PREMIUM LEGAL RESOURCES
ASK A LAWYER
From the Consumer Literacy Consortium -- April 1995
1. You can lower the price of a roundtrip air fare by as much as
two-thirds by making certain your trip includes a Saturday evening
stayover, and by purchasing the ticket in advance.
2. To make certain you have a cheap fare, even if you use a
travel agent, call all the airlines that fly where you want to go
and ask what the lowest fare to your destination is.
3. Keep an eye out for fare wars. Be prepared to act quickly.
1. Since car rental rates can vary greatly, shop around for the
best basic rates and special offers.
2. Rental car companies offer various insurance and waiver
options. Check with your insurance agent and credit card company
in advance to avoid duplicating any coverage you may already have.
1. You can save thousands of dollars over the lifetime of a car
by selecting a model that combines a low purchase price with low
financing, insurance, gasoline, maintenance, and repair costs.
Ask your local librarian for new car guides that contain this
2. Having selected a model, you can save hundreds of dollars by
comparison shopping. Call at least five dealers for price quotes
and let each know that you are calling others.
3. Remember there is no "cooling off" period on new car sales.
Once you have signed a contract, you are obligated to buy the
1. Before buying any used car:
a. Compare the seller's asking price with the average
retail price in a "bluebook" or other guide to car prices found at
many libraries, banks, and credit unions.
b. Have a mechanic you trust check the car, especially if
the car is sold "as is."
2. Consider purchasing a used car from an individual you know
and trust. They are more likely than other sellers to charge a
lower price and point out any problems with the car.
1. Don't decide to lease a car just because the payments are
lower than on a traditional auto loan. The leasing payments may
be lower because you don't own the car at the end of the lease.
2. Leasing a car is very complicated. When shopping, consider
the price of the car (known as the capitalized cost), your trade-
in allowance, any down payment, monthly payments, various fees
(excess mileage, excess "wear and tear," end-of-lease), and the
cost of buying the car at the end of the lease.
1. You can save hundreds of dollars a year by pumping gas
yourself and using the lowest-octane called for in your owner's
2. You can save up to $100 a year on gas by keeping your engine
tuned and your tires inflated to their proper pressure.
1. Consumers lose billions of dollars each year on unneeded or
poorly done car repairs. The most important step that you can
take to save money on these repairs is to find a skilled, honest
mechanic. Before you need repairs, look for a mechanic who:
* is certified and well established;
* has done good work for someone you know; and
* communicates well about repair options and costs.
1. You can save several hundred dollars a year by purchasing
auto insurance from a licensed, low-price insurer. Call your
state insurance department for a publication showing typical
prices charged by different companies. Then call at least four of
the lowest-priced, licensed insurers to learn what they would
charge you for the same coverage.
2. Talk to your agent or insurer about raising your deductibles
on collision and comprehensive coverages to at least $500 or, if
you have an old car, dropping these coverages altogether. Taking
these steps can save you hundreds of dollars a year.
3. Make certain that your new policy is in effect before
dropping your old one.
1. You can save $100 or more a year by purchasing homeowner
insurance from a low-price, licensed insurer. Ask your state
insurance department for a publication showing typical prices
charged by different licensed companies. Then call at least four
of the lowest priced insurers to learn what they would charge you.
If such a publication is not available, it is even more important
to call at least four insurers for price quotes.
2. Make certain you purchase enough coverage to replace the
house and its contents.
3. Make certain your new policy is in effect before dropping
your old one.
1. If you want insurance protection only, buy a term life
2. If you want to buy a whole life, universal life, or other
cash value policy, plan to hold it for at least 15 years.
Cancelling these policies after only a few years can more than
double your life insurance costs.
3. Check your public library for information about the financial
soundness of insurance companies and the prices they charge. The
July, August, and September 1993 issues of Consumer Reports are a
valuable source of information about a number of insurers.
1. You can save more than $100 a year in fees by selecting a
checking account with a minimum balance requirement that you can,
and do, meet.
2. Banking institutions often will drop or lower checking fees
if paychecks are directly deposited by your employer. Direct
deposit offers the additional advantages of convenience, security,
and immediate access to your money.
Savings and Investment Products
1. Before opening a savings or investment account with a bank or
other financial institution, find out whether the account is
insured by the federal government. An increasing number of
products offered by these institutions, including mutual stock
funds and annuities, are not insured.
2. To earn the highest return on savings (annual percentage
yield) with little or no risk, consider certificates of deposit
(CDs) and treasury bills or notes.
3. Once you select a type of savings or investment product,
compare rates offered by different institutions. These rates can
vary a lot and, over time, can significantly affect interest
1. You can save as much as several hundred dollars each year in
lower credit card interest charges by paying off your entire bill
2. If you are unable to pay off a large balance, switch to a
credit card with a low annual percentage rate (APR). For a modest
fee, Bankcard Holders of America (703-389-5445) and RAM Research
Corp. (800-344-7714) will send you a list of low-rate cards.
3. You can reduce credit card fees, which may add up to more
than $100 a year, by getting rid of all but one or two cards, and
by avoiding late payment and over-the-credit limit fees.
1. If you have significant savings earning a low interest rate,
consider making a large down payment or even paying for the car in
cash. This could save you as much as several thousand dollars in
2. You can save as much as hundreds of dollars in finance
charges by shopping for the cheapest loan. Contact several banks,
your credit union, and the auto manufacturer's own finance
First Mortgage Loans
1. You may save tens of thousands of dollars in interest charges
by shopping for the shortest-term mortgage you can afford. On a
$100,000 fixed-rate loan at 8% annual percentage rate (APR), for
example, you will pay $90,000 less in interest on a 15-year
mortgage than on a 30-year mortgage.
2. You can save thousands of dollars in interest charges by
shopping for the lowest-rate mortgage with the fewest points. On
a 15-year, $100,000 fixed-rate mortgage, just lowering the APR
from 8.5% to 8.0% can save you more than $5,000 in interest
charges. On this mortgage, paying two points instead of three
would save you an additional $1,000.
3. If your local newspaper does not periodically run mortgage
rate surveys, call at least six lenders for information about
their rates (APRs), points, and fees. Then ask an accountant to
compute precisely how much each mortgage option will cost and its
4. Be aware that the interest rate on most adjustable rate
mortgage loans (ARMs) can vary a great deal over the lifetime of
the mortgage. An increase of several percentage points might
raise payments by hundreds of dollars per month.
1. Consider refinancing your mortgage if you can get a rate that
is at least one percentage point lower than your existing mortgage
rate and plan to keep the new mortgage for several years or more.
Ask an accountant to calculate precisely how much your new
mortgage (including upfront fees) will cost and whether, in the
long run, it will cost less than your current mortgage.
Home Equity Loans
1. Be cautious in taking out home equity loans. These loans
reduce the equity that you have built up in your home. If you are
unable to make payments, you could lose your home.
2. Compare home equity loans offered by at least four banking
institutions. In comparing these loans, consider not only the
annual percentage rate (APR) but also points, closing costs, other
fees, and the index for any variable rate changes.
1. You can often negotiate a lower sale price by employing a
buyer broker who works for you, not the seller. If the buyer
broker or the broker's firm also lists properties, there may be a
conflict of interest, so ask them to tell you if they are showing
you a property that they have listed.
2. Do not purchase any house until it has been examined by a
home inspector that you selected.
Renting a Place to Live
1. Do not limit your rental housing search to classified ads or
referrals from friends and acquaintances. Select buildings where
you would like to live and contact their building manager or owner
to see if anything is available.
2. Remember that signing a lease probably obligates you to make
all monthly payments for the term of the agreement.
1. Home repairs often cost thousands of dollars and are the
subject of frequent complaints. Select from among several well
established, licensed contractors who have submitted written,
fixed-price bids for the work.
2. Do not sign any contract that requires full payment before
satisfactory completion of the work.
1. Consult Consumer Reports, available in most public libraries,
for information about specific brands and how to evaluate them,
including energy use. There are often great price and quality
differences among brands.
2. Once you've selected a brand, check the phone book to learn
what stores carry this brand, then call at least four of these
stores for the prices of specific models. After each store has
given you a quote, ask if that's the lowest price they can offer
you. This comparison shopping can save you as much as $100 or
1. To save as much as hundreds of dollars a year on electricity,
make certain that any new appliances you purchase, especially air
conditioners and furnaces, are energy-efficient. Information on
the energy efficiency of major appliances is found on Energy Guide
Labels required by federal law. Check with your electric utility
to learn if it has a program to help reduce the costs of any
2. Enrolling in load management programs and off-hour rate
programs offered by your electric utility may save you up to $100
a year in electricity costs. Call your electric utility for
information about these cost-saving programs.
1. A home energy audit can identify ways to save up to hundreds
of dollars a year on home heating (and air conditioning). Ask
your electric or gas utility if they can do this audit for free or
for a reasonable charge. If they cannot, ask them to refer you to
a qualified professional.
Local Telephone Service
1. Check with your phone company to see whether a flat rate or
measured service plan will save you the most money.
2. You will usually save money by buying your phones instead of
3. Check your local phone bill to see if you have optional
services that you don't really need or use. Each option you drop
could save you $40 or more each year.
Long Distance Telephone Service
1. Long distance calls made during evenings, at night, or on
weekends can cost significantly less than weekday calls.
2. If you make more than a few long distance calls each month,
consider subscribing to a calling plan. Call several long
distance companies to see which one has the least expensive plan
for the calls you make.
3. Whenever possible, dial your long distance calls directly.
Using the operator to complete a call can cost you an extra $1 to
Food Purchased at Markets
1. You can save hundreds of dollars a year by shopping at the
lower-priced food stores. Convenience stores often charge the
2. You will spend less on food if you shop with a list.
3. You can save hundreds of dollars a year by comparing price-
per-ounce or other unit prices on shelf labels. Stock up on those
items with low per-unit costs.
1. Since brand name drugs are usually much more expensive than
their generic equivalents, ask your physician and pharmacist for
generic drugs whenever appropriate.
2. Since pharmacies may charge widely different prices for the
same medicine, call several. When taking a drug for a long time,
also consider calling mail-order pharmacies, which often charge
lower prices. See the October 1993 issue of Consumer Reports
(available in most public libraries) for a list of several of
these pharmacies and their toll-free phone numbers.
1. Make your wishes known about your funeral, memorial, or
burial arrangements in writing. Be cautious about prepaying
because there may be risks involved.
2. For information about the least costly options, which could
save you several thousand dollars, contact a local memorial
society, which is usually listed in the Yellow Pages under funeral
3. Before selecting a funeral home, call several and ask for
prices of specific goods and services, or visit them to obtain an
itemized price list. You are entitled to this information by law
and, by using it to comparison shop, you can save hundreds of
The Consumer Literacy Consortium is a working group of
representatives from federal and state government agencies,
consumer groups, business organizations, and educational
institutions that seeks to develop and disseminate essential
messages to inform and educate consumers. Membership in the
Consortium does not imply endorsement of all of its messages or
the products and services of other members.
For information about how you can join the Consumer Literacy
Consortium's campaign to help consumers save money, write to Save
Money, c/o Consumer Federation of America at the above Washington,
Brought to you by - The 'Lectric Law Library
The Net's Finest Legal Resource For Legal Pros & Laypeople Alike.