Monday, September 04, 2006
In a quandary about credit cards, insurance, mutual funds?
Q: I've run up a big balance on my credit card. Does it make sense to shift it to a low-rate card?
A:Perhaps. There is a lot of competition in this marketplace, and you should be able to got a good rate. But there are some pitfalls, too. Before you transfer your balance, promise yourself that you'll stop spending and work on paying down the balance.
If you see the low rate as a now opportunity to spend, you'll be defeating your purpose.
You should also know about the hidden fees that might be lurking behind a low interest rate. For example, some card issuers charge a fee of 2 to 4 percent on the balance you transfer. Don't accept one that does.
Check, in addition, to find out what fee you'll be charged for new purchases. The card issuer may be using the low rate as a lure, with plans to charge you 17 to 19 percent on new purchases. And be careful about penalty fees, which can be applied to a whole range of things, everything from late payments and bounced checks to charges that go over the limit.
If your payment is just one day late, some card issuers will hike the interest rate-to 20 percent or more. They use the low fee to get your business and then stick you with a high fee when you're not paying attention.
Other hidden fees: Extra charges-maybe 4 percent-and higher rates for cash advances than for other charges and a special fee for those who don't carry a balance.
Q: I rent an apartment. Do I need homeowner's insurance?
A: Yes. although it's actually called renter's insurance for you. You need it for the following two reasons.
First, for liability purposes. If people are injured in your apartment, they can sue you. Your renter's insurance will protect you. Second, you need insurance on your personal belongings.
I remember when I was working at my first job at the Kansas City Star. My friend, a travel writer, was off on a trip when her apartment was totally stripped-every knife and fork and towel and shoe and pair of sox and underwear, as well as her television, audio equipment, books, and jewelry.
My friend didn't have insurance, and she had to start from scratch.
Renter's insurance is also good because it covers most of the belongings you carry with you when you're traveling.
Q: How often should I reView my mutual fund portfolio?
A: Once a year. January is a good time. As you know, you shouldn't be looking your funds up in the newspaper every day, panicking and second guessing yourself. But January is a good time to determine how your funds have performed and to rebalance your portfolio.
Collect all your statements, including those from the end of 1998. Many statements show you what percentage of your account is in each fund and what portion is in stocks, bonds, and cash. If your statement does not, do it yourself. Then look at your actual asset allocation to see how it has diverged from your target strategy.
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