Overrated financial products
Personalized cheques ($60)
I can never figure out why anybody would pay extra money to have personalized checks. I understand that some people feel the need to express themselves, but I can't imagine form of payment being a good medium for it. We already have plenty of questionable ways to express ourselves - bumper stickers and stick figure families on your cars. But personalized cheques? Whom are you trying to impress with your dolphin-themed cheques? Your local ATM machines? Most cheques you send through the mail to pay bills (if you're one of the seventeen remaining people that do it) get deposited automatically without people even looking at them.
On top of everything else, personalized checks cost money. In my mind, you might as well burn $60 (the average cost to order customized cheques) and be done with it. Or send it to me, I'll find a better use for it.
Overdraft protection ($5/month or more)
Overdraft protection works like this: If you run out of money on any given day but another expense comes in, the bank still processes the payment and charges you a small fee per day until your bring up your balance (in addition to your monthly fee). In reality, you're paying your bank a fee to cover your ass.
Here's a simple solution - keep an eye on your bank accounts and make sure you have enough money to cover all expenses. Granted, we have all been there. I've bounced a few checks myself when I was broke and an unexpected utility bill would show up out of nowhere. But in every single case, it happened because I wasn't paying attention - and paying your bank more money to cover your butt is a terrible solution. A better solution is to start paying attention.
Ideally, you want to have enough money in your account to pay for all your monthly expenses at the beginning of the month. This way you never have to worry about dipping below the liquidity line. But if you're not quite there yet, figure out when your bills clear your account and be proactive.
Christmas dinner prepayment plans
Recently I saw an ad on TV for prepaid Christmas dinner. The plan is pretty simple - the company debits your account once a month twelve times straight, and once Christmas comes it delivers a beautiful dinner to your door - complete with turkey, wine, gravy, and all the other fixings. Sounds delicious, but is it a good financial product?
First of all, you'll be greatly overpaying for this dinner. Not only do you pay for all the products at inflated prices, but you also pay the company profit (they wouldn't do it just for nothing, am I right?) and marketing costs including the cheesy ad on TV. Second, you're basically hiring somebody to take money from your account and put it aside for later use. Isn't that something you can easily do yourself?
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