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Fisher-Price Recalls, Money Lessons, Credit Scores, Medical Bill Mistakes, Fall Travel Deals

Aired October 2, 2010 - 09:30   ET


CHRISTINE ROMANS, HOST: A massive recall involving your children's toys and highchairs. We'll tell you about the millions of products in question and what you should do about it.

Don't get ripped off at the doctor's office: How to decode your medical bills and save a ton of money.

And as travel fees go up, we'll show you how to take that fall get away and keep your costs down.

The show that saves you money starts, right now.

Eleven million children's products and toys are recalled. It's a frightening thought for any parent as they scour through their homes to see if they've got anything on this list. So, let's get right to the important information. Don Mays is the director of product safety for "Consumer Reports."

Don, here, a stunning number of tricycles for toddlers, two and three and 4-year-old children who have been reported to have been hurt by riding a Fisher-Price tricycle. The Tough Trike toddler tricycle, seven million of them in the U.S. Some children actually hurt on this one. What are parents supposed to do with this thing? The company says set it aside and call them to get a new key to put in the ignition. It's this key that seems to be hurting the kids.

DON MAYS, CONSUMER REPORTS: That's right, the key is in sort of in the center console and if the child was to sit or fall onto the key, they can do serious injuries in the groin area. So, the recommendation from the Consumer Product Safety Commission is take this product away from children and contact Fisher-Price. Fisher- Price will supply a new key that's less hazardous.

ROMANS: Let's talk about the play yards, because this one, I think, is really troubling for people who have very small children. A play yard is something that a very small child, up to maybe four months old, maybe sometimes a little bit older, 2.8 million of these a choking hazard from an inflatable ball that's on this play yard. That's troubling.

MAYS: Well, it's not actually a play yard, but it's sort of a play station where a child is to lay underneath of the product and play with the toys above it. And balls can be a serious choking hazard for young children. If a ball comes off like it does in this case, it can put a child in grave danger. So again, you want to take this product away from a child and contact Fisher-Price.

ROMANS: Also, a bunch of highchairs, a lot of highchairs because of a clip on the back of the legs of the chair that's meant to hold the tray when it's not in use. That clip actually causing gashes in some children that took stitches to repair.

MAYS: That's exactly right. There are actually two pegs on the back legs of the highchair that are used to hang the tray when it is not in use. But safety standards actually address the safety of products like this only when they're set up in the manufacturer's use position figuring the child's only going to be in danger while in the highchair. Well, we now know that's not true. Here children have been falling on those pegs and causing serious cuts and some requiring stitches.

ROMANS: And also, these Little People Wheelies, these cars, a green and purple ones in particular, fewer of these being recalled, but if you have these Little People Wheelies, Stand 'n Play cars, you're supposed to take the green and purple ones away from your kids, right away.

MAYS: That's right. With these products and with any products, if the wheels pull off a vehicle, they can be small enough to pose choking hazards. And the best way to test for any choking hazard with any toy or other product you have in your home is to use a tube of toilet paper. If the product actually falls through that tube, it has the potential of choking a child ages three or less.

ROMANS: And one of the piece of that product that comes loose, you know, you get so irritated with the manufacturer that that could happen. You know, it's supposed to be a piece of a toy that stays together. I'm wondering, do you think there's increased scrutiny on children's products now? I mean, this is an awful lot of recalls?

MAYS: Well, there is, and I think that Fisher-Price is doing the right thing. I think the CPSC has done the right thing to announce these recalls, get that information out to consumers so kids don't get hurt. And yes, there is increased scrutiny. There are new laws that are required to make sure that toys are tested and meet safety standards before they come to the market. Very shortly, those will be in place for highchairs, too.

ROMANS: All right, Don Mays, "Consumer Reports," thank you, have a great weekend.

MAYS: Thank you.

ROMANS: There has never been a more urgent time to teach your kids the right lessons about money and about the world that's going on around them in terms of money. We've got that for you in an easy and even fun way to do it. Jean Chatzky is the author of "Not Your Parents' Money Book."

And Jean, you say you wrote this book because of the headlines, the kids hear the headlines, they know all of this is swirling around them, it's an important time for them to know about money and how to talk about it.

JEAN CHATZKY, "NOT YOUR PARENTS' MONEY BOOK": And if we as parents don't talk about it, the unfortunate fact is not enough kids are getting these lessons in their schools. Only 13 states have mandated financial literacy education and they're doing a great job, they're trying, but we have to do it at home.

ROMANS: You boil it down in the very beginning of Chapter 2, I love how you boiled it down to sort of three things that I think a lot of parents, in some cases, don't get. I mean, if you look at the consumer bubble, you can see, and kids and money, you have to earn the money, you have to spend less than you earn -- that's so un-American -- and you have to save and invest money that you don't spend so it can grow. I mean, it's as simple as that.

CHATZKY: It is as simple as that. It's the fact that money is a limited resource. We, over the past 10 years, during the bubble, we didn't treat it that way with our kids. Too much of the time we would hand them $20, we'd buy them what they wanted and they didn't learn to make choices that parents now, through the cutbacks, have had to make consistently.

ROMANS: And you know, I think kids have had everything they wanted, even if it was something small they could get at a discount retailer that didn't really cost a lot of money, but globalization has brought cheap, imported goods, kids got things all the time. I mean, you remember, our generation, we remember what we got in fourth grade, that big thing we really wanted for the holiday or fir our birthday. Kids now, they get a lot.

CHATZKY: And allowances, which should be used as a tool to teach about money are not used in the right way. Parents say they'll give them, they don't give them or give them five weeks worth because they forgot and they fell behind. And allowance needs to come with a list of things that you as a parent are no longer willing to buy for your kids so that then the kids have to go out and they have to decide, OK, do I want the snack at the cafeteria or do I want to go out Saturday night with my friends? And do I need to work to earn some more money so that I can get more of the things that are on my list?

ROMANS: There's a great Charles Schwab "Parent's and Money" survey that shows how much money kids get, on average, from their parents and I was stunned to see that about 1/5 of all kids get $100 or more a month. Wow, I never got 100 bucks or more a month. But with that...

CHATZKY: Not from my parent's, but with it needs to come...

ROMANS: Strings.

CHATZKY: Strings. Things that you as the parent will no longer buy for them. Maybe some clothing comes out of that $100, maybe some cosmetics for a teenage girl. You set it up so that it works for you.

ROMANS: There's something cute in here, too. Really quickly, you asked kids what kind of jobs do they think earned the most money. Were you surprised?

CHATZKY: I was a little surprised. You know, I mean, of course they think their favorite rock star musician is going to earn the most money. They don't realize that most rock stars aren't quite at the star level yet.

ROMANS: And you also asked them about who makes more money, Donald Trump or President Obama and they choose...

CHATZKY: President Obama, about 80 percent of the time, which would be really, really nice, sorry, Donald, it would be nice, but unfortunately, not the case.

ROMANS: Well, the still makes a lot more than the average American, but not as much as Donald Trump or a whole lot of other people who teenagers probably relate too, as well. Jean Chatzky, the book is "Not Your Parents' Money Book." Thank you so much.

CHATZKY: Sure, my pleasure.

ROMANS: Smart is the new rich, it's a simple concept and one I'm going to walk you through. Grab a pen and paper, you're about to get a whole lot smarter about your money, that's next.


ROMANS: Your house is your biggest investment, your biggest debt, and your biggest asset. The good news is, home prices are stabilizing. Home prices rose slightly .6 percent in July, this according to the latest S&P/Case-Shiller report. The bad news is, especially if you're trying to become a homeowner, 1/3 of consumers don't even qualify for a mortgage. A new Zillow Mortgage Marketplace report found people with credit scores under 620 were unable to get even one quote on a home loan. But there is a silver lining, 47 percent of you, almost half of you out there have good credit with scores of 720 or higher.

How important is this number? How do you fix it? Let's go straight to our panel. Ryan Mack is the president of Optimum Capital Management and Greg McBride is a senior financial analyst for Greg joins us from Seattle.

Let me start with you, Ryan. You say if you have a low credit score, you need to be doing everything right now to move back towards 750.

RYAN MACK, OPTIMUM CAPITAL MGMT: Exactly. At the end of the day, this is one of the most important things. I wouldn't obsess over it, I wouldn't be worried about it, but financial literacy's all about making sure that you have knowledge so you don't have to be concerned about it. Are you going to Annual Credit Report at least twice a year and getting one free credit report per year and then paying for the second one? Also making sure you're paying your bills back on time, regulate on your automatic bill payment. You're budgeting soundly, so you know exactly how much is in your account, so you can pay those bills regularly. Paying down your debt as frequently as frequently possible. It's also doing things such as getting a security credit card for those individuals who don't have a sound credit history, because 15 percent of your score is the length of credit history. So all of these things are things and more are things we need to consistently do to make sure we're boosting up FICO scores.

ROMANS: You know, Greg, he's talking so much about this score and paying your bills on time and the roman's numeral for you today is seven years. Seven years is how long one missed payment, one missed payment on a credit card on a mortgage, anything, will stay on your credit report. Paying your bills on time, Greg, the very big important one here, for keeping the score up.

GREG MCBRIDE, BANKRATE.COM: It really is. That that is the single most important factor in your credit score. And I think the good news there is that poor credit isn't forever. Those past missteps carry less weight with the passage of time, so if you are paying your bills on time and if you're paying down your debt over time, as Ryan noted a moment ago, those two factors constitute 2/3 of your credit score, you're taking two big steps in the right direction.

ROMANS: You know, I've asked the folks at FICO before, you know, what can I tell people about how to move this score up quickly? And they basically say be patient, pay your bills on time. Time heals all wounds. And if you consistently do these things, you're going to be OK. But what I hear from consumers and viewers and readers is that they feel like this is a number that's out of their control. Is it out of their control?

MACK: It's definitely not out of their control because at the end of the day, we have complete control. Are you writing letters and disputing things that you might have disputes over on your score?

ROMANS: And that's where you go to to make sure there aren't mistakes, because 75 percent of all credit reports have a mistake there somewhere.

MACK: Exactly and (INAUDIBLE), you might have an old account maybe from Bally's or a membership from 2002 that you forgot to cancel years ago or maybe sometimes they might have charged you, maybe your name is Ryan Mack, Jr. as opposed -- and they might have charged your father and now they have that information on your credit report. Now, identity theft, there's millions of cases if identity theft every single year, but these things we can dispute and take off. That's one of the fastest ways that I've actually assisted into the clients with to prove their score, by going to your and going to those Web site and challenging those things and taking those things off. They have 30 days to reply and respond to see if they're actually correct or not.

ROMANS: Greg, when you have a low credit score it costs you more money, that's the bottom line. Because, if you do get a loan, you're going to pay higher interest rates, and so it can cost you 10, 20, 30, $40,000 more over the cost of a -- over the course of a loan. What should people be doing when they're shopping around for interest rates on mortgages and the like? And if you have a credit score below 650, 620, should you even be out there in the marketplace? MCBRIDE: Well, if you have a credit score below 650, 620, I think, my advice is, hey, look, the affordability you're seeing in the markets today isn't going to go away. If you need to take six or 12 months to improve that credit score, to boost your savings, pay down debt, by all means, go ahead and do that. home prices aren't going to run away from us, mortgage rates are unlikely to skyrocket. You'll still have great affordability, but you're going to be in much better position to take advantage of that six or 13 months from now, if you've boosted that credit score.

ROMANS: All right, gentle men, thank you so much both of you. Greg McBride in Seattle, Ryan Mack, from Capital Management, and of course we'll tweet and put on Facebook, links to some more important strategies for how to fix that score if you can and get control of your finances with so much out of your control. In fact, I decided to boil it all kind of down for you what you can control, like your credit score, how to raise it, how to raise it quickly, how to fix errors and how to get credit working for you again and I put it all in a book called "Smart is the New Rich." It covers everything related to your house, your savings, and your bills. So, stay tuned for that. I'm very proud of that.

Next, why ignoring your medical bills and those explanation of benefit forms could cost you hundreds even thousands of dollars. And up next, we'll arm you with the smarts you need to become that empowered patient.


ROMANS: What does being an empowered patient have to do with your bottom line? Maybe more than you think. Not paying attention to your medical bills could cost you hundreds if not thousands of dollars. Here to explain is CNN senior medical correspondent Elizabeth Cohen.

Elizabeth, how common is this problem of medical billing errors? This is money right out of your pocket.

ELIZABETH COHEN, CNN SR MEDICAL CORRESPONDENT: That's right, it is money right out of your pocket and you would be amazed at how often it happens, Christine. The Medical Billing Advocates Association of America say that eight of 10 medical bills have errors in them and some people think oh who cares, my insurance is paying for this. Well you know what, most of us, our insurance has co-payments which means that you're paying, let's say, 10 percent or 20 percent. If you've got a $10,000 hospital bill, which would be a small bill, by the way, if you've got a $10,000 hospital bill and you're paying 20 percent, that's a huge amount of money. So, if you go to you will see a tool that we have. There's an interactive tool that you can use to check out your medical bills and see if are any issues with them.

ROMANS: Fantastic. OK, how do you fight the insurance company if you find an issue with that bill?

COHEN: Well, you know Christine, how they talk about with real estate it's all about location, location, location. Right. With insurance it's all about appeal, appeal, appeal. Just keep appealing their decisions, don't let them get you down, folks who do this for a living say that if you appeal enough times chances are -- actually the chances are really good that they will decide in your favor and in the end you'll be such a pain in the neck, they want to get rid of you.

ROMANS: The squeaky wheel gets the grease. Another big money pit you talk about in the book, prescription drugs. Tell me about that.

COHEN: Right. All of us are paying -- if any of us who are taking prescription drugs know that they very often are extremely expensive and, again, even if you have insurance you're still paying a big chunk of that bill. So, I have a couple of tips for what you can do when you go to the doctor next time, if you're expecting a prescription when you walk out there, even if you're not expecting one.

First of all, print out the $4 generic list that you can get online from your drugstore, go into the drugstore and get it. Bring that with you. When the doctor gives you a prescription, hand them a list and say hey is that drug on here and if not, will one of these work instead.

Also ask your pharmacist for help. If your doctor gives you a prescription, you get to the drugstore, it's ridiculously expensive, say hey, call my doctor and ask if there's something else. Also another thing you can do, if an expensive drug is truly the only drug that's going to work for you, consider a prescription assistance plan. A lot of pharmaceutical companies have these, they can help you out in many cases with the expensive drugs that you need to take.

ROMANS: And that's like going the Merck Web site or calling Merck or calling the drug companies and say, hey look, I got to take this expensive drug you have, I can't afford this drug. What program do you have for me?

COHEN: Exactly. Right, go the Web site for the company or call their 1-800 number, see if they can help you out.

ROMANS: Great tips to save some money. Elizabeth Cohen, thank you so much. And don't forget to catch Elizabeth's special report, "The Empowered Patient," it airs tonight and tomorrow night 7:00 p.m. Eastern, right here on CNN.

Airline fares are rising, so we decided to find you some great deals. Bargain fall getaways, that's next.


ROMANS: From sky-high ticket price and fees and surcharges, travel isn't what it used to be. Here to break down some of the biggest changes and give you some affordable alternatives, yes there are some affordable alternatives for the next getaway, Mark Orwoll, international editor at "Travel + Leisure."

First of all the fees, the fees, the fees. Is it ever going to end?

MARK ORWOLL, "TRAVEL + LEISURE": You know, probably not. But, and in fact, they are getting higher. You know, it used to be they would charge you $15 for your first checked bag. Now it's closer to $23 or $25.

ROMANS: And if they lose that bag?

ORWOLL: You don't get your money back. You don't get that fee back.

ROMANS: Oh, that drives me crazy.

ORWOLL: Yeah, it's unfair. The -- they are charging for peak travel days, a surcharge. You know, they raised the fares during Thanksgiving and Christmas, but they're also now tacking on $20 to $40 round trip surcharge for those peak travel days. The DOT is looking into this. I don't know that we'll get rid of them, but at lease what they can do is make it more transparent so that people, consumers, can know exactly what is in store when they're buying an airline ticket.

ROMANS: Oh yeah, people really are very angry with this. The mail we get about this is just unparalleled. Credit card fees and airline fees are the things that people hate the most, but you did find some good fall holiday and holiday travel. There are some bargains out there -- Montreal.

ORWOLL: Yes, Montreal one of the most beautiful cities in North America, one of the most beautiful cities in the world, actually, especially the old section. I love it. We were just talking about it. It's a real meat lovers paradise. Great food. And the queen of hotels in Montreal is the Fairmont Queen Elizabeth. Beautiful property. It's been leading hotel there for over 50 years. All the heads of state have stayed here, like Queen Elizabeth, II, herself, has stayed here. John Lennon and Yoko Ono stays -- their famous "Bed- In" in there in 1969. If you want to stay, it's your own bed-in, there's a deal going on $210 a night including breakfast, it's a 25 percent savings at one of the top hotels.

ROMANS: Palm Springs, there's 40 percent savings in Palm Springs, as well.

ORWOLL: That's right. It's at the Hyatt Grand Champions Resort. It's actually nearby Indian Wells. They've got -- it's going to be $240 and it's great for a family because not only are you going to get to take advantage of the golf and the tennis and the swimming pools there, but you're going to go on a private safari at the Living Desert Museum. It's got desert southwest animals, it has Africa animals all in naturally landscape surroundings. You even get to -- the kids get to feed the giraffes, there -- $240, they call it the "T&L Explorer Package" at the Hyatt Grand Champions.

ROMANS: And that's a good family package. And then, OK, it's still hurricane season, but you say the Ritz-Carlton, Rose Hall, in Jamaica is a good deal. ORWOLL: It is. and right now, you can get a deal. This is a former sugar plantation, one of the top resorts in Jamaica -- $189. That's 25 percent savings. They also have a stay four nights only pay for three. This is at a Ritz-Carlton resort. Fabulous. They've got golf there, they've got five restaurants, the rooms are all huge, secluded beach -- couldn't be better.

ROMANS: OK, so you're going to be hearing headlines about fees and about fares going up, but if you're smart and you keep looking around, you're going to be able to find some deals.

ORWOLL: Absolutely, be a smart traveler you will get some deals.

ROMANS: All right, Mark Orwoll, international editor for "Travel + Leisure," thanks for dropping by.

ORWOLL: Thanks.

ROMANS: All right, if you're taking the kids along in your travels this fall, you're in luck. Lots of airlines offer free swags for the little ones onboard, and we're not just talking about those little, you know, the little airplane wings. On southwest kids are given activity kits with postcards, playing card, a coloring book and colored pencils. Ask for it.

American offers a first time flyer certificate signed by the pilots and flight attendants. If you're flying internationally, Qantas and Singapore airlines offer free toys and activity kits in Sesame Street and Cartoon Network themes.

And for kids celebrating a birthday on an Emirates flight, a free birthday cake and a picture to commemorate their flight. Just be sure to let the airline know about the birthday at the time you make the reservations. Airlines don't always have these goodies on hand, but it certainly never hurts to ask. And sorry, there are n No goodies for the poor souls sitting in front of those little kiddies when they keep kicking the back of your seat.

That's going to wrap things up for us, but don't forget to join us for YOUR MONEY today at 1:00 p.m. Eastern for the very latest on the status of the Bush tax cuts. Time now for a quick check of your top stories, this morning. CNN SATURDAY continues, right now.