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In the case before the appeals court here last week, Denise Roberts had signed up for a fixed-rate 7.99% Fleet Bank MasterCard, responding to an offer stressing that it was "NOT an introductory rate" and that the rate "won't go up in just a few short months." A year later, it did - to 10.5% - for no reason beyond the bank's desire to increase its revenue as its cost of funds was rising. Overturning a district judge's decision in Fleet's favor, the appeals court said the circumstances may have violated the federal Truth in Lending Act, and the lower court should hear the case. After a similar appeals court ruling here last year, Fleet agreed to pay back $3.8 million to thousands of customers who were assessed a $35 annual fee after signing up for a "no annual fee" card. Since January, I've heard from a steady stream of cardholders outraged about sudden changes in rates. In many cases, the only trigger seems to be that they've used increasing amounts of their available credit - enough to lower the "credit score" lenders use to predict a borrower's likelihood of default. Lenders should be free to quit extending further credit to customers who no longer seem as creditworthy as they once were, or to offer them new credit only at a higher rate. But to change the terms after the fact - to raise the price people pay for money they've already borrowed - is unfair and unconscionable.
Required card use in order to get a great rate on balance transfers. Many of the zero-percent deals come with a kicker: You must use the card at least once a month, possibly for a minimum amount. That means you're not just transferring a balance and parking the bill in the no-interest zone indefinitely. Failure to make the transaction or to reach the trade amount can result in fees, penalties, or the imposition of a new, higher rate. Worse yet, the money you spend on the card drops to the bottom of the rate pool. Your monthly payments go to pay down the zero-rate balance transfer. The standard advice on paying down debt is always "pay down the highest rate debt first," so acting on these deals will put you at odds with that. High fees on everything else they can nail you on. The interest rate may be lower than on your present card, but if you pay a big fee in order to get it, you could wipe out the savings the lower rate should give you. Punitive rates when things go wrong. The low balance-transfer rate is the carrot; the extremely high rate you'll start paying if you're a day late or dollar short is the stick. A universal default clause that affects all of your consumer debts. Effectively, it means that if you are a day late on any payment to any creditor, the lender puts you into a default rate. So you could pay the credit-card bill on time each month, but if your gas bill gets hung up in the mail, you could get hit with a default rate that in some cases goes up to nearly 30% per year. Some card issuers peg their clause to anything that shows up on your credit report, which may give you some margin for error.
The controversy has been stoked by owners of Web sites who claim that spyware threatens the whole multibillion-dollar business model of selling online advertising by diverting their customers' eyeballs from the banner ads already there - much like a rival TV news channel suddenly scrawling its own messages across the bottom of CNN. Spyware represents a twist on "cookies," a simple form of tracking technology that first stirred fears over Internet privacy several years ago. Cookies, snippets of text that are automatically downloaded when a computer visits certain Web sites for the first time, can let marketers know some of the sites a consumer regularly visits. Spyware, by contrast, is like a cookie on steroids: It can track each click you make as you negotiate the Net. Formed five years ago, closely held Gator is one [there are others] of the most ambitious and sophisticated companies using new technology to target pop-ups and other online ads. Gator's software is running on about 35 million computers world-wide, more than half of them in the U.S., according to the company. Gator entices people to download its tracking software by slipping it inside other programs, which are offered free via Web ads. It developed a program called eWallet, designed to remember passwords and automatically fill in online shopping forms. Gator also bundles its advertising service with Weatherscope, which provides local weather data, and with music-swapping software, among other things. Unlike many other online advertising companies, Gator puts labels on its pop-up ads allowing people to click for more information about why the ads are showing up and how to get rid of them. Yet critics say some of Gator's efforts to get people to download its software have been deceptive. Recent visitors to a Web site featuring lyrics from the rock band U2, for example, were greeted by an official-looking blue box headed "Security Warning," suggesting that they needed to do something to protect their computers. Under that heading, in fine print, was a pitch for free calendar and time-keeping software that comes bundled with Gator's ad-spawning service. People impatient to get to the U2 lyrics might click to accept that package without bothering to read more than 15 pages of text on the privacy policy, terms and conditions. [Checking lyric sites is where I suspect I got the spyware.]
Economists have found that men with above-average looks are paid about 5% more than those with average appearance, while those who are below average in looks have wages 9% below the mean. Recently Daniel Hamermesh, a labor economist at the University of Texas at Austin who has long studied beauty and labor markets, wrote a paper with an undergraduate economics major, Amy Parker, that investigates the effect of beauty on a particular measure of performance: teaching evaluations for college professors. The economists collected teaching evaluations for 463 courses taught by 94 faculty members at the University of Texas at Austin, along with some characteristics of the instructors, like sex, race, whether they were on tenure track, and whether they were educated in an English-speaking country. They asked six undergraduate students to rate the photographs of the professors on a 10-point scale and used the average measure as a beauty score. The student ratings on the beauty scale were highly correlated with one another, suggesting that they were measuring the same aspects of appearance. According to the economists' statistical analysis, good-looking professors got significantly higher teaching scores. The average teaching evaluation was 4.2 on a 5-point scale. Those at the bottom end of the attractiveness scale received, on average, a teaching evaluation of about 3.5, while those on the top end received about 4.5. Other variables that positively influenced teaching ratings were being a native English speaker, being a non-tenure-track faculty member, and being male. The first fact is hardly surprising, the second is explained by the fact that non-tenure-track faculty members are often selected primarily for their teaching ability, but the third is a bit surprising. On closer investigation the economists found that good looks were significantly more important for men than women in producing high teaching evaluations. See "Beauty and the Labor Market" below for a potential explanation of why. The same effect was found in earlier research relating wages to beauty: being good-looking, or at least not being bad-looking, is significantly more important for men than for women. 1993 - Daniel Hamermesh and Jeff Biddle 1998 - Daniel Hamermesh and Jeff Biddle 1997 - Ciska M. Bosman, Gerard Pfann, Jeff E. Biddle and Daniel Hamermesh
Experts suggest keeping at most two or three cards active at a time to maintain a healthy credit report. That doesn't mean it's bad to open store accounts - it just means inactive ones should be closed. To do this, experts recommend writing a letter to the department store or other lender, asking it to close the account and send back written verification that the account was closed at the cardholder's request. Often such cancellations get reported incorrectly or don't indicate it was the consumer - not the creditor - who asked to have the account closed. Related article: Credit Score Simulators - Jennifer Bayot, NY Times, How to Rasie Your FICO - Kadet, WSJ / Kristof, LA Times
In general, when customers use their debit cards and authorize a $100 purchase with a personal identification number, or PIN, the merchant pays about 44 cents for the transaction, according to Nilson Report, a trade newsletter. On the other hand, if customers sign for the $100 debit-card purchase - routing the transaction through a credit-card network - the retailer pays the card issuer between 99 cents and $1.01. Regular Visa and MasterCard credit-card transactions are even more expensive, with the merchant paying about $1.66 to the card issuer per $100 transaction, according to Nilson. For consumers, one possible consequence of the lowered fee for certain debit-card transactions is that banks will have to charge more for rewards programs, which allow consumers to redeem points for things such as airline tickets, or pare these programs back. In the past, debit-card reward programs have been financed largely by the money banks receive from signature debit-card transactions. But with merchants now paying less for 'signed' debit-card purchases, it may be hard to support these programs indefinitely. Some of the nation's largest banks, including J.P. Morgan Chase, which owns Chase Manhattan Bank, and Bank of America, have said that they're reviewing their debit-card reward programs. But Citigroup said recently that the bank has no "current plans" to change the pricing or structure of its debit-card programs. Another way that banks can recoup revenue is by charging consumers for purchases made with their PIN numbers. If banks start to do this, consumers could get notification as early as this fall. Consumers should also realize that while banks have a vested interest in getting people to sign for debit-card purchases, merchants are the ones paying extra for this. So retailers such as Wal-Mart Stores Inc. will continue to push the less-expensive PIN transactions by setting up their card readers to automatically prompt customers for a PIN when the card is swiped. Buyers have to exit out of this function to have the transaction counted as a "credit," and in many cases, qualify for various rewards programs. "We're seeing more and more merchants doing this," said Mallory Duncan, general counsel for the National Retail Federation. Lastly, consumers shouldn't be surprised if merchants start raising the "minimum purchase" amounts they require for credit-card transactions because of the slightly higher fees. For years, businesses have told customers that they can use a credit card only if purchases reach a minimum amount, anywhere from $5 to $20 - even though this is a violation of credit-card issuers' policies. Related article: Beware of Debit Card Fees - Calmetta Coleman, WSJ & Albert Crenshaw, Washington Post
When the costs of fuel, insurance, maintenance, replacement parts, depreciation and loan interest are figured in with the purchase price, Honda creams its competition for value, according to research by car-buying service Edmunds.com. That's despite the fact that Honda's sales incentives are among the lowest in the industry. If price and long-term value are important, consumers should consider all those costs, "not just how much money is offered upfront to close a deal," says Bob Kurilko, vice president of product development at Edmunds.com. The Honda Accord, for example, sells for almost $5,000 more than the comparable Ford Taurus. And the Taurus has a $3,000 rebate on it. Still, over five years, the Accord on average will be $1,000 cheaper to own than the Taurus. Taurus drops $14,471 of its value over three years, and will typically cost the owner $5,753 in maintenance. The Accord loses $11,691 in value and will cost an average of $3,682 to maintain.
As competition heats up, some banks are now trying to make it easier for customers (of other banks, of course) to switch. Washington Mutual and Bank One both provide new customers with "switch kits" that include the forms needed to move automatic deposits and bill payments over from their former bank as well as a prewritten letter to that bank requesting it close the account. When it comes to switching brokers, the firms themselves will do much of the work. But there are still hassles. Investors submit a transfer form to their new brokerage firm, and then must wait for their old broker to hand over the assets. The process is supposed to take no more than a week but can end up taking months due to incorrect paperwork. The old firm can reject transfer requests, for example, if the transfer form is incomplete or inaccurate -- even if just one digit in an account number is wrong. One way to minimize problems: Make sure to attach a copy of your most recent brokerage statement to the transfer form to avoid mistakes. If you still have problems, file a complaint with the SEC. The SEC will ask the firm to send a written report that responds to your complaint. The more money you have, the more help you will generally get when switching. For example, J.P. Morgan Chase clients who have at least $100,000 parked with Chase or $250,000 in other investable assets are assigned a banker and a financial adviser who act as concierges and help clients fill out account transfer forms. If the client can't make it to the branch Chase officials will even make a house call to help them complete the documentation. But many people who switch banks end up doing it themselves.
Having an antitheft device in your car can qualify you for a discount on comprehensive insurance that can be as much as 30%, depending on where you live and your insurer, according to the Insurance Information Institute. To find out if you qualify, you can call some insurance companies for a quote. You can also get online quotes from Web sites such as insweb.com and www.insurance.com. Many new vehicles come factory-equipped with a global positioning system satellite tracker - the most popular is OnStar. It costs $16.95 per month for the basic security package [$203.40/yr], and if you pay more you get added features. A GPS system is also available on a wide variety of other vehicles. An alternative is the LoJack system, which uses radio rather than satellite technology. The basic version costs $695 but has no monthly fees.
Worse, the Medicare liability is growing with the speed of a nasty cancer. It will increase $1 trillion by next year's presidential election, dwarfing the recognized federal deficit. Then it will grow $5 trillion more by the presidential election of 2008. George Bennett, the president and CEO of Health Dialog in Boston, an entrepreneur and a former management consultant and an enthusiastic problem-solver, has a partial solution to the Medicare problem: "transitioning from managed care to collaborative care." What is the difference? "Managed care was used to get discounts and, ultimately, to deny care," he said. "The managed care world is a world of rules." Collaborative care is about making wise choices. As an example, he pointed out that if a woman has uterine fibroid tumors, managed care has a series of rules that determine whether she can have a hysterectomy. "The new idea is to make sure the family has access to the information that is used to make the rules. The idea is to inform." He noted that many women are less eager to have the operation when they learn that most of the symptoms and discomfort of fibroids disappear after age 50. "What you find is that more women opt out of a hysterectomy under collaborative care than would be denied [a hysterectomy] under managed care." In another example, he pointed out that men can take the PSA test for prostate cancer, but there is a good chance of getting a fake positive or negative result. "There is, however, a 100% chance of urinary or potency problems if they have an operation. What most people don't understand is that for every man who dies of prostate cancer, 150 die with it," he said. He also pointed out that it takes, on average, seven years for prostate cancer to metastasize and another seven years to actually die from the cancer. His bible is an amazing health care database developed by Dr. John E. Wennberg at Dartmouth Medical School. It shows that, Mr. Bennett said, "Geography is destiny - where you live has more impact on your treatment than your health." Sifting through the Medicare book of the Dartmouth Atlas of Health Care, for instance, I found these rather extraordinary facts: Medicare reimbursements per capita varied by nearly 300%, with the lowest ($3,074) going to the Lynchburg, Va., hospital referral region and the highest ($9,033) going to the McAllen, Texas, region. The odds of dying in a hospital ranged from less than 20% in Tucson, Ariz., to nearly 50% in Manhattan. Referrals for coronary bypass operations in California cities ranged from a high of 11.5 per thousand Medicare enrollees to a low of 3.6 per thousand. Basically, both the costs and frequency of any medical treatment vary widely, indicating that medical practices are idiosyncratic rather than scientific. This same chaos is a window of opportunity for Mr. Bennett and his "information therapy" delivered by trained, impartial nurses rather than agents of cost control. And what does this have to do with costs and that $35.5 trillion liability? Everything. Mr. Bennett pointed out that conservative treatment options - the kind people tend to opt for when they are fully informed - could lower Medicare expenditures 30%. That's a nice savings on any amount of money. On $35.5 trillion, it's $10 trillion.
From Fort Wayne to Rochester to Salt Lake City, the prices of typical homes across most of the country's vast middle have risen just ahead of inflation - and more slowly than incomes. The cost of homes in the most expensive cities is now about six times that in the least expensive, up from a ratio of three to one two decades ago. "The real housing boom is fairly concentrated," said Mark Zandi, the chief economist of Economy.com. "And at the moment, it is clearly keeping the economy afloat in those areas." There is no such cushion throughout much of the nation's interior. Some economists argue that the Federal Reserve's aggressive interest rate cuts might have been more effective at ending the economic slowdown if the gains in house prices - and the potential they create for consumer spending - had been more broadly shared. The dynamic is reversed for younger adults, who are struggling to afford houses on the coasts while their counterparts elsewhere in the country are taking advantage of low mortgage rates to buy bigger, better homes than in the past. Beyond determining many families' wealth and standard of living, the two-tier housing market has begun to create difficult questions for government officials trying to create policies that apply to the entire nation. For example, when designing pensions, it becomes very difficult to judge the ability of people to retire because their finances might be in much better shape than their income suggests. In the San Jose, Calif., area, home to the slumping Silicon Valley, households have raised about $10,000 on average since the start of 2002 simply by taking additional equity out of their homes when refinancing a mortgage, according to Economy .com. In Boston and Washington, they have taken out about $4,000. In much of the Midwest, they have taken out less than $2,000. In fact, households in the middle of the country that fall behind on mortgage bills cannot rescue themselves by dipping into their rising home equity and making up for a series of missed payments in one swoop. The states where home foreclosures have spiked most sharply since 2000 are in the Midwest or Southeast. The housing gulf stems in part from the relative open space and lack of building regulations away from the coasts that allow builders to put up new homes as soon as there is demand for them, and sometimes even before. Prices in Austin, Tex., and Las Vegas, two fast-growing areas, have risen only moderately. The gulf is also a byproduct of trends that have drawn educated, highly skilled people to the coasts. The surge of global trade and the growth of finance, health care and other white-collar industries have led the Northeast's and West Coast's share of the nation's economy to grow to almost 45%, from 39% in 1980, according to Economy.com. High-earning workers have followed the jobs, and not even an economic downturn that has hit Wall Street and Silicon Valley particularly hard has reversed the trend. Over the long term, house values tend to increase at roughly the same rate as incomes in any region, economists say. Because prices have outgained incomes on the coasts the last two decades, many analysts expect the housing gap to narrow eventually - but they were saying the same a decade ago.
The one-minute movies, which NBC calls "1MM's," will be broken into two 30-second segments, with a suitable cliff-hanging moment to end the first segment. Part one could play somewhere in a block of commercials in NBC's program at 8 p.m., with part two in the 9 p.m. or even 10 p.m. show. One four minute segment will play over four nights in eight, 30-second installments. Because NBC intends to repeat the movies relatively often, the network will be satisfied, at least for now, with the 10 minimovies it has ordered. ABC is planning a series of three-minute films that may run in one-minute installments. That initiative is part of ABC's talent-development program and is not specifically intended to address viewer retention.
While negotiating to buy old houses, he found that the seller's agent often encouraged him, albeit cagily, to underbid. This seemed odd: didn't the agent represent the seller's best interest? Then he thought more about the agent's role. Like many other ''experts'' (auto mechanics and stockbrokers come to mind), a real-estate agent is thought to know his field far better than a lay person. A homeowner is encouraged to trust the agent's information. So if the agent brings in a low offer and says it might just be the best the homeowner can expect, the homeowner tends to believe him. But the key, Levitt determined, lay in the fact that agents ''receive only a small share of the incremental profit when a house sells for a higher value.'' Like a stockbroker churning commissions or a bookie grabbing his vig, an agent was simply looking to make a deal, any deal. So he would push homeowners to sell too fast and too cheap. Now if Levitt could only measure this effect. He found a clever mechanism. Using data from more than 50,000 home sales in Cook County, Ill., he compared the figures for homes owned by real-estate agents with those for homes for which they acted only as agents. The agents' homes stayed on the market about 10 days longer and sold for 2% more.
Brimming with such a lack of purpose, the fad has found a home in Berlin and across Germany. On Monday, at 5:05 p.m., mobbers have been called to gather at the washing machine display in a department store in the German city of Dortmund, eat a banana, and leave. But events have also been organized in Rome, Vienna and Zurich. Australia is planning one. New York is the acknowledged place where people first used the latest technology to gather and delight in pointlessness. In June, more than 100 people gathered in the rug department of Macy's, claiming to a bewildered clerk that they were looking for a "love rug" for their suburban commune. The concept quickly took on a life of its own, propelled by e-mail, cellphones and the Internet. For more information, see cheesebikini.com and flashmob.info. Just the Facts Household Products Database If you're worried about the health risks of all the junk lying around your house, the National Library of Medicine, run by the National Institutes of Health can help. It launched a Web site this month that lists the potential health effects of more than 2,000 product ingredients. [householdproducts.nlm.nih.gov] The site also details the contents of more than 4,000 common household items. Its database lets people search by product type, manufacturer name or ingredients. (Leslie Walker, Washington Post 8-17) Quick Facts, Stats & Opinions Last year in North America, the number of self-checkout lanes increased 47%, said Gregory Buzek, president of IHL Consulting Group. (Mark Pothier, Boston Globe 8-24) House prices are up a cumulative 39% over the past five calendar years, according to home-finance corporation Freddie Mac. But Federal Reserve data indicate that mortgage debt, including home-equity loans, has risen even faster, up 58% over the same stretch. (Jonathan Clements, WSJ 8-20) In Alaska, for example, the average cost for a private room in a nursing home was $420 a day, the most expensive in the country. The average in Shreveport, La., was $96 a day, the least expensive, according to the study, by the MetLife Mature Market Institute. The nationwide average was $181 a day, up from $168 in a similar MetLife study in April 2002. The average cost for a home health care aide was $18 an hour nationally. The most expensive home care was in Fort Worth, at $27 an hour, and the least expensive in New Orleans, at $12 an hour. (Vivian Marino, NY Times 8-17) The first wave of boomers will begin retiring in just seven years. By 2030, 20% of the population, or 70 million people, is expected to be 65 years or older, compared with almost 13%, or 36 million today. Retirees will take $670 billion from their investments for living expenses in 2012, up from $134 billion in 2001, according to Boston consultant Cerulli Associates. (John Hechinger, WSJ 8-13) Tech Tips & News ISP's Plan to Scan Alll E-Mail Attachments In the wake of recent virulent computer attacks, many ISP's plan to join AOL and other ISP's in filtering all e-mail attachments before delivering them to their customers' inboxes in an effort to halt the spread of computer viruses. According to security firm MessageLabs, approximately 90% of all Internet worms and viruses spread via e-mail. Filtering is an expensive proposition for ISPs, costing millions of dollars to purchase software and maintain the program. In addition to cost, ISPs run the risk of filtering out legitimate e-mail. Customers have come to expect such service from their ISPs, which means that ISPs large and small will need to swallow the cost of filtering to keep their customers. (Washington Post, 8-27) Sobig.F Sets Record The Sobig.F worm has claimed the dubious distinction of being the fastest spreading virus to date. The virus flooded e-mail servers and inboxes, slowing corporate and university network access and causing some e-mail systems to be taken offline. The assault seems to have eased since August 21, when the malicious e-mail reportedly accounted for about 70% of e-mail around the world. (Internet News, 8-21) The Google Calculator Google announced this week it had crammed a mathematical calculator into its search service, letting users type math problems directly into the search box and get instant answers. Google's calculator is trained to recognize words as well as numbers, so you can type in "eight plus seven minus four" or "8 plus 7 minus 4." Cooks may like being able to type in "quarter cup in teaspoons" and see Google reply "1 quarter US cup = 12 US teaspoons." Does a mechanic want to know the size of a replacement part for a clock in inches, but you only know it in millimeters? Enter " .715 mm in inches" and Google will inform you it equals 0.0281496063 inches. (Leslie Walker, Washington Post 8-17) Google's E-Mailed News Last week, Google released a free news service, Google News Alerts. A simple form (www.google.com/newsalerts) lets you create a search query - up to 50 per e-mail address - and have links to related stories sent to that address, either once a day or as each article appears in Google's index. Other news sites, such as CNN Interactive (www.cnn.com/e-mail), still offer breaking-news alerts for free, but they are limited to a few stories a day and don't offer much customization. Yahoo's News Alerts service (alerts.yahoo.com) allows for some customization based on keywords and sources, but it covers fewer news outlets than Google's. Google News Alerts, by contrast, tap into all 4,500 news sources. (Leslie Walker, Washington Post 8-10) A recent survey by Consumer Reports magazine estimated that about 8 million Americans call software support services every year, but only a third of these get the help they need. (Hiawatha Bray, Boston Globe 8-18) Home Page Previous Factoid Too Top Sites
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