- You may lower the price of a round trip air fare by as much as
two-thirds by making certain your trip includes a Saturday evening stay
over, and by purchasing the ticket in advance.
- To make certain you have a cheap fare, even if you use a travel
agent, contact all the airlines that fly where you want to go and ask
what the lowest fare to your destination is.
- Be flexible, if possible. Consider using lowfare carriers or
alternative airports and keep an eye out for fare wars.
- Since car rental rates can vary greatly, shop around for the best
basic rates. Ask about any additional charges (extra driver, gas,
drop-off fees) and special offers.
- Rental car companies offer various insurance and waiver options.
Check with your automobile insurance agent and credit card company in
advance to avoid duplicating any coverage you may already have.
- 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 information.
- 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.
- Remember there is no "cooling off" period on new car sales. Once you
have signed a contract, you are obligated to buy the car.
- Before buying any used car:
- 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.
- Have a mechanic you trust check the car, especially if the car is
sold "as is."
- 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.
- 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.
- 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. Keys to Vehicle Leasing: A Consumer Guide, published
by the Federal Reserve Board and Federal Trade Commission, is a valuable
source of information about auto leasing.
- You can save hundreds of dollars a year by comparing prices at
different stations, pumping gas yourself, and using the lowest-octane
called for in your owner's manual.
- You can save up to $100 a year on gas by keeping your engine tuned
and your tires inflated to their proper pressure.
- 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.
- 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.
- 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.
- Make certain that your new policy is in effect before dropping your
- You can save several hundred dollars a year on homeowner insurance
and up to $50 a year on renter insurance by purchasing 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
- Make certain you purchase enough coverage to replace the house and
its contents. "Replacement" on the house means rebuilding to its current
- Make certain your new policy is in effect before dropping your old
- If you want insurance protection only, and not a savings and
investment product, buy a term life insurance policy.
- If you want to buy a whole life, universal life, or other cash value
policy, plan to hold it for at least 15 years. Canceling these policies
after only a few years can more than double your life insurance costs.
- Check your public library for information about the financial
soundness of insurance companies and the prices they charge. The July
1998 issue of Consumer Reports is a valuable source of information about
a number of insurers.
- You can save more than $100 a year in fees by selecting a checking
account with a low (or no) minimum balance requirement that you can, and
do, meet. Request a list of these and other fees that are charged on
- 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
- 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 (FDIC or NCUA). An increasing number of products
offered by these institutions, including mutual stock funds and
annuities, are not insured.
- 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.
- Once you select a type of savings or investment product, compare
rates and fees offered by different institutions. These rates can vary a
lot and, over time, can significantly affect interest earnings.
- You can save as much as a thousand dollars or more each year in
lower credit card interest charges by paying off your entire bill each
- If you are unable to pay off a large balance, pay as much as you can
and switch to a credit card with a low annual percentage rate (APR). For
a modest fee, RAM Research Corp. (800-344-7714) will send you a list of
low-rate cards. You can obtain a list of low-rate cards by accessing
"www.ramresearch.com.cardtrack" on the Internet.
- 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.
- 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 finance
- 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 company.
First Mortgage Loans
- Although your monthly payment may be higher, you can 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 l 5-year mortgage than on a 30-year mortgage.
- 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.
- 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 tax implications.
- 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.
- 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
up-front fees) will cost and whether, in the long run, it will cost less
than your current mortgage.
Home Equity Loans
- 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.
- 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.
- 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.
- Do not purchase any house until it has been examined by a home
inspector that you selected.
Renting a Place to Live
- 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.
- Remember that signing a lease probably obligates you to make all
monthly payments for the term of the agreement.
- 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
- Do not sign any contract that requires full payment before
satisfactory completion of the work.
- 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
- 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 more.
- 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.
- 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.
- 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
Local Telephone Service
- Check with your phone company to see whether a flat rate or measured
service plan will save you the most money.
- You will usually save money by buying your phones instead of leasing
- 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
- Long distance calls made during evenings, at night, or on weekends
can cost significantly less than weekday calls.
- 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.
- Whenever possible, dial your long distance calls directly. Using the
operator to complete a call can cost you an extra $6.
Food Purchased at Markets
- You can save hundreds of dollars a year by shopping at the
lower-priced food stores. Convenience stores often charge the highest
- You will spend less on food if you shop with a list.
- 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
- Since brand name drugs are usually much more expensive than their
generic equivalents, ask your physician and pharmacist for generic drugs
- 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.
- Make your wishes known about your funeral, memorial, or burial
arrangements in writing. Be cautious about prepaying because there may
be risks involved.
- 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 services.
- 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 dollars.
Membership in the Consumer Literacy
Consortium does not imply endorsement of all its messages or the products
and services of other members.
Association of Retired Persons
American Council on Consumer
Bank of America
Center for the Study of Services - Checkbook
Consumer Federation of
Direct Marketing Association
Federal Trade Commission
Minnesota Attorney Genera's
National Coalition for Consumer Education
Foundation for Consumer Credit
National Institute for Consumer
U.S. Consumer Information Center
Cooperative State Research, Education, and Extension Service
Food and Drug