Our Archive of Articles About Financial Literacy and Other Topics
Don't Switch Without Good Reason
May 26, 2008, 3:23 pm
Whether it's your credit card lender or your phone company, weigh your options carefully before switching.
The companies trying to get your business are in fierce competition with each other. Think about all the junk mail you receive every day. If you’re like most people, you’ve gotten to the point that you throw most of it away without looking at it. And yet, they keep sending it, day in and day out.
And if you pay close attention, you’ll find that a large portion of this mail isn’t asking you to try a new product or service. Instead, they’re asking you to switch from the company you currently do business with to their company. The types of companies you see this from most often are credit card companies, long-distance phone services, and Internet providers.
While it can sometimes be a good idea to switch from one company to another, you can also end up getting more than you bargained for and feel like you ended up with a raw deal.
For example, let’s look at how credit cards are marketed. Unless you have the worst credit in the world, you have likely received mail offering you a really low introductory rate on a new credit card. They even set it up so that you can pay off your other credit cards with higher rates to the new lower rate, theoretically saving you money.
Sounds like a great idea, doesn’t it? Unfortunately, after a few months the interest rate on the new card goes up to its normal level. Unless the interest on the original card was really high, you’re likely to find yourself paying out even more money than you would have if you had stayed. Not to mention that they may also have an annual fee, higher late fees, transfer charges, or other ways in which you end up spending more.
Another type of company that sends you this type of mail solicitation is the long-distance phone service. For years the big-name long distance providers fought tooth and nail for their share of the long-distance market. Now, we have an onslaught of smaller companies trying to get us to switch to their service.
Again, it may sound good at first, until you read the fine print. This particular type of junk mail will have headlines that read, “Save Up To 50% on Long Distance!” with a little asterisk next to it. Then, you read what’s next to the little asterisk and it says that the headline only applies to calls made between Monday and Wednesday after 10 p.m. and before 7 a.m. to states in the Mountain time zone.
After you read the fine print, seriously take a look at your present usage habits. Do their benefits really apply to you? If not, are you likely to change your habits to fit into their "savings program"? Probably not.
Our advice is to have a good, solid reason for switching from companies you’ve been giving your business to. Certainly, if you feel that the companies you do business with are providing poor service or an inferior product, by all means start shopping around until you find something better. But if you switch just because you got a piece of junk mail, you may simply be letting yourself be manipulated by advertising.
About Springboard Nonprofit Consumer Credit Management
Springboard is a nonprofit credit education and financial counseling organization founded in 1974. The agency offers personal financial education and assistance with money, credit and debt management through confidential counseling. Springboard is accredited by the Council on Accreditation, signifying high standards for agency governance, fiscal integrity, counselor certification and service delivery policies. The agency provides pre-bankruptcy counseling and debtor education as mandated by the bankruptcy reform law. Springboard is a HUD approved housing counseling agency and a member of the National Foundation for Credit Counseling, a national organization of nonprofit credit counseling agencies. The agency has several locations in California and offers face-to-face and nationwide phone counseling services. For more information on Springboard, call 1-800 WISE PLAN (1-800-947-3752) ext. 7750 or visit their web site at www.credit.org.
