Saturday, April 26, 2008

Fake (or misleading) checks

If you have one or several credit cards, you likely have received a check in the mail and had the same reaction I did- FREE MONEY (well, not quite). Most of the “checks” I receive from my credit card companies I can spot pretty quickly as just being cash-advance devices. In other words, cash the check and you have immediately consented to a cash-advance on your card, which is likely racking up interest at around 12-20%. This means the cash you just received is immediately losing value and losing it quickly. So, cash-advance checks= bad.

However, I was almost fooled by another “check” I received from a different source. When I was booking a flight one time, I had heard of Priceline (with the William Shatner commercials on tv), and decided to try their “Name Your Own Price” service to save some money (this experience- and I don’t recommend it- will be discussed in a later posting). As I was finishing the transaction for my flight, I was told I could save an additional 15% by signing up for the classic free 30-day trial of some service. Trying to get the most bang out of my ticket price, I signed up for the discount club service, called Great Fun, noting that I could opt out within 30 days of signing up, never pay a thing, and keep my 15% off my airfare. Though I’m sure the company was hoping I would just forget about opting out, I did so within the next 2 weeks, never paid for the service, and received my rebate check a few weeks later (which was about a month ago now). Recently, I received another check from Great Fun and on first glance, I had almost forgotten about my first rebate check or perhaps just thought this was rebate check #2. In fact, after I read the fine print, I learned that if I cashed the $9.25 check, I would automatically be enrolled in a new discount program (with the usual 30-day free trial of course). If I didn’t opt out by the end of the 30 days, I read, I would be charged around $190 for one year’s annual membership.

Again here, I find myself in a similar position as I found myself purchasing my plane ticket. This company hopes I cash their check, then either forget to opt out or love their service so much that I stay with it. Personally, I have little doubt that I would remember to opt out of the service if I did cash the check- I tend to obsess over these things. Looking at this from a strictly financial point of view, I could continue a cycle of cashing these types of checks (not the cash advance type described previously), always opting out within the 30-day free trial and have a little more money in the bank (and every little bit helps a college student without a regular job). However, there is always the slim chance I could forget to cancel the service or have one of these companies write such crafty fine print that my best efforts at escaping with their money would be thwarted. I took the check to the bank along with some others I had to deposit, but ended up not depositing it.

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