Monthly Archives: August 2024

Home and Auto insurance costs

Posted on August 31, 2024 by Melissa Hart

Each insurance company uses many factors to calculate what they charge a customer for home and auto insurance.

Some factors are about you, your home, or your car.

For home insurance, common factors include:

Your home’s age.
How old your roof is and what it’s made of.
Where you live.
The cost to replace your house.
Your claim history.
Your credit score.

For auto insurance, common factors include:

Your driving record and claims history.
Where you live and how much you drive.
Your age, gender, and marital status.
Your occupation.
The cost to replace the car you drive.
Your credit score.

A change in any factor can raise or lower your premium. This includes characteristics that change over time, such as the value of your home or auto.

For More Information, click here.

Teaching Suggestions

Ask students to make a list of major factors that most insurance companies use to calculate your premiums for home and auto insurance.
Have students talk with an insurance agent or financial planner to obtain recommendations about the types of insurance you may need for home and auto insurance.

Discussion Questions

Why do insurance companies consider your credit score in determining your home and auto insurance premiums?
In your opinion, what should be the main factors used to determine the amount a person pays for auto insurance?

CREDIT DENIED?

Posted on August 17, 2024 by Melissa Hart

Did you apply for credit and get turned down? Or did a lender offer you less favorable terms for credit? If so, they have to give you a notice with certain information. Improving your credit may take some time, but taking some steps will help you do it.

How to improve your credit? If your report is accurate but you want to improve your credit:

Know how to find legitimate help. A reputable credit counseling organization will spend time discussing your entire financial situation with you before coming up with a personalized plan to handle your money problems. They won’t promise to fix all your problems or ask you to pay before doing anything.
Know what negatively impacts your credit score.
- Paying bills late. If you think you might be late on a bill, call the company you owe money to. Explain that you’re having trouble paying your bill and ask for a payment plan.
- Keeping balances high. Credit scoring models look at how close you are to being “maxed out,” so try to keep your balances low compared to your total credit limit. Check your credit card limits — and pay down your balances, if you can. If the creditor says you were denied credit or more favorable rates because you’re too near your credit limits on your credit cards, you may want to reapply after you pay down your balances.
- Frequent credit applications. Many scoring models look to see if you’ve applied for credit recently. If you’ve applied for too many new accounts, or taken out large amounts of new credit, it could hurt your score.

For More Information, click here.

Teaching Suggestions

Have students talk to others to determine how they first established credit.
Ask students to make a list of actions they can take to improve their credit.

Discussion Questions

What factors can affect whether you can get credit, as well as the price you pay to get it?
Should you hire a credit repair company to help you fix mistakes in your credit report? Or, can you do it for yourself at little or no cost?

Categories: Chapter 5, Credit Scores, Wise Shopping | Tags: credit report, credit scores | Leave a comment

SHRINKFLATION AND SKIMPFLATION

Posted on August 3, 2024 by Melissa Hart

Over the years, companies have raised prices through shrinkflation, in which the price of an item stays the same while the package size is reduced. A sports drink bottle is now 28 ounces instead of 32 ounces, or the “half gallon” ice cream carton is now 1.5 quarts or smaller. However, the price has stayed the same or perhaps increased.

Other examples of companies downsizing products without downsizing prices include air-filled chip bags, smaller soup cans, and reduced size detergent packages. This marketing strategy is not new. One of the first examples was years ago when a coffee company reduced its one-pound can to 13 ounces.

Similarly, skimpflation occurs when lower-quality materials are used in products like paper towels or cheaper ingredients in microwave dinners and restaurant meals, while prices remain unchanged. This also occurs when a hotel reduces the frequency of room cleaning or offers fewer food options for the complimentary breakfast.

While shrinkflation can be measured in government cost-of-living statistics, skimpflation is much harder to compute. If a paper towel roll costs the same with fewer sheets (shrinkflation) that will show up as a unit cost increase (inflation). However, if the paper towel roll is the same size but with inferior material quality (skimpflation), this change is not reflected in inflation statistics.

To get the best value for your money, consumers are encouraged to: (1) continue to use unit pricing to compare package sizes; (2) compare prices at several stores; (3) search online for digital coupons and rebates; and (4) read reviews of other consumers for information on changing product quality.

For additional information on shrinkflation, click here.

Video link: click here.

Teaching Suggestions

Have students find examples of shrinkflation and skimpflation for various products and services.
Have students create a visual (poster or slide presentation) that compares examples of shrinkflation and skimpflation.

Discussion Questions

Describe actions a person might take to stay aware of shrinkflation and skimpflation.
How can a person assess changes in product or service quality to continue to make wise consumer choices?