Credit Cards: Interest Rates

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How the credit card companies soak the consumer with interest.

I have been getting a flurry of letters from my credit card companies citing new terms. They are long and cumbersome to read. I am sure few people do; I did not. However, there is a very important change in the way they charge interest. I discovered it when I underpaid my card at the end of a billing period by only $400, in error.

I always pay my card off when due. I know many people cannot, and for many years I could not. In the past I know, once you do not pay in full on the due date, interest is charged, at rates ranging from maybe 8% to as high as 30%. The card companies are limited to what they can charge by the state they are incorporated in. Many incorporate in Deleware because they allow 30% to be charged. Rates vary according to the creditworthiness and payment history of the borrower. Sadly, those who struggle to pay often see their rates raised to the maximum 30%. And of course they wind up in the never ending cycle of paying terribly high interest rates to the billion dollar banks, many of whom got bailed out during the financial crisis. But that’s another story.

For those who pay the entire balance when due, it is actually a good deal. You get billed for all charges from 1-30 days prior to the bill date, then get another 3 weeks to pay. So a free use of money. These banks borrow from the Fed, or pay their depositors maybe 1-1.5% per year to use those funds, and then charge a rate from 20-30% per year to those unfortunate enough not to be able to pay their bills in full when due. OK, they lose maybe 5% a year to write-offs (those who go bad and never pay). But still an immense profit center.

But here’s what happened to me. By short paying my bill by $400, according to their new rules, they then add an interest charge, not on the $400 I did not pay from the due date, but, get this, on all the charges on the bill (it was close to $5000--I put my business expenses on this card) and they go back to the date of the purchase, not the date the payment was due. So for that $400 error I was charged over $300! That’s their latest ruse to soak those who can least afford it.

I was able to call and convince them to undo the charge which they did, when I quickly paid the forgotten $400. Lucky me. I don’t think they would do it a second time. And I must say this card carrier, maybe the largest in the US, Chase, has a very helpful and courteous staff of operators, not nasty like you might expect.

I wish I could wave a magic wand and have everyone pay off their old balances, and pay for their purchases every month. It is a shame how much it is costing them and how much better their lives would be without credit card debt, which makes these billion-dollar bankers richer. They must laugh their way to the country club every day musing about how easy it is to make so much off the backs of the working poor, and those that simply do not manage their finances well.

The Secret to avoiding expensive Printer Cartridges

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One of America’s Biggest Ripoffs: Printer Cartridges

I am always amazed at what the computer printer crowd charges for refills. Let’s take Hewlett-Packard, the biggest and probably the worst offender. I had a 4 in 1 machine (print, fax, scan, copy) for my home office. It died two years ago. You do not fix them, of course, you toss them and get a new one. This planned obsolescence of our "toss away" society is a burden on our environment. The 4 in 1 I bought is a dandy; it does everything I could want and more. And all for $150! What a good deal.

Until you get to the cartridges. There are four for the four basic colors needed to print color images. Go to your local office supply store and they are $20 to $30 each! Look at them. It could not cost them more to make those flimsy plastic cartridges with maybe 50c of ink inside than, say $1. HP claimed my cartridges would last 500 impressions Yet they ask $20 and more. OK, so you go to one of the internet sites that advertises them for $10. They say they are refills. You buy them and put them in. You start getting printer errors. You throw them out. HP claimed my cartridges would last 500 impressions. Cartridge World stores have opened up near me specializing in refilled cartridges. But they charge, I found, 60-70% of what HP does, and I bought two there that did not work and they would not make good.

You then say to yourself, "I never print in color, why do the color cartridges run out?" Hewlett Packard tells you when you print a black image, like a letter, the machine uses the three colors for enhanced appearance. You say "I do not want enhanced appearance," but their machine does not allow you to print using the black cartridge; it will not work unless all four are filled. If one runs out you are out of business. Even the fax and scanner will not work! You are trapped.

The answer? Three years ago I bought a black and white laser printer. The $40 cartridges, which are big and look like they are worth $40,  last me a year and I do a lot of printing. I use the 4 in 1 only for the occasional color printout, faxing, copying and scanning. I hope my $80 worth of cartridges in my 4 in 1 will last me at least a year or more.

Consumer Reports is a great publication and website. I recommend it highly. Check their reviews on printers. They test machines to see how many pages you can print versus the cartridge(s) costs.

How to best handle the IRS

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The IRS--Not the baddies they are made out to be.

Unfortunately, because of entrepreneurial failings, I have paid business expenses instead of my taxes a couple of times. I always made sure I filed on time even if I did not send my tax payments. I have been successful in responding to the IRS when I was notified. I never found their agents to be threatening or overbearing. But they will be IF you ignore them.

Can you blame them? Other taxpayers paid when due and you did not. When they wrote, you put it aside and pretended either it never came or it would go away. It will not. Their computers and data are well maintained and they will not forget or go away. So best to face it and avoid their wrath and further entanglements.

The IRS is always willing to work with the taxpayer who is contrite and does not try to hide. They will make a payment schedule you can afford but you must make the payments when due. There are loads of ads on TV and in print by tax “experts” offering to hold the monsters off if you owe over $10,000, for a fee of course. "They will save you money." Most times it is a waste of your money. You will pay them in fees more than they might save you. That guy on TV who sounds so sincere, the one who wears the cowboy hat,  I read he is worth upwards of $20 million from his company. These firms have no special secret; they simply deal with the IRS the same way you could. And they soak you for as much as they can get from you.

If you feel intimidated to go it alone, take a knowledgable friend along to help you. But do go; do talk to them--you will be surprised how helpful the IRS can and will be. Always be humble, don’t go on and on about your troubles as they have heard it all. Instead, have your records in order and get right to the point. Apologize for causing the IRS this trouble; humility will get you far.

I know this is all easy to say when someone is in trouble, whether medical, family or business. But take my advice, address the problem. If you do not it will snowball into something far more unwieldy and serious. And that, in the words of the Godfather, “they do not forgive."

How can a judgment be collected?

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Collecting a Judgment-What a Farce!

Most people think, 'you go to court, you win, you collect.' Not so fast. You, the winner, are responsible for gathering information to be able to collect. It starts with the full and correct company name. Maybe you are lucky and can get a bank account number to garnish. But don’t expect our government to help you at all. They are oblivious to the plight of the consumer in these situations. Here is an example.

Seven years ago I had a claim against Verizon. Verizon fastidiously hides from lawsuits through a maze of corporate shenanigans. I sent the summons to one of their repair buildings I had passed for years. I named them on the summons as Verizon. That is the name on the building, and the only name on my monthly bill. The sneaky bastards do not even list a street address for their company, neither on their bill nor in the phone book, nor online. They only use post office boxes to which a summons cannot be legally served. That is how they hide from legitimate claims. They never showed, and I won a judgment. I gave it to the local sheriff to collect (you as the winner must find a sheriff or constable to collect for you, who charges a fee whether he collects or not). In this case, he tossed it back at me saying that the tenant at that Verizon location was not Verizon, but some other name. What the bastards at Verizon do is set up shell companies to own or lease their buildings, and so when the sheriff goes he cannot prove that Verizon has assets there. So I was stuck.

Luckier New Yorkers. There, you can sue the publicly known name, like Verizon only. And collect on that basis. In New Jersey the judgment name must be letter perfect but the consumer has no way of finding out what that name is. Big lawsuits are also served on corporate agents, which all corporations are required to have. But in the case of Verizon, they have a myriad companies with the name Verizon a part of them. You have no idea which is the entity to sue, and if you guess right, you have no idea where that particular entity has assets. So these cigar-chomping, private golf club member, jet riding executives of Verizon have a good laugh at the little guy they have cheated.

What is needed is a federal law, that the judgment name (the one you sue) need not be letter perfect, and that all invoices nationwide shall have the full corporate name and street address of the company billing someone for services. So the little guy knows what the correct name is, and where a judgment can be collected. There should also be a provision allowing triple damages to the judgment holder if a company seeks to evade its responsibility to pay up.

It’s a complicated issue, but as things stand now, the consumer is on the short end of the stick too many times. And I am always happy when someone wins something against Verizon and their battery of attorneys, or gets the best of that rotten firm in another way.

Verizon: Deserving their bad reputation!

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Verizon: They could care less!

Verizon is one of the most vilified companies in America. They seem heartless to many of their users when it comes to customer service. I have a Verizon cellphone and can say I have not had much trouble there as others have, aside from the occasional unexplained, incorrect charge which they do remove, after waiting 10-15 minutes to be connected to a customer service agent.

However, landlines they seem to care less about. Recently I ordered 6 landlines for a home business. They were most helpful in setting up the service, came and installed as promised, sent confirmations by mail and email which were useful. Here comes the problem. I was quoted $296 per month including tax. The first two bills come:  $525 each. Obviously an error. I call. I find half of their operators (customer service agents) are helpful; they seem like they are there for years and do care. The other half, the new ones, are not that bright. I called and waited the customary 10 minutes to get someone. Despite my having their written acknowledgment of $296 per month, she simply could not grasp that fact. She then explains that I was charged $525 because I did not order the free internet service, which when included with my “package," would have brought the price down to $350. I told her she was very mistaken, and she suggested having a supervisor call me back. Of course, I was never called back.

So I sent my payment in for $296 each month, with a letter of explanation, and sent it by certified mail. Unfortunately, from past experience, Verizon is simply incapable, or has a policy against, handling written correspondence. Any day now I will get a letter that my lines will be disconnected, despite my written explanation which included a copy of their quotation. I am convinced that their company policy is to have their operators settle all disputes. If the consumer is not satisfied, as I was, it's tough luck--we will shut you off. They are great at shutting people off, lousy at responding to letters. Of course we know why; it costs money to understand and write logical letters back to customers, and the $8.50 an hour new hirees so frustrate the customer that I assume most just pay the bill not to prolong the agony.

If they do shut my phones off, I will be forced to call (an agonizing experience) and convince them they are wrong somehow, or pay the ransom to have my service reinstated, lest I stop doing phone business. But if it happens I will take them to small claims court for damages caused by their incompetence.

The Justizz site helps with letters such as mine, and facilitates the filing of small claims actions.

Justizz also supports legislation requiring companies to respond to certified letters of complaint, and suspend any disruptive action until ten days after a reply is sent.

Do unnecessary lawsuits drive up costs for consumers?

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Consumerism: It works both ways! Don’t try to extort the big guys.

I have written many blogs on this site about my outrage at the way consumers are treated by some companies. But I am not completely one-sided in my defense of the consumer. As I have also written, the commercial enterprises in this country deserve fair treatment by its customers as well.

I know someone who was a big executive at a major public relations firm in New York City. The firm has some 750 employees worldwide, about 70% of whom are women. They were served with a sex-discrimination lawsuit a couple of years ago. It seems that five female ex-employees got together and claimed the usual: insulting remarks, not enough opportunity for advancement. This is a common action these days as a handful of blood-sucking law firms, in this case named Sanford Heisler, recruit a couple of disgruntled employees and try to shake down their former deep-pocketed employer. For this the greedy bums get 35-40% of the final award, hoping to pray on the sympathies of big city minority jurors to score a big payday. Or harass the company enough that they find it cheaper just to settle with the bums.

In this case it did not get that far. The public relations firm got signed letters I am told from all of its other female employees who stated they experienced no harassment at all. Of course, the executives denied any “conspiracy” against women was going on. Other evidence was gathered. A judge handling the case just  decided that the case against the company did not have enough merit to justify a class action. So now each of the aggrieved women must bring their cases separately. Now that the chance for a big payday is gone, the great folks at the law firm will doubtlessly drop their suit and seek other prey.

In my opinion, it should not stop there, because no disincentive has been set to deter the lawyers from seeking other victims for their extortion game. Most states have frivolous lawsuit penalties, but few if any strive to enforce them. Texas just began a “loser-pays” system where, if you lose, you pay the other guy’s legal bills. That system having just started is too new to be judged.

I recommend: You lose and do not collect a dime--you pay the other guy’s fees. Your action is determined to be frivolous and guesswork, you pay their fees and a penalty of 100%. In that case, a law firm would be sure all their ducks are in a row before starting an action. Watch how the number of lawsuits drops, and your insurance and medical costs follow them downwards. There are too many out-of-control lawyers out there hoping for a big score at the expense of large firms who simply do not want the bother or publicity. And remember, the honchoes at the big companies do not deduct those settlements from their bonuses; they pass it along to you, the consumer, who eventually gets stuck with the bill in the form of higher prices.

The Justizz Legislative Agenda has addressed this issue. I will sign the petition in its favor.