEO Tracy Mullin. “Retailers may need to make minor adjustments to holiday plans as fewer people may be hitting the stores in January to redeem gift cards.”

The survey found that the biggest gift-card spenders this year will be men, who will spend an average of $156.98 on the cards, and those over age 45, who will spend $168.02.

People are buying fewer cards primarily because they consider them impersonal. Other reasons cited in the survey: Shoppers would rather stretch their dollars by buying merchandise on sale; they’re turned off to cards with expiration dates or added fees; and they simply don’t know which gift card those on their shopping list would want. A smaller percentage of respondents were sour on cards because they’re worried the recipient would lose it or the retailer might go bankrupt.

A similar holiday poll by the Consumer Reports National Research Center revealed that gift cards remain highly popular — in fact, they’re among the most desired and most-given gifts — even though we continue to warn folks the onerous fees associated with some cards and the billions of dollars in gift card deposits that are never redeemed. An astonishing finding in our poll was that one-quarter of those who received a gift card in 2007 still haven’t used it. The most common reasons: They didn’t have enough time; forgot about the card; couldn’t find anything they wanted; or the card expired and became worthless.

Related:

• Michigan’s new gift card law a step in right direction
• Tweeter files for bankruptcy: use those gift cards fast
• A call to make gift cards safer
• Avoid gift card pitfalls