12/12/2008 10:49:00 AM Consumer Focus / Spending pitfalls A smart consumer is a happy consumer
Be mindful you don’t fall victim to the common mistakes shoppers make
As consumers feel the pinch at the grocery store and the gas station, Consumer Affairs has a handy list of the 10 most common financial pitfalls that Bermudian consumers should avoid.
Because being a savvy consumer means taking the time to learn what you need to know to avoid getting ripped off.
- Not knowing a store's policy before you buy.
Refunds, returns and expiry dates on gift certificates are almost always determined by store policies unless the product you purchased was faulty, and is thus covered under the Sale of Goods Act 1979 (as amended 2002).
- Not reading the fine print on contracts.
It's up to the consumer to pay debts on time, not for the retailer or service provider to track you down with invoices.
It's also almost always up to the consumer to be aware of interest charges, late fees, taxes, shipping and handling charges and warranty restrictions before you buy (unless there is tangible proof that the consumer could not reasonably be expected to understand such clauses due to mental deficiency or other issues, as determined by the Consumer Protection Act 1999).
Credit cards, cellphones, gym memberships, online purchases and contracts with service providers all demand extra attention.
Sign up for a monthly plan if possible, to determine if you really need these products and services, before committing yourself to a long-term contract.
You may find that you don't actually use the gym like you hoped to, or that you use far more or less cellphone minutes for talking and texting than you anticipated.
Even when dining out, you may be getting more than you bargained for when you get a bill 20 per cent higher than what you anticipated because gratuities were included.
Finally, consider the price of pulling out at the last minute. Most restaurants, spas and salons, marine operators and medical providers have clauses that you must cancel 24-to-48 hours in advance or risk paying a substantial cancellation fee for you and your party.
- Taking someone's 'word'.
Whether a customer service representative assures you that you can always change your mind later and get out of a contract with no penalties, or a contract says he'll definitely be done work in three months, always get it in writing or you won't have a legal leg to stand on when things go wrong.
- Throwing out receipts, invoices and contracts.
Retain all paperwork associated with a purchase for a minimum of six years- the maximum amount of time a retailer or service provider has to claim a debt from a consumer - in case you need to prove that you paid your bill in full.
You may also need documentation to claim a warranty, refund or return, or to demonstrate that you did not receive goods or services contractually obligated to you.
- Not having a budgeting system in place.
A percentage of every dollar you earn should be put away and considered off-limits (in other words, save or 'pay yourself first').
Get good investment advice by reading books, websites and speaking to financial counsellors about your families' financial plan.
Save early enough for retirement (and certainly don't rely on a pension to get you through your golden years). Have an emergency savings (of at least three years). Have insurance in place (for your health, your house and its contents, your vehicles, and for "all risks", including jewellery, watches, cameras, or your laptop computer).
- Not understanding the depreciation value of large purchases such as for a vehicle.
Also, the maintenance costs associated with that purchase that will greatly increase the cost to the consumer.
Peripheral costs of insurance, licensing, fuel, and repairs all add up quickly on vehicles, houses or condos, and air conditioning systems, to name a few.
- Paying for ATM fees when withdrawing cash.
Also, pay surcharges for using a credit card, overdraft fees for bouncing cheques, and other ways you can end up spending more for a purchase than the ticket price.
-Rushing into a purchase without considering all options before you buy.
Just because something is on sale does not mean you need it nor can afford it.
Always comparison shop for what you do need.
Research and get references and quotes from contractors before hiring one. If a contractor or retailer tries to convince you that you better buy now or it'll be too late, consider it "too good to be true".
- Trying to get rich quick.
Avoid gambling, as well as at-home businesses that have a high startup fee, never respond to unsolicited Internet, telephone or e-mail offers for vacations or other prizes, and avoid pyramid schemes or multi-level marketing plans, which suggest you can earn money by others joining the "business."
- Becoming a victim of identity theft.
Never give out your banking or credit information, nor your social insurance number or other personal information unless to verified and reputable agencies.
Don't ever give this information to anyone by e-mail, telephone or fax.
Laura Semos is the education officer at Consumer Affairs.
