Prepaid card users face larger-than-life fees

On the surface, prepaid debit cards seem like a viable alternative to bank accounts and credit cards. Millions of Americans have turned to prepaid debit cards as a cash-free alternative.

The caveat? Be prepared for hidden fees.

Many cards carry dozens of hidden fees. The additional costs can nickel and dime consumers with larger-than-usual ATM withdrawal and customer service fees as well as penalties for exceeding the prepaid balance.

“The fact is you have some programs out there charging fees that are too high,” says Green Dot founder Steve Streit. His prepaid card company decided to drop their card price from $9.95 to $4.95, monthly fees were also extinguished if the consumer used the card at least 30 times in a month, or deposited at least $1,000.

Green Dot's prepaid slogan? "No Credit Check. Safer Than Cash. No Bank Account Needed."

Prepaid cards have yet to go through regulatory and congressional scrutiny that debit and credit cards have already faced, because prepaid cards are a relatively new industry. This leads to problems of hidden fees, until the problem is resolved.

Visa, Mastercard and Discover receive 5 to 20 cents each time a prepaid card is swiped. Among the millions of prepaid card users, the potential revenue is off the charts.

Ten years ago, these cards were not the norm. In fact, they didn't exist.

However, as internet shopping increased, an untapped market was seen. Over the years many companies added prepaid cards, such as H&R Block, MetaBank, Comdata, Wells Fargo, Citi and Comerica to name a few. Celebrities ranging from Usher to Carmen Electra have endorsed prepaid cards as well.

The cards have become the norm for those who want to shop but have bad credit or don't trust banks. Director of national priorities for Consumer Action says, "To me, it's a terrible thing to give people their pay on a card that has fees on it."

Luckily for prepaid card users, fees are declining. Walmart has recently whittled down the fees on the MoneyCard, and NetSpend, Walmart, and Greendot are all cheaper than a checking account according to a study by Bretton Woods, a bank advisory firm.

Just be sure to read the fine print before signing up for a prepaid card.

Pay to play the savings game at Swoopo.com

As eBay shoppers shrink due to frauds and automated bidding software, Swoopo, a pay-to-play auction site is jumping into the action.

What is Swoopo? It's an online auction site for the U.S., Germany and Britain that charges 60 cents per bid. The charges add up fast, and the odds of winning are small -- especially since you're playing against two other countries.

The New York Times features an article on the pay-to-play site and points out the huge savings possible at Swoopo. "This month, a new 40-inch Samsung TV, which normally sells for $1,500, sold for $67.92, and a white LG refrigerator with a price tag of $1,498 went for a cool $77.90."

However, these savings are similar to winning the lottery. The odds are very much against you. The upside? If you know you will lose the item to another bidder, you have the option to buy the item at full retail price. The catch is that the full retail price is much higher than you will find it at Amazon.

The downside to Swoopo? One 60 cent bid turns into a second 60 cent bid which turns into multiple bids, and before you know it someone else has won the item up for auction. Much of the revenue is said to be used by Swoopo to advertise customers for the site, in order to double its registered users. Swoopo had 2.5 million users in July.

If you are looking for a bargain, we advise that you don't shop at Swoopo. If you are willing to pay for the item full price, and enjoy entertainment and excitement for your shopping experience, then check out Swoopo here.

Prepaid card users face larger-than-life fees

On the surface, prepaid debit cards seem like a viable alternative to bank accounts and credit cards. Millions of Americans have turned to prepaid debit cards as a cash-free alternative.

The caveat? Be prepared for hidden fees.

Many cards carry dozens of hidden fees. The additional costs can nickel and dime consumers with larger-than-usual ATM withdrawal and customer service fees as well as penalties for exceeding the prepaid balance.

“The fact is you have some programs out there charging fees that are too high,” says Green Dot founder Steve Streit. His prepaid card company decided to drop their card price from $9.95 to $4.95, monthly fees were also extinguished if the consumer used the card at least 30 times in a month, or deposited at least $1,000.

Green Dot's prepaid slogan? "No Credit Check. Safer Than Cash. No Bank Account Needed."

Prepaid cards have yet to go through regulatory and congressional scrutiny that debit and credit cards have already faced, because prepaid cards are a relatively new industry. This leads to problems of hidden fees, until the problem is resolved.

Visa, Mastercard and Discover receive 5 to 20 cents each time a prepaid card is swiped. Among the millions of prepaid card users, the potential revenue is off the charts.

Ten years ago, these cards were not the norm. In fact, they didn't exist.

However, as internet shopping increased, an untapped market was seen. Over the years many companies added prepaid cards, such as H&R Block, MetaBank, Comdata, Wells Fargo, Citi and Comerica to name a few. Celebrities ranging from Usher to Carmen Electra have endorsed prepaid cards as well.

The cards have become the norm for those who want to shop but have bad credit or don't trust banks. Director of national priorities for Consumer Action says, "To me, it's a terrible thing to give people their pay on a card that has fees on it."

Luckily for prepaid card users, fees are declining. Walmart has recently whittled down the fees on the MoneyCard, and NetSpend, Walmart, and Greendot are all cheaper than a checking account according to a study by Bretton Woods, a bank advisory firm.

Just be sure to read the fine print before signing up for a prepaid card.

Survey says prepaid phones are gaining popularity

The weakened economy is causing many Americans to take a hard look at their budgets, and a recently released survey by the New Millennium Research Council suggests that their monthly cellphone bill is one of the primary expenses people are trying to reduce. Over 60 million consumers are likely to eliminate some of their cell phones services and features if the economy continues to worsen, according to the survey of about 2,000 respondents.

In the last six months, about 15 percent of those polled have decided to eliminate extras such as internet connectivity and text messaging. An additional 40 percent of respondents who currently have these features replied that it is somewhat or very likely that they would get rid of these extras if the economy continued to decline.

Allen Hepner, a scholar with New Millennium Research Council, said in a statement that “The era of cell phone penny pinching is officially here. Thanks to the recession, the U.S. cell phone marketplace is undergoing fundamental changes that will just get bigger as the economic downturn deepens. What we see in these survey findings is clear evidence that most consumers will keep a cell phone during this recession, but only after shifting to less expensive cell phone plans, such as prepaid, and also by scaling back on cell phone extras...”

Prepaid plans have become more popular with consumers who are trying to cut costs because they require very little commitment which is often attractive when finances are uncertain. Over sixty percent of respondents with prepaid phones believe they are saving money compared to what they were paying for a contract-based or land line plan. The Telecommunications Research & Action Center, a non-profit education and advocacy organization, has also recently emphasized that many consumers could reduce their monthly bills by switching to prepaid phone service.

Click here for more information.

--Bridget O'Sullivan

Save energy while cooking pasta in less water

What if you could save money while cooking pasta? Would you alter your method?

Harold McGee, New York Times writer has altered his pasta cooking method and has found the savings to be significant.

McGee conducted an unscientific experiment and found major energy savings by cooking pasta in only two cups of water, instead of four-to-six quarts of water per pound of pasta. He writes, "Why boil so much more water than pasta actually absorbs, only to pour it down the drain?"

McGee's findings? Cooking spaghetti in a few cups of water multiplied by a billion pounds of pasta consumed by Americans each year, could add up.

In fact, a few trillion B.T.U.s. ( a unit of energy equal to the work done by a power of 1000 watts operating for one hour) could be saved at the stove top alone. In relation to the power plant, this translates to 250,000 to 500,000 barrels of oil, or $10 to $20 million given current prices.

C'mon, do you really need all of that water to boil pasta?

Click here for the lowdown.

Prepaid cellphone plans gain popularity

Many consumers are looking to cut as many expenses as possible out of their budgets, and the long-term cellphone contract seems to be the next casualty. Once the plan of choice for shifty characters who wanted to change their phone numbers frequently, prepaid options are rapidly gaining popularity with frugal shoppers.

Providers are also offering a variety of choices that make prepaid plans more attractive to consumers. Some plans allow customers to buy one-time-use cards in increments of $25 or $50 dollars, for example, and the balance is debited as calls are made or text messages are sent.

Other plans resemble the more traditional long-term contracts. Customers pay a monthly fee for a predetermined service plan, but they pay up front and the agreement is only month to month.

As the popularity of these services has increased, so too has the selection of phones and other hardware that accompany the prepaid plans. A major difference between choosing a long-term contract and a prepaid plan is that prepaid customers often have to pay for the phones themselves. To entice customers to sign on often for several years at a time, providers have traditionally offered phones for free. Over time, however, a prepaid plan plus the purchase price of a phone could still be more cost-effective than a long-term contract.

Prepaid contracts may also be a welcome vehicle for growth for the wireless industry. According to CTIA, a wireless trade group representing wireless communication providers, wireless penetration reached 85% in the United States as of June 2008.

Additionally, The New York Times reports that over half of the customers T-Mobile added in the fourth quarter of 2008 were prepaid customers. In some metropolitan areas such as Boston, providers such as MetroPCS are entering the market offering only prepaid plans.

--Bridget O'Sullivan

Is now the time to buy a house?

Housing prices are falling. Is the buying opportunity of a lifetime almost here?

Housing prices are down to nearly 5.5%, and this week the federal government may be locking the rate down to 4.5%. The buying opportunity of a lifetime is reportedly on its way, although no one knows exactly when it will begin.

The time is certainly fast approaching, and unfortunately we will only be able to know the absolute bottom of housing prices when looking back. According to a New York Times article, the moment will probably arrive when everyone is feeling the most pessimistic.

There's still a downside to the housing market. A study called "The Changing Prospects for Building Home Equity" forecasts that many buyers will see a decline by 2012. There's even a potential six figure drop on homes in San Francisco, New York, Los Angeles and Seattle.

For those looking to buy, here are a few tips:

Don't spend more than 28% of your pre-tax income on mortgage payments, insurance and taxes. With the current unemployment rates, use caution if you think you may be at risk. A.C. Panella, who teaches at a University in CA, waited until she reached tenure before purchasing a home with her partner, Amy Goldman, a lawyer for a nonprofit organization.

"We could afford the mortgage payment on one salary, were something to come up." says Panella. Start now to get on track to improve your credit score. It takes time to qualify for the best mortgage rates.

US injects $250 billion in financial institutions

In an effort to get capital flowing from the government’s $750 billion bailout plan, Secretary of the Treasury Henry Paulson called together the executives of nine of the country’s largest banks for a meeting in Washington.

He announced his plan for the government to buy up a number of shares from each bank. The government is also planning to guarantee and insure more commercial debts and deposits.

Is it a $250 billion band-aid? Perhaps.

According to the plan, the more capital a bank has and the more secure it perceives certain risks to be, the more growth is facilitated. If the market for credit grinds to a halt because institutions are not lending or because they choose to hoard their resources, the more likely the economy will remain stagnant.

"I don’t think there was any banker in that room who was going to look us in the eye and say they had too much capital," Mr. Paulson says in a phone interview with The New York Times in reference to Monday’s meeting with bank executives.

Some of the institutions represent at the meeting are suffering more seriously than others from the current sub-prime mortgage situation. Executives from the less-affected banks reportedly objected to the new plan initially. Others disapproved of the new guidelines related to executive compensation packages.

Ultimately, in a matter of just a few hours, all nine banks had signed on to the agreement. The effects of the deal are unlikely to be seen immediately, however, because it will take time for the newly injected capital to translate into more accessible credit and more growth.

Click here for the complete article.

--Bridget O'Sullivan

Global cut in interest rates expected

The Federal Reserve cut the benchmark interest rate half a point on Wednesday in the wake of volatile market conditions earlier in the week.

The central banks of several European nations and China also lowered their lending rates in an effort to improve what has otherwise been a grim economic outlook recently.

The New York Times reports that the actions taken by the Fed on Wednesday were the first ever instance of the United States coordinating with a number of other central banks to lower interest rates.

“At last, a coordinated show of force,” Ian Shepherdson, chief United States economist at High Frequency Economics, writes in a note to the New York Times. “The move is to be applauded but there is more to come. The playbook to avoid depressions says rates need to be as close to zero as possible.”

Rates have not been as low as they are, however, since 2004. Some consider the measure a crucial step because the bailout plan passed by Congress has done little in recent days to ward off large drops in the stock market.

One of the major components of the current crisis is that there is not a lot of liquidity in the market for credit. Due to concerns over taking on too much risk, financial institutions are unwilling to lend.

Consequently, there is little opportunity for growth. Lowering the interest rate can in some cases make it “cheaper” to borrow money, and the hope is that this will in turn stimulate growth and reverse the current contraction being seen in the market.

To read the original article, click here.

Oil prices hover around $100 per barrel

There has been no shortage of factors to influence the fluctuating price of a barrel of crude oil lately, but as Wall Street reorganizes prices seem to be reaching a plateau around $100.

The string of hurricanes in the Gulf drove prices up over concerns of damage to infrastructure, but the shaky days on Wall Street pushed prices downward due to fears of stagnant growth in the future.

The New York Times reports that the full extent of the damage from Hurricane Ike and the other storms has not been fully assessed because most oil and natural gas refineries in the affected states have not reopened.

The article also references statements made by the nation's energy department which indicate that oil inventories and stockpiles are declining. This decrease in supply could drive prices up.

In addition, although concerns over future growth can drive the price of oil down, in a very turbulent economy, oil can be seen as a more stableinvestment. As some investors more their money into commodities such as oil,prices are likely to go up. The price of oil is also tied to the strength of the dollar.

If the dollar gains value, investors are less likely to look to commodities. When the dollar is weak compared toother major currencies, commodities become more attractive investments and the price of oil is likely to go up. After reaching more than $140 per barrel during the summer, oil had fallen to around $90 as Wall Street readjusted to the recentrestructuring.

Concerns over hurricane damage, growth and the stability of the dollar all seem to be keeping oil around $100 perbarrel, at least until new information emerges from the financialsector.

Click here for more.

--Bridget O'Sullivan

Benchmark interest rate holds steady at 2 percent

Despite serious turmoil on Wall Street in recent weeks, the Federal Reserve made the decision to hold the benchmark interest rate steady at 2 percent.

Though lowering the interest rate is often regarded as an effective way to ease the credit market, a lower rate can also affect inflation.

The high consumer prices plaguing the economy since the price of oilspiked earlier in the year have raised concerns over inflation. Undercertain conditions, stagnant growth coupled with very low interestrates can worsen the economic situation.

"The financial markets aren't frozen because the federal funds rateis too high," Michael T. Darda, chief economist at MKM Partners, tells the New York Times. "The markets are frozen because there is a crisis of confidence. It's not a matter of whether the short rate is 2 percent or 1.5 percent."

In addition, rates are relatively low by historic standards. They have been over 2 percent since early 2005, and remained over 5 percentfor much of 2006 and 2007. The Fed began a series of cuts early in theyear to stimulate a flagging economy.

The New York Times reports that since January, over 600,000 jobs have been lost and the unemployment rate is over 6 percent. Due to concerns over the general health of the economy, in particular related to the stability of several major financial institutions, the Fed did not rule out the possibility of a rate cut in the future.

For the time being, however, worries over inflation are superseding concerns related to the economy's stagnant growth.

Click here for the complete article.

--Bridget O'Sullivan

Bigger isn't better with shrinking grocery stores

In an industry that has long declared "bigger is better," many supermarkets are opening increasingly smaller stores, according to the New York Times.

The article reports that Safeway has already opened a smaller store in California and Whole Foods and Wal-Mart are contemplating doing the same.

The previous mentality within the industry seemed to be that offering the largest selection would attract the largest customer base, but that is being reconsidered. Shoppers often go to the grocery store on the way home from work or to pick up a few last-minute items and in those cases the speed of the visit is very important.

A trend toward more prepared and ready to eat foods is also contributing to the shrinking stores. The article reports that themany of the plans for these smaller stores still include large deli counters and quick-meal options.

Big supermarkets continue to be very successful, so the trend is likely to emerge in new locations. Instead of building increasingly larger stores, more major supermarkets are planning to downsize their new branches.

A relatively new entrant in the US market, the British retailerTesco, has pursued the "shrinking store" strategy in the Southwest.

The article reports the company has opened more than 70 stores in the past year alone. Retailers are hoping that revisiting the concept of the small localgrocery store will keep their customers loyal.

Click here for more information.

--Bridget O'Sullivan

Whole Foods sheds 'whole paycheck' label

Sales for generic brand groceries and other moderately priced goods are up as sales of just about everything else are trending downward.

That poses a problem for high-end retailers like Whole Foods who rely on customers willing to pay quite a bit more for the experience of shopping for their upscale goods at their stores.

Now that gourmet groceries are a luxury most shoppers are quickly cutting out of their budgets, Whole Foods must quickly reposition itself as a better value.

The New York Times reports stores are taking steps such as offering guided tours of good deals shoppers can find and displaying “weekly buys” fliers.

Andrew Wolf, an analyst for BB&T Capital Markets, tells the New York Times that Whole Foods was “a tale of two stores.” He says the grocery items in the middle of the store, dry goods such as cereal and pasta, are competitively priced.

The “outer items,” such as meat and produce, tend to be more expensive at Whole Foods, he said. That can be risky at a time when consumers are becoming increasingly price sensitive.

It’s becoming clear that this worsening economic environment is having an impact on consumers at all economic levels,” Mitchell P. Corwin, an analyst at Morningstar says. “The whole paycheck image can really hurt you.”

Whole Foods, however, does not want to risk losing a segment of its customer base to this image. Long an unconventional retailer, the company has decided to continue to pursue the value branding strategy. One part of the experience Whole Foods does not want to change is the high level of service customers have come to expect.

The next time you visit Whole Foods, ask a representative for a tour of the week’s best deals. You just might go home with a list of suggested recipes for tonight’s dinner.

Click here for the complete article.

--Bridget O'Sullivan

Back to school shopping doesn't make grade

Back-to-school shopping may not make the grade this fall. Sales reports from July show a trend of consumers buying necessities only.

Don't expect a change anytime soon.

According to the New York Times' report, the benefits of the government stimulus check are fading away. Retailers' July sales reports showed a trend of consumers buying necessities and staying away from clothing and accessories. Money is being spent at lower priced alternative and discount stores such as Walmart and Costco Wholesale Corporation.

Ken Perkins, president of research at Retail Metrics states, "Consumers are in a fair amount of pain." This may be true, due to rising food and gas prices, and an economy in the slumps. Apparel stores such as Limited Brands, Abercrombie and Fitch, and Pacific Sunwear of California are not doing well.

Tighter credit, a troubled housing economy and a weakening job market have lowered the consumers' outlook for the economy to the lowest it has been in many years. Projections show that sales will slow in August and into the fall.

NYTimes reports that cable rates keep rising

Cable prices have risen 77 percent since 1996, roughly double the rate of inflation, reports the New York Times in an article titled "Cable Prices Keep Rising and Customers Keep Paying" found here.

The technology news feature cites data supplied by the Bureau of Labor Statistics released earlier this month.

Compared to the music industry, the piece reports that "the cable industry has never felt the pricing pressures the music industry is feeling. The most obvious reason is that Internet speeds have not been fast enough to permit easy downloading of movies and other video material."

Click here for the complete New York Times article.

Want to save money on your cable bill? Click here to find out how.