Al Jones' How To Get Good Credit Gab

National Financial Capability Challenge Runs from March 12 to April 13, 2012‏

2011-11-06T15:08:00.002-07:00

On March 12, 2012 the Financial Capability Challenge kicks off, and will run until April 13, 2012. The Challenge, which is conducted by the Department of the Treasury in partnership with the Department of Education, offers high school students all over the country the opportunity to test their financial smarts. Last spring, over 84,000 high school students from over 1,600 schools participated in the Challenge. Let’s work together to increase the number of teachers and students participating in the Challenge and to improve the number of perfect scores! The 2011 Challenge saw 563 students receive perfect scores, with a national average score of 69%.

Financial knowledge is increasingly critical for young people, because a strong foundation of knowledge is important to good financial decision-making throughout their life. We hope that the Challenge encourages teachers to incorporate financial education into their classrooms, and will engage students in learning about personal finance. As high school students prepare to tackle the process of financing a college education or an automobile purchase, or even paying rent for their first apartment, they are often encountering concepts like interest rates on loans for the first time and the importance of good credit scores. By participating in the Challenge, students encounter and test their knowledge of these concepts before they face these decisions. The transition from high school to college is a teachable moment for personal finance, as topics take on real life relevancy. For example, two million enrolled college students eligible for Pell Grants did not apply for Federal aid, leaving money on the table [1] and two-thirds of students taking private loans did not exhaust more affordable, flexible Federal aid first. [2]

As in previous years, an easy to use educator toolkit is available, with lesson plans focusing on the core concepts of spending, saving, borrowing, and protecting against risk. We hope educators will be able to use this toolkit to create a curriculum that best suits the needs of their students. The classroom offers an excellent opportunity to expose students to financial education as a practical application of the concepts they cover in classes such as math or social studies. High school teachers in any subject area are encouraged to participate to help prepare their students for future financial independence.

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[1]U.S. Department of Education, National Center for Education Statistics. (2008).The Condition of Education 2008. http://nces.ed.gov/pubs2008/2008031.pdf

[2]The Institute for College Access and Success.“Statement on College Board’s Trend Report.” (2009). http://www.ticas.org/files/pub/CB_statement_2009.pdf

Source: US Department of the Treasury

Banks May Be Adding Debit Usage Fees

2011-06-23T20:24:00.004-07:00

My June 23, 2011 interview at 9am on Fox 10 News with Diane Ryan

Banks May Be Adding Debit Usage Fees: MyFoxPHOENIX.com

Credit Card Payment Warnings

2010-03-08T13:16:00.004-07:00

I just received my most recently available credit card statement from my bank, USAA Federal Savings Bank, and was pleased to see the following additional consumer information (my personal amount removed) on this month's statement:

Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35.00 late fee.

Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example:

If you make no additional charges using this card and each month you pay ... Only the minimum payment $###.00 - You will pay off the balance shown on this statement in about ... ## years. And you will end up paying an estimated total of $##,###.00

If you make no additional charges using this card and each month you pay ... $###.00 - You will pay off the balance shown on this statement in about ... # years. And you will end up paying an estimated total of $##,###.00 (Savings = $##,###.00).

If you would like information about credit counseling services, call 1-800-531-1291.

I trust this is the direction other credit card issuers will follow in further informing holders of their credit cards.

Source: USAA Federal Savings Bank

New Credit Card Interest Rate Changes (FAQ's)

2010-02-24T13:20:00.006-07:00

This is a list of Frequently Asked Questions (FAQ's) I received from one of my credit card companies, USAA. I hope this helps those that have questions about the new credit card changes:

Q: Was this change based on my credit score, or was my credit report affected?

A: No, these adjustments were not based on your individual credit score, and your report was not affected.

Q: What is the "Prime Rate"?

A: Prime Rate is the most widely usd benchmark in setting credit card rates. It generally changes when the fed funds rate, which is set by the Federal Reserve Board, goes up or down.

Q: What is the "margin"?

A: This is the amount we add to the Prime Rate to determine your account's interest rate. The magin is calculated aed on your credit record and other factors.

Q: Could my rate go up in the future?

A: Yes, your variable rate is indexed to the Prime Rate, so if the Prime Rate increases or decreases, your rate will adjust accordingly.

Q: Did you raise any fees?

A: No fees or other charges were raised. While other card companies are adding new fees at this time, we're maintaining our low-fee, high-value USAA credit card.

Q: Can I opt out of this change?

A: You cannot opt out of this change. However, remember that only new transactions after April 30, 2010, are affected by this change.

Source: USAA Federal Savings Bank

New Credit Card Changes

2010-02-23T13:38:00.002-07:00

I have followed-up on your instructions and got the three credit reports. After I contacted the reporting bureaus with the discrepancies, and contacting the institutions/negative listings to get the eroneous info corrected, I got the discrepancies deleted from my credit reports. (a previous address was used for a business that I had nothing to do with, I thought I was signing-up for frequent-flyer miles with AirTran and was issued a credit card and was charged fees, for a card I never applied for, activated or used, and a cell phone in Puerto Rico I never applied for or ever used.)

My one credit card(BofA) has canceled me, saying I dont meet their criteria? Is charging me 26.4% interest and will not lower the rate even though I have never missed a payment. I'm living off SS disability and making minimum payments with a balance of 38 hundred. How do I negotiate a settlement with them to put an end to this, because at this rate I will be paying forever. This is the only issue I am dealing with, since I have no other cc and no other debts? Today the new credit card changes go into effect, how will this affect me?

Source: Beryl Berry

High Yield Checking Accounts

2009-10-14T13:50:00.001-07:00

Consider opening up a checking account in one of the following credit unions:

Each pays over 6%.

Certain restrictions MAY apply.

(Arkansas) - United Federal Credit Union - 6.01%,
(Kansas) - Golden Plains Credit Union (6.01%),
(Michigan...) - United Federal Credit Union (6.01%),
(North Carolina) - United Federal Credit Union (6.01%),
(North Dakota) - United Federal Credit Union (6.01%),
(Ohio) - United Federal Credit Union (6.01%),
(Oklahoma) - United Federal Credit Union (6.01%)

If you are going to park your money somewhere, you might as well get something for it.

Account “Users”

2008-03-11T10:38:00.001-07:00

If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse’s name as well as in yours (if the account was opened after June 1, 1977). A creditor also may report the credit history in the name of any other authorized user.

Limiting Access

2008-03-11T10:23:00.003-07:00

You may request that consumer reporting agencies do not distribute your name on lists used by creditors and insurers to make unsolicited offers of credit and insurance. Requests can be made by telephone or in writing by filling out a form available from each credit reporting agency. For telephone requests, call (888) 5 OPT OUT to be excluded from Experian, Equifax, and Trans Union. Telephone requests last for two years; written requests are permanent. Consumers have the right to sue consumer reporting agencies, users, and providers in state and federal court for violations of the Fair Credit Reporting Act.

Credit Insurance: Is It for You?

2008-03-11T10:21:00.003-07:00

There are four main varieties of credit insurance: Credit life insurance pays off all or some of your loan if you die. Credit disability insurance, also known as accident and health insurance, makes payments on the loan if you become ill or injured and can't work. Involuntary unemployment insurance, also known as involuntary loss of income, makes your loan payments if you lose your job due to no fault of your own, such as a layoff. Credit property insurance protects personal property used to secure the loan if destroyed by events like theft, accident or natural disasters.

On the Internet

2008-03-11T10:18:00.001-07:00

While using the Internet, you can learn about any number of topics and buy almost anything. Be aware, though, that Internet shopping, like traditional shopping, may carry some risk. Software to protect you and your privacy is often a part of most web sites. In fact, when ordering online, it would be wise to check if you are on a secure server by looking for a security symbol such as an unbroken key or padlock symbol at the bottom of your Internet browser window. These symbols indicate that any information you may send to the web site, including your credit card numbers, is encrypted or put into computer code prior to transmission.

Fair Credit Billing

2008-03-07T21:41:00.001-07:00

Have you ever been billed for merchandise you returned or never received? Has your credit card company ever charged you twice for the same item or failed to credit a payment to your account? While frustrating, these errors can be corrected. It takes a little patience and knowledge of the dispute settlement procedures provided by the Fair Credit Billing Act (FCBA).The law applies to "open end" credit accounts, such as credit cards, and revolving charge accounts - such as department store accounts. It does not cover installment contracts - loans or extensions of credit you repay on a fixed schedule. Consumers often buy cars, furniture and major appliances on an installment basis, and repay personal loans in installments as well.

The Cost of Credit - Costs of Settlement on a House

2008-03-07T21:34:00.004-07:00

A house is probably the single largest credit purchase for most consumers, and one of the most complicated. The Real Estate Settlement Procedures Act, like Truth in Lending, is a disclosure law. The act, administered by the Department of Housing and Urban Development, requires the lender to give you, in advance, certain information about the costs you will pay when you close the loan. The act also requires that lenders give you the booklet "Buying Your Home: Settlement Costs and Information" to help you understand the closing process and shop for lower settlement costs. To get the booklet, write to:

Deputy Assistant Secretary for Housing
Attention: RESPA Enforcement
U.S. Department of Housing and Urban Development
451 Seventh Street, S.W.Room 9416
Washington, DC 20410

Should you need to, phone: (202) 708-4560

The Federal Reserve pamphlet "A Consumer's Guide to Mortgage Closing Costs" also contains useful information.

The Cost of Credit - Cost of Open-end Credit

2008-03-07T21:24:00.003-07:00

Open-end credit includes bank and department store credit cards, gasoline company cards, home equity lines of credit, and check-overdraft accounts that let you write checks for more than your actual balance with the bank. Open-end credit can be used again and again, generally until you reach a certain prearranged borrowing limit. Truth in Lending requires that open-end creditors tell you the terms of the credit plan so that you can shop and compare costs.

When you're shopping for an open-end plan, the APR is only the periodic rate that you will be charged, figured on a yearly basis. (For instance, a creditor that charges 12 percent interest each month would quote you an APR of 18 percent.) Annual membership fees, transaction charges, and points, for example, are listed separately; they are not included in the APR. Keep these fees in mind and compare all the costs involved in the plans, not just the APR.

Creditors must tell you when finance charges begin on your account, so you know how much time you have to pay your bill before a finance charge is added. Creditors may give you a 25-day grace period, for example, to pay your purchase balance in full before you must pay a finance charge.
Creditors also must tell you the method they use to figure the balance on which you pay a finance charge; the interest rate they charge is applied to this balance to compute the finance charge. Creditors use a number of different methods to arrive at the balance. Study them carefully; they can significantly affect your finance charge.

Some creditors, for instance, take the amount you owed at the start of the billing cycle and subtract any payments made during that cycle. New purchases are not counted. This is called the adjusted balance method.

With the previous balance method, creditors simply use the amount owed at the start of the billing cycle to compute the finance charge.

Under one of the most common methods, the average daily balance method, creditors add your balances for each day in the billing cycle and then divide that total by the number of days in the cycle. Payments made during the cycle are subtracted to get the daily amounts, and depending on the plan, new purchases may or may not be included. Under another method, the two-cycle average daily balance method, creditors use the average daily balances for two billing cycles to compute your finance charge. Again, payments will be subtracted to get the balances, but new purchases may or may not be included.

Be aware that the amount of the finance charge will vary considerably depending on the method used, even for the same pattern of purchases and payments.

If you receive a credit card offer or an application, the creditor must give you information about the APR and other important terms of the plan (for example, annual fees and late payment fees) at that time. Likewise, with a home equity line of credit, this information must be given to you with an application.

Truth in Lending does not set the rates or tell the creditor how to calculate finance charges, it requires only that the creditor tell you the method that it uses. You should ask for an explanation of any terms you don't understand.

The Cost of Credit - Shopping is the first step

2008-03-07T21:20:00.003-07:00

Credit is a convenience. It lets you charge a meal on your credit card, pay for an appliance on the installment plan, get a loan to buy a house, or pay for schooling and vacations. With credit, you can enjoy your purchase while you're paying for it, or you can make a purchase when you're lacking ready cash.

But there are strings attached to credit as well. It usually costs something. And, of course, what is borrowed must be paid back. If you are thinking of borrowing or opening a credit account, your first step should be to figure out how much it will cost you and whether you can afford it. Then you should shop for the best terms

International Credit Card Transaction Fees

2007-09-05T11:33:00.003-07:00

Using a credit card overseas is convenient and does provide protection. Before you leave, contact the credit card issuer to identify any applicable fees and/or determine what cards you carry will offer you the best benefit while you are overseas.

ICampusDirect.com

2007-02-12T08:53:00.003-07:00

This site promotes that it has the best and latest student and non-student credit offers for lenders such as CitiBank and Discover Card. Click the links on the site and review the terms carefully. You may also want to consider comparing their rates directly with CitiBank and Discover.

Each application on the on this site requests your social security number and a "hard inquiry" may subsequently appear on your credit report upon completion.

Gold and Platinum Cards

2006-11-26T11:10:00.002-07:00

Elder Fraud by Relatives or Caregivers

2006-08-30T21:36:00.002-07:00

Seniors and their loved ones should be very suspicious if they notice any of the following: A relative or caregiver becomes extremely interested in the elderly person's financial affairs. A caregiver is reluctant to spend money on necessary medical treatment. Someone prevents the elderly person from talking on the phone or doesn't pass along phone messages. There are unauthorized withdrawals from checking or savings accounts. The caregiver claims that some money is "missing." Or, there are new or recently changed legal documents, such as wills or "powers of attorney" that give this other person rights to conduct transactions.

What should you do in these circumstances? Talk to another family member, a lawyer who could intervene on your behalf, or someone else you know you can trust.

May a debt collector contact anyone else about your debt?

2006-07-06T17:52:00.002-07:00

If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.

Developing a Budget

2006-07-05T18:07:00.002-07:00

The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses — those that are the same each month — like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary — like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.

Organize and protect your important documents

2006-07-04T15:54:00.002-07:00

Make sure your bank and brokerage statements, insurance policies, Social Security and company pension records, and other personal and financial papers are in a safe place and easy to get to.

As the victims of recent hurricanes, floods and other disasters have learned, it's wise to take extra precautions with essential records. For the most important original documents, such as wills, passports and birth certificates, seal them in airtight and waterproof containers to prevent water damage. Make backup copies and consider giving duplicates to loved ones —or at least let them know where to find your records in an emergency.

Consider renting a safe deposit box at your bank for certain papers that could be difficult or impossible to replace, such as birth certificates and originals of important contracts. Don't put into a safe deposit box anything you might need in an emergency, such as your passport or medical-care directives, in case your bank is closed for the night or weekend. Also, many experts generally advise against putting a will in a safe deposit box because, in many states, there may be complications accessing the will after the person dies. And remember that copies of wills aren't valid. Perhaps the best approach is to ask your attorney for guidance.

For the most important papers you keep at home, consider an inexpensive but durable home safe.

Fake Documents Used to "Steal" Homes

2006-07-02T08:02:00.003-07:00

Criminals are filing fake deeds to gain control of homes, often those belonging to the elderly, according to recent reports. A con artist can attempt to "steal" a house by falsely claiming to be the owner of a property or the owner's adult child who has the authority to conduct business for the family.

The perpetrator typically targets nice homes that are vacant for a long time, perhaps because the owner is away for the winter or is receiving extended medical treatment. The thief then goes to the courthouse and files a fraudulent deed that, in legitimate circumstances, can be a simple way to transfer the ownership of property from one person to another. After the courthouse records show the criminal as having the deed to the property, he will attempt to sell it and take off with the cash.

"Because the house is not being lived in, this fraud can go undetected for quite a while," said David Nelson, a fraud specialist in the FDIC's Financial Crimes Section. To protect yourself, he suggested "making sure the house looks lived-in while you are away," such as by arranging for mail and newspapers to be picked up or forwarded.

How may a debt collector contact you?

2006-06-30T22:48:00.002-07:00

A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

Vehicle Repossession

2006-06-29T18:05:00.000-07:00

When you finance or lease a car, truck or other vehicle, your creditor or lessor holds important rights on the vehicle until you’ve made the last loan payment or fully paid off your leasing obligation. These rights are established by the signed contract and by state law. For example, if your payments are late or you default on your contract in any way, your creditor or lessor may have the right to repossess your car. In many states, creditors or lessors can do this legally without going to court or warning you in advance, as long as they do not breach the peace. In addition, your creditor or lessor may be able to sell your contract to a third party, called an assignee, who may have the same rights and responsibilities as the original creditor or lessor.

However, some state laws limit the ways a creditor or lessor can repossess and sell a vehicle to reduce or eliminate your debt. If any rules are violated, the creditor or lessor may be required to pay you damages.

Fraud: Help for Avoiding Foreclosures?

2006-06-28T19:38:00.000-07:00

The fraudster goes through records at the local courthouse listing homes facing foreclosure. He or she then contacts the homeowners and offers assistance to prevent the foreclosure from taking place. Instead, the homeowner is then tricked into signing documents that, in the fine print, transfer the ownership of the property to the fraudster.

Before You Buy...

2006-06-27T18:00:00.000-07:00

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.

Where Do the Consumer Reporting Agencies Get Their Information?

2006-06-24T14:23:00.000-07:00

Credit bureaus collect information from parties that have previously extended credit to you, such as a department store that issued you a credit card or a bank that granted you a personal loan.

Who is a debt collector?

2006-06-21T19:22:00.000-07:00

A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.

Can you stop a debt collector from contacting you?

2006-06-20T18:39:00.000-07:00

You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.

Legitimate Cards

2006-06-19T18:20:00.000-07:00

Legitimate cards follow standard specifications as to color, tint, quality, and style. Stamped letters and numbers are spaced evenly and sized equally. The signature panel is uniform in size and is almost impossible to scrape off.

Car Ads: Reading Between the Lines

2006-06-18T08:48:00.000-07:00

Many new car dealers advertise unusually low interest rates and other special promotions. Ads promising high trade-in allowances and free or low-cost options may help you shop, but finding the best deal requires careful comparisons.

Many factors determine whether a special offer provides genuine savings. The interest rate, for example, is only part of the car dealer’s financing package. Terms like the size of the downpayment also affect the total financing cost.

Loan or Mortgage Fraud

2006-06-17T10:15:00.000-07:00

These typically involve unscrupulous "predatory" lenders (typically from the non-bank or home improvement industries) that use false or misleading sales tactics to make high-cost loans to consumers in need of cash, including older homeowners concerned about paying bills. Victims often can't afford the loan, and they may be pressured to refinance a loan repeatedly and pay high fees each time – a scam known as "loan flipping." Borrowers who pledge their house as collateral and can't repay the loan could lose the home in a foreclosure.

Getting Credit When You’re Over 62

2006-06-16T19:51:00.000-07:00

Credit is an important money management tool for both young and older consumers. Yet the elderly, particularly older women, may find it difficult to get credit.

If you’re an older consumer who has paid with cash all your life, you may find it difficult to open a credit account. That’s because you have “no credit history” of how you paid on credit. If your income has decreased, you may find it harder to get a loan because you have “insufficient income.” Or, if your spouse dies, you may find creditors trying to close joint accounts. A “joint account” is one for which both spouses applied and signed the credit agreement.

Under the federal Equal Credit Opportunity Act (ECOA), it’s against the law for a creditor to deny you credit or terminate existing credit simply because of your age.

If Your Spouse Dies

2006-06-15T08:44:00.000-07:00

Under the ECOA, a creditor cannot automatically close or change the terms of a joint account solely because of the death of your spouse. A creditor may ask you to update your application or reapply. This can happen if the account was originally based on all or part of your spouse’s income and if the creditor has reason to believe your income alone cannot support the credit line.

After you submit a re-application, the creditor will determine whether to continue to extend you credit or change your credit limits. Your creditor must respond in writing within 30 days of receiving your application. During that time, you can continue to use your account with no new restrictions. If you’re application is rejected, you must be given specific reasons, or told of your right to get this information.
These protections also apply when you retire, reach age 62 or older, or change your name or marital status.

Credit Card Blocking: What is it?

2006-06-14T17:59:00.000-07:00

When you use a credit or debit card to check into a hotel or rent a car, the clerk usually contacts the company that issued your card to give an estimated total. If the transaction is approved, your available credit (credit card) or the balance in your bank account (debit card) is reduced by this amount. That's a "block." Some companies also call this placing a "hold" on those amounts.

Here's how it works: Suppose you use a credit or debit card when you check into a $100-a-night hotel for five nights. At least $500 would likely be blocked. In addition, hotels and rental car companies often add anticipated charges for "incidentals" like food, beverages, or gasoline to the blocked amount. These incidental amounts can vary widely among merchants.

If you pay your bill with the same card you used when you checked in, the final charge on your credit card, or final amount on your debit card, probably will replace the block in a day or two. However, if you pay your bill with a different card, or with cash or a check, the company that issued the card you used at check-in might hold the block for up to 15 days after you've checked out. That's because they weren't notified of the final payment and didn't know you paid another way.

What happens while my bill is in dispute?

2006-06-13T18:04:00.000-07:00

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

The creditor may not take any legal or other action to collect the disputed amount and 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.

Loss of Multiple Cards

2006-06-12T18:00:00.000-07:00

While shopping, you can easily be targeted by pickpockets. If your purse or wallet is stolen, you may lose all your credit cards at one time.

Separate your cards. Only carry those cards with you that you plan to use. Also, check your cards from time to time and put aside those cards you don't use very often.

Buying A Used Car: Cash or Credit?

2006-06-11T13:51:00.000-07:00

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.

Rule of 78

2006-06-10T15:41:00.000-07:00

This method uses tables based on a mathematical formula to determine how much interest you have paid at any point during a loan. It requires that you pay more interest at the beginning of a loan when you have the use of more of the money and that you pay less interest as the debt is reduced. Since all of your payments are the same in amount, the amount of your payment that is going toward the principal increases while the amount going toward interest decreases. State law may mandate the use of the Rule of 78.

Generally, the longer the term of a loan and the higher the interest rate, the less favorable the Rule of 78 is to borrowers who wish to pay off early.

Who Decides whether or not to Grant You a Loan?

2006-06-08T18:37:00.000-07:00

The lenders themselves make the decision about whether or not to grant you credit. The credit-reporting companies only supply the information about your credit history.

Strange Requests for Your PIN Numbers

2006-06-07T20:31:00.000-07:00

This form of fraud involves thieves who find creative ways to steal your credit or debit cards when you don't know about it. For example, sometimes people crawl behind rows in movie theaters and steal pocketbooks while you are watching a movie. When you return home they call you, identify themselves as bank security agents, and ask for your PIN numbers. If you hesitate, they simply ask you to phone their supervisor and give you an accomplice's phone number to call. By doing so, they are able to get your PIN numbers and use the stolen debit cards to withdraw cash and make purchases.

Again, never reveal your PIN number to anyone. Also, never keep your PIN number in your purse or wallet. Don't write your PIN on your card either. Always try to memorize it.

Altered Cards

2006-06-06T22:05:00.000-07:00

Altered cards are made from actual cards. The original stamped data is melted down or pressed out. Then, the card is re-stamped with legitimate account numbers, names, and expiration dates, which have been illegally obtained. On altered cards, the letters do not line up well and are usually irregular in size. Some credit card companies help merchants identify altered cards by making an authenticator machine available to merchants. The machine authenticates or verifies certain information that is encoded on the back stripe on the back of the card.

Changed Circumstances

2006-06-05T19:10:00.000-07:00

The terms of your credit cannot be changed simply because your life circumstances do. For example, the length, interest, or other features of loans cannot be changed; you cannot be forced to reapply for a loan; and you cannot be terminated because you change your name or marital status, reach a certain age, or retire.

Counterfeit Cards

2006-06-04T10:26:00.000-07:00

Counterfeiters make most counterfeit cards by silkscreening or painting the card logo and issuing institution's name onto a blank piece of card plastic. Because they are silkscreened, the cards don't look exactly like the real thing. Real credit cards are printed. Also, the signature panel on silkscreened cards may be glued or painted on and can be easily lifted or chipped. This panel may also appear uneven in size or placement.

Unsigned Credit Cards

2006-06-03T15:33:00.000-07:00

Stealing and using credit cards that have not been signed is another potential fraud. In other words, credit card thieves could steal your unsigned credit cards and then sign your name on the card in their handwriting. By doing so, they take your name as an alias and they will never have a problem writing and verifying their own signature.

Protect your credit cards. When you receive a new or replacement card, sign the back of it as soon as it is activated. Always be sure to store it in a safe place. Cut up expired cards before disposing of them.

Fraudulent Telemarketers

2006-06-02T19:03:00.000-07:00

Watch out for fraudulent telemarketers! They may start with a postcard promising cash and prizes if you call an "800" or "900" number. If you do it, a friendly voice will ask for your credit card number to "verify" your identity, then come the high-pressure tactics to get you to buy merchandise with your credit card. Later, you may be billed several times, or you may never receive the merchandise at all.

If you do receive the merchandise, it may not be what you expected or you may feel that the price you paid was highly inflated. By that time, it is often difficult and time consuming to return the item and receive credit.

To protect yourself, ask for written information on products or services offered before you order them.

Fair Credit Billing Act

2006-06-01T18:33:00.000-07:00

The Fair Credit Billing Act provides for the prompt correction of errors on open-end credit accounts (department store credit accounts, for example) and protects consumers' credit ratings while they are settling disputes.

Under this law, if a consumer is disputing a charge, creditors cannot report the consumer's account as delinquent. This applies to open-end credit instruments, such as credit cards, revolving charge accounts, and overdraft checking. Consumers who question an item are responsible for notifying the creditor in writing within 60 days of receiving the bill. The creditor must acknowledge the notice within 30 days and may not do anything to damage the consumer's credit rating while the item is in dispute.

What Is PMI?

2006-05-31T19:30:00.000-07:00

PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

What Is a Residential Mortgage Transaction?

2006-05-30T19:35:00.000-07:00

There are four requirements for a transaction to be considered a residential mortgage transaction: (1) a mortgage or deed of trust must be created or retained; (2) the property securing the loan must be a single-family dwelling; (3) the single-family dwelling must be the primary residence of the borrower; and (4) the purpose of the transaction must be to finance the acquisition, initial construction, or refinancing of that dwelling.

Unsigned Credit Cards

2006-05-29T13:41:00.000-07:00

Stolen Checks

2006-05-28T14:45:00.000-07:00

A major concern for the elderly is the theft of checks from mailboxes and mail slots. Since the
mail carrier delivers social security checks on the same day of each month, these and other predictable, routine payments are easy prey for theft. Stolen checks are easily turned into cash by thieves who know where to go and what to do.

The Social Security Administration strongly encourages direct deposit of checks. Seventy-five percent of those receiving social security benefits use direct deposit.

If you have any regularly scheduled payments, you should seriously consider direct deposit. Federal Reserve Banks and financial institutions process direct deposit transactions electronically through a national automated system. Contact your financial institution about payments that are eligible.

Age

2006-05-27T08:44:00.000-07:00

Creditors can ask how old you are in order to be certain you have reached legal age to enter into contracts. They can also consider your age to estimate how long you will continue to work. However, age cannot be used to deny credit to those 62 or older (in the case of credit-scoring systems) or to those applicants whose age exceeds that required for credit insurance.

Applicant Notification

2006-05-26T20:52:00.000-07:00

Lenders must notify credit applicants of their decision within 30 days after the application is completed. If credit is denied, the creditor must provide a written statement that includes the action taken, reason for denial (or how to request it), the applicant's rights, and the name and address of the enforcing federal agency. If you believe that discrimination has taken place, you have the right to file suit. If creditors are found to have discriminated unfairly, they can be held liable for actual damages and punitive damages up to $10,000.

Divorced Individuals

2006-05-25T22:11:00.000-07:00

If you pay or receive alimony, child support, or maintenance, you can be asked how these items affect your income. However, if you do not plan to use this income to repay the loan for which you are applying, you do not have to list it on your application.

Prohibited Information

2006-05-24T18:30:00.000-07:00

Credit applications cannot ask you about your sex, race, color, religious affiliation, or national origin unless you are applying for residential real estate. Even then, you are not required to answer. The information is used only to enforce fair housing laws, not for evaluation purposes.

You cannot be asked your marital status, unless your spouse will help secure, use, or be legally responsible for the loan. Creditors are also prohibited from asking about your plans to have children.

Credit for Couples

2006-05-23T18:11:00.000-07:00

Spouses have the right to have their credit histories listed separately, including the accounts they use jointly. Married women have the option of using their birth name or married name. In the case of couples who jointly established credit, but whose credit appears in the name of only one spouse, the other partner has the right to rely on that credit history as well.

Limiting Access

2006-05-22T17:57:00.000-07:00

You may request that consumer reporting agencies do not distribute your name on lists used by creditors and insurers to make unsolicited offers of credit and insurance. Requests can be made by telephone or in writing by filling out a form available from each credit reporting agency. For telephone requests, call (888) 5 OPT OUT to be excluded from Experian, Equifax, and Trans Union. Telephone requests last for two years; written requests are permanent.

Consumers have the right to sue consumer reporting agencies, users, and providers in state and federal court for violations of the Fair Credit Reporting Act.

Equal Credit Opportunity Act

2006-05-21T12:10:00.000-07:00

The Equal Credit Opportunity Act requires that individual creditors apply credit standards in a fair manner, so that all consumers are given an equal chance to obtain credit. It does not require all creditors to have the same standards, nor does it guarantee approval of loan applications.

In reviewing your credit application, lenders cannot discriminate on the basis of sex, marital status, race, religion, national origin, age, income from assistance programs, or if you exercise your rights under the Consumer Protection Act. The only acceptable criteria are your ability and intent to repay funds borrowed.

Extra Copies of Charge Slips

2006-05-20T13:09:00.000-07:00

When processing your credit card, a dishonest merchant may decide to imprint a few extra copies of the charge slip. Later, the merchant can submit these copies to the issuing institution for payment on phony charges.

Keep your eye on your credit card whenever it is in use. Watch clerks process your credit payments. Open your credit card bills promptly each month. Make sure that you made the listed purchases. Also, report any charges that you did not make to the credit card company.

Stolen Cards at the Office

2006-05-19T22:29:00.000-07:00

Over the lunch hour when you leave your office for lunch, you could be the target of a credit card thief. Credit card thieves often gain illegal access to the offices of employees who are away in order to search unattended. Most times, they leave the offices and immediately go on a shopping spree, charge credit cards to their limits, and withdraw cash on debit cards.

Protect your credit cards as you would cash. Never write your PIN number on your debit card. Instead, always commit your PIN number to memory.

Renewals

2006-05-18T19:15:00.000-07:00

If there is an annual renewal fee for a card, you must be given an opportunity to cancel the card if you don't wish to pay the fee.

Earlier Disclosure

2006-05-17T19:02:00.000-07:00

Truth in Lending also requires card issuers to provide the information earlier than they had in the past. This lets you find out what credit will cost you before you are charged any fees. If a card issuer calls and takes your card application over the telephone and there is a fee for the card issuance or availability, including any fee based on account activity or inactivity, the card issuer must verbally give you the required information at that time. If there is no fee for the card or if the fee isn't required until you actually use the card, the card issuer can mail you the fee information instead of telling you over the phone. You must receive the information within 30 days, but no later than the delivery of the card.

Equal Credit Opportunity

2006-05-16T19:23:00.000-07:00

Credit is used by millions of consumers to finance an education or a house, remodel a home, or get a small business loan.

The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given an equal chance to obtain credit. This doesn’t mean all consumers who apply for credit get it: Factors such as income, expenses, debt, and credit history are considerations for creditworthiness.

The law protects you when you deal with any creditor who regularly extends credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Anyone involved in granting credit, such as real estate brokers who arrange financing, is covered by the law. Businesses applying for credit also are protected by the law.

Credit Card vs. Charge Card

2006-05-15T18:04:00.000-07:00

Many people use the terms credit card and charge card interchangeably, but there are important differences. In general, a credit card lets you make purchases for which you are billed later. Most credit card accounts allow you to carry a balance from one billing cycle to the next; however, you have to pay interest on that balance. Usually, you have to pay at least a certain amount of your balance each time you receive a bill.

A charge card is a specific kind of credit card. The balance on a charge card account is payable in full when the statement is received and cannot be rolled over from one billing to the next. Because you cannot carry a balance, a charge card doesn't have a periodic or annual percentage rate, so there is no rate for a charge card issuer to disclose.

The Finance Charge and Annual Percentage Rate --Part 2

2006-05-14T14:16:00.000-07:00

Example:

Again, suppose you borrow $100 for one year and pay a finance charge of $10. If you can keep the entire $100 for the whole year and then repay $110 at year’s end, you are paying an APR of 10 percent. But if you repay the $100 and finance charge (a total of $110) in twelve equal monthly installments, you don’t really get to use $100 for the whole year. In fact, you get to use less and less of that $100 each month. In this case, the $10 finance charge amounts to an APR of 18 percent.

All creditors—banks, stores, car dealers, credit card companies, finance companies—must state the cost of their credit in terms of the finance charge and the APR. Federal law does not set interest rates or other credit charges. But it does require their disclosure so that you can compare credit costs. The law says these two pieces of information must be shown to you before you use a credit card.

The Finance Charge and Annual Percentage Rate --Part 1

2006-05-13T18:05:00.000-07:00

Example:

Suppose you borrow $100 for one year, and the interest is $10. If there is a service charge of $1, the finance charge will be $11.

The annual percentage rate is the percentage cost (or relative cost) of credit on a yearly basis, which is your key to comparing costs, regardless of the amount of credit or how long you have to repay it.

Open-end and Closed-end Leases

2006-05-12T20:48:00.000-07:00

There are open-end and closed-end leases and your rights and obligations at lease-end are different in each of these. Both types of leases estimate the lease-end value of the item and use this to project depreciation, which is the basis for calculating your base monthly payment. In an open-end lease, at lease-end, you are responsible for the difference between the estimated lease-end value (the residual value) determined at the beginning of the lease and the actual lease-end value (the realized value). In a closed-end lease, you are not responsible for the item’s value at lease-end, but you are responsible for the condition of the item you lease (that is, an excess wear and use charge may be imposed). In an open-end lease, you may receive a refund of any gain and are responsible for any deficiency. In a closed-end lease the lessor usually keeps any gain and assumes any loss due to overestimating the residual value.

The Consumer Leasing Act provides consumers with some protections against unreasonable end-of-term charges in open-end leases. Assuming that you have met the wear-and-use standards, the residual value is considered unreasonable if it exceeds the realized value by more than three times the base monthly payment (the “Three Payment Rule”). If you believe the amount owed at the end of the lease term is unreasonable and refuse to pay, the lessor may attempt to prove that the residual value was reasonable when it was set at the beginning of the lease. However, if you cannot reach a settlement with the lessor, you cannot be forced to pay the excess amount unless the lessor brings a successful court action and pays your reasonable attorney’s fees. For example, assume that the residual value in an open-end vehicle lease is $12,000, the realized value is $11,000, and the base monthly payment is $250. The end-of-term deficiency is $1,000. However, under the Three Payment Rule, the maximum charge should not exceed $750 (assuming that there is no excess wear-and-use charge) rather than the full $1,000 deficiency unless the lessor can prove the residual value was reasonable when set.

You have the right to an independent appraisal of the property’s worth at the end of the lease term; however, you must pay the appraiser’s fee.

The Federal Reserve pamphlet “Keys to Vehicle Leasing: A Consumer Guide” also contains useful information on leasing and provides a sample of some of the disclosures you should receive when leasing a vehicle.

Cost of Settlement on a House

2006-05-11T17:14:00.000-07:00

What Laws Apply?

2006-05-10T22:28:00.000-07:00

Two laws can help you compare costs:

Truth in Lending requires creditors to give you certain basic information about the cost of buying on credit or taking out a loan. These “disclosures” can help you shop for the best deal.

Consumer Leasing disclosures can help you compare the cost and terms of one lease with another and with the cost and terms of buying for cash or on credit.

Shopping Is The First Step

2006-05-09T18:33:00.000-07:00

Credit is a convenience. It lets you charge a meal on your credit card, pay for an appliance on the installment plan, get a loan to buy a house, or pay for schooling and vacations. With credit, you can enjoy your purchase while you’re paying for it, or you can make a purchase when you’re lacking ready cash.

But there are strings attached to credit as well. It usually costs something. And, of course, what is borrowed must be paid back. If you are thinking of borrowing or opening a credit account, your first step should be to figure out how much it will cost you and whether you can afford it. Then you should shop for the best terms.

Make A Checklist for Comparing Credit Cards

2006-05-08T17:58:00.000-07:00

Think about how you will use your credit card.

Do you expect to:

Pay your montly bill in full?

Carry over a balance from month to month?

Get cash advances?

Once you have decided how you will use your credit card, make a checklist to compare cards.

Billing Errors

2006-05-07T11:13:00.000-07:00

Examples of billing error are:

1. A charge for something you didn’t buyA bill for an amount different from the actual amount you charged

2. A charge for something that you did not accept when it was delivered

3. A charge for something that was not delivered according to agreement

4. Math errors

5. Payments not credited to your account A charge by someone who does not have permission to use your credit card

What If The Item You Purchased Is Damaged?

2006-05-06T13:23:00.000-07:00

The federal Fair Credit Billing Act allows you to withhold payment on any damaged or poor-quality goods or services purchased with a credit card--even if you have accepted the goods or services--as long as you have made an attempt to solve the problem with the merchant.

The sale must have been for more than $50 and must have taken place in your home state or within 100 miles of your home address. You should notify the credit card company in writing and explain why you are withholding your payment.

You may withhold the payment while the credit card company investigates your claim. If you pay the charges for the goods on your credit card bill before the dispute is resolved, you will lose your right to make a claim.

What Kind Of Card Is It?

2006-05-05T20:35:00.000-07:00

Most credit card companies offer several kinds of cards: Secured cards, which require a security deposit. The larger the security deposit, the higher the credit limit.

Secured cards are usually offered to people who have limited credit records--people who are just starting out or who have had trouble with credit in the past.

Regular cards, which do not require a security deposit and have just a few features. Most regular cards have higher credit limits than secured cards but lower credit limits than premium cards.

Premium cards (gold, platinum, titanium), which offer higher credit limits and usually have extra features--for example, product warranties, travel insurance, or emergency services.

How Much Is The Credit Limit?

2006-05-03T17:49:00.000-07:00

The credit limit is the maximum total amount--for purchases, cash advances, balance transfers, fees, and finance charges--you may charge on your credit card. If you go over this limit, you may have to pay an “over-the-credit-limit fee.”

What are the fees?

2006-05-02T19:46:00.000-07:00

Most credit cards charge fees under certain circumstances:

Annual fee (sometimes billed monthly). Charged for having the card

Cash advance fee. Charged when you use the card for a cash advance; may be a flat fee (for example, $3.00) or a percentage of the cash advance (for example, 3%)

Balance-transfer fee. Charged when you transfer a balance from another credit card (Your credit card company may send you “checks” to pay off the other card. The balance is transferred when you use one of these checks to pay the amount due on the other card.)

Late-payment fee. Charged if your payment is received after the due date

Over-the-credit-limit fee. Charged if you go over your credit limit

Credit-limit-increase fee. Charged if you ask for an increase in your credit limit

Set-up fee. Charged when a new credit card account is opened

Return-item fee. Charged if you pay your bill by check and the check is returned for non-sufficient funds (that is, your check bounces)

Other fees. Some credit card companies charge a fee if you pay by telephone (that is, if you arrange by phone for payment to be transferred from your bank to the company) or to cover the costs of reporting to credit bureaus, reviewing your account, or providing other customer services. Read the information in your credit card agreement to see if there are other fees and charges.

How Will You Use Your Credit Card?

2006-05-01T20:00:00.000-07:00

The first step in choosing a credit card is thinking about how you will use it.

If you expect to always pay your monthly bill in full--and other features such as frequent flyer miles don’t interest you--your best choice may be a card that has no annual fee and offers a longer grace period.

If you sometimes carry over a balance from month to month, you may be more interested in a card that carries a lower interest rate (stated as an annual percentage rate, or APR).

If you expect to use your card to get cash advances, you’ll want to look for a card that carries a lower APR and lower fees on cash advances. Some cards charge a higher APR for cash advances than for purchases.

How Long Is The Grace Period?

2006-04-30T11:38:00.000-07:00

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

2006-04-29T12:02:00.000-07:00

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?

2006-04-28T20:59:00.000-07:00

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

2006-04-27T18:54:00.000-07:00

"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

2006-04-26T18:11:00.000-07:00

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

2006-04-25T19:40:00.000-07:00

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

2006-04-24T19:58:00.000-07:00

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?

2006-04-23T10:38:00.000-07:00

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

2006-04-22T10:42:00.000-07:00

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

2006-04-21T06:47:00.000-07:00

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.

***

Any other ideas on how kids can earn an allowance?

Get Good Credit Bill Payment Calendar System

2006-04-10T18:16:00.000-07:00

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

2006-04-04T23:19:00.000-07:00

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'