What about those extra frequent flier miles you got? Or that special, incredibly low interest rate on the credit card offer you received in the mail? Or the "no-payments-until-next-year" offer from the high-ticket-item retailer?
Free or next to nothing? They may feel like an elephant, and sound like an elephant, and even look like an elephant-but we think there's no pachyderm near here. Most of these things-really, all of these things-are usually more than what they appear to be. Because, you see, absolutely nothing is free. There's always a catch. Take the frequent flier miles. In his recently released novel, Seduced by a Mile, author Greg Moore asks some insightful questions. He wonders: Have you noticed there aren't as many airlines as there used to be? How about your ticket prices-higher than ever? Is this what Congress intended by their deregulation of the airline industry 20 years ago? And what have we got in return? Blackout dates. Capacity restrictions. Booking limitations. Significant advance purchasing requirements.
Moore's point-we're paying higher rates for fewer airlines-with a significant negative impact on corporate earnings (airlines get more and earn more-the rest of us pay more and earn less). Most of us tend to think of frequent flier miles as well-deserved freebies, when they might actually cost us more in the long run.
How about the credit cards? The next time you get an offer in the mail-probably today-read the fine print (usually printed on the back of the offer) required by the government. If you do, you'll find that the "incredibly low interest rate" is a temporary rate, set to expire in just a few months. When those few months are up, your rate will quietly expand by as much as 20 percent or more. And you may not know it unless you're accustomed to paying attention to details. Those big credit card companies are counting on most people failing to read the details.
I know what you're think-now who's going to rain on the "no-payments-until-next-year" parade. Judge for yourself. Look at those plans in a couple of ways. First, most of the retailers who make the offer don't handle the payment plan themselves-they sell it to a finance company. And the finance company is betting you won't pay off the debt before it begins to accrue interest-hence they make their money.
But, what if you're a disciplined consumer and you ensure that the debt is paid off by the time the "free" period is up. The finance company gamble didn't pay off. The retail outlet? Edward Ketz, a professor in accounting at Penn State University, told the Wall Street Journal he finds it hard to believe that retailers don't increase prices on the goods amiable in those special deals. "If you're not doing that," says the professor, 'You're losing money."
Either way, says furniture industry analyst Jerry Epperson out of North Carolina, both the retailer and the consumer are losers. "Just like there are no free lunches, there are no free dining room sets."
In an entirely different venue, how about Monicagate? Did the President "walk free?" We hope and think not. Fifty years from now, the former intern may be just a very small footnote in the history of the end of this century. But for at least the next few years-probably through his lifetime-Mr. Clinton will be dogged by his behavior, bot in the Oval Office and before a grand jury. He has the polls in his favor, but the pollsters only ask very limiting yes-or-no questions. And despite the popularity that comes from a strong economy, we think people will have a difficult time buying a used car, or anything else, from someone who has been so untruthful while he was president."
The bottom-line? Actually, not everybody's out to prove P.T.Barnum right. You can wager, though, that those who claim the loudest that they have a special "free" deal to offer just might be out to make a bunch of quick bucks. Let's face it-nothing's free these days-and most of the time it probably costs us more than it would have otherwise.
But there are real values out there for discriminating consumers. In the airline industry, for example, new companies like AccessAir are providing new service for an excellent value.
There are some credit card offers that are extremely good-but they rarely show up in the mail every other day. If you know where to look, you'll find them.
And plenty of retailers-many right here in central Illinois–have special purchase plans that allow them to make money without gouging their customers.
When the economy is going strong-when unemployment is low-when salaries and profits are increasing, it's easy to slough off the details. And when we do that, we open the door to those who profit by our carelessness.
But-if we read the fine print-then they lose and all the good guys, including us, win. IBI