How Long Is The Grace Period?

The grace period is the number of days you have to pay your bill in full without triggering a finance charge. For example, the credit card company may say that you have “25 days from the statement date, provided you paid your previous balance in full by the due date.” The statement date is given on the bill.

The grace period usually applies only to new purchases. Most credit cards do not give a grace period for cash advances and balance transfers. Instead, interest charges start right away.

If you carried over any part of your balance from the preceding month, you may not have a grace period for new purchases. Instead, you may be charged interest as soon as you make a purchase (in addition to being charged interest on the earlier balance you have not paid off). Look on the credit card application for information about the “method of computing the balance for purchases” to see if new purchases are included or excluded.

Building A Better Credit Report

If you've ever applied for a credit card, a personal loan, or insurance, there's a file about you. This file is known as your credit report. It is chock full of information on where you live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. Consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses with a legitimate need for it. They use the information to evaluate your applications for credit, insurance, employment, or a lease.

Having a good credit report means it will be easier for you to get loans and lower interest rates. Lower interest rates usually translate into smaller monthly payments.

What are the APRs?

The annual percentage rate--APR--is the way of stating the interest rate you will pay if you carry over a balance, take out a cash advance, or transfer a balance from another card. The APR states the interest rate as a yearly rate.

Multiple APRs

A single credit card may have several APRs:

One APR for purchases, another for cash advances, and yet another for balance transfers. The APRs for cash advances and balance transfers often are higher than the APR for purchases (for example, 14% for purchases, 18% for cash advances, and 19% for balance transfers).

Tiered APRs. Different rates are applied to different levels of the outstanding balance (for example, 16% on balances of $1–$500 and 17% on balances above $500).

A penalty APR. The APR may increase if you are late in making payments. For example, your card agreement may say, “If your payment arrives more than ten days late two times within a six-month period, the penalty rate will apply.”

An introductory APR. A different rate will apply after the introductory rate expires.

A delayed APR. A different rate will apply in the future. For example, a card may advertise that there is “no interest until next March.” Look for the APR that will be in effect after March.

If you carry over a part of your balance from month to month, even a small difference in the APR can make a big difference in how much you will pay over a year.

Fixed vs. variable APR

Some credit cards are “fixed rate”--the APR doesn’t change, or at least doesn’t change often. Even the APR on a “fixed rate” credit card can change over time. However, the credit card company must tell you before increasing the fixed APR.
Other credit cards are “variable rate”--the APR changes from time to time. The rate is usually tied to another interest rate, such as the prime rate or the Treasury bill rate. If the other rate changes, the rate on your card may change, too. Look for information on the credit card application and in the credit card agreement to see how often your card’s APR may change (the agreement is like a contract--it lists the terms and conditions for using your credit card).

Buying A Used Car

"I can’t wait to get my own car."

Sound familiar? Before you start shopping for a used car with a teenager you know, do some homework. It may save you serious money. Consider driving habits, what the car will be used for, and your budget. Research models, options, costs, repair records, safety tests, and mileage through libraries, book stores, and web sites.

Cash or Credit?
Once you’ve settled on a particular car, you have two payment options: paying in full or financing over time. Financing increases the total cost of the car because you’re also paying for the cost of credit, including interest and other loan costs. You also must consider how much money you can put down, the monthly payment, the loan term, and the Annual Percentage Rate (APR). Rates usually are higher and loan periods shorter on used cars than on new ones. Dealers and lenders offer a variety of loan terms. Shop around and help your teenager negotiate the best possible deal. Be cautious about financing offers for first-time buyers. They can require a big down payment and a high APR. To get a lower rate, you may decide to cosign the loan for your teen. If money is tight, you might consider paying cash for a less expensive car than you first had in mind.

Dealer or Private Sale?
The Federal Trade Commission’s Used Car Rule requires dealers to post a Buyers Guide in every used car they offer for sale. The Buyers Guide gives a great deal of information, including:

whether the vehicle is being sold "as is" or with a warranty;

what percentage of the repair costs a dealer will pay under the warranty;

the fact that spoken promises are difficult to enforce; and

the major mechanical and electrical systems on the car, including some of the major problems you should look out for.

The Buyers Guide also tells you to:

get all promises in writing;

keep the Buyers Guide for reference after the sale; and

ask to have the car inspected by an independent mechanic before the purchase.

Buying a car from a private individual is different from buying from a dealer. That’s because private sales generally aren’t covered by the Used Car Rule, or by "implied warranties" of state law. A private sale probably will be "as is" — you’ll have to pay for anything that goes wrong after the sale.

Before You Buy...
Whether you buy a used car from a dealer or an individual:

examine the car using an inspection checklist. You can find checklists in magazines and books and on Internet sites that deal with used cars;

test drive the car under varied road conditions — on hills, highways, and in stop-and-go-traffic;

ask for the car’s maintenance record from the owner, dealer, or repair shop;

and hire a mechanic to inspect the car.

Other Costs to Consider
There’s more to buying a car than just paying for it. Other items to budget for include insurance, gas, maintenance and repairs. Here are some tips to help you save money:

Compare coverage and premiums with several insurance companies. Buy from a low-price, licensed insurer, or add your teen to your policy. Some companies offer discounts to students with good grades. Remind your teenager that it pays to drive safely and observe speed limits. Traffic violations can cost money in tickets and higher insurance premiums.

Pump your own gas and use the octane level your owner’s manual specifies.

Gold and Platinum Cards

If you're looking for credit, be wary of some 'gold' or 'platinum' card offers promising to get you credit cards or improve your credit rating.

While sounding like general-purpose credit cards, some 'gold' or 'platinum' cards permit you to buy merchandise only from specialized catalogues. Marketers of these credit cards often promise that by participating in their credit programs, you will be able to get major credit cards (such as an unsecured Visa or MasterCard), lines of credit from national specialty and department stores, better credit reports, and other financial benefits.

Rarely, however, can you improve your credit rating or get major credit cards by buying 'gold' or 'platinum' credit cards. Often the only major credit card you might get is a secured credit card that requires a substantial security deposit with a bank. In addition, many of these credit-card offerors do not report to credit bureaus as they promise, and their cards seldom help secure lines of credit with other creditors.

Such 'gold' and 'platinum' credit-card offers usually are promoted through television or newspaper advertisements, direct mail, or telephone solicitations using automatic dialing machines and recorded messages. People who live in lower-income areas often are the target of these sales pitches.

Watch Out For...

Be wary of 'gold' and 'platinum' card promotions that:

Charge upfront fees, without saying there may be additional costs.

Some 'gold' or 'platinum' card promoters charge $50 or more for their cards. Only after you agree to pay this fee are you told there's an additional fee, sometimes $30 or more, to get the merchandise catalogues. Yet, these catalogues are the only places you can use the cards.

Use '900' or '976' telephone exchanges.

Ads for ' gold' and 'platinum' cards may urge you to call numbers with '900' or '976' exchanges for more information. You pay for phone calls with these prefixes -- even if you never get the 'gold' or 'platinum' card. The cost for these calls can be high.

Misrepresent prices and payments for merchandise.

You're not allowed to charge the total amount when you buy merchandise from 'gold' or 'platinum' card catalogues. Instead, you often must pay a cash deposit on each item you charge -- an amount usually equal to what the company paid for the product. Only after you pay your deposit can you charge the balance. Also, catalogue prices can be much higher than discount store prices.

Promise to easily get you "better credit."

Marketers of 'gold' and 'platinum' cards often claim its easy to get major credit cards after using their cards for a few months. In fact, the only major cards you usually can get through these marketers are secured. A secured card requires you to open and maintain a savings account as security for your line of credit. The required deposit may range from a few hundred to several thousand dollars. Your credit line is a percentage of the deposit, typically 50 to 100 percent.

How To Protect Yourself

Follow these precautions to avoid becoming a victim of 'gold' and 'platinum' card scams:

Think twice about any offer to get "easy credit."

Be skeptical of promises to erase bad credit or to secure major credit cards regardless of your past credit problems. There are no "easy" solutions to a poor credit rating that's based on accurate information. Only time and good credit habits will restore your credit worthiness.

Investigate an offer before enrolling.

Contact your local Better Business Bureau, consumer protection agency, or state Attorney General's office to see if any complaints have been filed against a particular promoter of 'gold' or 'platinum' cards.

If a marketer promises that a card is accepted at certain retail chains, verify it with the stores.

If a marketer assures you that reliable information about you will be reported to credit bureaus, call the bureaus to confirm that the merchant is a member. Unless 'gold' or 'platinum' card merchants are subscribers to credit bureaus, they won't be able to report information about your credit experience.

Be cautious about calling '900' or '976' telephone numbers.

Calls to numbers with '900' or '976' prefixes cost money. Don't confuse these exchanges with toll-free '800' numbers. If you dial a pay-per-call number mistakenly, contact your local phone company immediately. They may be able to remove the charge from your bill.

Cosigning A Loan

Cosigning a Loan

What would you do if a friend or relative asked you to cosign a loan? Before you answer, make sure you understand what cosigning involves. Under federal law, creditors are required to give you a notice that explains your obligations. The cosigner’s notice states:

You are being asked to guarantee this debt. Think carefully before you do. If the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

The creditor can collect this debt from you without first trying to collect from the borrower.* The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

This notice is not the contract that makes you liable for the debt.

* Depending on your state, this may not apply. If state law forbids a creditor from collecting from a cosigner without first trying to collect from the primary debtor, this sentence may be crossed out or omitted altogether.

Cosigners Often Pay

Studies of certain types of lenders show that for cosigned loans that go into default, as many as three out of four cosigners are asked to repay the loan. When you're asked to cosign, you're being asked to take a risk that a professional lender won't take. If the borrower met the criteria, the lender wouldn't require a cosigner.

In most states, if you cosign and your friend or relative misses a payment, the lender can immediately collect from you without first pursuing the borrower. In addition, the amount you owe may be increased — by late charges or by attorneys’ fees — if the lender decides to sue to collect. If the lender wins the case, your wages and property may be taken.

If You Do Cosign

Despite the risks, there may be times when you want to cosign. Your child may need a first loan, or a close friend may need help. Before you cosign, consider this information:

Be sure you can afford to pay the loan. If you're asked to pay and can't, you could be sued or your credit rating could be damaged.

Even if you're not asked to repay the debt, your liability for the loan may keep you from getting other credit because creditors will consider the cosigned loan as one of your obligations.

Before you pledge property to secure the loan, such as your car or furniture, make sure you understand the consequences. If the borrower defaults, you could lose these items.

Ask the lender to calculate the amount of money you might owe. The lender isn't required to do this, but may if asked. You also may be able to negotiate the specific terms of your obligation. For example, you may want to limit your liability to the principal on the loan, and not include late charges, court costs, or attorneys' fees. In this case, ask the lender to include a statement in the contract similar to: "The cosigner will be responsible only for the principal balance on this loan at the time of default."

Ask the lender to agree, in writing, to notify you if the borrower misses a payment. That will give you time to deal with the problem or make back payments without having to repay the entire amount immediately.

Make sure you get copies of all important papers, such as the loan contract, the Truth-in-Lending Disclosure Statement, and warranties — if you're cosigning for a purchase. You may need these documents if there's a dispute between the borrower and the seller. The lender is not required to give you these papers; you may have to get copies from the borrower.

Check your state law for additional cosigner rights.

Buying A New Car

Buying A New Car

A new car is second only to a home as the most expensive purchase many consumers make. That’s why it’s important to know how to make a smart deal.

Buying Your New Car

Think about what car model and options you want and how much you’re willing to spend. Do some research. You’ll be less likely to feel pressured into making a hasty or expensive decision at the showroom and more likely to get a better deal.

Consider these suggestions:

Check publications at a library or bookstore, or on the Internet, that discuss new car features and prices. These may provide information on the dealer’s costs for specific models and options.

Shop around to get the best possible price by comparing models and prices in ads and at dealer showrooms. You also may want to contact car-buying services and broker-buying services to make comparisons.

Plan to negotiate on price. Dealers may be willing to bargain on their profit margin, often between 10 and 20 percent. Usually, this is the difference between the manufacturer’s suggested retail price (MSRP) and the invoice price.
Because the price is a factor in the dealer’s calculations regardless of whether you pay cash or finance your car — and also affects your monthly payments — negotiating the price can save you money.

Consider ordering your new car if you don’t see what you want on the dealer’s lot. This may involve a delay, but cars on the lot may have options you don’t want — and that can raise the price. However, dealers often want to sell their current inventory quickly, so you may be able to negotiate a good deal if an in-stock car meets your needs.

Learning the Terms

Negotiations often have a vocabulary of their own. Here are some terms you may hear when you’re talking price.

Invoice Price is the manufacturer’s initial charge to the dealer. This usually is higher than the dealer’s final cost because dealers receive rebates, allowances, discounts, and incentive awards. Generally, the invoice price should include freight (also known as destination and delivery). If you’re buying a car based on the invoice price (for example, “at invoice,” “$100 below invoice,” “two percent above invoice”) and if freight is already included, make sure freight isn’t added again to the sales contract.

Base Price is the cost of the car without options, but includes standard equipment and factory warranty. This price is printed on the Monroney sticker.

Monroney Sticker Price (MSRP) shows the base price, the manufacturer’s installed options with the manufacturer’s suggested retail price, the manufac-turer’s transportation charge, and the fuel economy (mileage). Affixed to the car window, this label is required by federal law, and may be removed only by the purchaser.

Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

Financing Your New Car

If you decide to finance your car, be aware that the financing obtained by the dealer, even if the dealer contacts lenders on your behalf, may not be the best deal you can get. Contact lenders directly. Compare the financing they offer you with the financing the dealer offers you. Because offers vary, shop around for the best deal, comparing the annual percentage rate (APR) and the length of the loan. When negotiating to finance a car, be wary of focusing only on the monthly payment. The total amount you will pay depends on the price of the car you negotiate, the APR, and the length of the loan.

Sometimes, dealers offer very low financing rates for specific cars or models, but may not be willing to negotiate on the price of these cars. To qualify for the special rates, you may be required to make a large down payment. With these conditions, you may find that it’s sometimes more affordable to pay higher financing charges on a car that is lower in price or to buy a car that requires a smaller down payment.

Before you sign a contract to purchase or finance the car, consider the terms of the financing and evaluate whether it is affordable. Before you drive off the lot, be sure to have a copy of the contract that both you and the dealer have signed and be sure that all blanks are filled in.

Some dealers and lenders may ask you to buy credit insurance to pay off your loan if you should die or become disabled. Before you buy credit insurance, consider the cost, and whether it’s worthwhile. Check your existing policies to avoid duplicating benefits. Credit insurance is not required by federal law. If your dealer requires you to buy credit insurance for car financing, it must be included in the cost of credit. That is, it must be reflected in the APR. Your state Attorney General also may have requirements about credit insurance. Check with your state Insurance Commissioner or state consumer protection agency.

Trading in Your Old Car

Discuss the possibility of a trade-in only after you’ve negotiated the best possible price for your new car and after you’ve researched the value of your old car. Check the library for reference books or magazines that can tell you how much it is worth. This information may help you get a better price from the dealer. Though it may take longer to sell your car yourself, you generally will get more money than if you trade it in.

Considering a Service Contract

Service contracts that you may buy with a new car provide for the repair of certain parts or problems. These contracts are offered by manufacturers, dealers, or independent companies and may or may not provide coverage beyond the manufac-turer’s warranty. Remember that a warranty is included in the price of the car while a service contract costs extra.

Before deciding to purchase a service contract, read it carefully and consider these questions:

What’s the difference between the coverage under the warranty and the coverage under the service contract?

What repairs are covered?

Is routine maintenance covered?

Who pays for the labor? The parts?

Who performs the repairs? Can repairs be made elsewhere?

How long does the service contract last?

What are the cancellation and refund policies?

Billed For Merchandise You Never Received?

Here's What To Do.

You found the perfect set of linens in a mail order catalog. You call to place your order and charge it to your credit card. You're told that your linens should arrive in two weeks. Two weeks go by, then three and four, and still no linens. What you do get is your credit card bill with a charge from the catalog company.

So, just what do you do when you get a credit card bill but no merchandise? Get frustrated, to be sure.

But the error can be corrected. The Fair Credit Billing Act (FCBA) and the Mail or Telephone Order Merchandise Rule offer protections and procedures for consumers so they don't have to pay for merchandise they ordered but never received.

In addition, many credit card issuers have policies against merchants charging a credit card account before shipment. If you think a merchant charged your account prematurely, report it to the credit card issuer. Otherwise, the credit card issuer has no way to know that the merchant is not complying with its policies.

The Fair Credit Billing Act

To dispute a billing error on your credit card, you must:

Write to the credit card issuer at the address for "billing inquiries," not the address for sending your payments (the address for billing inquiries is often found on the back of your most recent monthly statement); include your name, address, account number and a description of the billing error.

See the sample letter below.

Send your letter so that it reaches the credit card issuer within 60 days after the first bill containing the error was mailed to you.

Send your letter by certified mail, return receipt requested, so you have proof of what the credit card issuer received. Include copies (not originals) of sales slips or other documents that support your position. Keep a copy of your dispute letter.

It is important to send the letter to the correct company. In the case of Visa and MasterCard, you should send it to the bank that issued the card.

The credit card issuer must acknowledge your complaint in writing within 30 days after receiving it, unless the problem has already been resolved. And the credit card issuer must resolve the dispute within two billing cycles (but not more than 90 days) after receiving your letter.

What happens while your bill is in dispute?

You may withhold payment on the disputed amount (and related charges), during the investigation, but you must pay any part of the bill not in question, including any finance charges on the undisputed amount.

The credit card issuer may not take any legal or other action to collect the disputed amount and the related charges (including finance charges) during the investigation. While your account cannot be closed or restricted, the disputed amount may be applied against your credit limit.
You placed an order with a catalog company and they charged your credit card immediately. The catalog company contacts you two weeks later and says the shipment will be delayed 60 days. You agree to the delay. The 60 days have passed and you don't have the merchandise. Can you still dispute the charge?

Maybe. In delayed shipment situations, credit card issuers often are more generous when they calculate the time for allowing disputes. To take advantage of this flexibility, include the following information in your dispute letter.

Tell the credit card issuer if the premature charge was unexpected. Some credit card issuers make an exception to the general industry rule against merchants charging before shipping if the merchant tells you about its practice at the time of sale. If you're certain the merchant said nothing or wasn't clear about its charge practice, the credit card issuer is more likely to allow the dispute.

Tell the credit card issuer when delivery was expected. In no delivery situations, some credit card issuers will use the expected date of delivery rather than the charge date as the start time for you to dispute charges. If you dispute the charge within a reasonable time after the expected delivery date passes, chances are good that the credit card issuer will honor the dispute. When you order or when a merchant notifies you of delayed shipment, it's important to keep a record of the promised shipment or delivery date. Include a copy of any documentation of the shipment or delivery date when disputing the charge with your credit card issuer.

What if you used a debit card to pay for the merchandise? The consumer protections for a debit card fall under the Electronic Fund Transfer Act and may differ from protections for a credit card under the FCBA. So you may not be able to dispute a debit and get a refund for nondelivery or late delivery. Still, some debit card issuers voluntarily offer protections and solutions to problems like the failure to receive merchandise bought with a debit card. Contact your debit card issuer for more information about particular policies and protections.
What if you financed your purchase through the merchant? If you financed your purchase through the merchant, you also may have protections under state and federal law. Check your credit contract for the following language: Notice: Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained with the proceeds hereof. It means that you may be able to claim that the seller failed to deliver the goods as stated in your credit contract.

Sample Dispute Letter

Date
Your Name
Your Address, City, State, Zip Code
Your Account Number

Name of Credit Card Issuer
Billing Inquiries Address, City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute a billing error in the amount of $______on my account. The amount is inaccurate because the merchandise I ordered was not delivered. I ordered the merchandise on (date) . The merchant promised to deliver the merchandise to me on (date) , and the merchandise was not delivered. (In addition, when I ordered the merchandise, the merchant did not tell me that it would charge before shipping.)

I am requesting that the error be corrected, that any finance and other charges related to the disputed amount be credited to my account, and that I receive an accurate statement.
Enclosed are copies of (use this sentence to describe any enclosed information, such as sales slips, payment records, documentation of shipment or delivery dates) supporting my position and experience. Please correct the billing error promptly.

Sincerely,

Your name

Enclosures: (List what you are enclosing.)

***

The Mail or Telephone Order Merchandise Rule

This rule covers merchandise you order by mail, telephone, computer and fax. It requires merchants to have a reasonable basis for claiming they can ship an order within a certain time.

Ship Dates

By law, a merchant should ship your order within the time stated in its ads or over the phone. If the merchant doesn't promise a time, you can expect it to ship your order within 30 days.

The shipment "clock" begins when the merchant receives a "properly completed order." That includes your name, address and payment (check, money order or authorization to charge an existing credit account - whether the account is debited at that time or not).

If the merchant doesn't promise a shipping time and you are applying for credit to pay for your purchase, the merchant has an additional 20 days (50 days total) to establish the account and ship the merchandise.

Delays

If the merchant is unable to ship within the promised time, it must notify you by mail, telephone, or email, give a revised shipping date and give you the chance to cancel for a full refund or accept the new shipping date. The merchant also must give you some way to exercise the cancellation option for free, for example, by supplying a prepaid reply card or staffing a toll-free telephone number.

If you ignore the option notice, and the delay is 30 days or less, it's assumed that you accept the delay and are willing to wait for the merchandise.

If you do not respond - and the delay is more than 30 days - the order must be canceled by the 30th day of the delay period and a full refund issued promptly.

If the merchant can't meet the revised shipping date, it must notify you again by mail, email or telephone and give you a new shipping date or cancel your order and give you a refund.

The order will be canceled and a refund issued promptly unless you indicate by the revised shipping date that you are willing to wait.

If you do not respond at all to the second notice, it's assumed that you are not willing to wait, and a full refund must be issued promptly.

Refunds

If you authorized a charge to your credit card account, the merchant must credit the account within one billing cycle - not give credit toward another purchase. If you pay by cash, check or money order, the merchant must mail you a refund within seven working days.

Tips for Shopping by Phone, Mail or Online

Consider your experience with the company or its general reputation before you order. If you've never heard of the seller, check on its physical location and reputation with the local Better Business Bureau or the state Attorney General's office.

Ask about the company's refund and return policies, the product's availability and the total cost of your order before you place your order.

Get a shipment date.

Keep records of your order, such as the ad or catalog from which you ordered; the company's name, address and phone number; any shipment representation the company made to you and when it made it; the date of your order; a copy of the order form you sent to the company or, if you're ordering by phone, a list of the items and their stock codes and the order confirmation code; your canceled check or the charge or debit statement showing the charge for your order; and any communications to or from the company.

Track your purchases. When you order online, keep printouts of the web pages with the details of the transaction, including the merchant's return policies, in case you're not satisfied.

Avoiding Credit and Charge Card Fraud

A thief goes through trash to find discarded receipts or carbons, and then uses your account numbers illegally.

A dishonest clerk makes an extra imprint from your credit or charge card and uses it to make personal charges.

You respond to a mailing asking you to call a long distance number for a free trip or bargain-priced travel package. You're told you must join a travel club first and you're asked for your account number so you can be billed. The catch! Charges you didn't make are added to your bill, and you never get your trip.

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways. For example, someone may use your card number without your knowledge.

It's not always possible to prevent credit or charge card fraud from happening. But there are a few steps you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility.

Guarding Against Fraud

Here are some tips to help protect yourself from credit and charge card fraud.

Do:

Sign your cards as soon as they arrive.

Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.

Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.

Keep an eye on your card during the transaction, and get it back as quickly as possible.
Void incorrect receipts.

Destroy carbons.

Save receipts to compare with billing statements.

Open bills promptly and reconcile accounts monthly, just as you would your checking account.

Report any questionable charges promptly and in writing to the card issuer.

Notify card companies in advance of a change in address.

Don't:

Lend your card(s) to anyone.

Leave cards or receipts lying around.

Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.

Write your account number on a postcard or the outside of an envelope.

Give out your account number over the phone unless you're making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Reporting Losses and Fraud

If you lose your credit or charge cards or if you realize they've been lost or stolen, immediately call the issuer(s). Many companies have toll-free numbers and 24-hour service to deal with such emergencies. By law, once you report the loss or theft, you have no further responsibility for unauthorized charges.

If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase(s) in question.

Allowance

Here is an excerpt of an interesting article I found online from the YoungInvestor.com Web site:

***

ALLOWANCE -- THE WHOLE SCOOP

I want an allowance!The first step in asking for an allowance is doing your homework. "Not more homework," you may be saying. "I get enough of that from school." But the more you know, the better prepared you will be to ask for an allowance.

Are you ready for a little investigation work? To find out how much of an allowance to ask for, you can do two things. First, ask others. Check with friends, brothers and sisters to find out how much of an allowance they receive. Next, put on your thinking cap. Why do you ask your parents for money - to buy lunch, go to the movies, or buy an ice cream? How much do some of these things cost? With an allowance, the money you get from your parents can now be managed by you. You can now be responsible for paying for these things.

Lastly, since you know your parents better than anybody, think of some questions they may ask you or objections they may have. Think of how you will answer them. It's like having the answers to a test question before you have the test.

Now you're ready to ask for an allowance.

How do I ask for an allowance?Set a time that you and your parents can sit down to talk. Pick a time when it's not too hectic and when there won't be interruptions. Before school, when you're running late and you're going to miss your bus, is probably not a good time to bring up the idea of an allowance.

When you've found the right time, start by explaining the homework you did to prepare for this talk. Tell them how you polled different kids to find out how much allowance they receive. Explain how you thought really hard about the different things that you could pay for instead of relying upon your parents.Since you did your homework and prepared yourself for their questions and objections, you will be ready with quick, thoughtful answers. Wow, won't they be impressed!

I got it! Now what do I do?You may be thinking SPEND, SPEND, SPEND. But you should be thinking BUDGET, BUDGET, BUDGET. A budget helps in many ways. It helps you know how much money you have to spend and how much you need to save. You can save to buy something that costs more than your usual allowance. You may need to put money aside for weeks or months to buy that special toy or pair of sneakers you want. With a budget, you can keep track of the money you put aside. Then, you'll know when you have enough for that special purchase. It also helps to save for future needs like school tuition. Our article, "Budgeting: Your Tool to Balance Saving & Spending," can get you started on creating a budget.

An allowance can give you the money you want but it also comes with responsibility and independence from your parents. An allowance can help you set priorities for spending and saving money. That may be hard to remember at times, but it's an important part of an allowance.

I didn't get it, now what do I do?There can be many reasons your parents may say no to an allowance. They don't believe in giving allowances; they think you are too young; they can't afford to pay an allowance separate from the family budget.

If they think you are too young, try again in the future. If they don't mind you having money of your own, think about other ways that you can earn it. There are lots of ways kids can make money. For example, kids can:

Wash cars
Rake leaves
Shovel snow
Sell lemonade
Sell baked goods
Deliver papers
Clean garages, attics, basements
Wrap holiday gifts
Walk or care for animals

These are all ideas that can help you earn money or add to your existing allowance.

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Any other ideas on how kids can earn an allowance?

Vantage Credit Score: The Three Major Credit Bureaus Introduce Vantage Score

I found this press release today and thought it was an interesting read. It was written by Robert Paisola of Western Capital.

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Today the major credit bureaus, Equifax, Trans Union and Experian rolled out a new credit scoring system that will affect YOU! What it is...[sic]

Okay, now on to the credit report scoring systems. The scoring model system came into being about nine years ago. The Fair, Isaac Company, developed it a computer software designer (hence the acronym "FICO"). The scoring system is licensed out to The Big Three credit repositories, which in turn call it by individual names to help differentiate which repository is issuing which score. Experian calls their score a FICO; Equifax calls theirs the Enhanced Beacon; and Transunion calls theirs the Empirica Model.

The score that each repository issues on their individual reports is a reflection of the information that repository has on an individual in their respective credit files. So, the score issued by each repository will usually be different from the other repository's scores. The primary repository will usually have the most accurate score, and if the borrower has had any credit problems over the past few years, the primary repository will usually have the lowest credit score.

However, it will sometime work in reverse - if the borrower has recently cleaned up his credit history, the primary repository will usually have the most accurate updates, and in that case, the primary repository may likely show the highest score.

You can look at two different repository's reports on a borrower, and in reviewing the credit profiles; you usually can see what differences in the credit information are likely causing the different scores.

Vantage Score, How It Works

Using a complex matrix measuring over 30 different variables in an individual's credit profile, the Fair Isaacs program converts the profile into a numeric score which is added to an individual's credit report. That score is a reflection of the computer assigned credit risk for that individual. The intent is to reduce the amount of subjectivity credit decision makers (underwriters) inject into the risk analysis process. The most important variables for mortgage loans are as follows:

Mortgage history Derogatory Credit History Liens or Judgments Length of Credit History Depth of Credit History Proportion of Debt to Credit Balances Amount of Available Credit
Generically speaking, the scores can run from 0 to 1,000. The highest I have ever seen is an 889. However, it is generally accepted that anyone with a 700 credit score is A credit, and over 720 is AA credit. Individual lenders technically assign their own credit grades to the credit scores, but between various lenders they are usually pretty close as to what score constitutes what grade. Here is an approximation of the credit score/grade:

Score Credit Grade 720 and up AA 700 to 719 A 680 to 699 A-/B+ 660 to 679 B+/B 640 to 659 B 620 to 639 B-/C+/C 600 to 619 C/D 580 to 599 D/F 579 and below F

It is important to recognize that these scores are not just about derogatory credit history. They are about determining credit risk associated with a particular borrower, and points are added or taken away based on many different factors related to your credit profile.

For example, once you begin start using credit accounts, you are usually going to have a credit score in the 565 to 580 range. Why so low? Well, you are just starting out, and you have no credit history to rate. Once you have 12 months of usage on your accounts, you will begin adding points to your credit history. Or if you mess up, you will destroy your credit quickly, and then you really face a tough uphill climb.

You are considered high risk when you start out, because you haven't really proven yourself yet. As you slowly build credit over a year's time, your score will start climbing. But now the paradox sets in. Each time you add a new credit account to your history, your score will drop. Why? Because you have added more debt to your credit load. However, once you have shown the ability to handle the new debt as well, your score will recover, usually in about six months. Once you have a 12-month rating on the new account, you will start having points added to your credit score.

Over time, you build your credit up by scoring points. To score points, you have to use credit, and your creditors have to report your accounts to the credit bureaus. Having a $200 tab at a local restaurant won't help you a bit, no matter how good your payment record is.

You also have to pay your bills on time. Every time you show a late pay, you lose points, and it takes an awful long time to recover them. Once you show 36 months of timely payment history on any account, you are earning the maximum points. Generally speaking, you will have an excellent credit score when you have four major accounts ($1,500 credit limits or higher) all with 36 months spotless payment history, and all usually maintaining balances that are at or below 60% of your available credit limits.

A mortgage rating will boost your score even further. You start collecting points on a mortgage at 12 months, and max out at 36 months. Obviously, this too is where you will lose the most points if you have any late pays on your mortgage history, and where it takes you the longest to recover any lost points.

Where you see scores in the 770 and up range, you will usually see about 8 to 10 years history, with 3 to 4 revolving credit accounts that are rarely maxed out, a sterling mortgage history, and two or more major installment accounts (like car loans/leases) that have been paid off. If the report shows any late pays, it was likely a 30 day, one time, on a revolving account, over three years ago.

How about the guy who never misses a payment, always pays on time, and still only has a 640 credit score? Well, if he uses a lot of credit, it could be that he has too many accounts, and he carries high balances (over 60%) in relation to the credit limits. Or he could be making too many minimum monthly payments, instead of sizable payments. Or yesterday he had a 685 score, but today he has a new $25,000 credit card, with a new $20,000 balance on it. Or he has good credit, but he only has four accounts, no mortgage history, and three of the accounts are less than 24 months old.

The scoring model has weighted adjustments as well. The guy who has a strong credit history, and a lot of depth in his credit report, and blip... there pops up a 30 day late. Well, it's been 60 days since, and the late pay wasn't on a mortgage or a car loan, so he's probably going to lose about 3 points on his credit score. If it was a mortgage or a car loan, he will lose about 10 points.
The guy with the 660 score? He's probably going to lose about 10 points on a revolving account late... if it's a mortgage or car loan, he might lose as much as 20 points. At 620, the revolving late will cost him 15 to 20 points, and a mortgage or car late could cost him a 30-point reduction in his score.

See, a computer can't tell if you are a deadbeat, or under financial strain, or just nonchalant about paying your bills on time. And it really doesn't matter what the reason is. All the computer knows is that if your score was already low, and you are making late payments, you are a credit risk - by giving you a low score, indicating you are a high credit risk, the credit report tells the next guy to loan you money that he is probably going to regret it!

Reliability of Scoring Models

For a lot of people, it doesn't seem fair. But the truth is, with the advent of the scoring models, more people can borrow more money than ever before. Risk analysis has become more quantifiable, and lenders are more confident now with the predictability factors in their loan portfolio management. Thus, they are comfortable offering more loan programs, and managing the risk by adjusting the interest rates and loan to value ratios according to credit score.
The models aren't perfect, and a lot of mistakes still occur. But there has been extensive research and verification on the reliability of the scoring models, by heavyweights such as FNMA and FHLMC. The research holds up. If you are a 640 FICO, you are a greater risk than a 700 FICO individual. You personally may never have a problem on a new loan, but of all the loans that lender made to 640 FICO borrowers; he knows he is going to have a higher default rate that on the pool of loans he made to 700 FICO borrowers.

More than that, he knows approximately what the percentage rate difference of the defaults is going to be between the two groups, and he will adjust his interest rates to make up for the higher losses he is going to absorb for the lower scoring group. He has no way of knowing if it will be you, or the other 640 FICO individuals who default... only that it will happen at a higher rate than 700 FICO defaults. And of course, if you are a 600 FICO, the risk you pose more than doubles.

Now here's the fun part. Figuring out where you rate in terms of credit grade. For a car dealer, if you have two decent lines of credit, and you had a couple of payment problems over two years ago, but you have been clean since, even though your score is a 585, he's going to get you a loan. To build you up, he tells you that you have "A" credit, so you are not paying as much attention to the financing being at 14.99% instead of the 8.99% that a real "A" borrower is getting. And not knowing any better, you go out the door thinking you are an "A" credit borrower.

Same thing with some of the consumer loan companies, or electronics stores, carpet stores, furniture stores and so forth that either carry their own financing, or have profit sharing arrangements with consumer finance companies. It is worth keeping in mind that these types of companies can easily repossess the goods, or come after you in court, without a great deal of risk in terms of loss. It's a lot easier to get credit from those kinds of lenders.

Same things with credit card offers. But, these scores can make a big difference in the card offers you receive, what kind of credit limits they will ultimately give you, and what kind of interest rates they are going to charge - both introductory and long term.

If you have a 700 FICO score, everybody wants your business, and you are going to find your mailbox stuffed with credit card offers all the time. You are also going to see a lot of 2.9% and 3.9% promotional rates for as long as 12-month periods, $10,000 to $25,000 credit lines, and long term fixed rates as low as 7.99%.

If you are in the 660 to 699 range, you're mailbox is going to be stuffed too... and you'll probably see a lot of six month 2.9% to 3.9% introductory offers as well. But you'll likely see most of your long-term rates hovering in the 12.99% to 15.99% range.

Chances are, you'll still see a lot of credit card offers in the 620 to 659 range, but you are going to be getting mostly generic standard high rate credit card offers. Some will offer you 3.9% introductory rates, but most of them will be for about three months or so, and then the card cranks up to 17.99% or higher, on a variable rate basis.

From 600 to 619, you'll still get quite a few offers too, but not too many low introductory offers. You might even get one or two that might offer you up to a $5,000 credit limit, but most will be in the $1,000 to $3,000 range, and you'll be starting right out at the 17.99% and up variable rates.

With a 580 to 599 credit score, you'll be seeing a lot of offers too - but they will be for $500 to $1,000 credit lines, no introductory low rate offers, and most will be starting out in the 19.99% and up variable interest rate range. Many of the offers will be for secured cards - in other words, to get the card, you have to post a savings account deposit with the card issuer, and you will only get a credit limit equal to your deposit. Most of these plans limit you to $500 until you show a 12-month rating on the account.

So now we have the new and improved Vantage Score that will provide a universal method for credit grantors and consumers to monitor their credit worthiness.

This is an article that was released today on the new system:

The nation's three consumer credit reporting companies - Equifax, Experian and TransUnion - today jointly announced the introduction of a new credit score designed to simplify and enhance the credit process for both consumers and credit grantors. VantageScore is a direct result of market demand for a more consistent and objective approach to credit scoring methodology across all three national credit reporting companies. This approach is unprecedented in the marketplace.

The new VantageScore leverages the collective experience of the industry's leading experts on credit data, scoring and analytics. Under the new scoring system, credit score variance between credit reporting companies will be attributed to data differences within each of the three consumer credit files and not to the structure of the scoring model or data interpretation.
By combining cutting-edge, patent-pending analytic techniques with a highly intuitive scale for scoring, VantageScore will provide consumers and businesses with a highly predictive, consistent score that is easy to understand and apply. VantageScore uses score ranges from 501 to 990. Consumers and credit grantors alike will recognize the logical score groupings that approximate the familiar academic scale:

901-990 - A 801-900 - B 701-800 - C 601-700 - D 501-600 - F

VantageScore is being independently marketed and sold separately through each of the three national credit reporting companies via licensing agreements with VantageScore Solutions, LLC. VantageScore is commercially available...

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Have any of you experienced any lendors which use the Vantage scoring system from Equifax, Experian or TransUnion to evaluate your credit?

Get Good Credit Bill Payment Calendar System

This bill payment calendar system is based on a bi-weekly pay day cycle.

To make this system work effectively; use the first pay check of the month and pay that day, the bills due between that date of payment and the day prior to your second pay check.

Use the second pay check of the month and pay, that day, the bills due between that date of payment and the day prior to the first pay check of the following month. Continue this bi-weekly bill payment cycle even when there are three pay dates in that month. Billing statements will arrive referencing “$0.00 Due” for that month’s cycle.

If the monthly payment amount for that bill (e.g., cell phone) varies, make an advanced payment based on the estimated amount you have paid over approximately three months. Send an additional payment, if you receive a statement referencing any additional funds due which were in excess of your advanced payment.

Over the life of the loan, you will notice a reduction in the total amount of interest being paid.

Welcome

Thank you for stopping by.

I look forward to sharing thoughts, ideas and experiences about obtaining good credit.

Create yourself an incredible day.

:-)

Alton J. Jones
How To Get Good Credit Expert and Author of 'Evil Money Evil Credit'