Feds list more low-quality nursing homes

The Centers for Medicare & Medicaid Services launched a new feature on its Nursing Home Compare Web site last week listing 134 homes it considers “special focus facilities,” or SFFs.

SFF is fedspeak for homes with a history of poor performance or repeated violations of health and safety rules.

To see the list, which is in pdf format, go to this page and scroll down to the downloads section and click on "Special Focus Facility Background Info and List - Updated 4/23/08."

For basic advice on choosing a nursing home, see our special 2006 report.

Put your tax rebate to work for you

The Internal Revenue Service will start issuing economic-stimulus payments next week and continue through at least July 11. When you get yours depends on when you filed your tax return, whether you arranged for direct deposit, and the last two digits of your Social Security number.

Depending on your income, you could get up to $600 per individual and $1,200 per married couple, plus $300 for each qualifying child. The intent, as you probably know, is to boost consumer spending, and the economy as well.

If you're planning to spend your payment, our colleagues at the Home & Garden blog have compiled a list of top-performing home-related products that you might consider buying.

But you may have better uses for the money, such as using it to pay down debt. For example, if you're carrying a balance on your credit cards, you can put your check toward paying it off. Similarly, if you're facing even a modest reset of an adjustable-rate mortgage this month (for example, a 20 percent increase on a $1,500 monthly payment), the tax rebate can help cushion that blow.

If you don’t need to use your stimulus check to pay off debt—and you don’t plan to go on an economy-boosting shopping spree—there are plenty of ways to put the money to work for you. If you are saving for retirement, you can put it in an Individual Retirement Account or Roth IRA. If you are setting aside money to help pay college tuition for a child or grandchild, you can put your rebate into a 529 college savings plan.

Other options that don’t require large minimum deposits are bank CDs, many no-load index funds, and U.S. Savings Bonds or Treasury Inflation-Protected Securities (TIPS) via Treasury Direct. 

Using your economic stimulus check to jump-start your own savings could end up being the best $600 or $1,200 you ever spent.—Chris Horymski

Two (really annoying) laws of personal finance

Like physics, the world of money seems to have its own set of immutable laws. As a consumer of financial products and services for several decades now, I would like to offer two. Perhaps other readers can add their own to the list:

1. Surprisingly few things happen on the first try. You might think that once you’ve given your bank, mutual fund, stockbroker, insurance company, or whatever an instruction it will be carried out. Don’t bet on it. In my experience these things often take a second try and sometimes a third.

It’s almost pointless to speculate on the reasons (innocent mistake? incompetence? greed? sadism?), but don’t be surprised when it happens.

What to do? Keep track of your requests and make copies of everything relevant. Mark a calendar for when you expect to see results. Try again if your first try isn’t successful. And don’t stress out. This is just the way things work. Or don’t work.

2. It’s almost always a mistake to give two instructions at once.  Chances are, only one will be carried out. Or neither. But rarely both.

So if you want a financial institution to, let’s say, change a beneficiary on an account and also note your new e-mail address, put it in two separate requests.

While these two laws particularly apply to the financial marketplace they seem to hold true in many other consumer transactions as well.

Have a law of your own to offer? Please share it, below. Or, if it has something to do with retirement, join the ongoing discussion at our retirement forum.—Greg Daugherty

Greg writes the “Retirement Guy” column each month for the Consumer Reports Money Adviser newsletter.

Safety nets offer financial protection in turbulent times

Many financial institutions are feeling the pinch of the credit crunch brought on by the subprime mortgage mess. If worry over the safety of your savings and investments is keeping you up at night, take heart. There are several government safety nets that can help if your money is threatened by a financial institution's insolvency. Here are some of those programs, along with their benefits and limitations.

Banks and thrifts. The Federal Deposit Insurance Corp. provides individuals at least $100,000 in basic coverage per institution. For many retirement accounts, including all IRAs and self-directed defined contribution plan accounts, the coverage is $250,000. Coverage limits for joint and trust accounts are a bit more complicated. FDIC insurance does not apply to safety deposit box contents or to mutual funds and other securities and insurance sold by banks.

Federal and some state-chartered credit unions. Insurance from the National Credit Union Administration generally is the same as for banks and thrifts, though there are some differences. Some NCUA-insured credit unions buy excess share insurance from American Share Insurance that covers every account for an additional $250,000. That coverage is not government-backed.

Non-NCUA-insured state-chartered credit unions. Some states allow state-chartered credit unions to forego government-backed insurance and opt instead for primary share coverage from American Share Insurance.The insurance provides $250,000 protection for every account. About 5 percent of state-chartered credit unions take this coverage.

Broker-dealers. The Securities Investor Protection Corp. provides each investor with $500,000 protection to recover missing assets, of which $100,000 may be based upon a claim for cash, if a brokerage firm closes or becomes insolvent. In most cases, the SIPC replaces existing securities. It doesn't cover market-related losses or losses due to investment fraud; nor does it cover non-members, even if they are affiliates of SIPC members. Click here for more information.

Defined-benefit pension plans. The federal Pension Benefit Guaranty Corp. covers workers with traditional defined-benefit retirement plans, the kind that provides a set income stream or a lump-sum benefit in retirement. Coverage limits are set yearly and vary by circumstances, such as a worker’s age on the date the retirement plan was terminated or went into bankruptcy. The fund does not cover plans created by the government, church groups, or small professional service employers such as doctors and lawyers.

Defined-contribution plans.  There’s no guaranty fund to cover 401(k)s and other defined-contribution plans, although retirement money invested in banks, thrifts, credit unions, and brokerage firms may be protected by the programs that apply to those institutions.

Insurance. Many insurance products, including fixed-rate annuities and life policies, are protected by a variety of state guaranty associations funded by the insurance industry. Coverage varies by state. The National Organization of Life and Health Insurance Guaranty Associations offers information about your state’s life and health guaranty programs.  Similarly, the National Conference of Insurance Guaranty Funds provides details about guaranty programs for property and casualty coverage.—Anthony Giorgianni

A time to put off retirement?

As if we needed more evidence of our national economic jitters, 41 percent of adults are postponing major changes in their lives due to financial concerns, according to a survey released the other day by the American Institute of Certified Public Accountants. The moves they’re delaying include such biggies as getting married, buying a home, having kids, and retiring. (That 41 percent is up from 30 percent in a similar survey last year.)

For anyone who’s considering putting off retirement until the economic clouds pass, the Consumer Reports Money Adviser newsletter offered this advice a while back. And the proverbial silver lining is that retiring later actually has some financial advantages, whether in good times or bad.

If you have an opinion on when to retire (early? late? never?), please join the discussion at our online retirement forum. —Greg Daugherty

Greg writes the “Retirement Guy” column each month for the Consumer Reports Money Adviser newsletter.

What to do if you have tickets on Aloha, ATA, Skybus, Skyway, or Champion Air

As promised in my earlier blog post, here are more specifics about the four airlines that recently stopped flying and one that has announced plans to do so next month. 

Aloha Airlines
The airline's site has FAQs for customers. Although Aloha's president and CEO cited "unfair competition" as what drove the company out of business, its competitors might provide your best hope:

• United Airlines and Aloha operated a code share agreement, a pact that allows carriers to sell seats for each other. United says it will rebook customers flying on a United ticket for no additional charge, where space is available; customers traveling on Aloha tickets are being offered a discounted one-way fare through the end of April. For more details, click here.
• Former rival Hawaiian Airlines is adding 6,000 seats to its daily inter-island schedule to help fill the void. The carrier's site provides these details on its plans to accommodate Aloha passengers. Aloha ticket holders can also call 877-892-8896 to hear recorded information.
• Mesa Airlines—which operates as go! within Hawaii—increased service from an average of 54 to 94 daily flights.
  

ATA
This airline says it is unable to offer refunds to those who paid by cash or check (no big surprise there) and suggests passengers contact other carriers. But it also says: "Please note, however, that other U.S. scheduled airlines are not obligated to honor ATA tickets."

ATA also sold tickets through a code share agreement with Southwest Airlines. Southwest plans to rebook customers who bought Southwest tickets but were due to travel on ATA by rebooking them on "a new itinerary closest to their previous travel plans" or offering a full refund on any unused portion of tickets. Southwest reservations agents are in the process of contacting passengers, but a toll-free number is available as well: 800-308-5037.

Skybus
At this writing, a brief post on the airline’s Web site advises passengers to contact their credit-card companies for refunds, adding that "More information for customers and others will be made available on the Skybus web site as it becomes available."

More bad news: AIG Travel Guard, which sold travel insurance directly through the Skybus site, says policies purchased directly through the Skybus site don't cover financial default. Further details are available on Travel Guard's site.

Skyway
As previously announced in January, Midwest Airlines "transitioned" all its Midwest Connect flights from Skyway to another commuter carrier, SkyWest Airlines of St. George, Utah. SkyWest is now serving those shorter routes with 50-seat Canadair regional jets.

Champion Air
This a rare case of an airline pre-announcing its shutdown. The details of the May 31 grounding are available on Champion Air's site. The key provision is this: "Champion will fulfill all outstanding service commitments and will remain fully in compliance with all regulatory, operational and labor contract requirements. The company has adequate funds to continue operations and to settle all outstanding financial obligations."

However, consumers who booked Champion flights through Worry Free Vacations, a division of MLT Vacations, a Northwest Airlines Corp. subsidiary, would be well-advised to contact the vacation packager to confirm their plans and ease any worries.—William J. McGee

Grounded by a bankrupt airline? Here’s what to do

Last week, three U.S. airlines announced immediate shutdowns, a fourth stopped flying as it had previously announced, and a fifth said it would shut down next month.

• Aloha Airlines, one of the two largest carriers operating within Hawaii, stopped flying after March 31.
• ATA Airlines, an Indianapolis-based major carrier, shut down on April 3.
• Skybus Airlines, a low-fare carrier based in Columbus, Ohio, ceased flight operations on April 5.
• Skyway Airlines, a commuter partner of Milwaukee-based Midwest Airlines, ceased flight operations on April 5 (as it had announced in January).
• Champion Air, a full-service charter operator based in Bloomington, Minn., announced on March 31 that it would cease flight operations on May 31.

In addition to these shutdowns, on April 10 Frontier Airlines filed for Chapter 11 bankruptcy reorganization, citing, among other industry issues, the "unprecedented cost of fuel." Although the Denver-based carrier said it intends to continue normal operations through the reorganization process, passengers should be cautious about booking Frontier. The airline's Web site offers further details.

What should you do if you have a ticket on one of these airlines (or the next one to stop flying)?

Know your rights. Visit the Service Cessations page on the U.S. Department of Transportation's Aviation Consumer Protection Division site. The DOT site has specific updates for ATA, Aloha, and Skybus. As of this writing, there is nothing yet on Skyway or Champion Air.

File a claim with your credit card company. "Customers who paid by credit card and who do not receive substitute transportation can file a claim with their credit card company," the DOT says in its Aloha update. If possible, enclose a photocopy of the ticket, itinerary, or receipt. State that your airline is in bankruptcy and has ceased operations, and that you are requesting a credit pursuant to the Fair Credit Billing Act.

File a claim with the court. The DOT says ticket holders who do not receive alternate transportation or a refund should file this claim form.

In my next blog post I’ll have more detailed information about each carrier.—William J. McGee

Helpful resources for caregivers

If you’re helping look after an older relative and happen to subscribe to our Consumer Reports Money Adviser newsletter, watch for your June 2008 issue. It features an article on caregiving when you and your relative live miles apart.

But whether you’re in a distant state or the very same house, caregiving presents some challenges. Here are three useful resources we came across at the recently concluded 2008 Aging in America conference. 

• The Family Caregiver Alliance offers numerous fact sheets and other information. The group also plans to launch a new, state-by-state list of resources called the Family Care Navigator in the near future.
• The National Center on Senior Transportation, a government-funded program administered by Easter Seals, offers this guide to local transportation options for older people and their caregivers.
• If you need help assessing an older person’s needs or arranging for appropriate services, you may want to consult a geriatric care manager. The National Association of Professional Geriatric Care Managers provides this guide to the field, along with an online directory of members that you can search by city or Zip code (click on “Find a Care Manager”).

Contrary to conventional wisdom, retirees get wealthier

We Americans are scolded so often about not saving enough for retirement (usually by financial services companies with an obvious stake in the matter) that it’s always a treat when some positive news comes along.

Such is the case with this recent academic paper. It says that retirees, especially those in the middle- and upper-income groups, generally manage their finances wisely enough during retirement that their wealth actually tends to rise rather than fall. This being an academic study, it’s more complicated than the foregoing one-sentence explanation, but that’s the bottom line.

The study reinforces something we found when we surveyed several thousand retired readers for an article in the February Consumer Reports. The huge majority of our retirees, it turned out, were quite satisfied with their situation.

This isn’t to say that you should stop investing for retirement or party like there’s no tomorrow once you do retire. However, if you save conscientiously now and spend smartly later, you may not only enjoy retirement but have the added pleasure of proving the financial fearmongers wrong.

Do you have a retirement-related experience to share or a question to kick around with other readers? Join the discussion at our online retirement forum.—Greg Daugherty

Greg writes the “Retirement Guy” column each month for the Consumer Reports Money Adviser newsletter.

SEC charges two with fraud in get-rich-quick investment scheme

Reading warnings about the tactics scam artists use to perpetrate investment fraud is one thing; seeing those alleged tactics in action can be real eye-opener.

In connection with civil fraud charges it filed recently against two Utah residents, the U.S. Securities and Exchange Commission has posted portions of TV infomercials it said the two used to dupe the elderly and others into believing they could “make extraordinary stock market profits" by buying an expensive securities trading system.

The SEC filed a complaint against Linda Woolf and David Gengler in U.S. District Court in Virginia, alleging that they falsely claimed that they became successful investors using the "Teach Me To Trade" classes, mentoring, and computer software. The two promoted the system through infomercials, print ads, direct mail, and free “investor’s workshops” typically held in hotels, the complaint says.

Separately, the two were indicted March 6 by a federal grand jury on charges of wire fraud and conspiring to commit wire and mail fraud in connection with their marketing practices.

In one of the infomercials on the SEC Web site, Woolf says she was a former teacher who was able to replace her entire income in less than nine weeks using the Teach Me To Trade system. In another infomercial, Gengler talks about how he turned $10,000 into $20,000 in one week. The SEC complaint says that Gengler claimed that he was able to pay back the $50,000 he spent on his "education" just three months after he began trading. It said he also claimed that he made $100,000 trading securities during the following year and nearly $800,000 about four years later.

Yet, according to the complaint, “during the period Gengler claims to have been a successful professional trader using the option and short-term trading strategies,” his tax returns “typically reflected no short-term capital gains.” It says that Woolf never declared a securities trading profit on her federal income tax returns.

Instead, the complaint alleges that together the two made more than $6 million in commissions selling the investment system, charging customers as much as $40,000. It says the two encouraged prospective customers to pay for the system by borrowing on their credit cards, providing a script for them to use when requesting a credit line increase.

"The allegations depict a cold-hearted scheme that preyed on the elderly, the desperate, and even the unemployed by promising financial security while instead robbing victims blind," SEC Chairman Christopher Cox said in a prepared statement. "The commission's charges should send a warning to all those who would masquerade as successful traders on TV while prowling the country for victims."

FINRA, the largest private regulator of the securities industry, has been warning investors about investment scams aimed at elderly people, and has urged the public to be especially cautious about attending free investment seminars.

The SEC is asking the court to order Woolf and Gengler to return all “ill-gotten gains” and to pay civil penalties. If found guilty in the federal indictment, the two could face 30 years in prison, a $250,000 fine, and five years of supervised release.

The complaint describes both as independent contractors for entities affiliated with Teach Me To Trade, which is owned by EduTrades, a subsidiary of Cape Coral, Fla.-based Whitney Information Network. In January, Whitney reached a settlement with the Florida attorney general, which investigated several of its stock market and real estate investment programs, including Teach Me To Trade. Although it did not admit wrongdoing, the company agreed to provide $450,000 in consumer restitution in addition to some $580,000 it had already refunded to consumers, set aside $150,000 to cover any additional claims, contribute $150,000 to the attorney general's "Seniors vs. Crime" program, and pay $150,000 to cover the cost of the agency’s investigation. It also agreed to change some practices and to make certain disclosures and disclaimers to consumers regarding its seminars and training courses.

For the 12 months ending Dec. 31, 2006, the complaint says, the company received $112.6 million in cash from sales of its securities workshops. —Anthony Giorgianni

Save the penny--or scrap it?

Our recent item about a proposal to ban the $100 bill prompted a number of comments on that topic, some that suggested the U.S. also get rid of the penny (and perhaps other coins) while it’s at it.

As it happens, the fate of the penny is also the subject of an interesting New Yorker article this week by David Owen.

This is not a new debate, of course, but one that’s been going on for years. An argument against doing away with the penny (and perhaps other coins) is that it would be inflationary to round prices up to the nearest nickel or dime.

Is the hassle of dealing with pennies simply not worth it, inflation or no?

What do you think? Please let us know by clicking on Comments below and sharing your, uh, two cents worth.

Safeguarding your credit and debit numbers

With the Hannaford heist still in the news, here are further tips on how to protect your financial information, courtesy of “Money Mom,” who blogs on our parent organization’s Web site, ConsumersUnion.org.

Ban the $100 bill?

New and more colorful $5 bills, intended to make counterfeiters’ lives more difficult, went into circulation earlier this month, joining the already spruced-up $10s, $20s, and $50s. The old $5 bills will continue to circulate until they wear out.

Coming next, at a date still to be determined, is the new $100 bill—unless, that is, those who would dump it altogether have their way. The anti-$100 bill argument, made in newspapers recently via this article, is that the $100 bill is handy for terrorists, drug kingpins, and other criminals who deal in large amounts of cash but plays little or no role in the lives of ordinary, law-abiding consumers.

Eliminating the $100 bill (the jargon is “demonetizing” it) would presumably mean that those of us with a C note we got from Grandma last birthday would be able to cash it in for some period of time before it became worthless. Criminal types with crates full of them, however, would have a lot of explaining to do.

What do you think? Should we keep the $100 bill or phase it out? Which would be better for consumers?  Please feel free to comment below.

When cyber crooks have your number

The latest data breach involving consumers’ credit- and debit-card numbers has hit the Hannaford Brothers supermarket chain, which operates primarily in New England, and the related Sweetbay supermarkets in Florida.

The company says cyber crooks made off with customers’ card numbers and expiration dates but not their names or addresses.  It offered this advice to anyone who might be affected.

For tips from Consumer Reports on preventing such thefts in the first place and dealing with one if it happens, click here.
 

What to do if you’re offered a buyout

News reports that Delta Air Lines plans to offer voluntary buyout packages to some 30,000 employees, more than half its workforce, may have you wondering what you’d do in that situation. Even if you don’t work in the beleaguered airline industry, it’s not a bad idea to have a “what if?” plan, especially given the current economic climate.

The Consumer Reports Money Adviser newsletter looked at that question last summer and had this still-timely advice to offer.   

30 years without a credit card, part 2

Last week I wrote a blog item that set off a surprisingly spirited discussion here and on Web sites such as The Consumerist.

In it I mentioned that I’ve gone three decades without a credit card—at least the kind that extends revolving credit. As I noted in the blog, I do have an American Express card, which has to be paid off in full each month.

Some of the readers who posted comments had favorable things to say; others thought I was splitting plastic hairs in saying the card I do carry isn’t technically a credit card. The words “smug” and “self-satisfied” even came up a time or two.

Quite a few commenters protested that anyone with the proper discipline could use a credit card without incurring onerous fees or paying outrageous interest.

I don’t disagree. I would point out, however, that lots of people do get in trouble with their credit cards, and there’s reason for concern that the situation is becoming worse. Here’s one recent study to that effect.

What may be most remarkable in all of this is how central credit cards have become to our lives. How did so many of us become so comfortable taking out a loan, in effect, every time we buy a burrito or a bottle of shampoo?

And whether or not we pay any interest on that loan, businesses are presumably adding something to the cost of their wares to cover the fees the card companies impose on them.

The genius of the credit-card companies is that they have managed to insert themselves into not just the big transactions where people might not have enough cash in their wallets but into the smallest, most everyday ones. This part is equally true for the card I carry, of course.

You’ve got to hand it to them, I suppose. But you don’t have to hand it to them with interest.

Comments, anyone?

—Greg Daugherty

Greg writes the “Retirement Guy” column in the Consumer Reports Money Adviser newsletter.

Bring out your inner skinflint

Money is tight these days, and most of us appreciate whatever advice we can get on saving. Our resident penny pincher, Anthony Giorgianni, shares one of his recent money-saving moves.

I recently decided to upgrade to the expanded-function “pro” version of one my favorite freeware computer programs, RoboForm, a handy and high-rated password manager and Web form filler. Just as I was about to pay $29.95 at the “checkout,” the wise shopper (make that “skinflint”) in me took over. In a new browser window, I Googled “Roboform coupon.” Right near the top of my search results was an online coupon for 20 percent off. I pasted the coupon code into the checkout page and got an instant $6 savings.

The lesson? Don’t even think of shopping online (and maybe elsewhere) without searching thoroughly for an online discount coupon. You’ll likely find that a simple Web search works best, though here are just a few of the many Web sites that offer free coupons and coupon codes: couponchief.com, couponcabin.com, fatwallet.com, retailmenot.com, and ultimatecoupons.com. Who knows how much the skinflint in you can save?

Sharper Image demonstrates perils of gift cards

Holders of Sharper Image gift cards have been getting a hard lesson in some of the downsides of gift cards.

Some three weeks after the specialty retailer filed Chapter 11 bankruptcy on Feb. 19, owners of gift cards and merchandise certificates are facing confusing options about what to do with those obligations, which the retailer initially said it wouldn't honor, at least for the time being.

On March 7, the U.S. Bankruptcy Court for the District of Delaware granted the retailer’s request to resume honoring its cards and certificates—but only for customers who make a purchase of at least twice the value of the card or certificate. So to use up a $50 gift card, a customer would have to buy at least $100 in merchandise.

Initially, the San Francisco-based retailer specifically told the court that it was not seeking interim authority to redeem its estimated $42.6 million in outstanding cards and certificates, including those cards it sold to Discover and American Express for use in those companies’ membership rewards programs. But that was before Feb. 27, when competing retailer Brookstone took advantage of the situation by offering to give anyone who surrenders a Sharper Image gift card, merchandise certificate, or similar obligation a 25 percent discount off their entire purchase at any of Brookstone’s 314 stores nationwide. (Brookstone’s offer does not apply to Web site purchases or to Sony, Celestron, Bose, Panasonic and Tempur-Pedic products.)

In its March 3 motion to the court, Sharper Image wrote:  “Brookstone is only one of undoubtedly many Sharper Image competitors that will attempt to capitalize on the fact that Sharper Image is currently prohibited from honoring its gift certificate and merchandise certificate programs by instituting promotional programs designed to draw customers away from the Sharper Image.”

The case is just one more reason why holders of gift cards, merchandise certificates, store credits and similar obligations should use them as quickly as possible and think twice about purchasing them in the first place. Last December, Consumer Reports Money Adviser reported on the problems with gift cards, including the risk of issuer bankruptcy. With growing problems in the economy, other retailers might also go under, leaving consumers with worthless obligations.

“It is not a surprise to us that people are having problems using these cards once [the store goes] into bankruptcy. The general advice is spend them quick. That advice is even better right now,” said Evan Johnson, administrator the Montgomery County, Md., Office of Consumer Protection. Johnson conducts an annual survey of gift cards to determine the fees and other conditions that card issuers impose.

The case could end up testing relatively recent state laws in California and Washington that prohibit retailers from using bankruptcy as a reason not to honor gift cards and certificates. In those states, the value of those obligations is deemed to be held in trust for consumers and not the property of the company. California last week tried unsuccessfully to get a state court to intervene. Attorneys general in both states say they are studying whether to raise the issue in the bankruptcy court.

YOUR CHOICES
If you have Sharper Image gift cards and merchandise certificates, what should you do? Here are your options:

• Redeem the card or certificate at Sharper Image. You can use it only if you spend twice its value. While that may seem unfair, especially if you received the card as a gift, it could be your easiest and least-costly option. The offer might not be valid at the 90 Sharper Image stores that the company plans to close as part of its reorganization plan, about half its outlets. Also, if Sharper Image fails, it won’t be there to honor its return policies or any other rights you may have if a products turns out to be defective.

• Redeem the card or certificate at Brookstone. In this case, you’d receive a 25 percent discount on your entire order if you surrender a Sharper Image gift card, rewards card, gift certificate, or merchandise credit. You won’t get the entire amount of the card or other obligation unless your purchase equals at least four times its value. For example, someone who has $50 on a Sharper Image Gift card would need to purchase $200 in Brookstone merchandise to receive the card’s full benefit. On the other hand, if your purchase exceeds $200, you would end up saving more than the value of your card. Brookstone spokesman Robert Padgett said a Brookstone store in Atlanta sold Sharper Image card holders three $4,500 massage chairs, giving a 25 percent discount on each.

• File a challenge. If the Sharper Image gift card or certificate was purchased recently using a credit card, the credit cardholder can try challenging the purchase with the credit card issuer. But this might not work. For one thing, you might already be past the time limit on such claims. Also, the credit card company might not agree with your claim.

• Wait out the bankruptcy. This is probably the least attractive option. For this to work for you, Sharper Image must reorganize successfully and resume honoring its gift cards and merchandise certificates without conditions. In its court filings, the company reported that as of Jan. 31, it had $251.5 million in assets and $199 million in debt. If Sharper Image goes out of business, card and certificate holders will have to line up behind the secured creditors for a piece of the liquidated assets. Typically, consumer creditors receive pennies on the dollar, if anything.

If you choose to roll the dice with this option, send a proof of claim form to Sharper Image Corp. Claims Processing, c/o Kurtzman Carson Consultants LLC, 2335 Alaska Ave., El Segundo, Ca 90245 (tel.# 866-381-9100). Be sure to designate yours as a priority claim. To do this, check the box next to “Up to $2,425 of deposits toward purchase, lease or rental of property,or services for personal, family, or household use,” and enter the entire amount on the line labeled  “Amount entitled to priority." This may place you ahead in the line of unsecured creditors.— Anthony Giorgianni

Speaking up can save you money

Within a few weeks, one of our staffers negotiated an impressive series of financial victories. First, she used an offer from a rival bank to pressure her own lender to cut the rate on her home-equity line of credit by a full percentage point. Next, she protested her cable company’s $10 monthly increase and gained a $15-a-month loyalty discount instead. Then she coaxed her home heating-oil company to cut its price by 25 cents a gallon, saving about $176 for the rest of the season. Finally, heeding her therapist’s advice to be more assertive, she negotiated a $40 discount off her usual fee of $175 an hour. The moral of the story?  It pays to haggle. The video below gives some tips for effective haggling.

Don’t trust a car dealer to pay off your loan

When trading in your old vehicle for a new one, you might be tempted to leave it to the dealer to pay off the existing loan, either by using part of the old car’s trade-in value or rolling any unpaid balance into your new-car loan. While that arrangement might sound convenient, it carries risks, as many Californians recently learned.

There’s a chance that the dealership may go out of business before paying off the note, leaving you on the hook for the remaining loan balance on your old car, along with the loan on the new car. The problem has become widespread in California, where hundreds of consumers have lost millions of dollars. The state is setting up a fund to reimburse victims.

Another danger is that the dealer might delay paying off the loan, causing your credit report to show missed monthly payments. That can damage your credit score, forcing you to pay more for future loans and insurance.

Consumers for Auto Reliability and Safety, a public-interest group in Sacramento, Calif., advises car buyers to pay off any outstanding loan on their old vehicle before trading it in for a new one. The group notes that doing so may be difficult, especially if the money you need to pay off the loan is tied up in the value of the trade-in. “It could be inconvenient, but how else are you going to know you’re protected?” asks Rosemary Shahan, the organization’s president. “How do you know the dealer is going to pay off the loan and not go out of business?”

If you can’t pay off the loan, you might want to wait until your payments are finished before shopping for a new car. That’s an especially good idea if you’re “upside down” on the loan and owe more money than the vehicle is worth. If you trade in a car under those circumstances, a dealership will typically add the balance of the outstanding loan to the new-car loan, leaving you essentially paying off two loans at the same time.

Similarly, whether you’re buying a used car from a dealership or an individual, make sure that any previous loan has been satisfied. If it hasn’t and the former owner falls behind, the lien holder might threaten to repossess the car. You can tell there’s been a loan if a lien holder’s name is on the front of the title certificate. If there is one, ask for proof that the lien has been paid. The lender should give you a lien release.  —Anthony Giorgianni

Smart investments for inflationary times

As if all the recent talk about recession wasn’t bad enough, now it’s inflation—the result of a higher than expected rise in the Consumer Price Index during January. There’s even talk of stagflation, a slow-growth high-inflation combo that many of us remember unfondly from the 1970s. If you weren’t around in the ‘70s, let’s just say that stagflation was even worse than disco.

What should investors be doing with their money? Here are a few ideas from a recent issue of Consumer Reports Money Adviser newsletter.

• Stocks. Traditionally, stocks have been seen as the best inflation hedge over the long haul, although some experts are beginning to question that wisdom. Rather than speaking of a pie chart split between just stocks and bonds (say 60 percent one, 40 percent the other), they’re likely to recommend a much more diversified portfolio, including the following items.
• Real estate. Investment real estate is one option, but that ties up your cash in a relatively non-liquid asset. And if you become a landlord, you will have to collect rent and fix furnaces. A more leisurely and liquid approach is to invest in real-estate mutual funds, exchange-traded funds, or a real-estate investment trust. Bear in mind, of course, that real estate has its own woes at the moment.
• Commodities. A generation or two ago, we’d have been referring to gold bars; in more recent times, mining stocks. Now financial planners often recommend having a small slice of mutual funds or ETFs that invest in a range of commodities—everything from platinum to pork bellies. The reason is twofold: In times of serious inflation, these kinds of assets often rise in value. Plus, their price movements tend to have little correlation with the stock market, making them a good diversifier in general.
• TIPS. Known formally as Treasury Inflation-Protected Securities, these bonds have two components: a fixed rate of interest rate plus an adjustment pegged to the Consumer Price Index. They’re sold in $1,000 increments and come in 5-, 10-, and 20-year maturities. For more about TIPS and how they work, go to Treasury Direct.
  

Making childrearing (a little) cheaper

Last time the U.S. Department of Agriculture put a price tag on the cost of raising a child from birth to age 18, its figures ranged from $143,790 for lower-income households to $289,380 for higher-earning ones. Here’s the full report if you’re curious.

A lively debate has ensued over whether those numbers are too high or too low, but most of us parents would probably agree on one thing: Raising a child isn’t cheap.

Recently our money team looked at ways to control those costs, focusing not on coupon clipping or generic baby food but on the really big-ticket stuff. You’ll find our advice in the Babies & Kids section of this Web site.

If you have any parental money-saving tips of your own to share, we’d love to hear about them. Just hit Comments, below.

Spend that tax rebate check? Probably not...

Americans are already thinking about what they'll do with the tax rebates outlined in an economic stimulus bill that President Bush has said he will sign next week. The rebates will be as high as $600 per individual and $1,200 per couple, plus $300 for each child. The Administration and Congress have agreed that the economy could get a shot in the arm if Americans spend that money on goods and services.

But a new poll by CCH, publisher of CompleteTax tax-prep software, shows only 21 percent of Americans plan to spend most or all of those funds at the mall. Nearly half (47 percent) said they would likely use it to pay down debt, and another 32 percent would save it.

You could look at that as heartening news--that Americans are finally getting serious about paying down record debt and improving upon our historically low savings rate. Or you could wonder if people are so burdened by debt and monthly bills that new spending is no longer a choice.

Either way, if this poll proves to be predictive, it's unlikely the economy will get the shot in the arm the politicians expect. But the extra cash will be helpful to many of us. And maybe our behavior will send a message to the pols: Control your debt and nurture your nest egg before you go out and spend more.

--Tobie Stanger

 

Your cost of living may be rising faster than the Consumer Price Index

Inflation as measured by the Consumer Price Index rose 4.1 percent from December 2006 through December 2007 (the latest figures available). But a closer look at the individual spending categories that comprise that headline-making index reveals that in some everyday spending categories, consumers definitely are being hit much harder than the overall rise in the CPI would suggest.

Not surprisingly, energy-related costs rose most steeply over the past year. Gasoline was up 29.6 percent; heating oil rose 28.3 percent; and the rate of increase for public transportation was 7.2 percent, or close to double the CPI rate.

And if it seems like you’re paying more and more for food, you’re right. Grocery prices are up 5.6 percent overall, led by 13.4 percent increase in dairy products, with the price per gallon for milk sometimes vying with the tab for a gallon of gas. Prices rose nearly 6 percent for fruits and vegetables, with increases in the range of 5 percent for cereal, meat, poultry, fish, and eggs. Both gasoline and groceries are the categories that are omitted from the “core inflation rate” that is often the focus of the Federal Reserve when it sets interest rate policy, even though they are a vital component of consumers' weekly budgets.

Drowning your sorrows about rising prices would have been a bargain by comparison—the 3.8 percent rise in alcohol prices actually was less than the total CPI increase. There were a few categories, such as apparel and furniture, for which prices dropped slightly, and there was also one product area that delivered tremendous bang for your buck: Personal computer prices actually declined by 13.2 percent over the past year.  —Andrea Rock

Making things last and last and…

A staffer who’s been reading old Ripley’s “Believe It or Not!” cartoons recently noticed a common theme. Seems the late Robert L. Ripley had a fascination with people who got an inordinate amount of use out of everyday things.

Consider:

“C. L. Bresee of Missoula, Montana has worn the same trousers 56 years.”

“Susan R. Wright [of] San Diego, Calif., has worn the same bouquet of artificial flowers for 55 years.”

And, our staffer’s personal favorite: “M. I. Freind of Lynbrook, L.I. [N.Y.] used the same set of thumb tacks for 35 years—without losing one.”

Believe it or not.

While Ripley’s heyday roughly overlapped with the Great Depression (1929 to about1939), the impulse to make things last seems to be enjoying a revival in our own time, driven as much by environmental concerns as financial ones.

For tips from the CR Money Adviser on making today’s products last, click here.

Review your credit reports regularly

We often advise consumers to obtain copies of their credit reports once a year to monitor them for accuracy and possible fraud. If you haven't done so in a while, now is a good time to get a look at what your creditors have been saying about you.

Credit reports contain information on your payment history with different creditors, inquiries made by various financial institutions, and public records such as foreclosures or bankruptcies. Consumer reporting companies collect and sell this information to lenders and other businesses that have a permissible interest in it. Your credit record can influence the rates you pay for borrowing and insurance, among other things.

Order your free credit reports online at www.annualcreditreport.com or by calling 877-322-8228. This is the official channel through which you can get your report from each of the three major consumer credit reporting bureaus—Equifax, Experian, and TransUnion. You can get all three all at once, or stagger your requests over the year to keep closer track on your records.

Other Web sites also promote free credit reports, but many of them tie those reports to fee-based services such as credit monitoring. A 2007 Consumer Reports WebWatch analysis of 24 such sites found that nine were owned or closely connected to TransUnion and eight were owned or otherwise closely connected to Experian. The report found that many of the alternative sites had names—like freecreditreport.com—that are similar enough to annualcreditreport.com to cause confusion.

Once you have your credit report, check it for accuracy:

• Make sure that your name, address, Social Security number, and all other personal information is correct.
• Make sure that there are no accounts, debts, bankruptcies, or court judgments on your report that don’t belong to you.
• Make sure that payment histories and balances are correct and that any errors you have reported have been fixed.

To help consumers take advantage of their rights to a free annual credit report, Consumers Union is offering a free online guide, Your Credit Matters, with advice on how to order a free credit report, review it for accuracy, and correct any mistakes. 

Health gift-card fees can make you sick

Adding a new twist to the growing gift-card industry, the Healthcare Visa Gift Card from Pennsylvania-based insurer Highmark is designed to be used exclusively for health-care products and services. But as gift cards go, this new one is much like the old ones, with enough fees and restrictions to give you indigestion.

Though the health-care gift card is billed as "a unique way to let loved ones know just how much you care," it’s little more than a bank-issued gift card with all the typical ailments. Want to buy one? That’ll cost you $4.95, plus a minimum $1.25 shipping fee. Lose it? Pay $4.95 for a replacement. Want to close out the account and take the balance? That’s another $6.95. Still have a balance after eight months? A monthly $1.50 fee will be deducted from what’s left.

So what do you get for all this? Not much. Unlike other bank-issued Visa gift cards, which are valid at most merchants that accept Visa, the Highmark card is supposed to be used only for health-related purposes, such as doctor and hospital visits, dental work, eyeglasses, medications, ambulance services, health spas, and so on. It can be loaded with as little as $25 or as much as $5,000.

It sounds good in theory, but there’s a big problem. The Visa electronic payment system isn’t capable of limiting the individual products purchased with a card, at least not yet. So Highmark does the next best thing: It limits card usage to businesses that typically market health-care services and products. But falling into that category are discount stores such as Target and Wal-Mart, supermarkets, and wholesale clubs (not to mention the candy aisle of your local pharmacy). That means your elderly aunt can use the card to support her cigarette habit, satisfy her sweet tooth, or buy just about anything else her heart (as unhealthy as it may be) desires.

What to do. If you would like to help a loved one pay for health care, there are better ways to do it than buying a gift card. You can simply write a check to his or her doctor for the next visit or pick up the cost of a prescription.

If you really prefer to give a gift card, consider one from a health-care retailer, such as a pharmacy. While you won’t prevent recipients from using the card to buy soda and Cheez Doodles, you will avoid saddling them with a bunch of fees and other annoyances common to the Healthcare Visa Gift Card and other bank-issued cards. —Anthony Giorgianni

Don’t be duped by fake check scams

A colleague brought us a letter he received in the mail at home that included a very real-looking check for $3,860.95. The letter informed him that he’d won $288,000 in a lottery, and that the amount of the check was deducted from his winnings, partially to pay the taxes that would be due on the total amount. The letter, which bore no return address but was posted in Canada, went on to instruct the “winner” to call for specific instructions on how to claim the full prize.

We didn’t call the number but we’ve seen this sort of thing before, so we knew it was a scam. For one thing, our friend never entered any lottery or sweepstakes, which presumably one would have to do in order to win. But this type of rip-off takes other guises—job offers or mystery shopper assignments, potential love interests in other countries, overpayment for items being sold at auction, even free pedigree puppies. What they all have in common is that they ask you to send money or personal information back to the scam artist.

The ones that come with checks attached might be the most convincing. You’re told to deposit the check and immediately send part of the proceeds to a third party for a reason that sounds legitimate. Of course, by the time you find out that the check was bogus, you’re out the money you sent—and probably bounced check or overdraft fees that your bank will hit you with.

“Most Americans don’t realize they are financially liable when they fall for these scams,” says Susan Grant, vice president of the National Consumers League. “There is no legitimate reason anyone would mail you a check or money order and then ask you to wire money in return. People need to know that checks can take months to clear, even if the money initially looks like it’s in your account."

The National Consumer League says that victims lose an average of $3,000 to $4,000 in fake-check scams. The league, along with the U.S. Postal Inspection Service and other partners, recently launched a Web site, FakeChecks.org, to help spread the word about these scams.

Bottom line: As realistic and enticing as that check looks, don’t cash it. File a report with the Federal Trade Commission or the postal authorities.
 

Recession’s bright side? Bargains for brave consumers

Let’s say you have some cash on hand, your job (or other source of income) is secure, and you love a good bargain. What opportunities might a recession bring?

First a disclaimer: Nobody, including us, knows what’s ahead for this economy or, indeed, precisely what’s happening now. (Recessions are officially determined after the fact by the National Bureau of Economic Research.)

However, the battle-scarred veterans of our Money team have seen our share of recessions, and some of us even took notes. Based on our collective judgment, here are some of the possible buying opportunities that consumers with cash—and the guts to spend it—may find:

Homes. Home prices are already down in many parts of the U.S. Where they go from here is anybody’s guess, but few of us would expect them to rise at a steep pace anytime soon. So if you’re in the market for a home, now could be a good time to start looking and get a baseline feel for the market—even if you decide to hold off buying for a while.

Mortgages. Interest rates are already relatively low, averaging 5.42 percent for a 30-year fixed-rate mortgage as we write this. Credit standards have been tightening, though, so expect higher hurdles in getting the very best rates.

Stocks. Some are sure to become bargains, but unless you’re a stellar stock picker, consider a no-load stock index fund and hope to benefit from an overall rise in the market. Keep in mind that stock prices will often start upward well before a recession ends, as investors look ahead to better times.

Credit cards. Our resident credit expert thinks people with good credit scores should have a golden opportunity to negotiate for lower rates. Issuers will want to hold onto creditworthy customers more than ever.

Cars. If demand continues to drop (sales for 2007 were down compared to 2006), carmakers and dealers will have to do something to move their wares.

Appliances and electronics. Ditto.

Luxury goods. Sales are already slowing, we hear, so high-end goods may carry less-high prices.

EBay stuff. People eager to raise cash may be auctioning off knickknacks and whatnots in record numbers. So that Pee-wee Herman doll or first edition of Proust you’ve long wanted could be yours for the clicking.

Home remodeling. Lower demand should mean more room to bargain and, possibly, less wait to get the work started. If you need to finance your home improvement, you might also find favorable borrowing terms if your credit score is high.   

Travel. Our travel expert says to expect fare cuts from the airlines, but beware of the carrier going bankrupt before you can use your ticket. Hotels and rental cars should see cuts too.

Other services. If it’s something consumers can put off until the economic clouds clear (cosmetic dentistry vs. an aching tooth, for example), demand should drop and prices along with it. And it rarely hurts to haggle—even in the best of times.

Who’s to blame for Cablevision’s high phone number-transfer fee?

We were surprised recently to hear that consumers who switch to Cablevision’s Optimum Voice VoIP telephone service are charged a one-time $40 fee to keep their old telephone numbers. Posing as a prospective customer, one of our reporters recently asked a Cablevision customer representative for an explanation. The representative said that Cablevision merely is passing on charges imposed by customers’ former companies to transfer the numbers to Cablevision. In this case, the company was Verizon.

Curious, we called Verizon officials, who told us they don’t charge Cablevision or any other company anything to transfer customers’ numbers. A Cablevision spokesman told us he had no idea why his company’s representative blamed Verizon. He explained that Cablevision came up with the fee to compensate for “processing,” “back-office,” and “other costs” associated with arranging the number transfer. He said part of the cost is offset by the company’s $9.95 installation fee for double- and triple-play subscribers, which he said is lower than other companies. (We know of companies that in most areas don’t charge installation fees at all.)

A few days later we called another Cablevision customer representative to see what would happen if we asked the question again. And sure enough, that representative also blamed the fee on Verizon.

After further research, we came up with our own theory about why Cablevision reps are blaming other companies for the fee. It’s embarrassingly high. In fact, most major carriers, including Comcast, Verizon, and AT&T, don’t charge new telephone customers anything to transfer their old numbers. Cox charges about $10 in some areas, though nothing in most. Similarly, Time Warner charges $20, but only in some areas.

And get this: When we told the Cablevision rep that we wouldn’t sign up for the company’s VoIP service unless she ditched the fee, she went off to speak to a supervisor and came back happy to waive it.

Well, we have a suggestion for Cablevision. Do away with the fee for all new customers, not just for those who are savvy enough to ask.

Recession ahead? Already here? Neither?

Nobody knows the answer to those questions or will for a while. But the dreaded R word is certainly in the air and the news at the moment.

What might a recession mean to you—and what should you be doing now just in case?

We dipped back into the CR archives to see what we had to say during the memorable recession of 1990-‘91. Our advice today would be much the same:

1. Get a grip on your cash flow. When you have a spare moment, make a list of your typical household expenses. Divide it into two columns: items you don’t have much immediate control over (mortgage or rent, for example) and those where you have more discretion (groceries, eating out, clothes, vacation travel, etc.).If you need to slow your cash flow in the months ahead, plan to attack the discretionary items first. You may also discover cash leaks you can plug right away—and should anyhow, recession or no.
2. Stash more cash. If you don’t already have an emergency fund, now would be a good time to create one. The conventional advice is to keep three to six months of living expenses in a reasonably liquid account, such as a bank or money-market fund. If you have a lot of assets, few debts, or rich relatives, you may be able to get away with less, but this is a good starting point.
3. Reduce your debts. You’ll waste less money on interest payments and reduce your overall monthly expenses. As a general rule, we noted in 1991, it’s best to keep monthly debt payments (apart from your mortgage) at no more than 15 to 20 percent of your take-home pay.
4. Consider your job. How well you’ll fare in a recession will depend in large measure on whether you can keep your customary income coming in. So try to be realistic about your job security as well as your employer’s prospects. It might be time to revise the old resume, just in case.

Remember, too, that recessions aren’t forever. The 1990-‘91 one ran for eight months, economists later determined. In fact, it was already half over by the time most articles like this started appearing.

Consumer Reports Money Adviser offers some additional tips on recession-proofing your finances.

Supersize your restaurant savings

Here’s a tip to save both money and calories: Buy the big size and split it. “With the mega-sizing of restaurant meals, sharing is the best way to save money and improve your health at the same time,” says Dayle Hayes, a registered dietitian in Billings, Mont.

For example, at one major fast-food chain, splitting a large order of fries instead of buying two medium-sized ones will save you and your lunch mate 190 calories (90 of them from fat) and about $1.59. And that’s just the fries.

Do you have some money-saving tips to share? Post them here by clicking on “Comments.”

Watch for gotchas in ‘triple play’ deals

It’s nearly impossible to miss all the ads for combined Internet, TV, and telephone service. These bundles can save you money, but like so many deals that sound great, the devil is often in the fine print.

For example, the promotional price—$99 is typical—doesn’t include taxes, franchise fees, or other charges. You may also have to pay monthly rental charges for cable boxes, remote controls, or other equipment. There might be installation, activation, and shipping fees, too.

And some companies don’t make it easy to find out what you’ll pay after the promotion ends. Making matters worse, the price for one service, say, the telephone, might increase after only three months, while Internet service might go up after six months.

And the package can change, too. We found one company that added a $15 charge for unlimited long-distance calls when its promotion ended.

Here’s what you can do:

• Before signing up, scour the provider’s Web site for frequently asked questions, and read the “terms of service” for details.
• Then call the company and review all requirements and charges, including taxes and fees.
• Ask what you’ll pay after the promotion ends.
• Find out if accepting the promotional price means that you’re agreeing to a contract. If so, take note of the penalty you’ll face if you terminate the service before its term is up.

For more on how to choose a triple-play deal and ratings (available to subscribers) of providers, click here. 

—Anthony Giorgiannni

Time to plug in the shredder and tame the clutter

If your list of 2008 New Year’s resolutions includes a vow to tackle the mounds of financial paper you’ve been collecting, here’s some advice from Rosanne Grande, a financial planner with R.W. Rogé & Co., in Bohemia, N.Y., on what to keep and what to shred:

• Bank records. Keep deposit and withdrawal slips until you get your bank statement each month. Retain monthly statements for at least seven years, in case the IRS audits you. Ditch CD records after the accounts mature and you collect the interest you’re due. The same advice applies to loan documents after you’ve paid back all the money that you borrowed, with one exception. Don’t burn your mortgage after you’ve paid it off. Keep it as proof of how much you paid for your house so you can calculate the tax, if any, on your gain when you sell it.
• Investment account documents. Shred the statements you receive each month or quarter as new ones arrive, but keep annual statements for seven years. If you still hold stock in certificate form, ask your broker to hold them for you electronically. You can also convert U.S. Savings Bonds from paper to electronic using the U.S. Treasury’s SmartExchange program at TreasuryDirect.
• Retirement-plan records. Retain your annual 401(k), IRA, and Keogh statements. If you’ve made nondeductible IRA contributions, keep Form 8606, which you must file with your tax return. It proves that you’ve already paid taxes on money in those IRAs.
• Credit-card receipts and bills. After you pay your bills each month, staple receipts for credit-card purchases to your statements and keep them for one year. They’ll come in handy if you need to return defective goods that you bought with a credit card. After one year, shred the receipts. You can do the same with your credit-card bills unless you need them to support tax deductions. In that case, hold them for seven years.—Denise Topolnicki
  

Charitable giving: Things to keep in mind this year

As you plan your holiday charitable giving, take note of these developments that could affect the ease of donating, and the tax-deductibility of your gifts.

Give (cautiously) via credit card
More charities are arranging to let you donate by credit card every month. The system is convenient, but has some potential pitfalls.

What to do: Check out our advice, “Easier ways to give.”

Save your receipts
The IRS now requires receipts for all deductible donations. Starting this year, all charitable deductions, no matter how small, must be substantiated either by a canceled check; bank record containing the charity name, donation amount, and date; or detailed receipt from the charity. Otherwise the contribution is not deductible.

What to do: Start collecting your charitable acknowledgements, receipts, and cancelled checks in one place now. If you make cash donations, you’ll need either a bank statement or a written communication from the charity noting the charity name, your donation amount, and the date. For more, check IRS Publication 526, Charitable Contributions, on the IRS Web site.

Make your donation count
Make sure your dollars will be efficiently and wisely used by the not-for-profit of your choice. Not every charity is efficient in its use of donors’ money, and not all charities are even recognized by the IRS as eligible to receive tax-deductible donations.

What to do: For advice on how to find the best charity for your money, check out this article from Consumer Reports ShopSmart magazine.

Donate directly from an IRA
This is the second and final year that individuals aged 70½ can make a charitable deduction directly from an IRA—up to $100,000 a year—without having to recognize the income and pay taxes on it. If you do so, however, you can't take a tax deduction for the donation, but it should count toward fulfilling your minimum distribution requirement without adding to your taxable income. This can be a good strategy to avoid the IRS’s rule that limits higher-income taxpayers from fully deducting donations. It’s also good for folks on the other end of the income spectrum who don’t itemize and therefore can’t normally get a tax deduction from a charitable donation.

What to do: Contact your IRA custodian with the names of charities to which you’d like to make donations. Since this could take a little time, start the process now so that the gifts are made before year end, when this tax break is set to expire. The contributions must go directly to the charity. Don’t cash any checks that are sent to you by mistake or you’ll pay the taxes. IRS Publication 526, Charitable Contributions, on the IRS Web site. —Tobie Stanger

Feds list poor nursing homes

The federal government has released its first ranking of what it characterizes as poor-performing nursing homes. The list, published by the Centers for Medicare & Medicaid Services, singles out 52 facilities across the U.S.

For basic, step-by-step advice on choosing a good nursing home, see Consumer Reports’ special September 2006 report.

Give the gift of micro loans

Looking for a holiday gift that will really keep on giving? How about turning a loved one into a humanitarian financier by giving them a Kiva.org gift certificate?

Recipients redeem their certificates to make “micro loans” directly to small entrepreneurs in 37 developing countries. Once the loan is repaid, the lenders can re-lend or withdraw the money, ultimately using it for that MP3 player or anything else they want.

It’s all done through the San Francisco non-profit group’s Web site, which features a profile of every entrepreneur seeking to raise him- or herself out of poverty.

Take for example Jorge Romero, who recently requested a 6-month, $650 loan to buy shampoo, conditioner, and other supplies for his beauty salon in Paraguay. Or Betha Auma of Kenya, a wife and mother of six seeking an 18-month, $800 loan to buy 20 sacks of grain to sell in her cereal business. Or Sun Channy of Cambodia, asking for $1,200 over 18 months to buy more ducks for her retail egg business.

Generous Kiva lenders quickly granted those three loan requests. In fact, due to huge media attention the organization has received from the Oprah Winfrey Show, PBS’s Frontline/World, and even former President Bill Clinton, the average wait for a Kiva loan is an incredibly short 1.5 days. The most popular entrepreneurs are African women, whose loan requests are filled almost immediately after being posted on the site, says Kiva spokeswoman Krista Van Lewen.

Recipients redeem their $25 to $5,000 Kiva gift certificates to set up a lending account. They then decide when to make a loan, in what amount and to whom.

Although account holders can lend the entire amount to a single entrepreneur, they most often divide the money among more than one borrower. Usually, each loan is made up of money pooled from numerous lenders, with each lender kicking in, on average, $25, the minimum loan amount. Kiva lenders typically have a total of $100 in their accounts or on loan at any one time. Lenders can track the entrepreneur’s progress through updates posted on the Web site or sent by e-mail.

Once the entrepreneurs repay their loans, the money is returned to the lenders’ accounts, where it can be lent again, donated to Kiva itself or withdrawn, all without fees.

Lenders don’t earn interest, and there’s even a small chance that they could lose part or even the entire amount they lend. But, of the more than $2 million in loans completed since Kiva was founded in 2005, only about a quarter of 1 percent are in default. Outstanding loans currently total more than $13 million. Because lenders expect to get their money back, Kiva loans are not tax-deductible. However, lenders may be able to take a capital loss deduction for any money they lose through default.

To purchase gift certificates, you must first create a Kiva account. The certificates are purchased through the Web site using PayPal, which accepts major credit cards. PayPal waives its transaction fees for Kiva members. The certificates can be sent directly by e-mail or printed. They must be redeemed within a year, or the proceeds will convert to a donation for Kiva’s operating expenses. The company will e-mail two warnings before that happens. Certificate givers can use the Web site find out if a certificate has been redeemed. —Anthony Giorgianni

Ways to cut the cost of shipping

Americans are expected to spend almost $475 billion this holiday season. And that doesn’t include the costs of sending gifts to relatives or paying a premium so they arrive in time for your own family. Here are four suggestions to trim shipping expenses.

Get ahead of the rush. Nearly a quarter of shoppers surveyed in 2006 said they waited until the last minute. But you’ll save big on shipping if you mail early. For the biggest savings at the post office, mail by Dec. 15—the deadline for items sent by Parcel Post to be delivered in time for Christmas. The deadline extends to Dec. 20 for First Class, Dec. 20 for Priority, and Dec. 22 for Express Mail. But those extra days come at a cost. A 10-pound package sent from New York to California runs about $45 if mailed Express vs. $16 for Parcel Post. A Priority Mail Flat Rate Box is a great value: For $8.95 you can send a package anywhere in the U.S. as long as it fits within one of two designated boxes and weighs no more than 70 pounds. FedEx Ground will deliver packages by Dec. 25 if shipped by Dec. 17, and the deadline for FedEx Express is Dec. 19. But those extra two days will add $25 to the cost of shipping a 10-pound package. 

Consider in-store pickup. Shoppers can avoid shipping costs with retailers who offer local in-store pickup for online orders. Wal-Mart says its Site to Store program has saved customers $10 million in shipping costs since the program was launched this spring. Site-to-store orders arrive 7 to 10 days after order processing, which can take 48 hours by itself. Other retailers that offer in-store pickup include Best Buy, Circuit City, and Sears. Merchandise is often available the same day, but you may have to travel to a particular store to get it.

Look online for coupons. Free shipping may be just an Internet search away. We entered "shipping coupon" into Google and found offers for free shipping at Target, JCPenney, Timberland, and the Gap. Popular coupon Web sites are Judy’s Book and Shopping Bargains.

Watch for promotions. L.L.Bean is offering free shipping on all holiday orders this year. And some online retailers will ship orders of a certain size for free. Amazon.com, for instance, ships qualifying orders of more than $25 for free, though delivery takes an additional 3 to 5 business days. —Gregory Brown

Consumer agency offers guidance on gift cards

When buying gift cards for the holidays, you might want to stick to retailer-issued cards, which remain relatively free of the expiration dates and pesky fees common to the bank-issued variety. In its fifth annual gift card survey, the Montgomery County, Md. Office of Consumer Affairs recommended 18 of the 22 retailer gift cards it reviewed from late October to November.

But the agency said all of the 30 bank-issued cards it examined continue to have purchase and processing fees, expiratio