The cost of a “free” reward ticket

Aeroplan has a harsh bereavement policy, which requires widows and widowers to pay 1 cent a mile to transfer points after their spouse has died. When I wrote about this in my column, I heard from many readers who had beefs about both Aeroplan and Air Miles.

Did you know you still have to pay a fuel surcharge when you use your points to get a reward ticket? Both programs have kept the fuel surcharges, even though many airlines have dropped them (including Air Canada on North American flights) as oil prices have plunged.

I checked Aeroplan’s website and found a vague question and answer. Since it told me nothing, I called Aeroplan’s customer service (as instructed) and got the real story.

Yes, Aeroplan does have a fuel surcharge for reward tickets, I was told. It has nothing to do with fuel costs and is misnamed. It’s there because Aeroplan hasn’t adjusted its points levels in a few years. This is another way of compensating the airlines for the reward tickets earned by members.

I asked Air Miles about the fuel surcharge and got an official answer, posted below, and a response from an angry reader.

Of course, there are many other taxes and fees you end up paying when you get a “free” ticket. That’s the reason why many people would rather just buy a discounted airfare and use their points for something else.

Just threaten to leave

As consumers, we have the power to take our business elsewhere. We should use that power now, during this recession, to get better deals.

When calling a company you deal with, ask for the retention department. That’s where you can get rock bottom prices or special inducements to keep you around. The people working there only tell you about these deals if they believe you’re going to leave.

The first time it happened to me was when I called to cancel a credit card I wasn’t using. Within a minute, they had lowered my interest rate from 18 per cent to about 12 per cent — and I didn’t even ask for it.

David Bach has a new book, Fight for Your Money, where he has a good story about cable and satellite TV. He was working with a couple on a money makeover show and persuaded the husband he didn’t need TSN. The household was paying $1,000 a year for cable and dropping the sports channel cut their bill in half.

“Later, I had him call back a second time and tell the cable company that he had just gotten a coupon from a satellite TV company offering introductory service at $19.95 for six months,” he says.

“Guess what happened? His cable company matched the offer — and threw in TSN for free, for a total savings of nearly $400.”

All it may take is one phone call to lower many of your bills, if you’re a good customer who has been around for a while. Companies know it costs less to give you a better deal than to recruit a new customer to replace you when you leave.

So, try it some time. Do research on all the competitors’ prices, then see how far you can go by saying you plan to decamp. But make sure to escalate your call to the right people, those who have the power to retain you as a customer and pull out all the stops to make sure you stay.

Do you have any haggling stories of your own? Do you find it easy to negotiate over the phone, on the internet or in a store to get the lowest possible price? Please give your best tips to help others.

Let’s ban door-to-door energy sales

I think I pulled my punches in calling for an end to auto-renewal of energy contracts last week. Today, I’ll go further.

In my view, allowing an army of pushy salespeople to trick people into signing contracts adds no value. It should be outlawed in Ontario.

Companies can continue selling their fixed-price deals, but only online or by phone (as RiteRate does). Doing it face to face just leads to abuses.

The reason I’m so angry is the sheer volume of complaints I get about deception at the door. I also hear from people who can’t seem to contact these companies on their own. They’re frustrated talking to call centre robots, who listen but don’t follow up.

Bell and Rogers, you’ve been outgunned by Direct Energy, Universal Energy, Summitt Energy, Superior Energy and Ontario Energy Savings Corp. That’s the new normal for me and I’m blazing mad to hear how many people are getting duped.

How do you cut cellphone costs?

My column last Wednesday on this subject drew lots of comments. This is one of my favourite hobbyhorses, since I now know (from my experience with Rogers) that you can get deals just by asking.

The Star’s new series, Personal Bailout, is about getting smarter with your money. So, my first contribution talked about whittling down your cellphone bills, which tend to be pure discretionary spending.

I got a few helpful suggestions from readers which I’m posting below. Now I want to hear from you about the best ways you’ve found to reduce those hefty monthly costs.

Have you switched from paying after you talk to paying before you talk? This is a big trend in the U.S. and there are deals to be had here at 7-Eleven and Petro-Canada stores.

Or have you switched from the Big Three (Bell, Rogers and Telus) to one of the low-cost brands? These no-frill carriers are stepping up their advertising, trying to scoop up frugal customers before new discount cellphone competition arrives later this year.

Let’s ban automatic renewals of energy contracts

It’s a rare day when I don’t get any complaints about energy marketers. Bad enough they push you into getting a long-term contract based on false promises of savings or mispresentation. Worse that these contracts can be rolled over automatically if you don’t take action to cancel them.

Direct Energy is the worst offender when it comes to auto-renewal. They have the nerve to charge 49.9 cents a cubic metre for a one-year natural gas contract, more than double the current utility rate. Enbridge and Union Gas are both charging about 23 cents a cubic metre (before adjustments, which bring down the cost further).

I sent four auto-renewal complaints to DE today, more than the usual amount. They’re posted below. You can see the outrage when people realize this arangement is legal in Ontario and there’s nothing they can do, other than to cancel when they get the first bill at the higher rate. Even then, they have to wait a couple more months for the changes to be made.

Why is negative option billing banned in Ontario, except for energy contracts? No one knows this. The salespeople don’t tell you that a contract can be rolled over if you fail to reply to the renewal letter. Even if they did, would you remember five years later when the contract ends?

Even my friends get ensnared. Check out writing teacher Beth’s blog, where she mentions her contract problems (near the end of her post). She’s spending five months in Paris and didn’t realize she had to cancel while she was away. If not, she would face more overpriced heating bills when she returned.

Why is this cancellation process titled in favour of the companies? Why aren’t politicians defending consumer rights to get out of contracts when they expire? I feel sorry for all the people who don’t know the rules and end up getting re-enrolled at these usurious rates.

Here’s a link to the Ontario Energy Board’s guide to what happens when an energy contract nears its end. I disagree 100 per cent with the website name, The Energy Choice is Yours.

As long as this complex system continues, the energy company has the choice of never letting you out.

Stocks: Still good for retirees’ portfolios?

That’s the subject of the PBS Nightly Business Report on April 10 (Good Friday). Previous shows in a year-long series on retirement investing are available here.

I haven’t seen the programs, but I think this is a terrific topic. Many seniors have been devastated by the stock market crash. They had way too much exposure to common and preferred shares, income trusts and equity funds in their retirement plans.

As interest rates fell to levels never seen before, many retirees wanted an alternative to investments that paid low interest. Financial advisers took advantage of their trust with promises of high returns and low risk. No one anticipated the severity of the stock market meltdown that started last year.

“It’s not about me, but my parents. I feel most adults ‘get’ your advice, but seniors are another matter,” said a reader who’s in the process of suing his father’s investment adviser.

You can read the rest of his story below.

Don’t buy insurance from banks

Banks love to sell insurance as an add-on to an existing product.

Sign a mortgage and they wil ask you about getting life insurance and critical illness insurance at the same time. Just a small increase in your monthly payments.

Take out a credit card and they will try to sell you insurance to protect you if you can’t make the minimum monthly payments. Often, they give it free for a few months and give you the option of cancelling afterward.

Many people don’t know they have credit balance insurance, since they don’t believe banks use negative option marketing. The information about having to cancel the insurance to stop it is slipped into a package you get along with the card.

Sometimes, borrowers feel they have to buy the insurance or lose the loan. The banks make you sign a waiver form, saying you’re on your own if you get sick or die. Now that’s pressure.

What you may not realize is that banks do “post-claims underwriting.” This means they don’t check your medical history in advance. They just ask you a few questions and then decide, based on your answer, whether or not you qualify for insurance.

Only when you or your loved ones make a claim under the insurance do they contact your doctors and start checking into your medical history. Then, they may decide you don’t qualify for coverage — and in fact, you may never have qualified — despite having paid premiums for all these years.

If you don’t believe me, check the column I did about a couple in this unfortunate position.

Luckily, I helped them get the coverage they thought they had. But the bank insisted they were at fault for misrepresentation on their application.

I know that if you buy insurance from a qualified insurance agent or broker, the proper checks will be done long before you have to make a claim and face possible denial for being ineligible.