Consumer Reports: Up to 311 Percent Interest Rates when Renting Appliances Instead of Buying

Consumers who believe that renting appliances and electronics is cheaper than buying them are in for an unpleasant surprise. A recent investigation made by Consumer Reports revealed that the interest rates of appliance-renting services can go as high as 311 percent, meaning the consumer paid more than three times the price of the item.

Several rental companies were passed through the microscope by Consumer Reports (CR), and the results of the investigation show that people who rent appliances could easily end up paying more than three times the price of an item without owning it at the end of the rental agreement. Also, if the same item would be purchased, consumers would save significant amounts of money.

Consumer Reports Associate Editor, Anthony Giorgianni, said that appliance rentals are especially attractive to low-income families, which don’t have the financial strength to buy the needed appliances and electronics right away. Giorgianni recommends them to postpone purchases to a more convenient time or even try to obtain a small loan to cover the purchase cost.

A case study is a Toshiba laptop worth 612 dollars. One of the rental stores investigated by Consumer Reports offered it for a rental fee of 38.99 dollars weekly with a minimum rental period of 48 weeks. The cost for renting this laptop, not including sales tax and other fees, would be 1,872 dollars. With this amount of money, the renter would be able to purchase three laptops and end up owning all of them at the end of payment, if purchased at the price suggested by the manufacturer. The interest rate for the rental amounts to 311 percent.

The rental option is an expensive one even when compared to credit cards with high-interest rates. If the same laptop was purchased with a credit card at an interest rate of 29.99 percent, by paying 38.99 dollars weekly, the laptop would cost 1,000 dollars less than in the renting scenario, and it would be the consumer’s property in approximately 20 weeks. In this scenario, if the consumer were to wait four months, and save 38.99 dollars every week, he or she would be able to buy the laptop with the savings, paying no interest rate whatsoever and saving a total of 1,260 dollars.

Among the suggested alternative to cover the necessity period without throwing away money at rental shops are borrowing from a friend or using free/cheap public alternatives (such as library computers) until the required amount of money for the purchase is saved or until the consumer is able to secure a retail loan.

According to data from Consumer Reports, Canada and the US have some 8,600 rental stores which generate annual sales of more than seven billion dollars. These stores are attractive because they don’t usually perform credit checks, and rentals are for small periods of time (weekly or monthly basis) but many of them use questionable business practices, on top of the already proven high interest rates.

 

College Students Favor Wal-Mart and Target When Shopping

The top retail shops that college students prefer to do their shopping at are Wal-Mart and Target, reveal the latest Student Watch survey made by OnCampus Research.

The top position in the top of the favorite retails shops of college students is Wal-Mart, with 62 percent of students reporting that they shopped there in the past three months. On the second spot comes Target, quite close to the top player, with 58 percent.

On the third and fourth places in the students’ preferences, with 36 percent, come dollar stores such as Dollar General and Dollar Tree.

When looked at from a student status perspective, freshmen prefer Wal-Mart, with 69 percent of them reporting they did their shopping there, while 59 percent of the graduates said they did most of their shopping in Target stores.

Divided by gender preference, the majority of females shopped at Victoria’s Secret and Forever 21 in the past 90 days, while males went for Dick’s Sporting Goods and Kohl’s.

The survey was conducted in October 2010 with the participation of more than 15,000 students from 21 college campuses across the US. The survey was published and sponsored by the NACS Foundation.

The consultative group OnCampus Research aims to assist companies in acquiring an improved understanding of the college market. The group offers qualitative and quantitative research in campuses nationwide through its online panel of approximately 18,000 students from 1,100 colleges in the US.

OnCampus Research specializes in in-depth interviews, syndicated studies, omnibus surveys, focus groups and online surveys.

Deloitte: April Ended with Large Drop in the Consumer Spending Index

The decrease in real wages and a growing number of jobless claims have lead to a considerable slide of the Index, which posted its largest drop in April since November 2007. The Consumer Spending Index tracks the cash flow generated by consumers with the aim of predicting future spending.

According to the chief economist at Deloitte, Carl Steidtmann, who is also the author of the April index, the steep rise in jobless claims and a serious deterioration of real wages have had a severe impact on the April Index, which fell by 3.16 percent from a revised increase of 3.78 percent in March.

Despite the fact that lower social security taxes gave consumers some extra disposable income, the rising prices of energy and food have started to take their toll on the purchasing power of consumers, he added. In the coming months, rising inflation will further impair the consumers’ purchasing power, especially if claims of unemployment continue to rise.

The index focuses on four elements – real home prices, real wages, initial jobless claims, and tax burden.

The tax burden posted an annual increase of 0.6 percent, to 9.7 of the individual income. The tax burden increase is an indicator of economic improvement. However, a 0.6 percent increase since last year is a very small change.

In recent weeks, the jobless claims shot upwards, from under the barrier of 400,000 to 471,000, while the growth of real wages contracted, and it is one percent lower than a year ago, severely impacted by growing fuel and food prices. Should oil prices continue to drop, real wages have improved prospects in coming months.

New home prices, adjusted for inflation, also dropped, but at a slower pace than in previous months. In the meantime, mortgage loans remain difficult to access. At the moment, the home market has unsold stock estimated at 11 million.

Deloitte LLP’s vice chairman, Alison Paul, warned that consumers might reduce their spending if they will act on fears of rising inflation and unemployment.

 

Forbes Recognizes Goodyear as One of US’s Highly Regarded Companies

One of the leading tire companies in the world, Goodyear, has been named in the annual list of the most reputable companies in the US made by Forbes magazine.

Goodyear was listed on the 38th position of the top that ranks companies by their corporate reputation in the US, and it is the only tire company that made it on the list, as well as the company with the highest rank among those in the automotive industry.

The Forbes list was created based on the consumer opinion survey US Reputation Pulse, made by the Reputation Institute. The survey aims to measure the admiration, respect and trust that consumers have for the largest 150 companies in the US.

The companies are analyzed from seven perspectives, which are the companies’ financial performance, leadership, citizenship, workplace, governance, innovation and products and services. According to the Reputation Institute, the aspects that contributed the most to companies’ reputation in 2011 were citizenship, products and services, and governance.

The Chairman and CEO of Goodyear, Richard Kramer, said that the recognition received by Goodyear is highly meaningful because it is based on the opinion of consumers who put their trust in Goodyear tires on a daily basis. Furthermore, the ranking is even more pleasing as it represents the public perception of the company, not only the products, showing that US consumers appreciate Goodyear for more than just quality products.

Goodyear is one of the largest tire makers worldwide, and it operates in 22 countries. The company employs more than 72,000 workers at the 55 production facilities across the world and in the Goodyear offices.

Saving and Spending Behavior Show No Proof of Economic Improvement

Positive financial results of companies, improved indices of the stock markets and slight growth of consumer confidence have generated positive economic news in the past couple of months, but a new poll reveals that many people are not committed to making savings or interested in increasing their spending.

The study shows that people continue to reduce their spending and show no relaxation about the financial aspects of their lives, suggesting that, despite positive economic signal, the psychological effects of the financial crisis persist.

The poll was made by Harris Interactive between February 14-21. The market research company surveyed 3,171 adults.

Harris Interactive has conducted a total of six such polls, including the current one. The last one was in October 2010, and its results were almost identical to the current ones. The poll asks consumers about what steps they are taking in order to reduce their spending and save money.

The percentages are identical – 45 percent – for people who decided to take lunch packages from home. There was only a one percent decrease in the number of consumers who purchase generic brands versus specific ones – from 62 percent in October 2010, to 61 percent in February. The number of those who use a barber or dresser less frequently than before went up from 37 percent to 38 percent, and there was a two percent decrease of those who opted for refillable bottles of water (from 37 percent to 35 percent). More diversified results have been obtained in groups of various generations, but overall, the figures do not show significant changes over a six-month period.

It appears that modest economic growth is not sufficient to re-establish consumer confidence, and the results of the poll suggest that, in the context of weak economic growth being predicted for the following twelve months, it is unlikely that consumer confidence will get a significant boost.

Poll Shows Improved Sentiments Towards Consumer Brands for Second Straight Year

consumer brandsA new poll from Harris Interactive looked into the sentiments of consumers for the various consumer brands. The EquiTrend poll identified 46 categories of brand of the year. The poll revealed that Sweet Treats, systems for video games and value merchandisers retain the highest levels of brand equity, while the poll showed wide gaps in consumer perception on financial services brands.

Overall, consumer brands have showed an increased level of consumer sentiments for the second year after the dramatic fall in 2009. Brands such as M&Ms and Target Stores received the highest ranking in their categories.

In the Automotive category, the brand of Ford ranks highest, while Toyota fell to the fourth place. In the luxury vehicles segment, the top brand is Mercedes-Benz. The top three airlines are Southwest, Jet Blue and Hawaiian Airlines. BBVA is the highest ranking retail bank, followed by Huntington Bank and TD Bank.

In the hotels category, Hilton scores the top spot in the categories of full service hotels and hotels for extended stay, with Hilton Hotels and Resorts and Homewood Suites, respectively. Panera Bread, Carraba’s and Olive Garden are the restaurants that attracted the best consumer sentiments in the casual restaurant category, while Subway and Dairy Queen are the best ranked quick-service restaurants.

Verizon, AT&T and Clearwire benefit from the highest consumer confidence in the Telecom category, while Motorola ranked first in the consumer’s perceptions on cell phone brands.

In the nonprofit segment, the animal rights organization Best Friends gets the first place.

The category of Financial Services brands was marked by wide gaps in perception between the companies that kept or increased their equity, such as USAA and Visa, and the ones that are still viewed by consumers as being responsible for the financial collapse of the US.

The EquiTrend poll made by Harris Interactive involved 25,099 consumers from the US, and they ranked nearly 1,300 brands according to criteria such as purchase consideration, quality and familiarity.

Top 10 Consumer Complaints for 2010, Impostors Make It in the List

identity theftIdentity theft continues to hold the number one position for the 11th year in a row, while impostor scams are the new “players” in the recently-released list of consumer complaints received last year by the Federal Trade Commission.

Identity theft accounts for 19 percent of the consumer complaints in 2010, or 250,854 complaints out of the total of 1,339,265. On the second place come 144,159 debt collection complaints, representing 11 percent of the total customer complaints in 2010.

Impostor scams made the top 10 for the first time, with 60,158 complaints, representing 4 percent from the total. The impostors pretended to be family, friends or representatives of government agencies or companies in order to people to send or give them money. In order to help people protect themselves against such scams, the Federal Trade commission issued the “Spotting an impostor” alert.

Other complaints on the most-frequent list, each with a 4 percent share, counting more than 56,000 incidences, are Internet auctions (56,107), catalog sales and other shop from home services (60,205), lotteries, prizes and sweepstakes (64,085), and Internet services (65,565).

Scams involving counterfeit check and foreign currency scams account for 3 percent of complaints, or 43,866 reports. The last two places go to mobile and telephones services, with a ratio of 3 percent (37,388) and complaints related to credit cards, which close the top 10 with 2 percent (33,258).

The report contains data from 50 states and 50 metropolitan areas, including a breakdown of the areas with the highest incidence of fraud per capita. The Commission’s report also includes a note on the areas with the highest number of identity theft cases.

Consumer confidence reaches highest level in three years

The Consumer Confidence Index continued to improve further in February, reaching 70.4, after posting significant increase in January, when it had a level of 64.8.

The consumer confidence study was conducted by The Nielsen Company based on a random sample. The last data was collected on February 10.

The index reached its highest level in the past three years and it is only six points below the 76.4 level from February 2008, owing to rising optimist about short-term prospects.

Consumers showed moderate improvements in their opinions on the conditions in the labor market and business operations. They also have more positive sentiments about their economic situation and income possibilities, but when it comes to employment conditions they still have reservations.

Assessments about current conditions are also slightly more positive than in January. The number of consumers who think current business circumstances are good rose from 11.3 percent to 12.4 percent, while those who think they are bad remained at the level of 39.6 percent. Slight improvements in the opinion on labor markets were also presented. Almost five percent of the surveyed consumers believe that there are plenty of jobs and the number of those thinking that jobs are difficult to obtain decreased by 1.3 percent, to 45.7 percent. More people believe that business conditions will get better in the following six months, while less people feel that conditions will deteriorate.

When it comes to the job market, feelings were mixed. There was a one percent drop in the ranks of those who expect more jobs to become available in the coming months, from 20.8 percent to 19.8 percent, but a decrease was noted in the numbers of those who expect less jobs as well, from 21.2 to 15.4 percent. More than 17 percent, representing a two percent increase, expect their incomes to increase.