Should frequent-flier programs be regulated?

New York Senator Chuck Schumer’s latest campaign is a bit more lightweight than health care reform: airline frequent flier programs. On Sunday he urged the Department of Transportation to regulate the programs, saying that consumers often face quickly expiring miles, confusing terms, and little notification from airlines before miles vanish.
  
We've written about this trend of expiring frequent flier miles in the past. Just a few years ago you had three years to redeem miles. Now 12-24 months is the norm (Virgin Atlantic is still three years). Miles used to expire after Dec. 31 each year; now they may expire any time and you're unlikely to get a call from your airline warning you. (Tthere are some sites that will track your miles expiration dates and alert you 30 to 60 days before they expire. We haven't looked at them, but the Los Angeles Times has.) There's even an iPhone app, Mileblaster, that keeps track of your miles and sends alerts. 

Some airlines give you fewer miles depending on the type of ticket you buy. British Airways, for instance, now gives only 25 percent of the miles you'd receive with a standard ticket if you book a discounted, or non-changeable ticket.
  
This all may not seem like a big deal since miles programs are free. But if you stay loyal to an airline in hopes of cashing in rewards, you may miss out on cheaper airfares from competing airlines. And according to the Associated Press, Schumer believes that consumers actually pay for frequent flier programs through higher ticket prices and fees.
  
Randy Petersen, founder of flyertalk.com and editor of insideflyer.com, says miles expiration policies fall into three scenarios:
 
•  Passive expiration. Points expire after two years, but you can easily reset the two years through almost any activity: filling out an online survey, making small redemptions (like buying a magazine subscription) or making purchases through an airlines "mileage mall." In such "malls," purchasing a single, 99-cent song on iTunes might be enough to keep your miles current. Delta, United and American Airlines fall into this group.  You can even go to http://www.e-miles.com and watch a quick commercial to earn points and reset your points clock. AirTran, Continental, Delta, Frontier, and US Airways all participate in e-miles. Some airlines will even reinstate miles for a fee. This may be a bad deal, however Delta will reinstate all of your miles, no matter how old, for $50.  

Shoppers say: Don't ask for phone # and e-mail at checkout!

Facebook and its ilk may have changed attitudes toward broadcasting personal facts and feelings, but there's one venue where a majority of Americans do not want to share: The checkout counter. 

Fifty-eight percent of consumers bristle when checkout clerks ask for e-mail addresses and phone numbers, according to a recent, nationally representative poll conducted by Consumer Reports, and assisted by our sister Web site, The Consumerist. That's in addition to our annoyance with checkout-counter solicitations to open store credit-card accounts, disdain for stores' obsession with extended warranties, and frustration with too few open registers.

Retailers, hear us, please. It's challenge enough during the holiday season to get a parking spot, navigate through malls and store aisles, spend within our budgets, and get to the front of checkout line in one piece. We don't want to have to share our personal information, which retailers use to hone their marketing programs or, if you will, pester us more.

There's nothing wrong with politely refusing to tell the checkout person that information. The store doesn't need it to complete the sale, and isn't going to turn you away if you say no. And there's good reason to resist: The more information floating around about you, the more likely your name will land on mailing, phone and e-mail lists used you more stuff you may not want or need. Consumer Reports Money Adviser recently reported on many of the ways retailers and service–providers use your personal information, as well as tactics to reduce your vulnerability. Do yourself and your family a favor and just say no.

At the sales counter, resist the store-card pitch

After waiting in an interminable line to buy holiday gifts, one thing you might not want to hear when you reach the checkout counter is a pitch for a retailer's credit card. In our nationally representative survey of the top holiday-shopping annoyances, 52 percent of respondents said they don't care for cashiers pushing store credit cards.
 
Of course, the 10 percent to 20 percent discounts that come with the store card on the goods you're buying can be tempting, especially this year when many people are trying to stretch their holiday shopping dollars. But if you don't typically pay your credit cards in full each month, you should decline the cashier's offer. And of course, before you sign up for any credit offer, you should read and understand all the terms and conditions of the account—something you might not be inclined to do with a long line of shoppers waiting impatiently behind you.
 
Here's the good and bad of store cards:
 
The Bad:
Interest rates can be wickedly high. For example, Macy's store card (which gives you 20 percent off your purchases for two days when you sign up) comes with an interest rate of 24.5 percent compared with a national average for credit cards of 12.81 percent as of Nov. 12, according to LowCards.com. If you miss a payment, any savings you get for opening a store card could quickly evaporate at such high interest rates.

• Opening a card will temporarily ding your credit score by only a few points, but opening a bunch of cards at once could have a real effect on your credit score.
 
• If you start using the card quite a bit it can lower the amount of rewards or cash you earn on your primary credit card.
 
• You might spend more than you'd planned, just to take advantage of the discount. And having a retailer credit card with rewards may entice you to spend more at that particular retailer, instead of shopping around for the best price.
 
• Store cards may not have the same consumer protections as credit cards. However many retailers offer both a store card and a Visa- or Mastercard-branded card that may give you some of those protections.
 
The Good:
• You can get a discounts of 10 percent to 20 percent on your initial purchases.
 
• If you frequently shop in the store—and you always pay your bills on time—you may be able to build points towards future purchases, get advanced notice of sales, or gain access to insider sales. But some retailers offer rewards or loyalty programs that don't require you to sign up for credit cards. 

• Store cards are easier to qualify for than general-purpose credit cards. So if you have limited credit, opening an account with a retailer is a decent way to build a credit history. But don't cancel the card immediately. You want to establish a long credit history, so if you're worried about overusing the card, cut it up, hide it at the back of your wallet, or leave it at home.—Chris Fichera  

Holiday tipping advice for 2009

In what's becoming an annual tradition around here, we've posted our holiday tipping advice for 2009, based on surveys conducted by the Consumer Reports National Research Center. 

Alas, for those on the receiving end, it looks like tips may be a bit smaller this year. 

For tip givers who feel a need to cut back, one way to sweeten your generosity is to tip a little earlier in the season. Your recipients may appreciate it — they probably have people to tip, too.

Some other no-extra-cost tips:

• Crisp new bills from the bank will seem more special than wrinkly old ones out of your wallet.
• A handwritten note is nice too.
• And if possible, try to deliver your tip in person.

If you have ideas to share, either as a tip giver or recipient, we'd welcome your comments.

Volunteer for AARP's Tax-Aide to help others and yourself

If you'd like to learn more about preparing your own taxes while also helping someone else, consider volunteering for AARP's Tax-Aide program, which begins training sessions soon. Tax-Aide employs volunteers to help prepare returns for low- and moderate-income individuals, with a focus on those 60 and older. You don't have to have a financial background, but you must attend a  3- to 5-day course, and to devote at least four hours a week between February 1 and April 15 to helping people face-to-face with their taxes. The jobs vary, from technology coordinators to "greeters" who direct taxpayers to the proper preparer, among other duties. AARP provides training in tax law procedures, preparing tax forms, and using tax preparation software. 

The application deadline for 2010 volunteers is December 11, 2009. Here are some details from AARP, including an application form. For more on doing your taxes yourself, consult Consumer Reports Money Adviser, and check back on this blog in early February, when tax season begins.–Tobie Stanger

Medicare Part D participants: For 2010, you better shop around

Medicare has announced its Part D drug plan costs for 2010. More seniors than ever will be combing through that data to try and find a better deal. Sixteen percent say they are likely to, or are considering, switching plans in 2010, according to a recent survey of seniors by Allsup, a provider of Social Security disability, Medicare and workers' compensation services. That’s a big jump; only five percent have switched since they’ve been eligible for the program.

However, figuring out which program is best for you can be a pain. You may have dozens of private plans to choose from, with different levels of coverage.

But staying put can cost you plenty, in terms of both access to the medicines you take and the amount of money you will spend. Consumers Union has been monitoring the total cost of buying five common drugs in five states since the Part D program began in 2006. Next year Illinois residents, for example, may be able to save more than $2,200 year if they switch to a better plan. Stay stuck in the wrong one, however, and your costs may rise by more than $1,500.

Open enrollment starts November 15 and runs through the end of the year. You can find out how to switch plans (or enroll) by going to the Centers for Medicare and Medicaid Services Web site.–Mandy Walker

New on Top 10 Complaint list: Sleazy credit-card & lending practices

The National Association of Attorneys General recently released a list of the 10 complaints consumers filed most frequently with state AGs in 2008. It includes two gripes of particular interest:

•Greedy banks that coaxed people into mortgages they knew couldn’t be paid back are evicting folks from their homes (no. 6)

•Greedy banks are raising interest rates, cutting credit limits, tacking on new fees, and otherwise overcharging for credit and debit cards (no. 4, a tie).

I certainly wasn’t shocked that a lot of people voiced those complaints, especially given the dastardly role the banking industry played in the near-collapse of the U.S. economy. But I was surprised to learn that this is the first time predatory lending and unfair credit-card practices were among the top 10 complaints since NAAG began compiling its yearly list.

Maybe it took the Great Recession for people to stand up for their rights on those two critical issues. But in many financial disputes, consumers may not know their rights under the law. In the November issue of Consumer Reports Money Adviser we explain consumers' legal rights in 11 typical clashes with retailers and service providers.

Consumer protection laws vary from state to state. Here's contact information on your state’s AG office.–Jean Pietrobono

Want to save more? Ask for a text reminder.

The Wall Street Journal today reported on a study showing that individuals who were reminded by text messages to save increased their savings account balances by 6 percent. The researchers concluded that attentiveness plays a part in savings discipline. Consumers were particularly motivated by reminders of certain personal goals. Those who were offered particular incentives by their banks upped their savings by 16 percent, on average. Negative messages were no help at all.

If you'd like a regular nudge to urge you to save, you may be able to set up electronic reminders through an online personal finance service. Consumer Reports Money Adviser looked at a few online services recently. (Note: Intuit, which now owns Mint, is reported to be shutting down its original online personal finance service, Quicken Online, and moving customers to Mint.) 

You also can easily automate savings by arranging periodic transfers of funds from a checking account to an online savings account. Consumer Reports offers tips for ramping up your savings. And Consumer Reports Money Adviser judges several online banks.–Tobie Stanger

Holiday regifting: How to do it right

Consumer Reports Holiday Shopping Poll recently reported that this year, 36 percent of Americans plan on regifting–that is, giving a gift they received to someone else. That's up from 31 percent the year before. Our own Tightwad Tod discusses the phenomenon here. 

If you think you'll be among that population passing on the wealth, consider these tips, adapted from Regiftable.com, a Web site sponsored by Money Management International, a not-for-profit credit-counseling service: 

•Ensure the gift is something you really can give again. Handmade or one-of-a-kind items are taboo for regifting. Same for signed books and monogrammed items. Appropriate goods might be bottles of wine, unopened boxes of candy, new household items and inexpensive jewelry. 

•Check the condition. Give only new, unopened packages.

•Consider the gift's desirability. If you don't like it, do you really think someone else will?  

•Think: Can you get away with it?  Make sure you don't give back the gift to the giver. Regift to folks unlikely to see or know the original giver. And consider whether you can keep the secret, without guilt.

•Wrap it up nice. Use new wrapping paper and a new card or gift tag. Only reuse gift bags in good condition.

•Explore other options. You also could donate the gift to a charitable group's thrift shop or holiday gift drive. Assuming you know its value, you could get a tax deduction in the deal, as well.

Give up my rights to save $10? No thank you!

Here's a new twist on how credit-card companies are attempting to get around the consumer-friendly Credit CARD Act, due to go into effect in February. 

Our sister Web site, The Consumerist, this week featured a reader's account of a telephone conversation with Capital One, in which the credit-card company offered to lower the fellow's overlimit fee to $29 per transaction from $39, if he chose not to be covered by one of the Credit CARD Act's consumer protections. (Click here for The Consumerist's update.)

The new law disallows overlimit fees, unless folks opt in for overdraft protection. But that $10 savings for opting in doesn't sound like much of an incentive, in our view.

If you have a story to report about a similar offer, or a unilateral decision, by your credit-card company, tell us about it at Consumers Union's Credit Card Reform.org. We'll be collecting consumers' anecdotes and commenting to the Federal Reserve to encourage more restrictions on credit-card company abuses.

And click here for Consumer Reports tips on taking control of your credit-card debt and avoiding credit-card company atrocities.–Tobie Stanger