Free Money Finance

Revenge!!!

Check this out -- Sears sales down 7.3% and Macy's sales down 4%. Think it could have anything to do with the facts that they have poor customer service and high prices?

I (we all) better use those gift cards quickly...

Why I Hate Macy's

As I mentioned, I received a Macy's gift card last year as a Christmas present. Guess what? I got another one this year. Now after a year of shopping the original one is down to a $40 balance. Then I have another full one to deal with. Ugh!

So we headed off to Macy's for the after-Christmas sales. The store is such a rip-off. Why do I say that? Let me give a few examples:

• We started on the ground floor and noticed they had holiday gift baskets at "50% off." I walked up and saw they were nice baskets -- comparable to what you could get at Harry and David for $50 or so. As such, 50% off should be a great deal, right? Nope. The "regular" Macy's price was $110 to $150, so even with the 50% off, many of the items were higher than what they should have been anyway.

• So we then went upstairs and noticed the Christmas decorations were on sale. 60% off stocking holders. We've been looking for some and knew that the full price at Target was in the $8 to $15 range (before any discount) for comparable items. The Macy's regular price: $36 each. So with the 60% off, they were still $14. (We later headed over to Target and bought some there for a discounted price of $4 each.)

• We finally made it to the men's coats. I wanted to check their prices versus a new Columbia winter coat I had purchased at Costco the week before for $99.97. (We decided that if I could find it or something similar cheaper after Christmas, we'd return the Costco one.) Anyway, Macy's had the EXACT SAME COAT. Same style. Same color. Same everything. Their "original cost" was $230 but it was now "on sale". Macy's new price: $165. What a rip!

• We finally made it upstairs. I have been looking for a chair massager from HoMedics and figured I could get one after Christmas at a great discount. The one I wants usually goes for $199 (I looked on the HoMedics site as well as a few others stores and sites). Macy's had the one I wanted for a "regular price" of $349, but it was on "sale" for $199. Now tell me, has anyone, ever paid $349 for this massager? (Other than an unknowledgeable Macy's customer, that is.)

We ended up finding a few things that were comparable to regular prices (or maybe even a bit better when you take into account both the sales and the coupon we had from the paper) -- towels and a crock pot. But other than those, there wasn't much there that we wanted -- and what was was waaaaaaay over-priced. Yeah, I've heard of people who "work the system" at Macy's and get "great deals", but are these really great deals? Some may be, but I suspect that most are "great deals" when compared to Macy's over-inflated prices. And imagine how many people pay full price or get 10% off and think they're saving a bundle -- when they're really paying way too much for something they could get for a lot less somewhere else.

Have I mentioned that I hate Macy's?

P.S. A few days after the Macy's trip, I found the massager I wanted on sale at Amazon for $149. Plus they offered $20 off immediately, so I paid $129 in the end. With free shipping. And no sales tax. On a rewards card that gave me cash back. ;-)

P.P.S. Anyone want to buy my Macy's gift card? ;-)

Another Reason to Hate Macy's

I have my own reason for hating Macy's, but here's another one:

Some Macy's stores overcharged holiday shoppers who used debit cards to make purchases on one of the busiest shopping days of the year.

Ok, so it was only for a two-hour period on one day, but still...

Update: Beware 2008 Costco Photo Calendars

As many of you know, I've recommended the Costco photo calendars in the past as great gift items. I've given them out for the past several years and have always had rave reviews. In fact, they are the only gift I've ever given that people request year after year (they start in November, asking me to make sure that I'm getting them a new calendar this year.)

Anyway, today I received this email from a reader:

Based partly on your enthusiastic recommendations, last year we created photo calendars through Costco.com. Exactly like you said, they were amazing quality and a hugely popular gift with the kiddo’s grandparents. This year, I went straight to Costco.com to do them again.

They arrived today. And look horrible. Apparently they switched providers/printers, the customer service rep indicated that they were “swamped” with refund requests and quietly recommended snapfish.com when I inquired if I could still get the “old style” calendar. I did get a full refund, but now will have to scramble to replace them in time for the holidays (and they will be considerably more expensive even before the rush shipping).

I had the same thing happen to me. I ordered five this year, and they screwed up one of them (put the cover on backward). I am supposed to get a refund (they emailed me and said I'd be credited when I called them, but their phones are swamped and I haven't been able to get through), but who knows if that will happen. In addition, the quality is waaaaaaay below what it was last year. Very, very poor. I can no longer recommend their service to anyone.

I hope they switch back to their original provider -- or at least one with comparable quality to what I've seen in the past. If not, I'll be looking elsewhere for my photo calendars next year.

Update: Just got this response from the original emailer:

I had to wait on hold about 30 minutes last night before I could talk to a customer service rep. Once I did, he was pretty sympathetic and very forthcoming with a full refund.

Good luck getting your money back.

33% off calendars at Snapfish.com if you order by today with code CALENDAR33 (which brings the price down close to Costco levels). And if you go through fatwallet.com, they are offering a 12% rebate.

FYI, I sent Costco and email note this morning. I'll let you know how they respond.

Menard's Makes Cents

I was at Menard's a couple weeks ago buying a bag of mulch for putting my roses to bed (we need winter protection for roses here in the great, white north). The bill came to $4.01 with tax and, as usual, I didn't have any change with me. I gave the guy a $5 bill and expected him to give me $0.99 back. Instead, he said, "No need to give you all that change back" (or something like this) and handed me a $1 bill.

This was the sort of treatment that used to be commonplace among retailers. I can remember as a kid that it seemed like a "rule" in my small town -- if the customer was lacking a penny or two, the retailer simply paid that part of the transaction so the customer didn't get a ton of change back (which very few people like to carry.) This practice then morphed into the "penny jars" at various establishments where you could pick up a penny if you needed it or leave one (or more) for someone else if you had extra. It was a system where customers worked together to eliminate the dreaded handful of change issue.

But this too seemed to go by the wayside. Sure, some retailers still have a penny jar (I see it mostly at rural gas stations), but most don't. I guess with the combination of people paying more by credit card as well as retailers working to squeeze every penny of profit they can, the options of the retailer picking up the cost of a penny and the penny jar are not really viable today.

That's why I was shocked when the guy at Menard's spotted me a penny -- and I thought it was worth a mention. I guess there are still some retailers out there who do that little extra to make their customers happy. Well done, Menard's.

Target Makes Good for the Salvation Army

In my review of Target earlier this year, I took them to task for their bah-humbug banning of Salvation Army red kettle bell ringers at their stores. This issue came to my mind again earlier this season when we stopped by a Target (something we don't do very often) and, as I expected, there were no ringers -- which took away from the "feel" of the season for me, but that's for a different post. Anyway, I've tried to correct mis-statements, opinions, thoughts, etc. on this blog when conditions change or new information is brought to light, and now I need to revise my thinking in Target and the Salvation Army. Why? It appears they recently gave $1 million to the charity. The details:

MINNEAPOLIS (November 12, 2008) –Target today announces a $1 million donation to The Salvation Army to revitalize the organization’s libraries, media centers and educational facilities across the country. The retailer announces its commitment, which includes $25,000 grants to all forty divisions, at the unveiling of The Salvation Army Bushwick Community Center’s newly transformed library. The introduction of the Center’s updated library will serve as the kick-off of forty more library, educational and after-school facility renovations to take place throughout next year.

Now what I don't know is what Target is currently giving versus what the Salvation Army used to get by having bell ringers in front of Target stores (maybe this is way more, maybe it's way less, maybe it's the same), but I felt obliged to point out that Target isn't the Salvation Army-hating store I accused it of being.

I stand corrected.

Sears Makes Good!

Late on Friday afternoon I got a call from the manager at my local Sears store. He was responding to my letter/issue. He apologized several times, said they had done many things incorrectly, and asked what he could do to make me happy. I thought about saying, "give me a complete line of Craftsman tools" but instead I simply asked for the 20% discount I thought I was due. He said that was no problem and he issued the refund to my credit card.

So while it was not the best experience (they should have taken care of me from the start), Sears did eventually make good. Here's to one store manager who understands customer service!

Memo to Self: Yes, I Really HATE Sears

I thought my troubles with Sears were over. But I still have to shop there because I have $500 in credit from my last problem with them. And when you have to shop there, you're open to the same old Sears customer service.

Anyway, our old microwave died last week. We looked at Consumer Reports and a Sears Kenmore model was ranked #1 and was also a Best Buy. So we decided to use some of our credit to buy one. That's when the problems began. I'll let my letter to Sears (sending it our tomorrow) explain the rest of the story:

I have recently had a very unsatisfactory experience at your store and wanted to detail it for you. Here are the events that have transpired over the past few days:

• On Saturday, November 8, my wife and I purchased a new microwave at your store. Before we did, we asked if it was going on sale anytime in the future. The sales person said she didn’t know but we had a 30-day period after we purchased the item to get credit for any subsequent sales.

• The very next day (Sunday the 9th), we received a Sears ad in our Sunday paper. It noted that small appliances were 20% off. Not knowing whether or not microwaves were included (it didn’t say they weren’t, but it didn’t list them either), I asked my wife to call the store and find out.

• My wife called the store and got the automated message system. It asked her what department she wanted and she said, “appliances.” It then asked if she wanted large appliances or “small appliances like microwaves.” (This was the wording it used.) Of course she said “small appliances.” She was transferred to a phone that rang and rang and no one picked up.

• So she called immediately back, went through the process again, and asked for “large appliances” this time. Again, the phone rang and rang and no one answered.

• She repeated this process – calling both small appliance and then large appliances – the next day (Monday, November 10th). Again, the phones rang and rang with no one answering.

• So on Tuesday, November 11th (the last day of the sale), we drove to the store to talk to someone there. We saw our sales clerk and she wasn’t sure if microwaves were included. She said they were usually excluded in the ads, but that this ad didn’t have them excluded in print. So she called a “manager”.

• The “manager” (I didn’t get his name), then proceeded to tell us about store policy, what the ad meant to say, how things get so busy that people can’t answer the phone, how the store was under pressure to limit markdowns, and on and on. He also said he would not give us the sale price, saying he didn’t have the authority to do so. I explained to him the basics of customer service, how we had many options for buying microwaves, how we made a trip to the store because no one would answer the phone, and how he was risking future purchases we could make at Sears by acting the way he was. He was unmoved and tried to deflect the responsibility to someone else. As such, he said he’d bring the manager of small appliances over to talk with us.

• Jane, the small appliances manager, came over and basically said the same thing the earlier gentleman said. I told her what I’d said previously to the “manager.” She was unmoved. She also tried to deflect responsibility to someone else as well, but we passed since she said that person would give us the same response.

As I’m sure you can tell, I’m frustrated with the situation – with the lack of clarity in the ad, with the message on the phone lumping microwaves in with small appliances (which they apparently aren’t), with the failure of the staff to answer the phone, and with the failure of the staff to recognize the appropriate customer service steps to take when a mistake is made.

I’m sure you also know that we have a variety of places where we can shop for the types of goods Sears sells. Especially in this economy, I would think that store like yours would want to keep their customers happy. Already I’ve decided to hold off on a snowblower purchase I was ready to make at your store because of this incident. Obviously you can run your business however you like, but by having customer service as I’ve described above I believe you’re going to alienate people from shopping with Sears. And many of these people, just like me, are going to be regular buyers in multiple product categories – not just hit and miss buyers of one product. Can you really afford to lose buyers like this to Home Depot, Lowe’s, and the like?

I wanted to give you one last chance to make this right before I send a request to the corporate headquarters. I’m asking that you do the right thing so I can return to being a loyal Sears customer.

I'm sure I'll hear it from the "Sears didn't make a mistake, you did" crowd, and I'd partly agree. Sears probably meant to exclude microwaves from the sale. But they had several opportunities to tell us about this -- in the ad, on the phone where microwaves were classified as small appliances, and by answering the phone when we called. If any of these had informed us that microwaves were excluded, we probably would have given up the quest for the discount. But by the time we had to go to the store and find out, it was too late. We'd been re-buffed too much, and a 20% discount to make us happy for our time and effort seems like the least they can do.

I'll keep you all informed of how this turns out. BTW, we also found out that our Sears credit can be used at Kmart (got the kids some shoes there yesterday) and I'm hoping it can be used at Land's End as well. If so, we'll have a lot more flexibility in getting rid of our credit. Now if only Macy's had something similar.

Update: Sears made good!

Logan's Roadhouse Delivers Again

Remember not long ago when I had some kudos for Logan's Roadhouse? Well, it happened again today at lunch.

A friend and I ordered, we were busy chatting, then the food came. I never noticed that it was taking a long time or was "late", but I guess it was. Anyway, the manager came over, introduced himself, said the food was 13 minutes later than what they would have liked it to be, and that as a result our meals were on the house. Sweet! We chatted with him a bit and thanked him as he left. It's nice to give your business to a place that treats its customers right. So we left a bit bigger tip than I normally would have and left as happy campers.

BTW, Logan's has a "buy a $25 gift card and get an extra $5 free" deal going on now. I'm there all the time, so I think I'll buy a few of those for meals next year. It's a great way to get a decent discount on good food. 

Why AAA is Worth the Annual Fee

We've belonged to AAA for years. My wife used to have a Honda Civic that didn't have any warning (a beep or anything) when you left the lights on. It was a regular occurrence (about twice a year) that we'd go somewhere, leave the lights on, and come back to a dead car (for example, on a foggy morning where we'd turn the lights on for safety but it was so light out when we parked that we didn't notice they were on.) So we regularly had AAA come out wherever we were and jump the car.

Then there was the time my car was flooded at our church (long story) and needed to be towed to the dealership. AAA came to the rescue.

But it wasn't until we moved to Michigan that we REALLY started to value our AAA membership. Here's how it specifically saves us money:

• We have AAA car, house, and umbrella insurance. They are the cheapest around (believe me, we know since we shop around regularly for car insurance.) I'm not 100% sure if you need to be a member to get their insurance, but I was under the impression you had to be. Maybe someone can set the record straight for me on this one.

• I save gobs of money on hotels each year. I travel several times each year on business and we usually stay at Hampton Inns. Hampton ALWAYS has a AAA rate that's lower than the "normal" rate. True, this savings is for my employer as I'm reimbursed for travel, but then again, helping the company save money benefits me in that it makes the company more profitable.

• We also save on personal hotel costs. While planning for our recent trip to Chicago (it was ultimately canceled), we checked a wide variety of hotels based on costs and locations. We found a Hampton Inn we liked for $239 a night (for a suite, so it wasn't bad.) We tried getting a price several ways -- calling the hotel directly, going online to check various sites, and so on. The cheapest option was using our AAA discount which saved us $24 a night or $72 total.

• For the same trip, we were planning on taking the train to Chicago (fun for the kids, cheaper than driving and parking, etc.) Amtrak was going to charge us $184 for four tickets, but with a AAA discount it was $157 -- another $27 saved!

• AAA has free travel materials -- maps, books, etc. -- that we always end up using every year. Even if we don't buy travel packages/services from them (which we never do), these materials help us get a lot of information that we ultimately use to get the best prices possible. For example, some information from AAA helped us save a good amount on our trip to Disney last year.

• And of course, there's the roadside assistance that AAA is known for. I guess it's a form of insurance -- and we pray we never need it -- but if we do it will be nice to know it's there for us.

I'm sure there are tons of other ways to save using AAA, and I'm anxious to hear them. Anyone out there have some ways to save with AAA?

Can You Pay for a Costco Membership by Saving on Gas Alone?

We get gas quite often at Costco since it's usually the cheapest place to buy it around here. The other day while filling up my car, I started to wonder whether or not you could pay for your annual Costco membership just by saving on gas alone. So I ran the numbers for our family. These are the facts/assumptions I used:

• I drive 15,000 miles per year and my wife drives 5,000.
• At our average miles per gallon, I estimate we consume 881 gallons of gas per year.
• I checked the gallon estimate against what we spend annually on gas (at an average cost per gallon) and it appears to be a good number.
• Costco is anywhere from $0.02 to $0.07 cheaper than most stations in our area. Most often it's about $0.05 cheaper, so this is the number I used.

Given these assumptions, by getting our gas at Costco versus other options, we save just over $44 per year. The cheapest Costco membership is $50 per year, so the answer for us is "no, saving on gas alone won't pay for a Costco membership."

BTW, if we saved $0.02 each time the savings would be $18 and if we saved $0.07 each time the savings would be $62.

Anyway, there are a TON of assumptions that HAVE to be true for us to even get this close to paying out the cost of membership. For instance:

• This analysis assumes that ALL gas is bought at Costco for the entire year. Has anyone ever purchased all their gas in one year from one station? (When you travel, how do you even know that station will be around?) I never have.

• This analysis assumes that Costco is ALWAYS a better price. Maybe sometimes it isn't. I've had comments here suggesting sometimes it's better and sometimes it's not. I'm sure this analysis would have different results in different parts of the country.

• This analysis assumes you don't drive any farther to Costco to get gas than you'd drive to get it elsewhere. If we were going just for gas, we'd have to drive 15 miles (round trip) farther to get to Costco than our nearest gas station. That's a money killer right there. We get gas at Costco when we're already in their neighborhood for other reasons, so we don't have any extra costs in getting to/from their station.

There are probably some more assumptions that I'm missing, but I think these are the major ones. The bottom-line for me is this: Even if the true savings is only $10 or so per year, that's a decent start on paying out the cost of a Costco annual membership.

Then again, my annual membership is paid by my employer, so it's all gravy for me. ;-)

How to Save on Checks (Some Companies Just Don't Get It)

I haven't ordered checks from my bank in about 15 years or so (maybe not that long, but it seems like it's been forever.) I started ordering them through the mail and now order online because you can get a ba-zillion checks for not much money by ordering them that way -- versus paying much-higher-than-average prices by buying them at the bank.

I use fewer and fewer checks each year as more and more bills go online or are automatically paid with my credit card, so one box lasts a long, long time (plus I order two boxes at a time to make re-order times even longer), but I recently ran out of checks and needed to re-order. So I did what I normally do -- I looked in the Sunday paper as it's usually full of offers for cheap checks.

In the ads, I found an ad for Checks in the Mail that had the following in big, bold letters at the top:

CHECKS ONLY $3.99 PER BOX

That seemed like a pretty good deal. I got my last set of checks from Checks in the Mail, so I knew they would have something I'd like. Cool!

Then I saw a little asterisk by the last "9". It was tiny and had no details on the page on which it was listed. I turned over the piece and searched. After awhile, I found that the asterisk led to this statement:

Limited time offer - for first-time customers only

Hmmm. I was starting to get a bad feeling about this, but I was sure they would honor the price for me. Why not, right? It wasn't like they had a corner on the check business. It was better for them to make a sale to me at a cheaper price rather than make no sale at all, right?

So I went to their site and tried to re-order my check design. The prices came up as $12.99 for one box or $25.98 for two boxes for the design my wife wanted (not a "basic" design, but not on the "high end" either.) "First-time customers" could get the same product for $19.98. This still seemed high to me, but I was willing to pay it if they made it easy and gave me the reduced price.

I went to their site, found the contact info, and sent them this message:

I noticed that your prices for new customers (ad in the paper) are much better than those for returning customers. I would like to buy from you, but I can get checks from a competitor of yours for MUCH cheaper than the $12.99 per box you want to charge me (for comparable checks). If you'd like to offer me the new customer discount, please get back to me and let me know how I can get it. Otherwise, I'll be ordering from a competitor within the next 24 hours.

I sent the message, confident they would give me the $19.98 price (after all, they still had to be making good money doing this, right?) A day later, I received the following email:

Thank you for your inquiry.  We can not offer you the first time order prices.  All of our competitors and us have first time order prices that are lower so that you can try our company but for reorders all the companies go up in price.  We apologize for any inconvenience that this has caused.

I couldn't believe it. They were willing to lose a profitable customer for a measly $6. Unbelievable!

So I simply got another ad (told you there were tons of them) and ordered from a new company as a "first-time customer". I got two boxes of comparable-quality checks (a design my wife liked) for less than $12.

I'm in business so I understand how companies lure customers in with low prices and then work to charge them higher prices on later purchases -- those are facts of life in almost any business (grocery stores with loss leaders, magazines with initial subscription versus renewal fees, and so on.) But I also know that it costs much less to sell to a current customer than to acquire a new one and that it's better to make a smaller profit on a customer than to drive them away to a competitor. But that's what Checks in the Mail just did. They had a customer willing to pay a reasonable fee for a product and yet they turned him away because he wasn't willing to go as high as they wanted. This just doesn't make any sense.

Of course, it's their right to do so -- it's their company. But as a consumer, it's my right to go elsewhere for a product if I don't like the deal offered. And that's what I did.

Undoubtedly I'll get some comments like "you're so cheap" or "why did you spend all that time to save $14?" Well, it didn't take that long (the entire process took less time than it took me to write this post). Besides, it is ultimately a big deal to my finances. First of all, $14 here and there can add up quickly and become "real money" very quickly. Secondly, a mindset of shopping around and getting a good deal is just part of who I am. Yeah, it's "only" $14 this time, but the same principles applied on bigger ticket items can make a HUGE difference in your finances.

Dell Tells Me Their Computers are Crappy

I love Dell computers. I've had several of them throughout the years and we buy/use them at work as well. They've always been high in quality and I've never had a problem with them.

A year ago, my mom was looking for a computer, so I bought her a new Dell as an early Christmas present. She's loved it and I do too (since I hear from her more now that she has email.) :-)

Since I bought the computer, I was the owner on Dell's records (even though the computer was sent to Iowa.) So as the one-year anniversary comes up, Dell calls me to ask if I want to extend my warranty that's soon to expire. Thankfully my wife answers the phone and tells them that "if I'm interested, I'll call them back."

Well, the message didn't get through and the next time I wasn't so lucky. My son answered the phone, and when they asked for me, he handed it over. I didn't know who it was until I answered. I cringed immediately.

Anyway, the conversation really intrigued me. Why? Because the Dell rep was basically saying there was a good chance I'd have a problem with their computer. In other words, she said they made crappy computers. The conversation went something like this (not exact words, but the meaning is real):

Dell rep: Hi, I'm calling about the warranty on your Dell computer. The current warranty is about to expire and we'd like to offer you the chance to extend it.

Me: I don't want to extend my warranty.

Dell rep: Can I ask why not?

Me: Because that's why I buy Dell computers -- they last a long time with very few problems.

Dell rep: Yes, but what if something does go wrong?

Me: I've owned several Dells the past few years and never had anything happen to them. Why do I need a warranty on a product I think won't go bad?

Dell rep: To protect yourself in case the computer fails.

Me: I'm not going to be sold a product I don't think I'll need.

Dell rep: But what will happen if your computer goes bad? What will you do?

Me: I'm not going to be sold something I don't want or need. Good-bye. (I hang up.)

Does anyone else see the irony in this call? They market their computers a high in quality and reliability, then call a year later to convince me that the computers are crappy and I need to protect myself from their imminent failure. Sheesh!

The Best and Worst Buys at Warehouse Club Stores

Smart Money lists the best and worst items to buy at warehouse club stores as follows:

Best Buys

• Alcohol
• Milk, butter and eggs
• Electronics
• Meat
• Prescription medications

Worst Buys

• Designer clothing
• Items that won't get fully used
• Frozen food
• Paper goods
• Gasoline

I'm a frequent Costco shopper and I also compare their prices with other alternatives on a regular basis, so I think I'm fairly informed on the pros and cons of warehouse clubs. Here are my general recommendations/thoughts:

1. If you have a price book (or a great memory), you can accurately compare the cost per whatever (ounce, pound, etc.) between a warehouse club and any other place you can get an item. We'll be in Costco and I'll ask what my wife usually spends on item X. She'll give me a price and an amount (like "for 16 oz.") and I'll do the calculations on my calculator. Then we can really determine the better price.

2. I have NEVER seen Costco have higher priced gas than neighboring station. They're always 5 to 15 cents cheaper per gallon in our city.

3. Do warehouse clubs really have designer clothing? I never see it.

4. I'll need to do a toilet paper comparison. I always thought the Kirkland brand was a great deal, but maybe it's not.

5. Of course, if you buy something because it's cheaper and then you don't use all of it because it contains so much, you have actually cost yourself money. One solution to handle bigger quantities (like OTC medicine where you get a bazillion pills in their smallest package) -- find a friend or relative who will split the cost and item with you.

6. Samples, samples, samples. LOVE these! It allows us to try new and interesting foods that we would never try otherwise, so I consider this a big benefit of warehouse clubs.

7. Photos. Costco has a simple site where you can upload your photos and pick them up the same day at a local store. And of course they have the famous custom calendar as well.

8. Other things I think are good buys at Costco: 1.) Prepared food (at their restaurant.) There are limited choices, but for what they have the prices are decent. 2. Tires. I bought my tires there and so have several of my friends. One recent co-worked saved a few hundred dollars when I suggested he look at a warehouse club to buy tires.

Props to Bed, Bath and Beyond

Check this out:

• In October 2007, we bought an aero bed at Bed, Bath and Beyond.
• We got it for $170 (a decent price) and it had a $20 rebate with it.
• We sent in (and received) the rebate.
• We originally intended to use the mattress "now and then", but my daughter's mattress was old (interestingly, her allergies went away when we removed the old mattress) and she wanted to use the aero bed, so we put it on her bed.
• She used it for months with no problem, but then it sprung a slow leak. We had to air it up every night and by the next morning it was half way flat.
• It got worse and worse until the bed would barely hold any air for more than a few hours.
• We looked for a leak, but couldn't find one. Either it was really slow or was through the device that filled up the bed (you would plug it in and inflate/deflate as needed.)
• My wife went to our file where we keep warranties and receipts on purchases like this. The bed had a one-year warranty.
• She called Bed, Bath and Beyond, told them the story, and they said to bring it in.
• We took the bed, the box it came in (stored in our basement) and the receipt to them the next day.
• It was no hassle at all. They gave us $170 credit back on our credit card. Yep, they didn't even subtract the rebate.

This is the sort of service that makes me glad that we (mostly my wife) shops at Bed, Bath and Beyond. When something goes bad and needs to be returned, their policy is simply GREAT! Kudos to them for going against the flow of most other retailers who are doing all they can to limit even legitimate returns.

Chase Makes Good Despite My Mistake

If you all recall, I had an offer from Chase on my Chase Freedom(SM) Credit Card to get $10 cash in exchange for making three "blink" transactions. Well, I didn't get it when I expected, and I called them. they said it would take another month to post. So when I got my statement this month and it still didn't show up, I called again.

This time the service rep said she didn't see anything about it on my account but they would look into it and get back to me. After I hung up the phone with her, I noticed that in very tiny print at the top of the original offer, they said the blink offer was good on a different Chase Freedom(SM) Credit Card (I open two near the same time to get two $100 credits.) Oh well, I thought, I just lost $10.

A week later I get a note from Chase saying they investigated, that the offer was on a different card than the one I'd used for blink transactions, but as a courtesy they were going to give me $10 credit on my next statement. Since I'd be the first person to complain if a company had ripped me off, I want to also give credit to those businesses that take care of me. Kudos to you, Chase. You certainly did well this time.

Review: Macy's (And the Problem with Gift Cards)

This will be short: I hate Macy's.

Let me count the ways:

• They have NOTHING I'd ever want to buy.
• If I did want to buy one of the items they had, I could get it for at least half price somewhere else.
• The gauntlet they call the cosmetics section has such a hodge-podge of strong-smelling perfumes that just walking through it to get to the mall gives me a headache.

Let me back up a minute and tell you my story.

I don't think I'd ever been in a Macy's before February of this year. But last Christmas, a kind friend gave me a gift card to Macy's for Christmas. So my wife and I went to see what they had. For my response, see the bulletpoints above.

So we tried another Macy's in a different part of town. It was bigger, but was still full of over-priced stuff I didn't want and it smelled too. Even my wife couldn't find anything she was remotely interested in.

We gave it a few months and tried again. Same result.

So we have a gift card that's full and needs to be used. Our plan is to visit the Macy's in downtown Chicago when we go there in October. Supposedly it's a super-Macy's and has TONS of stuff. Surely we can find something there that we like. If we can't, here are some options we're considering:

• Selling/trading the card online.
• Giving the card to a charity/worthy cause.
• Using the card to buy Christmas presents for others this year.
• Seeing if we can get the card broken into $20 increments and handing them out to friends and family.

Then again, maybe I'll just give the card away here. ;-)

Anyway, you can see one obvious problem with gift cards -- if you give someone a gift card to a place they don't like, they're stuck with a gift they can't use. That's why we usually give Meijer gift cards (think Super Target for those of you unfamiliar with Meijer.) At the very least, people can get groceries with the cards we give -- boring I know, but it provides a great safety net if they can't find something else they like at the mass merchant.

Kudos to Logan's Roadhouse

Went to lunch with a friend today at Logan's Roadhouse. We both ordered the salmon caesar salad and we chowed down on peanuts while we waited for our food. The waitress came back and said they had burned one of the pieces of salmon and they were cooking us a new one -- so it would be a bit longer. It was no big deal for us and we kept chatting. Ten minutes later (20 minutes from when we came in the door), both of us had our food.

As we were close to finishing, the manager came over and apologized that our food was late. We said it was no problem, but she said it had inconvenienced us and as a result they were giving us our meals for free. We said that we appreciated it but that it wasn't necessary -- but she insisted.

So five minutes later we left a healthy tip and departed Logan's feeling good.

It's nice to see that some places are still going above and beyond to try and make everything great for the customer. I tip my hat to Logan's.

FEMA Report from Iowa

I received this from a reader last night via email:

I thought I would pass along a quick story of my experience with FEMA after the recent deluge of rainfall/flooding in Iowa.

I had couple inches of water throughout my partially-finished basement due to excessive rainfall (seepage under basement floor due to elevated water table and hydrostatic pressure).  Sump pump was working but could not keep up. I have been in my house 8 years and never even had any water in sump pit before.   Homeowner Insurance (State Farm) does not cover seepage. I lost carpet/pad and ended up cutting drywall up 2 feet to prevent mold/mildew from starting. My loses ($$) are very minimal compared to many of my fellow Iowans.

I did not plan to apply for FEMA Disaster Assistance, but my dad forwarded an article written by staff writer from Cedar Rapids Gazette about his personal experience with water in his finished basement. The writer's basement flooding sounded very similar to mine and he talked about applying and receiving monies from FEMA. I still did not plan to apply, but I attended the local Farmer's Market (Des Moines) this past Saturday. Several FEMA workers were walking around and handing out fliers about Disaster Assistance Program. I visited with one of the FEMA workers about my situation and he said I should definitely apply.

I ended up dropping by local Jr. High School where FEMA had the local office set up. I applied that afternoon (Sat.).... 20-30 minute process. I ran a few errands on my way home from applying, and as I pulled in the garage an inspector called me on cell phone to set up time for home inspection.  He wanted to come that night, but I had prior commitments so I set the inspection the next morning (Sunday). Inspection took about 30 minutes. Provided receipts & additional personal information and gave tour of home and damage was documented.

It turns out that FEMA direct-deposited Disaster Assistance monies into my checking the next day (Monday). It took a total of 3 days (Sat to Mon). My experience with FEMA was a very positive one.

My first thoughts upon reading this were:

1. I'm glad the reader got help. I've been in a flood before and it can cause great damage rather quickly.

2. Wow, that's a VERY FAST response by FEMA.

3. Why is the government handing out money so quickly and for (relatively) minor issues? Have we reversed course from being too slow to respond (Katrina) to being too fast?

What's your take?

Costco Gas 18 Cents Cheaper than Others

My family went shopping this weekend, and as we left home, I noticed that gas was $4.19 per gallon at the station closest to our house. I noted that I needed gas and said I would get it at Costco since we were headed there anyway. I expect Costco to be 5 to 6 cents cheaper per gallon based on past experience, but when I arrived, I was shocked. Gas at Costco was $4.01 per gallon -- and 18 cents per gallon difference!!!

I'm Done with Walmart

The Saturday before Memorial Day, we went to Walmart. After spending an hour in the store and having a cart full of $130 of merchandise, we made our way to the front of the store to find the following:

No human checkers for carts with more than 10 items.

The "10 items or less" lane was open and had seven or eight people waiting to be checked out. The only other option -- self-check-out. Are they kidding me?

We had $130 worth of stuff. It was various sizes (bag of fertilizer, etc.) that don't really scan well. We aren't trained as scanners. We don't want to be scanners. There were tons of other people wanting to check out -- where were the checkers??????

I was furious! I don't save enough money at Walmart to then have to wait in a crowded line, check out my own purchases, and, during the process, wait even longer because we don't know how to use the scanner and/or the one person monitoring the four self-check-out scanners was helping someone else with problems.

That's it -- I'm done with Walmart. We have a Target that's closer to our house anyway and their prices aren't that much different than Wally World. We also have Meijer as an option. Walmart has sunk so far down the scale on customer service that I wouldn't be surprised to see the ghost of Sam Walton come back and take out a few of their executives. It's simply hideous! And they've lost my $2,000 or so of business every year! I've had enough of them!!!!

End rant.

Companies Paying You to Help the Environment

Until recently, all I saw from most companies was lip service when it came to protecting/helping the environment. But now it appears that some organizations are providing financial incentives for their customers to be more environmentally friendly. The details from Smart Money:

Worried about the effects of petroleum-based plastic bags on the environment, both San Francisco and Oakland, Calif., have banned stores from providing them to customers. And Seattle is considering imposing a 20-cent fee per bag. Meanwhile, dozens of businesses across the country are offering customers incentives to leave the plastic and paper behind. Allstate offers a 2% discount on insurance to clients in Colorado and Ohio who use paperless statements, while Whole Foods, which stopped providing plastic bags to customers last month, offers a five- to 10-cent discount for each bag shoppers bring with them.

But let's be honest -- it's not all about helping the environment:

Not only do these businesses get to monopolize on the good PR of the green movement, but they're also boosting their bottom line. After all, those paper bank statements and plastic bags cost money. "This is a case where they are saving money and also getting to say they're doing the right thing," says Michal Ann Strahilevitz, a marketing professor at Golden Gate University. "It's win-win."

Still, I am willing to give kudos to companies for even trying. In our area, Meijer recently gave us a nice canvas bag with six compartments when my wife bought spaghetti sauce. We've also seen Costco offer reusable tote bags for a nice cost (three for under $4), but they were not canvas and not washable, so we passed on them. We're on the lookout for some nice, roomy, sturdy, canvas bags.

How about your area? Has any store/business started offering financial incentives designed to get you to help the environment?

Warehouse Clubs Are Worth the Annual Fee

Here's a post where the author compares the prices of items at Sam's Club to the prices at local grocery stores and comes up with the following conclusion:

Most of the time, I was able to compare items of the same container size. In other words, if a package of four 32-ounce bottles of Mott's Apple Juice could be purchased at Sam's, I priced the same Mott's Apple Juice, but in a single 32-ounce bottle from the two grocery stores. When this was not possible, I wrote down the price of a comparable size. After crunching the numbers, I found that a great majority of the items were indeed cheaper at Sam's. On average, the savings amounted to 31%, more than enough to easily offset the $35-45 annual membership fee.

Even better, if you buy in certain categories you can save even more:

To see if there were patterns to where the savings would be found, I broke down the data into categories: baby, can goods, cereal/bread, cooking/baking, dairy, frozen, health/hygiene, household (cleansers, paper and plastic products, etc.), snacks, soup/sauce, and other (peanut butter, stuffing, salad dressing, etc.). The big winners: cereal/bread, cooking/baking, snacks, and other averaged nearly 40% savings. Still not impressed? Buy some raisins, syrup, bottled water, and sandwich bags and you can save an average of 66%.

And if you buy the store brand you can save a bundle:

And it doesn't stop there. You can rack up even more savings by buying generics in bulk, where I found savings of up to 83% on items like aspirin and hand sanitizer.

A few thoughts from me on this:

1. Obviously you have to USE the items and make sure they don't go to waste. Otherwise your savings gets eaten up quickly.

2.  Buying in bulk is often a money saver, but not always.

3. I'm assuming the same conclusions about Sam's above will apply to Costco.

4. Let's say you spend $500 per month on groceries. That's $6k per year. If you "only" save 20% of this, that's $1,200 per year. Not a bad deal for a $35-$45 membership fee, huh?

5. For me, the decision is even easier -- my employer provides a free Costco membership for me. :-)

Government Versus Business: Who's Better in an Emergency?

Though this article isn't really personal finance related, it does have many elements that deal with personal finance such as how the government spends our tax dollars, how companies that take our money actually provide a key service no one has really thought of, and how we'd all survive if a disaster struck us (something -- life -- that falls under my "more important than money" category.) Plus, I found this interesting, so I'm going to run it.

This story says that for-profit companies (Walmart, Home Depot, and Lowe's in this case) are better equipped to help local residents survive in a catastrophe than the federal government is. The highlights:

Examining federal and private responses to Hurricane Katrina, the study says why FEMA was destined to fail and why for-profit companies succeeded at disaster recovery.

The study says Wal-Mart, Home Depot and Lowe's made use of their local knowledge about supply chains, infrastructure, decision makers and other resources to provide emergency supplies and reopen stores well before FEMA began its response. Local knowledge enabled the big-box stores to make plans ahead of the storm and then put them into effect immediately.

"Profit-seeking firms beat most of the government to the scene and provided more effectively the supplies needed for the immediate survival of a population cut off from life's most basic necessities," Horwitz wrote in the study, which was published by the Mercatus Center at George Mason University in Fairfax, Va. "Though numerous private-sector firms played important roles in the relief operations, Wal-Mart stood out."

Also, Wal-Mart leadership gave tremendous discretion to store managers and employees to make decisions rather than waiting for instructions from upper-level management, allowing for more-agile disaster response. CEO Lee Scott passed down a guiding edict to regional, district and store managers: "A lot of you are going to have to make decisions above your level. Make the best decision that you can with the information that's available to you at the time, and, above all, do the right thing."

Score one for capitalism, huh? Now where are all the Walmart bashers? ;-)

But what about all those stores that raised prices just to make a bundle off desperate people? There aren't many of them:

He also examined the conventional wisdom that businesses take advantage of disasters through price-gouging and other unsavory business practices.

Though some price-gouging does occur during disasters, Horwitz's report details how Wal-Mart, Home Depot and Lowe's sent truckloads of free supplies to the hardest-hit areas in the aftermath of Hurricane Katrina. He noted that's good public relations, of course, to help build long-term customer loyalty.

I have to mention that one government agency did do a great job -- the Coast Guard:

Horwitz said the Coast Guard also places a strong emphasis on local knowledge. A flat organizational structure and unique agency culture allow for subordinate officers to alter the plans for a specific operation so long as they follow the commander's intent.

The Coast Guard's experience with search-and-rescue operations and marine work, and its division by geographic area, provide greater expertise for disaster response, Horwitz said.

The bottom line:

"Disaster response happens at the local level," Horwitz said. "FEMA is not local to anyone except people who live in Washington, D.C."

So it's not really a business versus a government story, it's a local versus national story. I don't see any comments on how local governments did -- perhaps they were to be commended as well. Or maybe they don't have the financial resources or skills/knowledge to direct a rescue effort? I'm not sure. But to me, this is an encouraging report about business in the US and how they can be a unique help when no one else can/will.

Thoughts?

FINALLY!!!! Sears Comes Through!!!!

In my on-going Sears elliptical battle, I took a reader's advice and wrote a letter to the company. But instead of sending it to the president of the company, I sent it to the local store manger. Here's what happened:

1. I got a call from the local customer service person and I told him my story. He said he'd discuss it with the store manager and the manager would call me.

2. Two weeks later, no call from the manager. I called the customer service guy. He apologized and said he'd handle it and I should be hearing from the manager soon.

3. Two weeks later, no call from the manager. I called the customer service guy. He apologized and said he'd handle it and I should be hearing from the manager soon.

4. This time I DID hear from the manager. He said he was trying to resolve the situation to my satisfaction (a store credit for anything in the store -- NOT just for elliptical equipment.) He said I'd hear from him in a couple days.

5. He called me back a day or so later and said he needed my driver's license number to complete the information. I told him there was no way I was giving out my driver's license number. In the past, my home phone number was all that Sears needed to keep track of my issue and that's all they were getting. He said that he might not be able to process the return then. If not, he'd call me back. And if I didn't hear from him, all was well.

6. Three days later I received a $500 Sears gift card in the mail!

Thanks to Sears for finally doing the right thing. It took awhile (and a lot of persistence from me), but once I found that one person willing to do the right thing (the local customer service guy), it all worked out.

Kudos to Dick's Sporting Goods

Well, it's FINALLY spring here in Michigan -- or so they tell us. I need a few consecutive days above 50 to make it feel like it's really spring. We're getting close to that. ;-)

And what does spring mean? Soccer! My son plays basketball in the fall/winter and soccer in the spring. And of course he's grown a whole shoe size since last spring, so last weekend we were off to Dick's Sporting Goods to get him some soccer shoes (I had a gift card given to me by the parents of the basketball team -- as a thank you for being the assistant coach.)

Turns out everyone in the state was at Dick's looking for soccer or baseball or golf shoes. We found three that we kind of liked, rounded up a clerk (which was hard to do in the crowd), and asked her to find my son's size in the various shoes. She disappeared for 10 minutes, came back, and we tried them all on. After some debate/discussion about which he liked best, which fit best, and so on, we landed on a particular pair.

Just to confirm, my wife asked the price of the shoes. The clerk scanned them with a hand scanner and informed us they were $39.99. Yikes! We showed her the spot where we'd taken the original shoe when we'd asked for it in my son's size -- and the price there was $24.99. She looked it over and gave us a couple excuses as to why the price was wrong -- the wrong shoe had been placed there and that was for a youth shoe anyway (turns out my son is now an "adult" since he's above a size six.) But before we could put up much of a protest (we simply said, "Oh, we thought they were $24.99"), she said, "I suppose we can let you have them for $24.99."

Needless to say, we took them. They were my son's favorites and were at a decent price (the price we had expected -- whether they had been misplaced or not.) All was right with the world.

I have to give kudos to Dick's for:

1. Developing an environment where clerks can do the right thing for the customer
2. Hiring people to actually do the right thing when a problem comes up
3. Not being the greatest at making sure the right shoe is on the right display and priced correctly ;-)

Ok, that last one was a bit of fun on my part, but I do have to give them thumbs up for taking care of their customers. Many stores/clerks would have given us the "I'm sorry, there's nothing I can do" speech, but Dick's had a different outcome. I've always enjoyed shopping there, but now I'm even more inclined to do so as I know they're at least trying to put the customer first.

Review: Home Depot

I've now reviewed Walmart, Kmart, and Target. This week, we head into home improvement land with my thoughts on Home Depot.

Like most other guys, I LOVE home improvement stores. The power tools, the lawn equipment, the home fixtures I never knew existed -- what's not to love? ;-)

I shop at both Home Depot and Lowe's (which I'll review next week) and have for quite some time. Here's what I see as the pros and cons of Home Depot:

Pros

• Prices -- The prices seem decent, though not as good as the prices you can get at a mass merchant like Walmart. That said, the Walmart hardware aisle is just that -- and aisle. Limited selection to say the least.

• Selection -- If it's a home improvement item, they stock it in aisle after endless aisle. I often go there because I KNOW they'll have something.

• People -- Most of the workers at my Home Depot are knowledgeable and can help you with a project you're working on.

• Location -- My Home Depot is in a good location -- and there's even another one close to my church.

• Deals -- They often have discount tables that offer some really great deals.

• Freebies -- Free popcorn on Saturday mornings at my Home Depot. Woo hoo!

Cons

• People -- Yeah, their clerks help you out -- if you can find one. It seems like there are about two per store on average.

• Stores -- Smaller, dirtier, and darker than Lowe's. Home Depot certainly has that "garage workshop" feel down.

• Checkout -- EVERY TIME -- 10 people waiting to pay are stacked at one register. Now they have self-service lanes. They work for everything but unusual items -- which is what Home Depot is FULL of. Example: buy a heavy bag of something (dirt, fertilizer, water salt, etc.) and try to get it through the self-service lane. It won't work as it's too heavy to register on the computer as having been scanned.

• Merchandising -- I can be standing right in front of the item I want and still not see it. Home improvement stores seem to thrive on making the obvious hard to find.

Overall, I'd give Home Depot a B- grade. Generally, they are an "ok" place to shop, though there are a few simple steps they could take to make the place much better.

What's your opinion of Home Depot?

Review: Target

I've already given my impressions on Walmart and Kmart, so I guess it's time to discuss America's retail darling, Target.

Growing up, we shopped in Target all the time. There wasn't a Walmart around when I was younger and Kmart was just coming on the scene. But Target was established, close to our home and my mom loved shopping there. So we spent a lot of time in Target through the years.

As I got older, I went through my "limited mass merchandiser" shopping phase, though I still did go back to Target to get most of my Christmas presents. Then once I got married, my wife never shopped at Target (much), so I didn't either. But we moved and we had a Target nearby, so we stopped by every now and then. And to make it even more convenient, they built a new Target a few blocks from our house. So we're now there fairly often, though I wouldn't say we do a lot of shopping there.

Pros

The biggest pro to me is that Target stores are nice. They look great, have plenty of space, are well-maintained, and are located in convenient, good shopping areas.

Our Target isn't a Super Target, but it does sell some food. And their regular prices on cereal are VERY good. Quite often, my wife will stop by Target just for cereal.

I don't really notice much difference in staff at Target and other places other than the workers there don't seem like they're inconvenienced by your presence (I often get this vibe from Kmart and Walmart when I'm there.)

Cons

Their merchandise is "ok", but it's in that middle ground between "cheap" and "very nice" quality-wise though the prices are good. But in many cases the products are simply too trendy for me. I know, I'm showing my age.

I also always assumed that their prices were higher. Why? I guess because nicer stores = higher prices in my mind. But they aren't (at least that much), but at least I'm not alone in my perceptions:

In February, Citigroup managing director and analyst Deborah Weinswig polled shoppers and found that though Target consistently underprices supermarkets on groceries by about 10% to 15%, shoppers perceived the opposite: that Target's prices were a full 20% higher. Moreover, though prices at Target average out to within 1% to 3% of those of Wal-Mart, 87% of respondents said they shopped at Wal-Mart because it was the cheapest. "The problem could be that some of these stores are so clean that you just assume you're paying more," says Weinswig.

So while I'm listing price as a con, it's really price perception that's the con, not actual prices. Then again, as every marketer knows, perception is reality.

There's one other beef I have with Target -- they banned the Salvation Army from having bellringers at their stores a few years ago. Yeah, they've since tried to "help" in "other ways" (like if you buy something they give a partial donation), but it's just not the same. I'm not a big supporter of the Salvation Army, but I do appreciate what they do and always give them some money at the holidays. In addition, I think having them outside of stores adds to the spirit of the season. But Target's ban was basically saying "bah humbug" to the Salvation Army and it's left a bad taste in my mouth. As a result, they aren't on my "A" list of places to shop.

Overall rating: C

I know this review will be very unpopular with many readers as Target seems to be America's most-loved retailer, especially among the "I hate Walmart" crowd. That's ok with me -- everyone is entitled to their opinion. And if Target hadn't axed the Salvation Army, they would have received a much better grade from me. But if a store can't have a bit of grace for an old charity/tradition, then they certainly aren't worthy of receiving many of my hard-earned dollars.

Review: Kmart

Last week I started my "review" series where I give my comments, thoughts, and opinions on a retail store. We had quite a spirited discussion about Walmart then, and I'm looking forward to the same today. ;-)

This week I'll be reviewing another mass merchandiser: Kmart.

I have a long history with Kmart. I used to shop there all the time while growing up and between my junior and senior years in college I worked for a store as an assistant manager intern (no, you can NOT get farther down on the food chain than that.) At that time Kmart was the king of mass merchants, but my particular store was panicked because a new competitor was headed into their region, some company by the name of Walmart. They had heard of Walmart's devastation on other Kmarts across the south, and they were bracing for an invasion that they expected to be about as terrible as the Huns coming to ransack their city.

But that was a long time ago -- back in the days of the Blue Light special (yes, I had to do those) and Teddy Ruxpin (he was new that summer and I swear I almost murdered our display bear because all he did was talk, talk, talk!) For now, I'm going to look at Kmart as a shopper and what I think of it as a consumer. To cut to the chase, here's my quick summary:

In general, I think a good description for Kmart is "a low-end Walmart." Yep. I'm not too high on the big K.

Pros

The only pro I can think of is that they SOMETIMES have a great deal in their ad that makes it worth the horror of actually going into their store near us. That's about it for the positive. Oh yeah, there's a Taco Bell nearby, so that makes it a more positive experience. ;-)

Cons

The cons -- everything else. Stores are crummy and in poor locations, prices are only "ok", employees are rude, merchandise is weak. If I could think of anything else negative to say, I'm sure it would apply to these stores.

Overall rating: F

As a result of my thoughts above, we rarely shop in Kmarts. I was in on a few weeks ago and it simply served to reinforce the perceptions noted above. It's a loser in my book.

What's your take on Kmart?

SmartyPig: A Simpler Way to Save Or A Fee Trap?

The following is a guest post from The Finance Buff.

Smarty what? That was my first reaction when I read about SmartyPig on Netbanker. It sure has a catchy name. What's it about then? From SmartyPig's web site:

"SmartyPig is a simple, smart, fun way to save for a specific goal. Using groundbreaking technology and the latest in security standards, SmartyPig allows you to invite family and friends to contribute to your account, gives you additional incentive boosts from top retailers who sell exactly what you’re saving for AND *4.30% (APY) interest on the money you’re saving."

"*Annual Percentage Yield (APY) is effective as of 3/9/2008. Rates may change at any time without prior notice."

SmartyPig wants to offer a service which encourages people to save for a specific goal and then make the purchase when the goal is reached, as opposed to charging the purchase now on a credit card which adds to one's debt. I'm all for that. Want that new car or vacation? Save up. In a nutshell, here's how SmartyPig works:

1. Save for a Goal. You open an account with SmartyPig. You create one or more savings goals, minimum $250 per goal. You have to set up automatic monthly electronic fund transfers from your bank account toward these goals, minimum $25/month per goal, although you can also add more money on top of the automatic transfers by doing a one-time transfer. While you are saving toward the goals, your money earns interest in a FDIC insured savings account.

2. Get Help from Family. You can keep the goal private to yourself or make a goal public and solicit help from friends and family. They will have to pay a $5 fee every time they contribute to your goal. The SmartyPig founders said they got this idea of collecting money from family members from 529 plans where it's common for grandparents to contribute to their grandchildren's account, although I don't think 529 plans charge fees to the contributors.

3. Redeem Your Savings. You can't get your money back unless you close your goal. You can close your goal at any time, either because you reached your goal or because you changed your mind. You get a prepaid MasterCard debit card from SmartyPig. You can either withdraw money to the debit card or use the money to buy gift cards from SmartyPig's partner retailers. Some retailers will add an up to 5% bonus if you buy their gift cards. They may charge you a shipping fee if it's a physical gift card. It's possible to get a check from SmartyPig but you will have to pay a $25 fee per check. From the terms and conditions:

"At no point in time can the funds in your SmartyPig Savings Account be transferred to a third party or a bank account outside of SmartyPig. Funds can only be redeemed on a SmartyPig MasterCard® Debit Card, a Best-In-Class Retail Gift Card or cashiers check."

If SmartyPig achieves what it's supposed to achieve, i.e. getting people to back off from charging their credit cards, it would be a great benefit to the consumers. Netbanker thinks it's "the most innovative financial service we've seen since Prosper launched two years ago" and they gave it a Best of the Web award. However I doubt it will have a material impact on people's behavior, because I think people who want to save will save and people who want to charge will still charge. It's not like people who want to save don't have a good way to save now. Online savings accounts are everywhere. Industry pioneer ING Direct lets you set up multiple accounts for tracking different goals. With ING, there is no minimum balance, no mandatory requirement for automatic transfers, and no limitation on getting your money back. Or does SmartyPig think people who want to charge their credit card now will give up instant gratification just because there is SmartyPig now? Letting family members contribute to a goal is touted as an innovation but they can do it today easily by sending a check or by PayPal.

The SmartyPig service also has quite a few fee traps. Hey, they've got to make money somehow! You want to contribute $100 to your sister's wedding? They will charge you $5 every time you do it. How come you can add money to your SmartyPig account by electronic fund transfer but you can't pull your money back the same way when your goal is reached? Because they want to earn the interchange fees from the debit card. If it takes 1 year for a typical goal to be reached, they pay you 4% interest on an average of 50% of the ending balance (because money is added to the account over time), but they take back 2% interchange fee from the merchants when you use the debit card. That's smart business (for SmartyPig, not you)! They get to recoup their entire interest cost. What a deal. If you ever lose your debit card, they will charge you $20 for a replacement. Don't want the debit card but want a check instead? $25 fee for producing a check. Are the gift cards with up to 5% bonus such a big deal? You can buy gift cards today from eBay and a few other places at a discount which translates to a bigger bonus. How did SmartyPig become a roach motel where your money can check in but it's so hard to come out? What's wrong with just crediting back to the same checking account the money came from? I'm afraid it's because they don't make any money that way. Breakage from prepaid debit cards and gift cards is a big deal.

Call me old fashioned but I see a lot of smoke and mirror in SmartyPig. I also don't see how it solves any problem that's not being solved today. Announcing a goal and sharing the progress with family members is nice. Being charged $5 for the privilege of chipping in is not. Separating the savings account balance into specific goals is nice, but not being able to get the saved-up balance back to your bank account is not.