Many students, at some point in their lives, will rely on the services of a financial adviser. CFTC.gov has three short videos (2-3 minutes in length) that allow viewers to make decisions on whether or not to invest after hearing a pitch from an investment “pro.” Ask your students to jot down the key words or phrases used to entice them to invest. Thanks to WAPO’s Michelle Singletary for highlighting these in recent column.
This Consumer Reports video got me thinking about how this question can be structured as an activity to develop your students’ comparison shopping and Excel skills. Here’s the video:
First, let’s get the comparison shopping out of the way. I chose this washer-dryer pair advertised at one of the leading rent-to-own companies:
How much would the washer-dryer pair cost if you could buy it upfront at this retailer?
Note the everyday low price noted on the top right (or Cash Price at bottom center) of $1,424.98. I wanted to see how that might compare if you tried to buy the same Maytag Centennial Washer and Dryer at a “big box” retailer. After a 30 second Google search, I came up with the following costs at one retailer:
Assuming that figures for rent-to-own and “big box” exclude taxes and delivery, the “big box” cash cost of $1,097 is 23% less than the cash cost at the rent to own. Why is this important? It shows that the rent-to-own customer is starting out with a handicap as they will be renting an item at an already inflated price.
What is the implied interest rate with the rent-to-own model, using the data for this washer-dryer pair?Continue reading →
I stumbled upon this Complaint Database on the Consumer Financial Protection Board (CFPB) website and thought it would make a great activity for students while also increasing their “street smarts” regarding common complaints with financial service firms.
Our students need to understand the role of incentives before they purchase any financial product (or any product for that matter). Whether they are purchasing a new or used car, getting a credit card, opening a checking account, or buying a stock, they need to understand that the person facilitating this transaction may be acting in their own interests rather the interests of the consumer.
As the banking industry has consolidated into a handful of national banks (think Bank of America, Wells Fargo, JP Morgan Chase, U.S. Bank), the promise has always been that these companies can continue to grow by getting their customers to buy additional products or services. This concept of cross-selling a credit card or mortgage to a checking account customer has become the banking mantra and anyone who has stopped by a branch in the past few years has likely seen this first-hand at the teller window (“Is there anything else that I can help you with today, such as open a wealth management account with us?”).
With apologies to Paul Simon (for those feeling nostalgic, here’s a Youtube video). Ok, back to the post. Interesting way to get students to sit up and take notice about the threats of identity theft. I pulled a sample of 2-3 minute videos from the last month that show how the bad guys operate. As students watch the videos below, have them jot down the scheme, how they can protect themselves from becoming a victim and what they should do if they are victimized. Happy viewing!