October 21, 2019

Today’s Ads Offer Lots of Bad Advice

Regarding today’s advertising, I often wish that I had the time to put all these “great deals” in a magazine and mail it out to consumers. The problem is that the consumer is either not given all the information, the offer does not state the obvious risks, or pertinent information is omitted. Sort of like the bottles of snake oil that were sold many years ago.

I keep hearing about a tax refund. Should I lower or raise my deductions? People get refunds when they overpay during the year on their Federal taxes. If your tax withholding is factored for your itemized deductions, then you should about break even with Uncle Sam. That should be your goal.

I keep reading articles about the stock market crashing. Should I sell my stocks and bonds? Most of these articles are written by people who simply want their articles printed or want to sell you an annuity that pays nothing but your investments will be secure with them so they can invest your money and they will gain the big dividends. There will always be corrections in the stock market but over the long run, the market is secure.

I see TV programs that say buy gold and silver so I can sleep at night. Silver and gold are not good investments for most people. There are issues in selling, buying and storing gold and silver and the majority of coins sold on TV are over-priced. If a bar of gold goes up in price, you must sell the entire bar to reap any incremental gain in the price of gold.

How about buying a warranty for my used car? Be cautious when considering purchasing a warranty from many of these firms. There is a lot of fine print that limits their risk in the repair of your car including countless disclaimers and many offer repairs with only used parts. Keeping a car for many years has an inherent risk that cannot be avoided. Hoses, belts, brake pads, steering and ignition systems will deteriorate with age. If you plan to keep your car for five or more years, I suggest spending the money for an overall inspection each year and, depending upon the model, be prepared to spend money to keep it in good condition.

What about credit cards that offer money back each month? This is a gigantic scam. The money you “allegedly” save is usually refunded back to you in the form of a credit to your account. The credit card companies are not stupid. They don’t want you going out and buying a new car and getting 3%+ back from them so they cap the spending each quarter. These “cash back” cards also carry higher interest rates so you had better not miss that payment or you will find yourself paying a significant amount of higher interest more than they advertise on their regular cards.

I see ads with payments plans as low as 1.9% for 84 months for a new car. Car companies are struggling with the rising price of an automobile. The last amount published was that the price of an average car had risen to $37,491.00. To make the payment affordable, the car firms are pushing the number of months for which they will loan you the money. However, be very cautious when considering a loan for this long. Consider the amount of miles you drive each year and do the math. Twelve thousand miles per year is about normal but multiply that 12,000 miles by 7 years and you are at 84,000 miles. Your car will need maintenance during its road life and the manufacturer’s warranty expires at 36,000 miles so for about 48,000 miles you will have both a car payment and higher maintenance bills that could amount to a huge financial burden.

Many tax preparation firms are offering an upfront advance on my tax refund interest free. Sounds like a good deal to me? Again, this is lousy deal. The advance is given interest free but it is in the form of a credit card that has more fees attached to it than you could ever imagine. There is a fee to get money from an ATM over and above the fee that the issuing bank is charging plus a fee to check your balance.  It goes on and on. There is no such thing as a free lunch.

How can the firms that sell specialty products on TV make any money when the price is only $12.99? It is called “shipping and handling” and they reap a fortune off consumers. The S & H cost can be as much as $7.99 for a $19.99 dollar product. Sure there is some expense attached to sending their product to you but it does not cost them $7.99 to ship a couple of knives to you. It is so profitable that they can send you a second knife “free” for just separate “shipping and handling.”

Print Friendly, PDF & Email
Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

View all articles
Written by Donald Wittmer
Click to access the login or register cheese