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Archive for Thursday, May 3, 2007

Forever’ stamps might not be a good bargain

May 3, 2007

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I used to proudly proclaim I was a bargain shopper. I would get goose bumps when I saw a store sign that said, "Save Now."

But the truth about money is that when you spend, you never save. Yes, if you buy one pair of shoes for full price and get a second pair for half off, you may have gotten a bargain. However, you have not saved a penny. You've just spent less.

I'm reminded of that as I contemplate whether I should stock up on the U.S. Postal Service's new "Forever" postage stamps. They were introduced to help ease consumers' aggravation at having to pony up additional postage because of an increase in the price of a first-class stamp. The stamps are called "forever" because they will be good for any future single-piece first-class envelope weighing one ounce or less, no matter how prices might change in the future.

The Forever stamp's launch comes as the cost of mailing a first-class letter is about to rise again to 41 cents, from 39 cents, effective May 14. But you don't have to wait until then to purchase the Forever stamp. It is available now for 41 cents, although you might want to wait to use them until May 14 or thereafter. The stamp depicts the Liberty Bell with the word "forever" printed on it. And there is no limit to how many you can buy. So far the Postal Service has sold more than 500 million Forever stamps. In anticipation of demand, the service has printed 5 billion, according to Mark Saunders, a Postal Service spokesperson.

So should you rush out and stockpile sheets of this stamp?

I wouldn't. And I wouldn't for the same reason I'm financially cautious about filling my pantry with food and household items I might not use for months.

Before you buy in bulk, consider the cost of having that money tied up in items you won't use for quite some time. It's like the frequent sales at the grocery store. If you see a sale of 10 bottles of apple juice for $10, is it always a good deal to buy all 10?

The answer: It depends. If you have three kids like I do, you may in fact go through those 10 bottles in just a week or two. And because the juice might not be on sale for another three weeks, it could be a good buy. However, if it will take weeks or even months before you use that juice or some other item, then you should keep the money in the bank and earn interest on it. Or put that money toward the purchase of something you really need.

In the case of the Forever stamp, the same strategy should apply. The stamp would be a good bulk buy if you know you'll have a lot of mail to send after there is an announcement of another future rate increase. Just make sure you buy before that increase takes effect because the cost of the Forever stamp will sell at the new one-ounce, single-piece first-class mail price.

The good news is there's no need to fear massive hikes in the cost of mailing a letter. Last December, President Bush signed the Postal Accountability and Enhancement Act, the first major change to the Postal Service since 1971. The law requires that postal rate increases be tied to the rate of inflation, as measured by the government's Consumer Price Index.

Since 1983, the last year that the Postal Service received a federal subsidy, the price of a first-class stamp has remained at or near the rate of inflation, Saunders said.

Under the new law, the Postal Service has the option of applying for one more rate increase by Dec. 20 - after that date the inflation linkage takes effect.

While you may not want to hoard Forever stamps just yet, there are some postal pricing changes that clearly are a good deal. The Postal Service is switching some of its pricing to reflect differences in envelope and package size.

The current pricing structure relies primarily on a weight-based system. Under the current system, a two-ounce letter, a two-ounce flat envelope and a two-ounce parcel all cost 63 cents to mail. The new shape-based system, which also goes into effect May 14, combines weight with shape to allow pricing to be aligned with processing costs, says Postal Service spokesman Dave Partenheimer.

So, for example, if the contents of a first-class large envelope are folded and placed in a regular letter-sized envelope, it will cost 58 cents to mail instead of the new pricing of 97 cents.

The cost for many wedding invitations, which typically weigh two ounces, will drop to 58 cents from 63 cents, under the shape-based system.

I like this new approach. The Postal Service should be applauded for creating a pricing structure that will reduce the amount you'll spend to mail some items. And notice I didn't use the word "save."

Comments

redneckwoman 7 years, 9 months ago

Do you mean when I have a stack of bills (every two weeks) I'm going to have to go to the post office every time to get different postage just because the envelope they sent me is the wrong size?

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