Consumer news, tips, commentary and musings by veteran consumer and finance journalist Anthony Giorgianni

Contact me at anthonyconsumer@gmail.com
8/21/18

A reader emails me almost every week asking whether it's a good idea to purchase a home service contract, commonly known as a home warranty.

As with any so-called extended warranty, my answer is that it's probably better to  self  insure by putting the roughly $125 to $800 you'd spend annually into a savings account or dedicated product repair and replacement fund. And I'm not only one who feels that way. The non-profit Consumers' Checkbook gives the same advice in its coverage of home warranties.

Admittedly, home warranties do have edge over many other types of service contracts. Instead of protecting a single items, such as your refrigerator or television, as other plans do, the coverage applies to a range of items, such as your appliances, home heating and ventilation system, plumbing and more, depending on which plan you buy. So if your air conditioner doesn't break, your washing machine or furnace might. So there may be a better chance you'll use the coverage compared to a single-item service contract.

But there are drawbacks, as I point in this recent story I wrote for Consumer Reports. Among them is that there typically are a lot fine print exclusions, stuff that isn't covered. For instance, depending on the plan, your refrigerator might be protected but not the ice maker, a component that suffers a lot of breakdowns. It's the same thing for your hot water heater. The heater itself might be covered, but not the tank – a not-so-reassuring  limitation when you're standing in a flooded basement late at night.

And then there's often an ambiguous "preexisting condition" clause, a kind of well-know-it-when-we-see-it exclusion that the company can use to avoid paying or claim. Keep in mind that the third-party technician the company will dispatch to evaluate the problem will be beholden to the company, not to you.

Beyond that, service calls aren't free. There's usually a copayment ranging from around $75 to $125, depending on the company and plan. And you'll likely have to pay it even if it turns out that a breakdown isn't covered.

The result of all this is that there are lots of online complaints about home warranty companies, even those that have garnered good ratings from the Better Business Bureau. For example, over the last three years, the BBB has received nearly 10,000 complaints against the B-rated Memphis-based American Home Shield.

Some warranty companies have drawn scrutiny from consumer agencies. In 2015, New Jersey-based Choice Home Warranty agreed to pay near $780,000 to settle a complaint by that state's attorney general that the company "used creative and deceptive means to deny their customers’ claims." The company has a "C" rating from the Better Business Bureau, based on more than 4,000 complaints and an alleged advertising violation.

What to Do

There are so many reasons why it's a good idea to skip a home warranty and put the money into a savings account or dedicated repair fund instead. Doing that, you'll be able to use the money for whatever you want. Maybe you won't have enough serious breakdowns to justify the cost. Perhaps most of your stuff simply will become obsolete before you face major repairs, and you can use that cash to replace it. Or maybe you'll need the money for something else. Perhaps you'll lose your job or suffer a costly medical emergency.

And if something does break, self insuring will give you greater control. You don't have to worry about something is because of preexisting conditions or some fine-print limitation. Maybe the item that malfunctions will be your car or anything else that's not covered by the policy. And you can decide who will fix the problem, a technician that's beholden to you and not to company that may be most interested in holding down its costs.

Of course, none of this means that no one ever benefits from home warranties. Along with the complaints, you'll find reviews from customers who feel they've come out ahead. But you have to consider the odds and the other demands on your cash.

If you decide to purchase a home warranty anyway, it's essential to check out companies thoroughly. and compare Look for reports at the Better Business Bureau. Also, find out what others are saying by trying a web search with the names of the companies.

Finally, check out the coverage carefully.  It may be tedious, but it's really important to read every bit of contract fine print. Pay special attention to what is and isn't covered. Then take some time to think about it.
Also on Blogger
Think Twice Before Buying a Home Warranty
It's probably better to self insure
Buying a house? Choose a Home Inspector Carefully
8/16/18

When you're buying a house, especially if it isn't new, you should consider hiring a home inspector to make sure there are no hidden problems with the structure; plumbing, heating and electrical systems, roof, windows or anything else that can affect the price you'd be willing to pay or your decision to buy at all.

But it's essential to investigate the inspector carefully before committing to a contract, based on the complaints dissatisfied customers have made online and elsewhere.

In a recent undercover investigation, the Washington, D.C.-based non-profit group Consumers' Checkbook found shortcomings among all 12 inspectors it hired to examine a three-bedroom Virginia home. On average, the group said, the inspectors discovered only about half of the 28 problems it had identified in the test house. Among the issues some inspectors missed were unrepaired water damage to a ceiling and walls, an unsafe fireplace and a roof that was in poor condition. It didn't matter that all the inspectors were licensed, as required by Virginia law. The inspections cost the group an average of $450.

In a story I wrote for Consumer Reports this month, I report on a woman who told me that the inspector that she and her husband hired to examine a Texas home missed a serious issue: A disconnected pipe that was causing raw sewage to spill into the crawlspace. Unfortunately, the couple discovered the problem only after they bought the house.

What to Do

Carefully check out an inspector you're planning to hire. Try a web search with the inspector's name and such terms as "reviews" and "complaints." As with any purchase from a seller you don't know, look for a report at the Better Business Bureau.

Although it's no guarantee of a proper inspection, it's still a good idea to verify that the inspector has any state required license or registration. Finally, choose an inspector certified by at least one of the three major trade organizations, the American Society of Home Inspectors, the International Association of Certified Home Inspectors and the National Academy of Building Inspection Engineers.

For more tips, check out my story on Consumer Reports website. And visit the Consumers' Checkbook website, which details the group's investigation and provides helpful advice you shouldn't miss.
8/24/18

I was a guest earlier this month on Hot Shopping Tips (episode 14) – a series of free and really helpful podcasts by my friends and former Consumer Reports colleagues Lisa Lee Freeman and Mandy Walker. The subject was: "Ten hacks to get the best deals on cars and avoid repair ripoffs." I thought I'd provide some additional specifics in a few posts here. Today: How to save hundreds on vehicle scheduled maintenance.
If you check your car's owner's or maintenance manual, you'll find the car maker's recommended maintenance schedules.

For instance, there may a list of maintenance procedures at 5,000 miles or six months and another at 10,000 miles or 12 months.

It's  important to take care of your car or truck as the manufacturer recommends, especially if you don't want to risk the warranty coverage. But just telling a car dealer or independent mechanic that it's time for scheduled maintenance is a surefire way to end up with an unnecessarily big bill.

Maintenance schedules typically include many items that you easily do yourself, such as checking the installation of the driver's floor mat, topping off the antifreeze and other fluids and inspecting the wiper blades. Indeed, there's usually a bunch of things to check that a shop would be happy to look at for free After all, it's prospecting for work for which may be able to charge you.

Consider the 36,000-mile/36-month maintenance schedule I examined for a 2016 Toyota Highlander in preparation for Lisa and Mandy's podcast. Other than a lot of stuff to inspect, there's very little to do. Essentially it's changing the engine oil and oil filter, replacing the cabin and engine air filters and rotating the tires.

Yet, for 30,000 maintenance on a 2016 Highlander, the auto repair website RepairPal estimated the cost at $469 to $628 – and for just six of the items on the list of recommended procedures. A local Toyota dealer gave me a much lower quote, around $300. A big price for what amounts to little more than an oil change.

For comparison, I priced the important procedures piecemeal, instead as part of a scheduled maintenance package.

For the oil change, a local tire chain had a $29 special, including the use of synthetic blend oil. It said it would rotate the tires for free. I found the engine and cabin air filters at an auto parts store for $20. You can change them both yourself in just a few minutes. There are plenty of videos online that show you how.

Next, I called back the same Toyota dealer to ask about doing a multi-check to see if the vehicle needed any additional work. This time I didn't mention anything about $30,000-mile service. As I expected, the dealer offered to look over vehicle or free.

The bottom line?  Bottom line? That $300 scheduled maintenance would now cost about $50. For an all-wheel-drive Highlander, figure on adding another $25 to $40 for some recommended driveshaft maintenance, which neither the dealer nor RepairPal mentioned in their list of items.

What to Do

Never tell a repair shop that your vehicle needs scheduled maintenance, or you'll likely trigger an estimated for a high-priced package of services. Instead, review the list of maintenance recommendation and decide what really needs to be done and what simple items you can do yourself. If you're not sure, ask a friend or relative who knows something about cars. Keep in mind that with a simple web search, you likely can find a lot of free  online videos that explain how to simple maintenance on your vehicle, whether it's inspecting fluids, changing filters or anything else on that list.

For procedures for which you need or want to hire a pro, gets estimates for those items alone. Comparison shop. By law, you're not required to have an authorized dealer perform the recommended maintenance as a condition to maintaining the manufacturer's warranty (although warranty coverage could be affected if maintenance is done incorrectly.

One related tip: Be cautious if a repair shop recommends maintenance that isn't on the manufacturer's list of recommended procedures, such as flushing your transmission or filling your tires with nitrogen. These services typically have little or no benefit and are intended to increase the shop's profits. Occasionally, car makers do add items to the list of recommended maintenance based on issues they discover as models age. If the shop says that's the case with your vehicle, make it show you a car maker's so-called technical service bulletin  or other proof, or verify with the car maker directly.
Don't overpay for scheduled maintenance
A $300 Oil Change For Your Car?
8/29/18

The trick to saving money on repairs for your car, appliances or anything else may be something you've never even considered: Do the repairs yourself, or at least find out whether you can order the parts at a discount and have a technician install them.

It may sound like it's more trouble then it's worth. But doing your own repairs or supplying your own parts can save you hundreds of dollars.

These days there are many online retailers of low-cost parts for cars, computers, appliances, and more. Many of them have posted online how-to videos and instructions that show you how to diagnose a problem and replace a part yourself. Those resources can give you a good idea about whether the job is something you can handle on your own. (If you're hiring a repair shop, online videos also an help you decide whether a technician is misdiagnosing the problem, perhaps intentionally, or charging you an outrageous amount to fix it.

I've saved a lot over the years making many repairs myself, among them replacing a belt and pulley on a clothes dryer, installing a new oven heating element, fitting my laptop computers with new keyboards and screens – most of ithis pretty easy wor. Last week, I followed on online video that helped me fix a problem with my washing machine that didn't even require any new parts.

Here are some recent repairs I made on my Ford Explorer: Replacing the alternator, $122; installing new front brake pads and cleaning and re-greasing the wheel bearings, $40, and replacing one of the power window motors and regulator (the part that carries the glass up and down), $50. That's a total of $212, far less than the $629 to $800 combined estimate I received from the auto website RepairPal and local shops.

Not only can you save money by doing your own repairs, there's a lot of satisfaction in fixing things yourself and knowing you're not at the mercy of a repair shop that may be cutting corners, charging too much, or fixing something that really isn't broken. Yes, your time is worth money. But doing your own repairs can provide valuable lessons that will make you a smarter consumer. And if you have kids, having them observe, or even help, can make them better consumers, too. Finally, it can be rewarding just finding out how the stuff you own works. Often, It's all less complicated than you think.

Supply Your Own Parts

Even if you can't or don't want to do a repair yourself, you may be able to save by ordering the parts locally or online and paying a professional to install them. That way you'll avoid the big mark-up that shops typically impose on the parts they provide in-house. Not every shop will agree to install outside parts, but I haven't found one yet that wouldn't.

For instance, a local Ford dealer recently said it would charge me nearly $600 for the parts it needed to overhaul my Explorer's air conditioning system, a job I wasn't confident doing myself. Searching online, I found a complete air conditioning overhaul kit for just $267. Just a few weeks earlier, I saved more than $100 by ordering a replacement power steering pump and hoses online and having the dealer install them, too.

And car repairs aren't the only ones where you can save by supplying your parts. Last year, a heating company charged my neighbor more than $300 for a replacement control unit for her furnace. Soon after, I found the exact same unit at a local home improvement store for  less than half the price. Curious, I checked with the heating company, which said it would had no problem installing a customer-provided part. Of course, by that time, it was too late.

What to Do

When you need a repair, find out if you can do it yourself, even if it's just replacing a knob and handle on your clothes dryer, like I just did for $25, or a microwave over wave guide, which a friend did for less than $10. (An appliance repair shop wanted $100.) Or maybe it's something more complicated that you can handle on your own.

Yes, there are some drawbacks you should consider first. You may need to buy some more tools, although they're usually good to have. And there's always the possibility you might screw something up, as I've done a couple of times –  increasing the cost and the time its takes to get things right.

There's also the danger that the parts store may give you the wrong part, which has happened to me twice – a big inconvenience if you discover the problem while you or your shop is in the middle of making the repair. And keep in mind that technicians won't warranty a part you provide. So if something goes wrong with it later, you'll have to get another one from the parts supplier (hopefully, it provided a warranty) and pay the shop another labor charge to swap out the bad one.

And sometimes a self-repair isn't practical. Maybe the problem is too complicated to diagnose or fix on your own. Or perhaps you're just not confident you won't seriously damage something or injure yourself. Of course, it's critical that you consider and follow safety precautions.

Alternatively, find out how much the repair shop will charge you for the parts and use a web to see if you can find them for less yourself. Verify that the shop is willing to install them. If so, it may even advise you what to order, as my Ford dealer did.

As with making repairs, supplying your own parts isn't always possible. Maybe the technician, in diagnosing the problem, already has dismantled your car or furnace and can't wait days for you to order parts. Or you may need your refrigerator or washing machine right away, and the technician has the parts on hand. (Of course, if you find a lower price on a part, you always can ask the shop to give you a discount, I've had success with, too.)

So use your judgment. But when it's practical to do your own repair or provide your own parts, the savings can be huge.
Or at least order your own discounted parts
Save Money By Doing Repairs Yourself
Page 3
Find my other posts below:
A local bank for convenience and an online bank for savings
Why You Should Consider Having More Than One Bank
9/8/18

I'm surprised these days by how often people tell me they're keeping their savings in a major walk-in bank that's paying just half a percent or less interest.

When I point out that online banks typically have savings rates that are many times higher than those of their brick and mortar counterparts, I'm often rebuffed. The most common reason I'm given is that walk-in banks simply are more convenient, providing such benefits as free local ATMs, in-person access to real human beings and even coin counting.

Certainly there are good reasons to have a local bank. But it's not an either-or choice. As I point out in this Consumer Reports story, it can make a lot of sense to have a walk-in bank or credit union for checking, ATMs and other benefits, as well as one or more online banks for their high rates on savings accounts and certificates of deposit. Indeed, many online banks actually require depositors to maintain an external checking account – most likely at a local institution – for use in transferring money to and from their online accounts.

When it comes to savings rates, online is where the action is. That's because online banks compete primarily on how much they pay. As a result, there has been a sort of rate war among them, as the institutions vie to stay at, or near, the top of the list of best payers on the bank comparison websites such as Bankrate.com, DepositAccounts.com, and MagnifyMoney.com. And to get there, banks currently need to pay an annual percentage yield of around 2.25 percent. That's 40 to more than 200 times the yields you're likely to see at a local big bank.

Even if you have a relatively small amount in savings, those higher rates can translate into a lot more income. For instance, if you deposit $10,000 in an online bank paying a 2.25 percent yield  your first-year earnings would be $225, $180 more than if you deposited that amount in an institution paying a .4 percent yield. With a $100,000 deposit, the first-year earnings at 2.25 percent would be $2,250, compared to just $400 at.4 percent. And if you're getting just .01 percent locally, the differences can be staggering.

Even if your attention has been on the stock market or other investments, where your earnings can be significantly higher, it makes sense to keep at least some money in savings, where it's available for emergencies and other immediate expenses and not subject to market risk. And as interest rates continue to rise, savings may look even more attractive.

What to Do

If you have more than just a tiny amount in savings, look for the best rate you can find, even if it means moving your money to an online bank you never heard of. You can find the best rates by visiting those bank-comparison websites. Just keep in mind that, by default, both Bankrate and DepositAccounts put banks that advertise with them at the top of the list, even if their rates aren't the highest. To see the best rates at Bankrate, change the selection in the "Sort by" drop-down box from "Default" to "APY." At Deposit Accounts, simply scroll down below the list of "Sponsored" banks, or you can sign up for free membership, which removes the ads.

Before opening an online account, verify the minimum deposit requirements and look at the available features, such as check-writing, ATM access, IRAs, and payable on death accounts, which let you designate one or more beneficiaries in case something happens to you.

Also, carefully review the fees, limits on the number of allowed monthly withdrawals and other terms and conditions. In particular, be on guard for money transfer charges, which a few banks charge when you move money out of the account. It's also a good idea to check any customer reviews. Some sites also have bank health ratings that can give you an idea of an institution's financial condition. But you also should verify that the bank is covered by federal or state deposit insurance.

Opening an online account usually is easy. You give the bank your Social Security number and contact details, among other information. You'll also likely need to provide an account and routing number for the local checking account that you'll use to transfer money back and forth. Once you're done, you may need to wait a few days for your online bank to make trial deposits to your local institution.

Once your account is open, check rates often. Some online banks prefer to maintain a reputation as top payers and will respond right away to increases in interest rates generally. Others will pay top rates for a while and then fall behind. If your bank's rates become uncompetitive, don't hesitate to move your money. But check first whether the institution has a policy of keeping any accrued interest that hasn't yet posted to your account. If it does, you may need to wait until any interest is credited. Most banks compound interest daily but pay it only once a month.

Also, when checking your bank's current rates, don't look only at the rate posted on it's website. Some banks have adopted a sneaky practice of advertising new, higher rates, while keeping existing customers at the older lower ones, hoping those customers won't notice.  So check not only your bank's current advertised rates, but also the rate it actually is paying you. You can find it by looking at your account details (more on this practice in a future post).
Should You Give Through Crowdfunding Websites?
It's less risky donating to
top-rated charities
9/13/18

There have been a lot of reports in recent days about a homeless veteran who alleges that a New Jersey couple spent more than $400,000 they had raised on his behalf on the crowdfunding website GoFundMe.

The case raises aan important question: How safe are the campaigns on crowdfunding websites? The answer is that you're taking your chances when you respond to these online appeals.

There are plenty of cases of alleged fraud on crowdfunding websites, such as the one I mention in a story I wrote for Consumer Reports. In that instance, an Iowa woman was placed on probation after she pleaded guilty to misrepresenting that her daughter had cancer.

Even if a crowdfunding site has a policy to protect donors from fraud, it can be difficult to determine whether the money has been used for the advertised charitable purpose.

And there are other considerations. Donations to crowdfunding campaigns typically aren't tax deductible. And when you donate through these sites, a portion of your contribution is siphoned off for fees charged by the sites and credit card processors. In the U.S., for instance, GoFundMe currently charges 30 cents per donation and a processing fee of 2.9 percent
.
Another issue is the possibility that a campaign will raise far more than actually is needed, whether it's to pay for an operation for a pet, help a family recover from a fire or anything else. What happens to the extra money? That's typically not a question with charities, which focus on a broad range of needs.

Of course, there's no guarantee that real charities will spend their donations effectively either, and there have been plenty of reports about abuse and outright fraud by nonprofits. And charities often have plenty of overhead expenses, including for fundraising and administrative functions, that can seriously reduce the amount that goes to save the whales, protect the environment, help the needy, fight disease or any other cause.

But real charities at least have some accountability. Typically, they're required to file federal tax returns, so-called federal form 990, that show, among other things, how much they raise and how they spend their money. Charities also provide independent audits and annual reports. Beyond that, many national nonprofits and regional groups are evaluated by three major charity watchdogs, the BBB Wise Giving Alliance, Charity Navigator and CharityWatch. Charities also are closely regulated by the states. Finally, nonprofits that have been around for a while have established track records that can demonstrate how effective they are at addressing their charitable missions, not so with a temporary crowdfunding  that appeared overnight.

Of course, donating to a charity isn't necessarily as gratifying as giving to a crowdfunding campaign, in which you'll likely know the exact individuals or project your money is supporting. But charities have expertise in identifying the greatest needs within a given cause, and they divide their resources so that they help more just one person or project.

What to Do

The safest and most effective way to give is to a nonprofit group that meets the standards of the charity watchdogs, especially if you're hoping for a tax deduction.

If you want to give to a crowdfunding campaign, use your judgment. Find out exactly who is raising the money, how it will be used, the amount that's needed and, if possible, what will happen to any excess donations.

One way to be confident that your gift is going to a good cause is to give to campaign that's been set up for someone you know, such as a relative or friend whose needs you're sure about. But even then, you probably can give directly and avoid the fees. Another option is look for a campaign that's being overseen by a trustworthy third-party, such as a local civic group.
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