TheState.com: Business

Not every consumer cost is going up, up up

Sat, 05 Jul 2008 20:51 EDT

Everything costs more these days, right?

Not really.

Despite what you hear on the news about expensive fuel and food, the prices of some consumer items — from women’s clothing to electronics — aredropping faster than you can say disinflation. And last month, the Consumer Price Index — the yardstick for what people pay for things — showed prices are moderating, as long you exclude the big two.

It’s time to buy some stuff while it’s still cheap, thanks to good weather, inexpensive microchips and the supreme law of the land — supply and demand:

ELECTRONICS

'Advance fee' loan: Crunch fules schemes

Sat, 05 Jul 2008 20:54 EDT

Federal and state authorities say the nation’s housing slump and credit squeeze are resulting in a spike in reports of companies preying on frustrated borrowers who are having difficulty securing commercial loans through conventional sources.

The Federal Bureau of Investigation, the Federal Deposit Insurance Corp. and state regulators across the country say they have seen an increase in “advance fee” loan schemes in which companies charge would-be borrowers upfront fees but never seriously try to find financing for their projects.

The FBI says it recently received “several hundred” complaints about advance-fee loan schemes. “We saw some in 2007, but not nearly to the level we’re seeing this year,” says Cathy Milhoan, an FBI spokeswoman in Washington. On its Web site, the agency includes “advance fee scheme” in a warning to the public about “common fraud schemes.”

“Clever con artists will offer to find financing arrangements for their clients who pay a ‘finder’s fee’ in advance,” the Web site states. “Victims often learn that they are ineligible for financing only after they have paid the ‘finder.”‘

The FDIC says consumers should be wary of companies that request fees via a wire system, and of upfront fees, saying that “loan fees are normally paid to a business after the loan has been approved.”

The myths of starting a business

Sat, 05 Jul 2008 20:54 EDT

According to a study by the U.S. Small Business Association, only two-thirds of all small business startups survive the first two years and less than half make it to four years. But before you let doubts quash your dream, take some time to examine them. From Scott Shane on Kiplinger.com, here are four common myths of entrepreneurship:

It takes a lot of moneyto finance a new business

The typical start-up only requires about $25,000 to get going. The successful entrepreneurs who don’t believe the myth design their businesses to work with little cash. They borrow instead of paying for things. They rent instead of buy. And they turn fixed costs into variable costs by, say, paying people commissions instead of salaries.

Go to venture capitalistsfor start-up money

Not unless you start a computer or biotech company. Computer hardware and software, semiconductors, communication, and biotechnology account for 81 percent of all venture capital dollars and 72 percent of the companies that got VC money over the past 15 or so years. VCs fund only about 3,000 companies per year, and only about a quarter of those companies are in the seed or start-up stage. In fact, the odds that a start-up company will get VC money are about one in 4,000. That’s worse than the odds that you will die from a fall in the shower.

Callable CDs: A wrong number?

Thu, 03 Jul 2008 19:36 EDT

Interest rates are low, so savers are pressed to find decent returns. Certificates of deposit are an ultra-safe way to save money.

Amounts below $100,000 are federally insured. But with today’s low interest rates, they don’t pay very much. CD holders are lucky to keep abreast of inflation.

So there’s a lot of interest lately in callable CDs, which may pay up to one-half to 1 percentage point more than the conventional kind. Trouble is, savers run the risk that the issuing bank will yank the CD from them should rates decline. That would force savers to reinvest in lower-yielding instruments.

That doesn’t stop brokers, who sell most of the callable CDs, from pushing them. They argue that this is the perfect time for callable CDs because the Federal Reserve has indicated that it isn’t planning to lower short-term rates in the immediate future. And a good argument exists that it won’t increase them soon, either.

Not surprisingly, callable CDs aren’t everything they’re cracked up to be. For one thing, brokers get a commission for selling them, cutting into the already thin returns. (The quoted rate is after the broker has taken his cut.)

Three prescriptions for lower drug costs

Thu, 03 Jul 2008 19:36 EDT

If you’re one of the nearly 47 million Americans without health insurance, or if your plan offers only limited drug coverage or requires high copayments, you’re probably feeling the pinch of rising costs for prescription drugs. Consumer Reports offers three cost-cutting strategies:

USE MAIL ORDER

Whether your pharmacy benefits manager has a mail-order service like Express Scripts (www.express-scripts.com) or you order from an online pharmacy like www.drugstore.com, you can often save 25 percent or more.

Depending on your drug needs, you may also be able to delay entry into the Medicare “doughnut hole” coverage gap, which allows Medicare drug plans to kick in only after your out-of-pocket expenses reach a certain level (in 2008, that level is estimated to be more than $3,200).

If you opt for an online pharmacy, do your homework. Many aren’t licensed and might sell counterfeit or substandard medicine. The Food and Drug Administration recommend purchasing only from Verified Internet Pharmacy Practice Sites, or VIPPS, which have a seal from the National Association of Boards of Pharmacy.

Make the call

Sat, 05 Jul 2008 20:54 EDT

Key points about “callable” CDs

• They pay slightly higher yields than traditional CDs.

• Issuing banks can redeem these before maturity, which can work against investors in both rising and falling rate environments.

• It's best to stick with short-term maturities, and pay attention to the various caveats.

Choosing a new credit card

Thu, 03 Jul 2008 19:36 EDT

Low interest rates may offer a good time to apply for a new, or even first, credit card. Several considerations, such as interest rate and fees, should come into play, however, before a consumer signs on to a new credit card.

Several good Web sites provide useful information related to credit card selection and use. Here are a few:

• Bankrate.com (www.bankrate.com): Contains 13 tips for credit card selection and use.

• Bond Market Fund (www.tomorrowsmoney.org): Offers insights for using credit cards wisely.

• Consumer Action (www.consumer-action.org): Provides good overview of credit card basics, including calculating interest and tips to lower costs.

Protect your pet, and your wallet

Thu, 03 Jul 2008 19:36 EDT

If you’ve decided you may need pet insurance for your pet, you’ll want to know what to look for when buying a policy. Just like any form of insurance, there are pitfalls of which you should be aware. From PetsBest.com, a pet insurance company, here are four tips to consider when buying insurance for your pet:

Ask your veterinarian

Chances are the vet has heard all the news, whether it be good or bad, about insurance plans from other policy holders. See which one gets the best reviews.

Choose the insurance company carefully

Be sure the firm is licensed in your state. That gives you some confidence the company has met some minimum standards, and it often means the plan will have the coverage you need.

Protecting yourself from bouncing checks

Sat, 05 Jul 2008 20:54 EDT

Are bank overdraft protection services worth it?

If you are known to bounce a check from time to time, you need a system in place to keep you from paying hefty fees.

But be aware of what protection you’re signing up for — “bounce coverage” for many people can be a waste of money.

What is overdraft protection? It’s an agreement that if you make a payment that exceeds your bank balance, your bank will pay the merchant automatically. Essentially, it’s a very temporary loan from your bank, so you can stay in good standing with the seller and avoid a returned-check fee from the merchant.

A bounced check with no protection usually results in a $20-$30 fee from the bank, as well as a $20-$30 fee from the merchant. With the typical overdraft protection plan, this penalty is cut in half — you only have to pay the bank’s $20-$30 fee as long as you put money back into the account quickly.

Employers cut back for 6th straight month

Thu, 03 Jul 2008 19:21 EDT

WASHINGTON — Employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, underscoring the economy’s fragile state. The U.S. unemployment rate held steady at 5.5 percent.

The latest snapshot of business conditions, released by the Labor Department on Thursday, showed continued caution on the part of employers chafing under high energy prices and are uncertain about how long the economy will be stuck in a sluggish mode, reflecting fallout from housing, credit and financial troubles.

Heavy job losses in construction, manufacturing and financial services, along with cutbacks in retailing, eclipsed job gains in education and health services, leisure and hospitality, and government.

The report, however weak, was largely on target with economists’ forecasts. They had been expecting employers to reduce payrolls by about 60,000 in June and for the unemployment rate to slip a notch to 5.4 percent.

The national jobless rate spiked to 5.5 percent in May. That marked the biggest over-the-month increase in two decades and left the rate at its highest since October 2004.

Talking Shop: One more development to report to you

Thu, 03 Jul 2008 19:21 EDT

Since starting this column in January 2007, I have met so many interesting people and learned of so many unique local businesses. And what I like best about it was I got to share community retail news with you.

Well today, I have a little development news of my own. I have accepted a buyout offer, and this is my last column as a retail reporter for The State.

Some of my favorite columns were about local entrepreneurs — such as Mae Buzhardt of Mae’s in Lexington, Harold and Gloria Rittenberg of Moe Levy’s in Columbia and Hopkin’s barbecue sauce maker James “Gene” Sumter.

I love getting scoops on redevelopment plans at Dutch Square Center and new tenants Steve & Barry’s and Burlington Coat Factory arrivals at Columbia Place mall.

In the coming months, be sure to keep the business staff abreast of any new stores, especially my replacement Neil White. (Reach Neil at (803) 771-8643 or nwhite@thestate.com.)

NAACP joins effort to stop mortgage bias

Thu, 03 Jul 2008 23:05 EDT

The S.C. State Conference of the National Association for the Advancement of Colored People joined a national Day of Action this week against discriminatory mortgage lending practices.

The national NAACP filed a class action lawsuit a year ago against 17 of the nation’s largest lenders alleging African-Americans were given higher mortgage interest rates than others despite having similar credit records, income and other qualifications.

Following are three questions with Dwight James, executive director of the S.C. NAACP, and James Fleshman, Midlands Director for the S.C. Mortgage Brokers Association.

DWIGHT JAMES

Why did you decide to join the National Day of Action?

Oil soars then eases as dollar gains ground

Thu, 03 Jul 2008 23:05 EDT

NEW YORK — Oil prices briefly soared to a new high near $146 a barrel Thursday, extending the previous day's record-shattering rally before easing somewhat as the dollar gained ground against the euro.

Americans hitting the road for the July Fourth holiday were confronted with an unwelcome record of their own: The average retail price for regular gasoline jumped to within two-tenths of a penny of $4.10 a gallon, according to AAA, the Oil Prices Information Service and Wright Express.

Light, sweet crude for August delivery rose $1.72 to close at $145.29 on the New York Mercantile Exchange. Earlier in the session, it rose as high as $145.85 a barrel.

Oil prices settled at $143.57 Wednesday, up $2.60 above the previous high. They continued climbing overnight, propelled by a report of lower crude stockpiles in the United States, lingering concerns about conflict with Iran and comments by Saudi Arabia’s oil minister suggesting his country would not boost production.

Prices backed off, however, after the European Central Bank did not signal more rate increases. That decision, which followed a widely expected quarter-point rate hike meant to stem inflation in the 15-nation euro zone, led the dollar higher against the euro.

Economy weathers more hits

Thu, 03 Jul 2008 19:21 EDT

NEW YORK — Wall Street capped a shortened trading week with a mixed finish Thursday after some uneven economic data: news of a contraction in the nation’s services sector and a tame reading on employment.

The Dow Jones industrial average showed a sizable advance, while the broader indexes ended mixed. The stock market closed early ahead of the Fourth of July holiday.

The Institute for Supply Management said its index of service sector activity fell to 48.2 from 51.7 in May. That news touched off more misgivings about the well-being of the economy.

The look at the service sector follows a largely as-expected report from the Labor Department, which said the nation’s unemployment rate held steady at 5.5 percent last month. The government also reported that 62,000 jobs were lost in June, but that number was close to economists’ forecasts.

The jobs report appeared to assuage some worries that the snapshot of the labor market would be more grim. Employment numbers are critical because consumers who are out of work or are nervous about losing their job are likely to cut their spending. They’ve already become cautious because of higher food and energy prices.

Distillers get ready for amber-colored future

Thu, 03 Jul 2008 19:21 EDT

LAWRENCEBURG, Ky. — To Wild Turkey master distiller Jimmy Russell, the piercing sounds of a warehouse rising in the Kentucky countryside are the sounds of prosperity.

“As long as you see work going on — and the construction, and increasing your size — you know your business is doing well,” said Russell, who started working for the bourbon maker in 1954.

Distillers are expanding their bourbon production and storage and dispatching sales teams around the world, bullish for a traditionally Southern beverage gaining popularity worldwide. Surging exports, the weak U.S. dollar and rising popularity among younger Americans are driving the boom.

“It’s an exciting time to be in the bourbon business,” said Max L. Shapira, president of Heaven Hill Distilleries, a family-owned liquor company based in Bardstown. “Most of the time that I’ve been in the business — up until about the last 10 years — everybody was trying to consign the bourbon category to that great liquor store in the sky.”

Heaven Hill recently spent nearly $4 million boosting capacity 50 percent at its distillery in Louisville, where it makes Evan Williams and Elijah Craig bourbons.

Recalls: Streamer fireworks pose risk of shocks

Thu, 03 Jul 2008 19:21 EDT

About 84,250 Oh Chute parachute with streamer fireworks, manufactured in China and distributed by Fireworks Over America, are being recalled because the parachutes can get tangled in power lines, posing a risk of shocks.

The fireworks were sold at various firework stores between April 2007 and June 2008. Details: (800) 345-3957; www.fireworksoveramerica.com or www.cpsc.gov.

• Girls’ jewelry items tainted with lead

About 13,000 It’s a Girl Thing bracelets, necklaces and phone charms, manufactured in China and distributed by Bead Bazaar USA, are being recalled because the jewelry might contain high levels of lead, which is toxic if ingested.

The jewelry was sold around the country between February 2006 and June 2008. Details: (800) 838-1769; www.beadkit.com.

Ports authority rejects Daniel Island offer

Thu, 03 Jul 2008 19:21 EDT

CHARLESTON — The State Ports Authority has rejected an offer from Daniel Island residents to buy 1,300 acres of agency property on the island for $25 million.

The Daniel Island Property Owners Association had made the offer on the land last week.

The ports authority this week rejected the offer as too low.

The residents said the struggling real estate market and the limited development potential for the soft land justified the sale.

Ports Authority chairman David Posek says the agency is updating an appraisal but doesn’t think the $25 million offer approaches the value of the property.

Lockheed Martin to lay off 100 in S.C.

Thu, 03 Jul 2008 19:21 EDT

GREENVILLE — Lockheed Martin plans to cut up to 100 jobs from its aircraft refurbishing facility in Greenville County.

The defense contractor said on Wednesday that employees will receive formal layoff notices next week.

Officials at the Maryland company say they expect the workload to pick back up after military aircraft return from overseas deployment later this year.

Lockheed Martin currently employs nearly 900 workers at the 161-acre site in Greenville County, and has contracts with another 55 employees.

Last month, the company said 100 employees at its Mauldin facility would transfer to Pennsylvania by year’s end.

Sonoco to close plant in Canada

Thu, 03 Jul 2008 19:21 EDT

HARTSVILLE — Hartsville-based Sonoco said Thursday it will close a cardboard plant in Canada next month because of rising energy costs and declining demand.

The 53 employees at the Montreal mill make heavy-weight coreboard. Most of it is shipped to other Sonoco plants that use it for industrial packaging, which have been losing sales.

“In addition, escalating energy, transportation and chemical costs have further impacted the profitability of the mill making it unpractical to run the mill at less than full capacity,” said James Harrell, general manager of Sonoco’s North American paper business. “As a result, we have no other choice than to close down operations.”

After the Montreal mill closes Aug. 27, Sonoco will operate 23 paper mills worldwide.Shares rose 30 cents to $30.56.

Meal Deals: Food co-ops find savings in numbers

Wed, 02 Jul 2008 19:21 EDT

As food prices steadily creep up, some local residents are banding together to save on their grocery bills.

Vendors at the State Farmers Market on Bluff Road say more families and community groups are shopping their produce stands nowadays. In the past, it was more so restaurants and other small businesses.

“There are a lot of individual shoppers — house moms, co-ops, co-workers, church groups and neighborhood groups — these days,” said David Nidiffer of L & N Produce Co.

The U.S. Department of Agriculture estimates that skyrocketing energy costs will cause grocery bills to jump 5 to 6 percent this year after increasing 4 percent in 2007. It has motivated consumers to search for ways to cut costs.

About 30 workers at the Columbia Housing Authority have begun a co-op, pooling a few dollars each to buy cases of fruits and vegetables at the local farmer’s market and then splitting the bounty.