Transcripts

"Money File"-Snap Financial Decisions

SUZANNE PRATT: In the "money file" tonight, why some financial decisions are a snap. Eric Schurenberg, managing editor at "Money" magazine explains.

ERIC SCHURENBERG, MANAGING EDITOR, MONEY MAGAZINE: Yes, money can be complicated, but some money decisions are so clear that making the right call ought to be a reflex. For example, when a retailer offers you a 10 percent discount if you'll just sign up for the store's credit card, say no. Rates on store cards are typically above 20 percent, which can wipe out your discount pretty fast. Plus the very act of applying for a store card will hurt your credit score.

When you open a mutual fund account and are asked if you want to reinvest dividends, check yes. It adds up. If you'd put ten grand into an S&P 500 index fund 10 years ago and reinvested dividends, you'd have over $22,000 now. If you didn't reinvest, just $19,000.

When the salesperson at an electronics store pushes an extended warranty, don't buy it. It'll cost you $30 to 200 bucks. But if you've bought a lemon, it will become clear in the first months, when it's still covered by the manufacturer's warranty.

At the gas station, fill it with regular. It's about 7 percent cheaper than premium and no matter what the manufacturer says, your car doesn't need the pricier brew.

When the checkout clerk says, credit or debit, say credit, but hand over your debit card. By paying with your debit card, you avoid running up your credit balance. But by saying credit, you send your debit card to be processed over the credit card network, where you get more liability protection and face less chance of paying a fee. None of this will make you rich. It's just nice to know that at least in a few money situations, you can make snap decisions and be right every time. I'm Eric Schurenberg.