We know to watch out for tricks along with sugary treats during this season of ghosts and goblins. But neighborhood vandals aren't the only ones to keep an eye on. Some companies that sell us financial services aren't above using a few tricks to capture our business, and year-round vigilance is required.
Here are five tricks that you might encounter:
TEASER RATE TEMPTATION: You've seen the offers: Zero percent interest on balance transfers, interest rate bonuses on CDs or annuities and high yields on money market accounts. The trick: The teaser rate applies for only a short time or it comes loaded with so many catches that you won't keep it for long. In addition, special deals on rates may mean other features of the product are not so great.
CREDIT CARD FOUL PLAY: You think you've got a good deal on a credit card as long as you make your payments on time. The trick: Your rate might skyrocket if you are late with a payment on a different card. Credit issuers increasingly keep tabs on your total credit picture, not just your relationship with their company.
TAX BRACKET DECEPTION: Sellers of tax-advantaged investments such as municipal bonds, partnerships and annuities often illustrate their benefits with examples. The trick: They usually are based on the assumption the investor is in one of the highest federal tax brackets, which currently top out at 35 percent. Some go even higher by showing a combined federal and state tax bracket. But if you're in the 10 percent bracket and live in a state with no income tax like Florida, you'll get far less benefit from the investment.
SURRENDER CHARGE SWINDLE: Annuity sales agents emphasize that you can exchange one annuity for another without tax consequences. The trick: An exchange still has serious financial consequences if it triggers a surrender charge on the old annuity or starts a new clock running on surrender charges for the new annuity. It could cost you big time if you want to cash out.
BAIT AND SWITCH: Those ads for super high-yielding CDs are really a come-on by companies selling annuities. The trick: There are no CDs that pay the advertised rate; that's just to get you in the door. If you insist on a CD, the company will give you a cash payment to raise the yield to the advertised rate.
If you know how the tricks work and you pay attention to the fine print, you shouldn't be caught by surprise.
Q. My husband, who is 75, falls for all these money-making schemes he gets in the mail. He checks "send for information" and puts it on his credit cards. He has never made a nickel on anything, but he continues. How do you stop junk mail?
Work-at-home schemes are just about always fraudulent. Take the mailings to your post office or send them to Inspection Service Support Group, 222 S. Riverside Plaza, Suite 1250, Chicago, IL 60606-6100. You also can fill out a complaint form online at www.usps.com/postalinspectors If you have lost money, keep your original documents and send copies.
Next, reduce junk mail by sending a letter or post card with both your names, your home address and signature to Mail Preference Service Direct Marketing Association, P.O. Box 643, Carmel, NY 15012-0643. This will stop mail from members of the association who screen their mailing lists against the association's list. More information is available at www.dmaconsumers.org.) You also can write the senders of junk mail, include the mailing label and ask to be removed from their lists.
A more drastic step would be to open a post office box and fill out a change of address form so you can screen mail before your husband sees it.
Your husband's behavior could be an indication of dementia. If there is a senior center in your area, ask whether there is someone you could talk to about this issue. If this begins to seriously affect your family's finances, it might become necessary to ask the court to appoint a guardian to protect your husband's assets.
Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to huntley@sptimes.com or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.
