Pod Insights The Clark Howard Podcast 11.21.24 Shopping Season - Return Policies / Got Credit Card Debt? About this episode We’re one week out from Thanksgiving, and holiday shopping is in full swing. One thing to consider - return policies. Clark has a personal story to share that saved him big money. Also, this season of giving arrives with credit card debt at an all-time high. A Clark smart assignment for you. Return Policies: Segment 1 Ask Clark: Segment 2 Credit Card Debt: Segment 3 Ask Clark: Segment 4 Mentioned on the show: Phone Plan Finder – Find and Compare Phone Plans - Clark.com Budgeting Basics: What You Need To Know To Get Started Best Budgeting Apps in 2024: Our Top 5 Budgeting & Saving Archives - Clark Howard The Best Place To Buy a Mattress How Can I Get Rid of My Old Mattress Cheaply? Should I Freeze My Credit With the Other Credit Bureaus? How To Freeze and Unfreeze Your Credit With Experian, Equifax and TransUnion Best 529 College Savings Plans By State Should I Contribute to a 529 Plan Only To Roll It Into a Roth IRA Later? Clark.com resources Episode transcripts Community. Clark.com Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Disclosure in Podcast Description: A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. As of 9/26/24, the average, annualized yield to worst (YTW) across the Bond Account is greater than 6%. A bond’s yield is a function of its market price, which can fluctuate; therefore, a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our Fee Schedule. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. See https://public.com/disclosures/bond-account to learn more. Learn more about your ad choices. Visit megaphone.fm/adchoices
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0:35 Speaker 01 It's my pleasure to welcome you here to the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. A week from today, we'll be sitting down to turkey and dressing and whatever else you like to have for Thanksgiving. And holiday shopping has become a new tradition on Thanksgiving. How about that with the dot-coms? One thing you've got to worry about with Christmas shopping? Return policies. And I want to tell you a story of something that happened to me that saved me big money.
1:18 Speaker 01 And I want to talk about returns costing you money as well. And something I don't want you to do this Christmas season is get more into credit card debt because credit card debt in the country is way at an all-time high. And we've got to have a talk before you go for those bargains. So, return policies are all over the board right now. And I'm hearing every story known to humanity about trying to return things with some retailers charging you money to return an item, others putting up roadblocks for you to return, others
2:02 Speaker 01 saying, "Why don't you just keep it?" I've got a funny Amazon story. I bought a platform for a mattress on Amazon and the package came open and parts missing. So, I contacted Amazon with an online chat. They were very speedy and sent me a replacement.
2:27 Speaker 01 In a couple of days, and I said, where do I return the old one to? Well, you said it's missing parts. It's yours to keep. We don't want it. I said, well, I don't want it. And so they said, well, we won't take it back. But we're crediting you for it. We're sending you a new one, but we won't take it back. So there I am with this bed frame. So my son and I take all the parts out. And we figured out only a few parts were missing. That could easily be replaced at a hardware store or something like that. So we re-box it up and I take it and donate it at Goodwill.
3:12 Speaker 01 So somebody's getting a bed frame that's just going to require a little bit of running around to make it work fine. But that's not an unusual story, forgetting the part that it was missing parts. I talked about this last year at this time. That occasionally you're going to have a retailer say they didn't want an item back. You're going to hear that a lot in January from clothing retailers or retailers that you bought clothing from that are general merchandise retailers. If something doesn't fit, let's say you receive a sweater and it's too small, too large, whatever. And you want to return it. They may tell you, keep it, keep it.
3:55 Speaker 01 And then I guess you then re-gift it. Because retailers are losing so much money on certain types of returns. It's mind blowing. I mean, the logistics involved in processing returns is so expensive that it is cheaper for a lot of retailers to just say it's yours. I had a crazy thing. I mentioned yesterday, I got this 85 inch TV for $698. So I'm going to give you more detail on that. I bought it at Sam's Club, at sam'sclub.com for 898 or 899, whatever.
4:39 Speaker 01 And then 10 days after I bought it, it then goes on sale for 698. Well, you know, Costco's published policy is that if the price on something drops within 30 days when you buy it, you can just ask for a credit and they give it to you. Well, so I do a message, a chat thing with Sam's and I said, do I understand this right? Cause you can return a TV for 90 days. Then in order to get back the $200 difference, that I have to return the TV that I just got, rebuy it in order to get the lower price? The person doing the chat said, give me a minute or whatever. Next thing I know, he
5:22 Speaker 01 said, we've credited $217 and so many cents to your account. Cause they don't want that TV back because they'll have to salvage it at that point. And so even though it's not, and I looked in the terms of service of Sam's Club membership, I couldn't find anywhere that they do the 30 day guarantee like Costco does. But effectively they did it by me contacting them and I got back, it was $217.80 I got back. So the thing I'll tell you is a Costco shopper, and now I can amend that with an asterisk about Sam's Club. You buy an expensive item, in those 30 days after you buy it, you should monitor if that item does get
6:07 Speaker 01 cheaper, if it goes on sale, because you may well, you will at Costco, if you ask for it, and you may well at Sam's Club, get that money back.
6:17 Speaker 02 All right. We'll go to questions.
6:19 Speaker 01 Do I sound too cheap?
6:20 Speaker 02 Are you kidding me? This is why you have the Clark Howard Show.
6:23 Speaker 01 Okay.
6:24 Speaker 02 You're showing us all how to do it. Jamie in Washington says, I learned something with Uber the other day. I ordered a ride and watched him start driving toward my house and it said eight minutes for him to arrive. Then he started taking random turns down random roads. I'm thinking, wow, this guy's super lost. And then it shows he's 15 minutes from me and all of a sudden it shows four minutes and a new driver. I told the new driver about how quote unquote, lost my other driver got, and he told me some Uber drivers drive around pretending to be lost and take a long time in hopes that you will cancel the ride and they make a little bit of money from you canceling and they never even have to give a ride.
7:03 Speaker 01 So I had, my record was when I was in Florida in August, I used the Uber app to get an Uber and I had Four drivers accept the trip and then later go rope-a-dope on me.
7:21 Speaker 02 Wow.
7:22 Speaker 01 Four different ones. And then finally, I got a fifth one who then picked me up and I waited 41 minutes.
7:32 Speaker 02 Wow.
7:33 Speaker 01 For a 15-minute ride. I mean, so this is a thing on Uber and it also happens on Lyft, that the drivers do the rope-a-dope. They'll accept a trip before they really look at it. Then they'll realize, huh, I'm not going to make enough money from that trip. But then they don't cancel on you. They stall and wait for you to cancel on them, where you might get hit with a fee every time you cancel. And you're looking at me like this has never happened to you?
8:05 Speaker 02 It's only, it's funny. It's never happened to me on Lyft. For some reason, I've had it happen on Uber. But I've been lucky with, I mostly use Lyft. But yeah, and I also thought that the drivers-
8:14 Speaker 01 Is it called pink? Are you the higher status?
8:17 Speaker 02 I used to have it for free with my credit card, but they did away with that, so I don't have it anymore. But I thought that they didn't show the drivers where you were going until you got in the car. But I guess they don't, they must show them now.
8:28 Speaker 01 So I, I guess the drivers do know.
8:31 Speaker 02 I mean, you would think with that happening.
8:33 Speaker 01 A trip's not worth it.
8:35 Speaker 02 Okay, yeah, because I guess if you're driving someone two states away, you need to know that.
8:40 Speaker 01 Oh, no, I think they like those trips.
8:41 Speaker 02 Yeah, they probably would love that. Kathy in California says, "We are Verizon Wireless users with seven lines, and we won't be changing anytime soon because some of us are getting bill credits for free devices bought through them that run for another year or so. We were getting $10 a month per line for allowing auto pay from my checking account. Not something I loved, but worth it for $70 a month. Suddenly, it's only $5 a month discount unless I get the Verizon Visa card. But the fine print says we can get the card and re-enroll to get the additional $5 per line discount. It has some perks that might be useful, like 4% on groceries and dining, and has no annual fee, plus a $100 statement credit after three months. We have a credit score over 800, have no outstanding debt, and pay off our cards every month,
9:26 Speaker 02 and it will get them off of our checking account. Is it worth the trouble of unfreezing our credit and having another card?"
9:32 Speaker 01 Okay, let's go back to the very beginning.
9:34 Speaker 02 I knew you were going to.
9:36 Speaker 01 How'd you know I was gonna?
9:37 Speaker 02 Because I know you.
9:38 Speaker 01 All right. So this is the game that Verizon, AT&T, and T-Mobile play.
9:44 Speaker 01 And I was thinking when I was watching on football, I was watching a Verizon ad where they're taking a hammer to their iPhones.
9:54 Speaker 02 Yes.
9:55 Speaker 01 But then they can trade it in, in any condition and get the new iPhone, whatever. And I was thinking about, long, long ago and far, far away, like 20-plus years ago, people used to get a computer for free if they signed a contract for dial-up internet. That may be 30 years ago. I don't know if you remember that, that people were, were all excited to get these free PCs, these desktop computers, if they signed up for three years at an inflated price for the dial-up. This is the same kind of marketing gimmick, is they get you hooked with a deal on the
10:37 Speaker 01 phone that's paid out typically over two, more often, three years, where you get the monthly credits. And then they're getting you to look at that while they completely rip you off on the monthly cellphone service. And there will come a time where you just rip off the Band-Aid. You pay the remaining balance on those phones that you have on the payout where they're giving you the monthly credit, and you switch those seven lines from Verizon to someone who is less than half the cost per month for service. Verizon itself is spending so much money on advertising for their various discount brands
11:21 Speaker 01 right now that don't come under the Verizon name, Total Wireless, Visible, Straight Talk, all these brands that are owned by Verizon, where they're trying to capture people at whatever price per month they're willing to pay. And I can tell you that whatever it is, it's a fraction of the cost of being with name-brand Verizon, name-brand AT&T, or name-brand T-Mobile.
11:45 Speaker 02 Kathy's a great candidate for our Phone Plan Finder. At Clark.com/PhonePlanFinder, you can put in the seven lines and see what Clark's talking about.
11:54 Speaker 01 Even if you have to absorb those phones. So that means I never answered your question. If you're like, yeah, yeah, yeah, Clark, I'm going to stay with Verizon, then yes, to be able to, for nothing else, to get 4% cash back at no annual fee for groceries and dining, that alone would make it worth it. And then on top of it, they pay you 100 bucks bribe to get the card. As long as you use it only for the purposes that get you the bargains, the 4% back, then you've got a real winner there. It's a perfect situation player credit card.
12:31 Speaker 02 David in California says, how do you lengthen the life of electric rotary shaper blades? You speak about shaving razors and drying them, but what about the electric ones? The instructions from my Nerelco say to rinse them and air dry them. Will the rinsing diminish the life of the rotary blades?
12:48 Speaker 01 That's a good question. I can't answer because I have never changed the blades on my electric razor.
12:55 Speaker 02 And how long?
12:56 Speaker 01 Years.
12:57 Speaker 02 Wow.
12:58 Speaker 01 How long are the blades okay for?
13:00 Speaker 02 I don't know, man.
13:01 Speaker 01 I don't know. I haven't, I haven't been suffering nicks or cuts or whatever.
13:08 Speaker 02 But you, when you did, you, you used to, you would dry your razors?
13:12 Speaker 01 I would dry my traditional razor, which I use on any day I'm on camera. Today's the day I'm on camera, so I, I shave traditional. But any other day, I just use the three-blade Nerelco razor. And if I'm, I know it came with extra blades. I'm sounding like a complete idiot right now. Because I've never, ever thought about this, David, and I've never even looked to see how I change the blades. Okay, that'll be my assignment.
13:42 Speaker 02 Yes, you have homework for sure.
13:43 Speaker 01 To figure that out, shave with the new blades set in my rotary Nerelco thingy, and see if suddenly I'm getting a better shave. Because I guess it deteriorates so slowly, I haven't even noticed.
13:59 Speaker 02 I bet the Clarkies will write in to us, too. I'm sure someone out there has mad knowledge about this.
14:06 Speaker 01 Because I have no idea what the answer is to that. Coming up ahead, we're going to talk credit card debt. I do know the answer to that. And I'm not at all happy with the situation we're in right now with credit card debt. And you've got an assignment through the Christmas shopping season from me.
14:27 Speaker 01 All right, so we got to talk here. It was only four years ago, four years ago, that credit card debt in the United States cumulatively was 700 billion, which was actually an improvement. Americans during the first year of COVID heavily paid down credit card balances. And it was going in the right direction for like the first time in forever. Then we went in that cycle. It was a dual cycle of revenge spending when people started getting back out again in 21. And the inflationary cycle that led to people that are on really tight budgets,
15:10 Speaker 01 running out of money and then using credit cards as a borrowing system to pay for food and necessities. So we got a double story here because we've got a lot of people who use credit cards as just a payment system, earn rewards, whatever, cash back. Then we have people that are using credit cards as a borrowing vehicle and are trying to survive without enough money coming in each month. So if you're one of the people who just can't get by on what you're earning, this is not for you.
15:48 Speaker 01 This is for people who are using credit cards because I see it, I want it, that settles it. And you're running balances on cards, paying now an average interest rate of 25%. Highest ever for an average rate. That's the latest number I saw. And now here we are in the Christmas shopping season. You compound the problem because everything you're buying is 25% more expensive than you think it is on sale because if you're using credit to buy it, it doesn't settle it because you got to pay that back plus all the interest. If you're someone who is
16:30 Speaker 01 In that very large segment of Americans who pays your balance in full every month, it's about more than a third of people now, and you can afford it and you want to buy this sale item or that one, or you want to book this Black Friday travel deal or whatever it is, go for it. That's fine if you can afford it. But if you are in that muddy middle I'm talking about, and you're part of what's led the balances on credit cards to climb and climb and climb to what is an all time record, I think even inflation adjusted all time record, then it's time for you to have a rethink and come up with, okay, I'm gonna
17:12 Speaker 01 say a word that to a lot of people is a cuss word, have a budget for your Christmas spending. A budget, that's right. Where you say, okay, this is what I can afford to spend for Christmas and pay for, and this is what I'm gonna buy. Because with the constant churn of sales, sale, sale, sale, sale, sale, and any store you go into, you see the sale signs everywhere, pulling you like a tractor beam into that aisle to buy whatever, or online, seeing the sense of urgency with Amazon or Walmart saying, this is on sale, this is on sale, or Target, wherever. If you cannot afford to pay for what you're buying, and you're
17:54 Speaker 01 already servicing interest on credit cards, you gotta rethink this. You got to. There will always be other deals when your finances are where you can afford to just pay for something. This is not a time to borrow for once. The carry cost is too brutal. Nobody ever got rich paying Visa or MasterCard. I always used to say 18%. Right now, I gotta say 25%.
18:27 Speaker 01 Bad idea.
18:28 Speaker 02 Okay.
18:29 Speaker 01 I'm no fun. I'm a no fun zone, Krista.
18:32 Speaker 02 Well, it's fun when you don't feel like you owe, that's for sure.
18:35 Speaker 01 I owe, I owe, I owe. So off to work I go. That's not what you want to be doing.
18:39 Speaker 02 No, it's very stressful. Pam does want to make a purchase. Pam in Florida. She said, my husband and I are in need of a new mattress. Ours is seven years old and well worn. We've been shopping around and it's been very confusing and frustrating venture. Not to mention the sticker shock. We both want to try it out before we buy. So buying sight unseen online is out of the question. When is a good time to buy and how do we know what a good price is for a mattress?
19:05 Speaker 01 Okay, we got to talk. All right. So I went through a journey on this as well with mattresses because the mattress market has gone through crazy weird changes. So we have never had mattresses as expensive as we have right now and as inexpensive as we have right now. What they call the bottom bucket to the top bucket has never been wider than it is right now in the mattress market. And so if you go to a mattress store of some kind and they start showing you mattresses and they'll always have a really terrible bargain price mattress.
19:47 Speaker 01 It'll be awful. And you and your husband will lay down on it, Pam, and you'll say, oh, man, this is the worst thing ever. Salesperson setting you up and they take you over to another one and they'll, they'll say, try this one. It may be 10 times the price of the first one. Or they may go through a sequence of them. It's all a sales technique. The reality is you can get a really great mattress at a really good price. And I want to tell you a couple of things and then I'm going to go to your thing about not wanting to buy online. Okay, so.
20:28 Speaker 01 The mattress market has morphed so much and Consumer Reports has done a great job rating mattresses. And if you don't have a subscription through your library, you may be able to see it for free. You just buy one time access and you will learn so much about finding a mattress or narrowing in or zeroing in. Plus, there are specific places that are great to buy a mattress from. But my thing is I love now buying a mattress online, opposite of what you said you want. And the reason for that is when you buy an online mattress from most online sellers,
21:11 Speaker 01 you either have pretty much an unlimited time to return that mattress for a full refund or at least three or four months or six months to try it out. And if you don't like it, you get a full refund. Don't trust anybody who says that they will give you a credit towards another mattress. Uh-uh. You want a full refund. But if you follow Consumer Reports as they explain different types and styles of mattresses, what the sleep experience is like for side sleepers, back sleepers, you know, people sleeping on their stomach, that kind of stuff, you'll really be able to focus
21:53 Speaker 01 on a more narrow number of mattresses. And Consumer Reports has ratings that we have a summary of on Clark.com of physical stores also you can go to and do what you want to do and try out a mattress. But even with them, make sure you have the guarantee where if you don't like it for at least three months, you have the right to return for a refund.
22:19 Speaker 02 And Dallas on our team wrote that article on Clark.com. And she also listed, she went through all these different retailers and listed what their a queen size mattress costs as of November this month 2024. So we have a very updated guide there if you want to look at it.
22:35 Speaker 01 So I want to tell you that the last mattress we bought was a king. And we bought it at Costco and it was $469.
22:46 Speaker 02 The problem is returning, right? Like you can return it, but you have to get it back in the box.
22:51 Speaker 01 Well, you can't get it back in the box. So I mean, in the worst case scenario with Costco or Sam's, you might have to rent a flatbed from Home Depot, throw it in there, tie it down and take it back, but they will give you your money back and you start again. But I've never had to do that with a mattress. The only time we ever bought a mattress that really stunk was when my wife, it's not her fault, but there was this particular high-end mattress that a friend got her really excited about. We bought this thing. It was almost $2,000 and it was horrible. And we had to, we found, actually found a place to donate it to.
23:36 Speaker 02 Okay, that's good.
23:38 Speaker 01 But that was 2,000, almost $2,000 down the tubes.
23:41 Speaker 02 I mean, I remember years ago before these bed in a box things, I mean, your advice, and I saw you do it so many times when we'd be in a Costco, is to lay the mattress on the floor. You have people lay down on the mattress and like chill out in the mattress for a while.
23:55 Speaker 01 But you know, when Casper came up with the compressed mattress thing, it totally changed the industry. And so people overwhelmingly buy these mattresses either that they cart home and let pop up like an old popcorn popper, or they order them online and have them delivered.
24:16 Speaker 02 All right. Linda in Washington says, what do you know about the fourth credit bureau in Novus? Should I be freezing my credit with this bureau also?
24:24 Speaker 01 Okay. So thank you for asking this, Linda, because people will ask, well, why don't you talk about doing a credit freeze with check systems? Why don't you talk about doing a credit freeze with this one, that one, or the other one? And so I find that
24:41 Speaker 01 I try to get people to freeze with the three main Equifax TransUnion experience. It's not going to solve all the world's problems, but it's one of the most important things to protect your identity. And why those three? Because they're used so universally, they have so much market share. But then you have specialty bureaus like Inovus. They have minimal market share in credit granting decisions, at least at this point. And so I've not made talking about them a priority, or some of the other more obscure one, there's one that many of the cellphone companies use that criminals have been targeting.
25:24 Speaker 01 And I don't even want to get into telling you about that one and freezing your credit with that and all that. So you just, we've got busy lives, there's a lot of noise in our lives. So the most important thing is if you have not frozen with the three mains, get it done. Because it's not like data breaches and all that are slowing down, they're accelerating. And that's why you need to put the most basic protections in place. They're free to do, quick to do. And if you don't know how to do it, go to Clark.com/creditfreeze and you can get it done. But freezing with Inovus, if you really want to do a lot of the smaller
26:06 Speaker 01 credit bureaus, you can do that. It's not a priority for me.
26:11 Speaker 02 May in California says, "My son's a freshman in high school. Is it too late to start a 529 plan? I looked up the Clark's 529 Dean's List, and it says the California plan has no state tax benefit, but Arizona plans, any 529 plan, I believe, has tax benefit."
26:27 Speaker 01 Yeah.
26:27 Speaker 02 "Would I receive a tax benefit if I roll with the Arizona plan instead of the California plan? Is it cheaper to go through the state plan directly rather than going through the Fidelity 529 plan?"
26:37 Speaker 01 So if California offers no state tax benefit for a 529, I didn't remember that California had no benefit. Let me look at our latest review. Yep, no state tax benefit. So it doesn't matter which of the plans you go into, as long as they're an ultra-low-cost plan. Arizona has a low-cost plan, only for the index, age-based index plans, is really a good plan. California's plan is very good. Again, their age-based equivalent is really good. So as long as you go with a low-cost plan, you're fine. Now, to the core of your question,
27:22 Speaker 01 if you have a kid who's already in ninth grade, is there an advantage to it? Yes, because you'll get tax-free growth over the next several years till your son enrolls in college. And then if you end up with an embarrassment of riches, your son's scholarship's out, or decides not to go to college, or whatever it is, ultimately, you haven't lost anything because that money can ultimately become your son's Roth IRA and continue tax-free growth and tax-free spending all the way, way down the line when they are approaching
28:02 Speaker 01 or in retirement. So it's a fantastic improvement in 529 plans. And it makes it a no-brainer, even if it's a coin toss, whether or not a child will go to college. 529 has become a great way to build tax-free assets for that child. The maximum amount under current law that can be converted later into a Roth IRA is $35,000. There are specific rules how the money goes into that Roth IRA. And I want to thank you so much for joining us today. And I hope that you've learned something, or been inspired to do something in your
28:45 Speaker 01 life that will help with our core mission, which is for you to learn ways to save more, spend less, and avoid getting ripped off. And our newsletters are something I'm so proud of. Our Clark Daily Newsletter, our Clark Deals Daily Newsletter. But what I'm most excited about is the subscription price for our newsletters. They are free. If you want to check them out, go to Clark.com/newsletter or newsletters. And you're off to saving money or making more money. Have a great day.
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