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Today on the Consumerism Commentary Podcast, Jay Frosting and Flexo talk with Matt Schulz, Vice President of Content for InvestingAnswers.com.

They discuss the implications of a recent legal ruling that excludes credit card application fees from the limit on fees that credit card issuers can charge within the first year.

Consumerism Commentary Podcast
Credit Card Application Fees: S07E01 / 157

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Table of contents

Consumerism Commentary Podcast[00:00] Introduction from Jay Frosting
[00:33] Interview with Flexo and Matt Schulz
[00:49] Challenging the 25% fee limit specified in the Credit CARD Act
[06:00] Will application fees be more pervasive now?
[07:14] Are these fees limited to those with bad credit?
[09:18] A very high interest rate is worse than almost any other option
[12:34] The CFPB is still hearing public comments on this decision
[13:41] Application fees aren’t refundable and don’t guarantee credit
[14:21] The CFPB is trying to get more done before a possible Executive Branch change (addressing Republican criticisms of the bureau)
[18:33] Reduction in debt is part frugality and part banks reducing credit
[20:02] End

Update:

We were mistaken during the recording regarding whether First Premiere refunds its application fee. Here’s what the terms and conditions say:

“Right to Reject: You may still reject this plan, provided you have not used the Credit Account or paid a fee after receiving a billing statement. If you do reject the plan, you are not responsible for any fees or charges, including any Processing Fee(s) paid prior to receipt of your Account Opening Disclosures. Any such Processing Fee(s) previously paid will be refunded upon rejection of the plan.”

It also says this:

“Refund Disclosure: We will refund your Processing Fee and initial fees (those fees that are billed at the time of account opening) if (1) you have not used your Card for a Purchase or Cash Advance; and (2) you have not paid a fee after receiving a billing statement. We will refund any partial payment of the Processing Fee if you do not open your Credit Account within 85 days of approval. We will refund any Credit Limit Increase Fee charged to your Credit Account if you notify us, within 30 days of the date of the Periodic Statement on which it appears, that you do not wish to have the credit limit increase. This will result in a reversal of the credit limit increase. Except as described in this paragraph, these fees are non-refundable.”

Here are the link for the terms and conditions.

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

Theme music by Mindcube.

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I try to visit my family on the other side of the country a couple times a year. Most of my family has migrated to the west coast from the east. The migration, at least in my immediate family, began over ten years ago, and more of the clan join the California contingent each year. Having family gives me a nice excuse to travel, though, and I’m trying to visit more often.

Over the last few years I’ve tended to not have real vacations while I travel, and I’m now considering that to be a problem. While away from home, rather than also separating myself from work, I’ve mostly remained connected and involved. As a business owner, I felt I had that responsibility. I hope to change that aspect of my travel this year, and have some thoughts on doing so, but first I wanted to write about my latest flight search experience.

Since beginning regular travel to the west coast several years ago, I’ve noticed my location and destinations generally led to Continental Airlines for the lowest fares — often lower than the recommended JetBlue and Virgin America (whose flights out of New York City tend to be less convenient, anyway.) Southwest is the most popular recommendation I receive, but they don’t fly the routes I travel most often. For a few years, I’ve noticed the good pricing pattern with Continental, and that led to my decision to give into marketing pressure and focus on the Continental frequent flyer program.

Continental Airlines LogoHaving accrued a good number of miles, the airline has succeeded in converting me to a loyal customer, price-checking my flights but usually selecting Continental and United. In just a few days, the merging airlines’ frequent flyer programs will be consolidated, making it theoretically easier to use the miles I’ve accumulated in both programs. My favorite benefit comes from holding the co-branded credit card. Most of the time, I’m able to bypass the long security lines, even when I don’t have a first class ticket. (I’ve only flown first class twice, which I was only able to do by cashing in miles I earned mostly through credit card usage for an upgrade. Paying for a first class ticket is not something I would consider at this point in my life with my finances.)

I could have saved some money by choosing inconvenient flight times. Had I chosen to depart at 7:00 am or fly overnight, I might have spent $50 less on the airfare. For me, traveling is not always about choosing the least expensive options, it’s about convenience and compromises. I’m willing to pay a little extra (in this case about 10% more) for convenience. In fact, if I were able to choose a different week to travel, I could have found flights for a little more than half the cost of the dates I chose. I’m bound to what happens to be a popular week for travel, and prices are higher when flights are in demand.

A few days after my flight was ticketed, I decided to compare prices. I was able to find availability on the same flights on the same days in the same fare class for $10 less than what I paid. That’s a $5 savings per passenger. Obviously, this was not significant enough of a price decrease to warrant changing bookings for a ridiculous $150 fee per ticket (the fee does make sense if you consider it as a disincentive to change flights frequently, but there’s no justification for the fee in a “cost of processing” sense). It did make me consider that the day you book a flight might have an impact on the final price. Saturdays may be expensive while the middle of the week could offer slight discounts.

Checking for the same availability today, I see the fare class I originally booked on the return flight is no longer available, and the total price increased by $300 for two passengers.

Unlike every so-called vacation I’ve taken for the past five years, I’d like to prevent myself from working. I usually fall into the habit of mostly continuing to do business while traveling, and I hope that this year I can begin finding time truly for myself. That’s the plan; I’ll see how it works out.

How to take a real vacation from work

If you run a business or are responsible for a major project, it’s difficult to leave your work behind and trust that any plans you put in place for the work to continue while you’re away.

  • Start planning as soon as you know you’re going to travel to have any necessary responsibilities or tasks handled by someone you trust. This might take some training, so thesooner you can start, the better.
  • Proactively notify your most important contacts, internal and external, particularly anyone who relies on you.
  • If you intend to refrain from answering or reading work-related email, make sure your system sends an automated response to outside contacts informing them of your unavailability and offering options for alternative people to contact.
  • Remove the temptation to check your email or voicemail. If you don’t have your mobile phone or laptop with you, you might find it easier to relax. It won’t be as easy to check in with your coworkers or clients.
  • Realize that the world will not end if you’re not immediately available.

What are your tips for taking a real vacation?

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I wrote about three credit card benefits you’re paying for but not using for GoBankingRates and BusinessInsider. Whether you pay interest on your carried credit card balances or whether you’re just subject to the natural increased cost of products due to retailers’ card processing fees, you’re paying for the cost of benefits that card issuers provide to their users. It’s not just cash back — benefits include extended warranties, purchase protection, and price protection. If you’ve never used these “free” features, you’re not taking full advantage of what you’re paying for.

  • Extended warranties, if your card offers this feature, can extend the manufacturer’s warranty, usually up to one extra year. While retailers often try to sell you extended warranties on products at the point of sale, the option from your credit card issuer is often “free” and automatic.
  • If your card offers purchase protection, you don’t have to worry about accidental damage for a period of time after the purchase. Even if you drop the item, the credit card might be able to replace it.
  • Purchase price protection will help you receive from the issuer a refund if a product you buy is advertised in print at a lower cost than the price you paid.

There are some caveats to the coverage, and not every card offers the same features. Read the article for more information.

Here are a few recent articles worth mentioning. Read the full article →

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There’s a chance you could become a multi-millionaire after repeatedly slamming your head into other people and suffering through the resulting mini-concussions and minor brain damage, but not everyone can be a professional football player in the NFL. There’s a safer and less harmful path toward financial independence.

Cognitive ability is an important part of your human capital, and your human capital measures, among other things, how likely you’ll be able to support yourself financially, particularly through difficult economic times. Cognitive ability is important because many jobs requiring intricate skills and the best careers that offer opportunities for advancement require the ability to learn and adapt, and that’s the core of cognition.

The ability for the brain to process information changes throughout one’s lifetime, and without stimulation, cognitive ability can decline. When companies like Google or SAS ask puzzling interview questions, they’re testing, among other things, cognitive ability. To be hired as a software engineer, you would need to show that you have a strong command of whatever primary programming language is popular at the time, but in an industry that changes so quickly, strong cognitive ability will show that you can learn and adapt to the changing environment.

Rubik's CubeThe key is instilling cognitive ability in children at an early enough age. As we get older, we can continue to refine cognitive ability, but only to a small extent. These tactics may no longer work for me; the best adults can generally do to keep cognitive skills sharp is to get enough sleep and exercise, and eat nutritious food.

If you’re interested in helping your child prepare for a life full of challenges, there are some tactics you can employ.

Learning a new language

As a child, I enjoyed learning languages. I never became fluent in anything other than English, but I enjoyed the process of learning the rules. As a kid, I was fascinated by languages, and spent time learning a little bit of as many as possible. Like many kids, I learned a little Spanish from Sesame Street. I learned Hebrew and tried to teach myself Yiddish. I studied Latin in middle school, was taken out of usual classes to study Greek independently, and took five years of German. I learned programming languages like BASIC, Pascal, lisp, and C. And as a younger kid, I dabbled with creating my own languages and codes.

Music and mathematics have features in common with languages, as well. Music, particularly learning to play an instrument instead of just listening to Mozart, has been shown to improve cognitive ability.

As an adult, learning a new language or a musical instrument is a time-consuming task. There are programs that help frequent travelers learn languages quickly, but you could get a bigger cognitive benefit by learning a language through a more academic curriculum or through immersion. Rather than focusing on key phrases that help you get by in a foreign land, incorporating a new language into the way you think can help keep your brain active. On the other hand, young children, even those learning their first language or languages, can often learn multiple languages concurrently without being confused. Language skills not only improve cognitive ability, but they can make someone a more marketable employee around the world or increase the chance of international success in their own businesses.

Completing puzzles

Elementary school is a great time to focus on solving puzzles whose solutions require thinking “outside the box.” I seem to remember this being called “lateral thinking” when I was younger, but I don’t know if that term is widely used today. These are the types of puzzles that stymie job applicants at companies like Google. But puzzle solving as an adult won’t have the same impact as puzzle solving when the brain is at its most impressionable.

  • Logic puzzles are kind of like the game Clue. You often have two or more dimensions to work with, and the goal is to pair each of the dimensions together based on a limited number of clues. A grid helps eliminate incorrect pairings to discover what’s correct. The more dimensions included in the puzzle, the more brain power necessary to solve the puzzle.
  • For a child, a Rubik’s Cube can be an engaging puzzle. While the answer now comes packaged with the toy, and there are numerous Youtube videos describing how to solve the puzzle in about twenty moves, the cognitive challenge is in working to find patterns of movement that move closer to the result.
  • Text adventure games open up a child’s mind to being able to control their environment. Video games have changed since I was a kid, but I enjoyed the early text adventure computer games like Scott Adams’ Adventureland. (Classic game lovers can play Adventureland here.)

Reading and writing

Reading and writing help develop important cognitive skills focused on processing information the same way they’ll need to make sense of problems as adults. Writing, particularly creative writing, improves the command of language and can help children find clarity when expressing their ideas. Writing is a skill that will easily set someone apart from the competition, as might be necessary in tough job markets. I’ve personally seen atrocious written communication among co-workers throughout the many jobs I’ve had. I will never say I’m a great writer, but these skills are lacking in my former non-profit and corporate environments.

When I compose a well-worded communication, the supervisors shouldn’t be surprised. Every employee with a college education should be able to express himself or herself somewhat eloquently.

These cognitive skills nurtured at an early age can help prepare children for financial success in life. The best careers need smart and flexible employees to take on unforeseen challenges. People often predict what the hottest careers may be one generation from now, but the specific opportunities are irrelevant if children are prepared today to handle any problem that presents itself.

What did you do as a child to improve your cognitive ability? If you have children, how are you helping them prepare for the future?

Photo: Don Wright

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Weekend Reading

by Flexo

Here are a few articles I’ve spotted recently. Are you superstitious? Superstitions can extend into your finances; the belief that the stock market’s performance on January 1 signals the performance for the entire year can be classified as a superstition. Frugal Zeitgeist offers a compilations of several superstitions and their origins. I’m a customer of ... Continue reading this article…

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Many Consumerism Commentary readers have written in to let me know that they recently received a check for about $98 from Bank of America. This check is not a result of the Bank of America overdraft fee class action lawsuit, but it is the result of a similar lawsuit. First of all, the overdraft lawsuit ... Continue reading this article…

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PayPal Makes Accepting Charity Difficult

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Around the holidays, for-profit companies see an opportunity to do something charitable, even though they’re not technically registered non-profit organizations. The concept reminds me of college. I was in my university’s marching band, and we frequently traveled as a group to performances. At the end of the trips, someone on the bus collected money from ... Continue reading this article…

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After years of failed self-improvement in a number of aspects of life that most people tend to consider important, like organization, time management, and self-motivation, I’ve come to accept some of my flaws while taking advantage of my strengths. I haven’t completely given up on the strive to improve facets about myself that could lead ... Continue reading this article…

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