Sunday, August 15, 2010

Take stock of your situation and save

Belt-tightening is not solely about finding bargains on food, clothes and other everyday consumer products. You also should be watching expenses on financial products and services. Shown below are some cost benchmarks for common financial purchases. If you're spending more than the norm, it might be time to shop around.

ITEM: Auto insurance

AVERAGE COSTS: It's hard to pinpoint average premiums because they vary by company, driver characteristics, vehicle and more. A recent study by insure.com pegged the average Arizona premium at $1,153 a year, below the U.S. average of $1,429.

OTHER CONSIDERATIONS: The Arizona Department of Insurance provides premium quotes for different insurers and scenarios. This premium comparison and complaint-ratio report can be found on the agency's website, www.id.state.az.us/consumerauto home.html.

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ITEM: Mutual funds

AVERAGE COSTS: Stock funds on average charge 1 percent a year or $10 for every $1,000 investment; bond funds average about 0.75 percent. These figures are summed up in a standard measure called the expense ratio.

OTHER CONSIDERATIONS: The most penny-pinching funds charge less than 0.2 percent. Exchange-traded funds, or ETFs, tend to be especially low-cost. Some mutual funds also levy sales charges, or "loads," in addition to ongoing expenses.

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ITEM: Checking accounts

AVERAGE COSTS: Free checking accounts are common, with nearly half of banks offering them, MoneyRates.com reports. Accounts with no maintenance fees are more widespread at credit unions, where four in five offer them, Bankrate.com says.

OTHER CONSIDERATIONS: Beware of other costs. For example, a Bankrate.com study pegged the average bounced-check fee at $29.58. If you use an ATM outside your bank's network, plan on paying about $2.22 on average.

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ITEM: Debit rewards

AVERAGE COSTS: Debit cards let you earn points on transactions that can be redeemed for rewards. Bankrate.com found most banks don't charge fees for these programs. On the rest, fees average $25 a year.

OTHER CONSIDERATIONS: In its survey of 40 rewards programs, Bankrate.com also found three in four debit cards don't limit the amount of points you can earn. Some even grant extra rewards if you deal with favored merchants.

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ITEM: Home insurance

AVERAGE COSTS: Arizona homeowners pay below-average premiums, thanks in part to few natural disasters here. The National Association of Insurance Commissioners' latest tally put Arizona premiums at $634 on average compared with $822 nationally.

OTHER CONSIDERATIONS: As with auto premiums, the Arizona Department of Insurance tracks sample insurance costs for homeowners. This consumer guide and premium comparison for homeowners insurance can be found at www.id.state.az .us/homerate.html.

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ITEM: Tax-return preparation

AVERAGE COSTS: Tax help can range from nothing to hundreds of dollars. A survey by the National Society of Accountants pegged the average fee charged by professional return preparers at $229 for a Form 1040, Schedule A and state return.

OTHER CONSIDERATIONS: Taxpayers with simpler returns can expect to pay less. The same NSA survey put the average fee at $129 for Form 1040s with a state return and no itemized deductions. There's also the Free File program for moderate-income people at www.irs.gov.

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ITEM: Credit cards

AVERAGE COSTS: Interest rates have been rising, with advertised rates now averaging 13.7 percent, reports LowCards.com. That's up from 12.1 percent a year ago. Most cards now charge variable interest.

OTHER CONSIDERATIONS: While it might pay to switch credit cards, be careful if your credit isn't good because you might have trouble qualifying. Also, check on terms and conditions before you leap, as the rules have been changing.

by Russ Wiles Arizona Republic August 9, 2010

Take stock of your situation and save

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