Deceptive Credit Card Practices Rising

Posted By: Janielle Viggiano

Alison Howard, a single mom from Atlanta, sent her only son Bryan off to college last year for what she hoped would be a lifelong education. One lasting lesson is now burned into his brain: Beware of banks bearing special credit card offers. The University of Albany, Ga., student, failing to fully familiarize himself with all the many lines of fine print in the terms of the arrangement, unwittingly racked up hundreds of dollars in penalty fees in just a few months.

In an effort to protect consumers like Bryan Howard from what the Federal Reserve called "unfair or deceptive" practices by banks issuing credit cards, Congress earlier this year passed the Credit CARD ACT of 2009.

But such unfair or deceptive practices haven't abated in the lag time between when the law was passed and when it goes into full effect in February -- they are actually on the rise, according to a report released today by the Pew Charitable Trusts.

A full 100 percent of the credit cards offered online by the 12 leading bank card issuers continue to include practices that will be soon be outlawed, once the legislation passed in May takes effect next year, according to a new report by the Pew Health Group's Safe Credit Cards Project.

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New Law Banning Credit Card Offers On College Campuses

Posted By: Janielle Viggiano

There is an upcoming change in the laws that govern credit promises to rid campuses nationwide of credit card pressures and sales tactics. According to Vellequette, “Passed in May, the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 will, beginning in February, prohibit credit card issuers from signing up anyone under 21 who either doesn't have a co-signer or the ability to make payments on their own (2009).” The law also prohibits companies from passing out free incentives such as: t-shirts, hats, pizza on campus or at events such as football games or any sporting event. The law requires people under the age of 21 to get a parent or guardian signature of approval before they can be issued a credit card and colleges and universities must disclose any deals they make with credit card companies.

In a 2008 study done by Sallie Mae Inc., a leading student loan company found that, “of 280 undergraduate college students’ ages 18 to 24 found that 84 percent of the respondents had a credit card, compared to 76 percent in 2004. Half of the respondents had four or more cards. The mean balance of the students’ cards was $3,173, and the median debt grew from $946 in 2004 to $1,645 in 2008. The number of freshman arriving on campus with a credit card went from 23 percent in 2004 to 39 percent in 2008, according to the study. Forty percent of the respondents said they charged items to their credit card knowing they didn’t have the money to pay for them (2009).” In the same study they found that 18 to 24-year-olds carry more debt than ever before as a group, and are most likely to be the focus of aggressive, manipulative, and even predatory practices and are the most likely to not make payments.

Sources: http://toledoblade.com/apps/pbcs.dll/article?AID=/20091029/BUSINESS07/910290316/-1/BUSINESS06

http://mainecampus.com/2009/10/08/credit-card-offers-banned-on-college-campuses/

http://www.myhometownnews.net/index.php?id=63358

negeotiating with credit card companies

Posted by Chris Keeler

Obama Consumer Protection

Posted by Chris Keeler

Investing in your 401k will pay off

By Nicholas Vanikiotis

The Majority of companies eliminated their internal policy of matching their employees' 401k, but that looks like it is going to change in the upcoming months. The cutbacks were instituted in 2008-2009 due to the lack of funds companies had. Consumers cut their spending and companies needed to do the same.

This was never a permanent decision says companies like Motorola and Fed-Ex. It was merely a short-term fix to cut their excess spending and offset the credit crunch. The good news is that companies say that they will reinstitute their policies of matching 401k contributions in 2010. This is good news for consumers and the economy. It shows that the economy is on the upturn since companies have the cash, or at least forecast that they will, to have such expenses. It is also a testament to consumer spending. This indicates that companies revenue is increasing this means that also consumer spending is also increasing. And according to the Bureau of Economic analysis, in August, personal income has increased over 19 billion dollars and disposable income increased over 15 billion dollars. The advice I would give to US consumers is to check with their employer on the 401k matching policy and increase their savings in their 401k, especially if they had taken money out of their account over the past year.

Sources:

http://online.wsj.com/article/SB10001424052748703816204574487422993305320.html

http://www.nytimes.com/2008/12/21/your-money/401ks-and-similar-plans/21retire.html

http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm

Will the Estate Tax Disappear?

Posted By Nicholas Vanikiotis

Many people hope the federal estate tax will disappear next year, as scheduled. They could be sorry if it does.

Back in 2000, Congress enacted a gradual loosening of the estate exemption. It has since risen to its current level of $3.5 million per individual, or up to $7 million per couple. The tax is scheduled to lapse just for next year and return in 2011.

Washington insiders are betting lawmakers won't let that happen. Instead they believe Congress is likely to act before the end of this year to extend the current system through next year. And perhaps they should, because getting rid of the estate tax actually would cause problems for most taxpayers.

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Nano's Sales Soar

Posted by: Janielle Viggiano

Oct. 26 (Bloomberg) -- Tata Motors Ltd., India’s largest truckmaker, reported second-quarter net income more than doubled as economic growth boosted truck sales and the introduction of the Nano car revived demand.

Profit totaled 7.29 billion rupees ($156 million) in the three months ended in September, compared with 3.47 billion rupees a year earlier, Mumbai-based Tata Motors said in a statement today. That exceeded the 4.32 billion rupee median profit estimate in a Bloomberg survey of nine analysts.

Tata Motors’ vehicle sales rose in the three months through September, the longest-winning streak in at least two years, as a decline in auto-loan rates and increased spending by the government spurred demand. Chairman Ratan Tata began selling the Nano, the world’s cheapest car, in July, helping the company avoid the worst of a global recession.

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A New Kind of Auto Loan

Posted by: Janielle Viggiano

Before applying for an automobile loan, make sure you do your research. Consumers interested should first review their credit scores to determine whether or not they can afford the loan. A bad credit score can to lead to paying more for a loan or even denial of receiving one. If you are looking to get a low interest rate on your new vehicle, start building your credit to improve your score. Start by paying creditors on time and don’t skip monthly payments. If you have several credit cards, pay down the balances.

If you have credit problems or a poor credit rating, you can still obtain an auto loan. A bad credit auto loan is a type of loan that provides you with the finances to purchase a car but also becomes a means of developing your credit ratings. A bad credit auto loan serves as a tool to re-establish your credit and can be extremely advantageous if managed correctly. According to PR-inside.com, “The requirements for a bad credit auto loan are quite strict, which is understandable due to the fact that it is offered to individuals who demonstrate a poor credit history. First, you must have a well-paying job or any source of income which is sufficient to cover your current expenses like monthly utility bills. Of course, your income must also be enough to pay the loan amount, as well as and other costs pertaining to the maintenance and insurance of your vehicle. So, as long as you have an adequate and steady income source, you could still obtain a bad credit auto loan, despite having a poor credit rating. The lender would also look into how long you have been employed; if at least you have been in your current job for a year, you have better chances of getting approved (2009).”

Having a downpayment is a great way to get approved and receive lower rates. A downpayment means you finance the car for a lower amount, therefore giving you lower monthly payments. Make sure before deciding on a loan that you have shopped around and gotten several different quotes from different lenders. You can do it online or by calling numerous lenders or an auto loan broker, which will give you quotes from multiple lenders.

Sources: http://news.carjunky.com/before-applying-for-auto-or-mortgage-loans-cdh775.shtml

http://www.pr-inside.com/low-interest-rate-new-car-loan-r1543029.htm

http://www.pr-inside.com/basics-you-need-to-know-about-r1539697.htm

When Debt Takes Over

By Laura Reginelli

Access to credit often causes individuals to buy items they cannot necessarily afford and when the credit card bills begin to pile up, the regret starts to set in. Recently Americans have made themselves known for this problem as many have watched their total debt skyrocket into unmanageable numbers.

When the debt becomes too large to handle, many turn to debt consolidation as an escape route. Debt consolidation according to wisegeek.com “allows consumers to combine their assorted unsecured debts into one payment.” So if you are in debt to multiple combines and have several unpaid invoices, then this may be the easiest way to manage your situation. The debt consolidation agency takes on the burden of paying your bills while you agree to make one, manageable payment at a time to them. Often times debt consolidation is also used by individuals to ensure one, relatively lower interest rate for their credit payments.

In the past, many felt that filing for bankruptcy was their own route out of unruly debt issues. However, debt consolidation loans give individuals another, more feasible option. These types of loans also allow you to improve your credit score while paying off your debt piece by piece.

When going through debt consolidation make sure you have all your bills, invoices and current loans organized and accessible. Debt consolidation agencies also require proof of identity an income as well upon beginning the consolidation process.


Sources: http://www.wisegeek.com/what-is-debt-consolidation.htm
http://www.debt-consolidation.com/?utm_source=yahoo&utm_medium=organic&utm_content=toplevel
http://ezinearticles.com/?What-is-Needed-to-Apply-For-Debt-Consolidation-Loans?&id=2916070

Obtaining a Loan without a Credit Check: Is it Possible?

Posted by: Laura Reginelli

Everyday commuting through bus or cab sounds little tougher and this Christmas, if you have decided to own a new car despite your bad credit history then car loans for credit check is considered as the best option. This alternative is much better than getting approved for a credit card with adverse, bad or no credit check. So, with easy monthly installment you can feel free to enjoy the Christmas in your own way.

The reason behind the approval of car loans no credit check is that lender uses borrower's car as collateral against the loan amount. On other hand, the unsecured option for availing a car with no credit check is little tougher to avail by the no credit check status borrower. The down payment by the borrower against the car loan gives a sigh of relief to the lender. This helps the lender to evaluate your repaying ability for paying the money back. So, it is recommended that borrower must pay as much as he can because it lower-down the stress of loan installment.

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Fair Credit

Posted by Chris Keeler

Going Straight to the Bank with Profits from Credit Cards

By Jorden Meltz

As banks begin to release their earnings for the third quarter, many are continuing to realize the effects of the recession with under-performance in their consumer credit departments. So in reaction, many have decided that in order to raise profits they have to raise bank fees, versus the conventional thinking that smart investments would help them now and would have helped to prevent this problem in the first place. It is been reported that Bank of America is expected to charge fees of between 30-99 dollars, even to customers who pay their bills on time. This comes as no surprise, as Bank of America recently announced a one billion dollar loss for the third quarter. It clearly is no wonder why people have begun to lose trust in the financial industry, as clearly many consumers are now paying the price for making smarter financial decisions. It is also reported that Citibank will begin to charge consumers fees if they do not charge at least $2400 to their credit each year. With the pressure of new legislation weighing heavily upon many banks that already struggling, they are continually trying to find ways to get more money out of consumers. It is absurd to think that some consumers are actually being somewhat punished for making smarter financial decisions versus rewarded and thus I think it is safe to say regulation is needed sooner than later.

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How do college students build credit history as rules change?

Posted by Nicholas Vanikiotis

By Sandra Block, USA TODAY

Some aspects of college life never change. Late-night study sessions. Uninspired cafeteria food. No place to park, ever.

But next year, a familiar site on many campuses will disappear: the tables strategically placed in high-traffic areas, offering free iPods, T-shirts and other goodies to students who sign up for a credit card.

Legislation signed into law in May will prohibit credit card companies from offering gifts to college students who agree to fill out a credit card application. The legislation also prohibits lenders from issuing credit cards to individuals younger than 21 unless they can prove they can afford payments or get a parent or other older individual to co-sign.

Consumer advocates say these reforms are long overdue. However, the provisions don't take effect until February. In the meantime, credit card companies can continue to market their cards, and some advocates worry that this year's campaigns will be more aggressive than ever.

Source: http://www.usatoday.com/money/perfi/columnist/block/2009-09-07-credit-cards-college-students_N.htm

Repo- What to do

Over the past few years, the rate of auto repossessions has increased as the auto loan market has undergone its own subprime lending crisis, similar to the one that crippled the U.S. mortgage industry.

As with mortgages, auto lenders frequently provided large loans to people with lower credit scores. In turn, American consumers, who became accustomed to borrowing rather than saving, purchased as much car as possible for a low monthly payment. That practice meant that loan repayment terms often extended to 60 months and beyond. For example, among borrowers with good credit, 41 percent of auto loans were longer than 60 months in 2007, up from 12 percent in 2002. Among subprime borrowers (people who paid higher interest rates because of poor credit), 67 percent of loans were for more than 60 months in 2007

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Posted by Chris Keeler

Retaliation To Credit Card Companies May Hinder Your Credit Report

By Laura Reginelli

Nowadays credit cards are a fact of consumer finance. It seems as if most people prefer to pay with their credit card instead of carrying large sums of cash at all times. According to the article below, many credit card companies have recently started to charge annual fees which consequently is causing some people to drop their credit card all together. However, by canceling their credit cards these individuals may see some negative reflections on their credit reports. Canceling a credit card affects the utilization rate on your credit report and ultimately this could cause a 50 to 100 point drop on your credit report. So before cancelling any cards, ensure that the benefits outweigh the consequences.

Article

Theodore Casser has been a loyal Bank of America credit card customer for about 10 years. But the prospect that the bank might start charging him an annual fee because he pays off his balance monthly has the Baltimore software developer ready to sever that relationship.

"I take it almost as an insult," says Casser, who hasn't heard yet if he will be among the small percentage of unprofitable Bank of America customers to be charged a $29 to $99 fee starting next year. "I'm happy to take the hit to my credit rating to cancel the card.

"Many consumers are mad these days at card issuers for imposing fees, boosting interest rates or raising minimum payments and penalties. And like Casser, some customers are upset enough that they threaten to cancel their cards in retaliation. But can getting even backfire by damaging your credit score?

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Closing Credit Cards Can Affect Your Credit Score

Posted By: Janielle Viggiano

Some misconceptions about credit cards and credit reports that people believe is that if you close a lesser-used low-credit limit credit card or lines of credit, it may or may not harm or help your overall credit scores. You can never have too much available credit and it will not negatively affect your score. If you close an account, your history will remain on your credit report, even if the account is 20 years old. Depending on how much you owe in relation to your limits on all your accounts you can tell whether or not closing a lesser-used low-limit credit account help or hurt your score. There is no good reason for closing an account from a scoring perspective. According to McFadden, “An account that is open with a good history can stay on forever--it could stay on for 20 years. the bureaus will automatically remove (a closed account) in 10 years, but that could be removed sooner if that credit card issuer decides to remove it. Once it's closed and paid off, that account then becomes inactive, and it's not uncommon for the credit card issuer after a few years or even sooner to just delete that completely, just purge if from their records. One of those five ares that the score considers, looks at how long you've had credit-- that accounts for about 15 percent of the score. That may or may not impact your score a lot depending on your other accounts. If you've only got a few accounts, that could impact it heavily; if you've got a lot of credit for a long period of time, that will probably not impact it by much, if at all (2008)." Having new credit cards within the last six months and canceling a department store credit card you’ve had for years could potentially affect your credit because it will be taking it off your credit score.

Source: http://www.bankrate.com/finance/credit-cards/closing-credit-card-dings-credit-score-2.aspx

Fixing the College Credit-Card Mess

Posted by Nicholas Vanikiotis

Every year for the past six years, Representative Louise Slaughter (D-N.Y.) has introduced a bill designed to prevent students from taking on unmanageable amounts of credit. For six years, she has tried to alert Congress to the dangers of college student debt. And for six years, she has failed.

But this year may be different. With a Democrat majority in Congress and a growing number of college kids piling up debt that could haunt them long after college, credit-card companies are coming under increasing scrutiny, and Slaughter thinks she just might have the critical mass to succeed this time. "This Congress finally cares more about the interests of students than the interests of credit-card companies," says Slaughter.

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Barclays Boosts Rating for Ford

Posted by Mary Clare McGraw

A Barclays Capital analyst on Tuesday upgraded Ford Motor Co. to "Equal Weight" from "Underweight," citing expectations that the automaker's third-quarter results will beat Wall Street predictions.

Brian Johnson also boosted his price target for the Dearborn, Mich., company by $1 to $8.

Johnson said Ford continues to benefit from higher new and used car pricing, which should increase the company's North America and Ford Motor Credit third-quarter results by 12 cents per share over the investment bank's previous estimates.

In addition, while Ford's European results were probably hurt by pound and euro exchange rates, the company should also benefit from strong demand in Brazil where it is a large player, he said.

In light of those factors, Johnson revised his third-quarter earnings prediction to a loss of 7 cents per share from a loss of 16 cents per share. Analysts, on average, expect a loss of 16 cents per share, according to a surveyed by Thomson Reuters.

In midday trading, Ford shares rose 14 cents to $7.71.

College Credit Card Debt

By Nicholas Vanikiotis

Now more than ever college students are being bombarded with credit card applications. Personally I alone get a new application every couple weeks with some enticing offer that has seemingly amazing rates and bonus packages. But with the mounting debt being accumulated by college students sooner or later it will catch up with them. An average college student has approximately 4,000 dollars accumulated in credit card debt. It seems that no one is teaching students how to properly manage their finances and thus are being consumed with debt. An interesting statistic is that 22% of students pay the minimum balance each month and only 17% pay their balances off in full. The other 41% are carrying their balances over each month, accumulating charges that can easily be avoided with proper credit management.

One good thing that the government is doing is in May they passed a law, which tightened the rules on credit card fine print and variable rates on college campus credit cards. The government also needs to address the affinity credit practices that campuses are doing with card companies. Credit card companies are paying hundreds of dollars per student to the University for access to their personal information. This is giving college campuses millions of dollars The Obama administration has done nothing to address this.

http://www.businessweek.com/bwdaily/dnflash/content/sep2007/db2007093_443488.htm

http://moneyfeatures.blogs.money.cnn.com/2009/10/15/my-12-year-old-got-a-credit-card-offer/

http://redtape.msnbc.com/2009/05/college-debt-so-crushing-grad-says-i-wish-id-gone-to-prison-instead.html

U.S. Consumer Credit Fell By $12 Billion in August

Posted By Jorden Meltz

Consumer credit fell by $12 billion, or 5.8 percent at an annual rate, to $2.46 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $19 billion in July, less than previously estimated. The series of declines is the longest since 1991.

Labor Department figures last week showed there were more job cuts than forecast in September and the jobless rate kept rising. The data prompted President Barack Obama to say he’s working to “explore any and all additional measures” to spur growth, and underscored forecasts for the Federal Reserve to keep its benchmark interest rate near zero through next year.

“Demand for credit has just gone through the floor,” said Ellen Zentner, senior macro economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. “Households are in paying- down-debt mode, they’re not in the mode of taking on new debt.”

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Understanding Credit Scores

By: Jessie Bruyn

In order to determine whether you are approved for a credit card, creditors use a scoring system to essentially rank your reliability in paying back the borrowed money. The score is calculated by a mathematical formula - each one is different depending on which credit scorer they company uses.

Fair Isaac, or FICO, is the most popular algorithm used. The distribution of American's credit scores published by Fair Isaac is as follows:

Credit score	Percentage
499 and below	2 percent
500-549	5 percent
550-599	8 percent
600-649	12 percent
650-699	15 percent
700-749	18 percent
750-799	27 percent
800 and above	13 percent

The importance of a good credit score is especially important in determining loan interest rates. According the the FICO website, difference in the interest rates offered to a person with a score of 520 and a person with a 720 score is 4.36 percentage points, which can make a huge difference in the amount of repayment in the long run.

You are entitled to one free credit report a year and if you are ever turned down for a card for reasons related to your credit score you are also entitled to see the credit score and report in question. Credit reports can be obtained from one of the four national credit reporting agencies: Experian, Equifax, TransUnion, and Innovis.

http://www.bankrate.com/brm/news/credit-scoring/20031104a1.asp
http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=29793
http://en.wikipedia.org/wiki/Credit_bureau

Negotiating with your credit card company is easy!

Posted by: Jessie Bruyn

Another Option Other Than Bankruptcy

Posted by: Janielle Viggiano

When the credit card bills activate piling up and you're getting rear within fees it seems that bankruptcy is the alone distance towards get out of the financial mess. There are alternatives that are far better than bankruptcy. One of the greatest things you can do towards eliminate indebtedness and become financially solvent again is towards utilize the facilities of a credit card debt consolidation company.

There are two primary advantages towards a debt consolidation loan. The former is that your novel credit shall mix numerous cheaper debts whilst at the equivalent moment lowering the size of interest you are paying.

A credit card debt consolidation corporate bids the choice of mixing your credit card debt into a single manageable loan. Instead of trying towards keep up with multiple credit card fees that each possess a tall interest rate estimated you'll possess the faucet of making a single monthly payment. The bundles calls shall give away and your financial life shall become many organized.

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Credit Card Debt

Posted by: Janielle Viggiano

According to BusinessWeek, “the next horror for beaten-down financial firms is the $950 billion worth of outstanding credit-card debt-much of it toxic.” Credit card debt is unsecured, meaning consumers don’t have to make down payments when opening up their accounts. The average debt in households with one credit card is growing. According to MSN Money, “more than a third-36% - of those who owe more than $10,000 on their cards have household incomes under $50,000, according to the VIP Forum analysis, 13% who owe that much have household incomes under $30,000. The percentage of disposable income used to pay debts is still near record highs and the median value of total outstanding debt owed by households rose 9.6% between 1998 and 2001. Bankruptcies set another record in 2003, with 1.6 million personal filings, the American Bankruptcy Institute reports.

Banks are more willing than ever to cancel your credit card debt, but that doesn’t come with repercussions. The non-payment will stay on your credit report for years, bringing your credit score down dramatically. If you are on the brink of bankruptcy, you should approach your credit card company and ask if you can pay less than the full amount or even less than the minimum.

Sources: http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp

http://abcnews.go.com/Business/Economy/story?id=6662160&page=1&page=1

http://www.businessweek.com/magazine/content/08_42/b4104024799703.htm

The Truth About Credit Cards

By: Laura Reginelli

It’s easy to see why so many people are sucked in to getting a credit card or even a retail store card. The discount on the initial purchase, the ability to buy now and pay later, it’s hard to ignore the allure that credit cards seem to bring.

Unlike in years past, credit cards allow you to buy what you desire at that moment instead of waiting till when you have the cash available. Furthermore, with the help of credit cards the online shopping industry has exploded. The realm of purchase possibilities has only expanded with the introduction of credit cards. Credit cards also help build your credit line which may help in the future when your credit reports are looked at when considering purchasing a home. An equally important benefit of credit cards is the fact that they give families some “wiggle-room” when they encounter emergency expenses.

All that glitters isn’t gold however and credit cards do have their drawbacks. Often times when people buy on credit they have the notion that the purchase is “free” even though they have to pay their bill sooner or later. When the bills start to pile up and you fail to pay them on time, credit cards tend to have a high cost to borrow. Ultimately this could lead to an increased amount of debt if you rack up overdue bills with high interest rates.

Like all things in life, it is important to consider both the benefits and disadvantages of signing up for a credit card before jumping into it. So if you feel that you can control your spending and be responsible with usage, a credit card may be the right payment choice for you!

Sources: http://creditcardsclub.com/articles/introduction/AdvantagesandDisadvantagesofOwningCreditCard

http://www.mtstcil.org/skills/budget-12.html

http://www.kimberlycredit.com/advantages_disadvantages_credit_card.htm

What Do You Value Your Credit Card At?

Posted By: Laura Reginelli

By CANDICE CHOI, AP Personal Finance Writer – Thu Oct 15, 2:59 pm ET

NEW YORK – How much would you pay to keep your credit card?

For Randy Dawson, a new $29 annual fee pushes the limit. But he'll likely pay it to keep the Bank of America card he's had for five years.

"I feel as though they're holding me hostage over my credit score," said Dawson, a 46-year-old resident of Johns Creek, Ga. who owns a marketing firm.

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To fix financial system, protect consumers first

By Nick Porcell

Even though, the economy is starting to recover, yesterday the DOW Jones Industrial Average went above 10,000 for the first time since plummeting down to 6,500 in March earlier this year, there is still a long way to go before we fully recover from the worst economic downturn since the Great Depression. President Barack Obama's answer to help make sure such a downturn does not happen again is a new agency called the Consumer Financial Protection Agency. The new agency will help protect consumers against predatory marketing of subprime mortgages which were a root cause of the current recession. Those toxic loans were bundled in complex mortgage-backed securities that went through the global financial system, destroying enormous sums of investor wealth and nearly paralyzing credit markets.

The Consumer Financial Protection Agency would improve transparency, fairness, and the appropriateness of financial products and services like home mortgages, credit cards, and bank overdraft loans. Banks would be prevented from suddenly jacking up credit card fees and hiding rate increases in pages of fine print. And financial institutions would be pushed to describe their products as clearly, comprehensibly, and concisely as possible. To prevent the megabanks from getting around any new rules, the legislation must preserve the ability of the states to impose consumer finance protections of their own. State attorneys general usually do a good job defending the consumer’s interest, while international financial giants have a history of getting their way with the federal government.


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Credit Card Popularity

By Jorden Meltz

After what may come as a not so surprising response by credit companies to drain every last penny out of consumers before the new Credit Card Accountability, Responsibility, and Disclosure Act of 20009 sets in, there has been a push by congress to move the effective date forward to December 1 of this year. Several banks and credit companies have already started the transition process, while several are holding out until it becomes mandatory to adhere to the new rules in February of next year. It is for this reason that reports that credit card satisfaction has reached a three year low is not shocking to anyone. Fee and interest rate hikes have left many consumers unhappy and forced to pay higher rates on debt they may not have been able to manage in the first place. With nearly 84% of college students having at least one credit card, there is clearly a large impact on students and their ability to pay back growing debts on top of loans they may have already incurred. The fact that congress is trying to push forward the effective date shows that they have become aware of the tactics credit companies are trying to use and showing the greater public that their concern for how they are treated is an issue that must be addressed.


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The Basics: Your 3 worst debt consolidation moves

Posted by Leah Gorham

By MP Dunleavey

If you're up to your eyeballs, the fantasy of debt consolidation can suck you right in. Watch out for the slippery side of consolidation loans, balance transfers and other 'easy fixes.'

The phrase "debt consolidation" has always had a magical ring to me.

As if somehow, someone would have the power to mush my debt into one neat little package, which by some incredible financial alchemy would also then shrink the debt itself -- and I'd only owe a hundred bucks or so.

I know I'm not the only idiot who's had this fantasy, because an entire industry has sprung up to support it: The Debt Consolidation Industry and Covert Sting Operation. Every day, I get at least one piece of regular mail offering me low-interest balance-transfer deals for credit-card debt, or arm-twisting e-mail from unknown credit organizations that scream things like:

"DEBT RELIEF IS JUST A CLICK AWAY!"
"CUT YOUR MINIMUM MONTHLY PAYMENTS BY 50% OR MORE!"
"SLASH YOUR INTEREST RATES DOWN TO ZERO!"

These promises are incredibly alluring to anyone who is caught in the quicksand of having too much consumer debt, and who will believe anything, do anything -- click her ruby slippers (bought on sale for just $400!) three times -- to make it go away. But before you start skipping down some financial yellow brick road to see the Wizard of Debt Consolidation, remember this: Watch out for those flying monkeys.

To read more click here.

4A's Oppose Proposed Consumer Finance Protection Agency

Posted by Nick Porcell

WASHINGTON (AdAge.com) -- If you think privacy and blogging rules are the biggest regulatory issues in Washington this fall, think again.

Controversial legislation winding its way through the House to create a Consumer Finance Protection Agency would establish a whole new regulatory system for financial-services advertising. One provision, according to media industry advocates, could make media outlets liable for running financial advertisements the new agency deems misleading.

Those advocates raise the specter of media outlets being forced to hire experts to study advertisements from financial services companies.

The legislation would also restructure the Federal Trade Commission, the ad industry's main regulator, by shifting much of its regulatory authority and resources to the new agency.

"The whole advertising community should be concerned about this," said Dan Jaffe, exec VP of the Association of National Advertisers.


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A New Push for Obama's Consumer Finance Agency

Posted by Jorden Meltz

Those weren't olive branches President Barack Obama was tossing at the financial industry at the White House on Oct. 9. In an effort to jump-start his faltering proposal for a Consumer Financial Protection Agency, the world's newest Nobel Peace Prize winner lobbed some verbal grenades at industry opponents—particularly the U.S. Chamber of Commerce, which has led the charge—and called for a new push to get his proposal passed.

It's going to be a hard slog. Financial companies are afraid the plan would curtail their marketing of many high-margin products, so the industry is spending a lot of money and effort trying to kill it or water it down. One of the tactics is to refocus the debate around small business owners and the small community banks that serve them.

But now, Frank and the Administration are running into more serious opposition—particularly from a block of moderates known as the New Democrat Coalition—than they expected on two key issues. First is how much enforcement power the new agency would have. While the President wants it to be able to enforce any new rules it sets, the moderates want enforcement powers to remain with existing banking regulators. An even bigger fight is brewing over whether banks would have to comply with state consumer laws when they are stricter than whatever the new federal agency comes up with.

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The Bend But Don't Break Mentality of Plastic

By Jorden Meltz

The recession has been a wake up call to all consumers and has lead almost everyone to reevaluate how they spend their money and what they spend it on. The pockets of consumers have not been the only ones gathering more lint than money lately, as credit card companies have been feeling the heat of the recession too. Borrowing fell by about $12 billion over the last month, and clearly has some credit companies worried. The troubled times have resulted in desperate measures such as rate increases and increased fees, as credit companies are looking to make up for the lost profit on those who are still resorting to their credit cards to make purchases. Bank of America, in an effort to not be associated with such actions, has announced they will not raise interest rates on the consumers who have credit cards issued by them, an announcement that gained widespread praise from Senate Banking Committee Chairman. With credit companies knowing that regulation will soon be passed restricting their formerly cash-cow like methods of driving revenues, they are trying to find new ways to ensure the credit industry, although it has fallen on hard times recently, manages to stay as one of the most preferable ways to make purchases. Whether it be through taking a more consumer friendly approach or through dropping rates, as long as they can continue to offer convenience and credit it seems people will be out using their credit cards.


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How Rewarding is Your Credit Card's Reward Program?

By Leah Gorham

Credit card reward programs are becoming less rewarding as a new law takes effect restricting the credit card industry's ability to raise interest rates and charge fees. Credit card companies are reducing the amount of programs that offer lucrative rewards such as frequent-flier miles and cash rebates, and now customers often have to pay higher fees to earn these rewards. For example, Discover has eliminated one of three tiers in its cash-back program. Previously, customers received 0.25 percent of the first $1,500 spent, 0.5 percent for the next $1,500, and 1 percent for anything above $3,000. Now they will receive 0.25 percent back for the first $3,000 spent and 1 percent above that.

For a large segment of consumers, the benefits offered under reward programs for certain credit cards are the sole reason why they choose one credit card over another. However, it is important that as consumers we look closely at the terms of these programs and understand the loopholes that credit card companies often use to change the terms and conditions of their rewards programs. In a recent study conducted at CardHub.com, it was revealed that all of the major credit card issuers (American Express, Bank of America, Capital One, Chase, Citibank and Discover) will revoke any reward points earned in a billing cycle during which a consumer’s account is delinquent. Moreover, all of the major credit card issuers reserve the right to change the terms and conditions of their reward programs or even cancel the program at any time, and for any reason.

Although the real value of credit card rewards may be less than expected, there are still positive ways to use rewards. For instance, by using points to make charitable donations, a consumer can make a $50 donation to the nonprofit of their choice for as little as 5,000 points ($50 worth). Just remember, you can't take a tax deduction on these points donated. Another way to avoid these loopholes in the programs is to opt for cash back rewards since once you keep the rewards you earn and credit card companies cannot devalue the rewards in any way after you have earned them.

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Addicted to Shopping

Posted by Mary Clare McGraw

Anger at bank overdraft fees gets hotter, bigger and louder

Posted by Leah Gorham

By Kathy Chu, USA TODAY
Controversial bank account fees, which have fattened banks' bottom lines at the expense of vulnerable consumers, are rapidly becoming a black eye for the industry.
Under siege are the fees charged to consumers who spend more than they have in their accounts, whether by check, debit card or at the ATM.

Last week, four of the nation's largest banks said they would scale back some of their overdraft policies. Their efforts, while meaningful, have failed to appease lawmakers, including powerful Senate Banking Committee Chair Chris Dodd, D-Conn., who is preparing legislation to crack down on what he calls a pattern of "abusive" practices.

At first glance, banks' practices seem reasonable enough: Overdraw your account, and the bank will cover the transaction — for a fee. The problem is, most banks don't ask consumers if they want their transactions automatically paid. In recent years, as banks realized how lucrative these fees can be, they've made it easier for consumers to overdraw their accounts, to the tune of $36.7 billion in revenue last year, USA TODAY research has found.

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Creditors Scramble for College Students

Posted by Jorden Meltz
As college students across the country headed back to campus last month for the new school year, so did the credit card companies. And they're pounding the pavement.

The companies are scrambling to sign up young people for credit cards in a last-minute effort to beat the new credit card law that takes effect in February. Under the new rules, the Credit CARD Act of 2009 will restrict anyone younger than 21 from getting his or her own credit card, unless a parent, guardian or spouse is willing to co-sign or unless the underage person has proof of sufficient income to cover the credit obligations.

Not everyone thinks that's such a good thing. "One of the unfortunate consequences of this new legislation is that it will inhibit otherwise responsible kids from establishing a credit history," said Greg McBride, a senior financial analyst at Bankrate.com, a consumer financial services company.

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Still Serious Disagreement Over Consumer Protection

Posted by Nick Porcell

WASHINGTON -(Dow Jones)- U.S. lawmakers are making significant progress on proposals aimed at updating the nation's finance rules, but consumer protection continues to be a serious area of contention, the head of a key U.S. House panel said Thursday.

House Financial Services Committee Chairman Barney Frank, D-Mass., said he's "puzzled" by the fact that "many of those who have been the most vociferous in their criticism of the Federal Reserve are resisting the biggest shift of power away from Fed currently on the table - and that is in the consumer area."


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Discount Stores Joining the Retail Credit Card Game

by Mary Clare McGraw

Many national retailers offer their own credit card for their loyal shoppers to use at their stores. This is a win-win situation for retailers because they promote their customers to spend money, while also making money off of the interest charged on the credit card. Retail stores like Bloomingdale’s, Neiman Marcus, and Sears are notorious for their credit cards for their customers and now, discount stores like Kmart, WalMart, and Target are now offering their own credit cards as well. With these discount store cards, the perks are as nice as the penalties are severe and the interest rates are high. The Kmart card does not charge interest for the first 6 months, but after the 6 month introductory period, the interest rate cardholders will have to pay on their bill is 11.9% on both Kmart purchases and non-Kmart purchases, the latter of which they pay the interest on from the time they sign up for the card. Shopping with a Target Guest Card helps to raise money for a local school of the cardholder’s choice, which is an attractive feature, but it also comes with a jaw-dropping 21 percent interest rate. These cards will essentially kill you if you do not make your payments on time because the rates are so high.
In this recent economy, discount stores have not been hit quite so hard, whereas other retail companies have not been so lucky. What happens if you use a retail credit card from a company that files for bankruptcy? Well, unfortunately for you, you still have to pay off your outstanding balances. The bank who underwrites the credit card you are holding with that company’s name assumes the debt and becomes your creditor and you have to pay them back in full. Many consumers have found themselves in a battle with the bank trying to claim they should not have to pay if the company is going out of business anyway. The bank will be sure to notify you of your obligation to pay but you will have some nasty paperwork to handle and it is not something you want to deal with. There is often no way to know if a store you shop at frequently and hold a card at will go under but just be prepared to pay off your balance no matter what!

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Credit Cards and College Students

by Leah Gorham

The use of cerdit cards among college students has risen in the past year, including students using credit cards to pay for tuition, textbooks, school supplies, and other direct education expenses that could be payed for by less expensive financial aid. According to a 2009 study by Sallie Mae, a saving- and paying-for-college company, 84 percent of undergraduates had at least one credit card, up from 76 percent in 2004. Moreover, the study found that more than three-quarters incurred finance charges by carrying a monthly balance. Surprisingly, 60 percent of students experienced surprise at how high their balance had reached, and 40 percent said they have charged items knowing they did not have the money to pay the bill. These statistics demonstrate the need for better financial planning among college students and wiser use of credit cards.

Some steps that can be taken to help keep finances in check while in college are keeping parents involved and having a family discussion about a monthly budget, tracking expenses including small daily expenditures that can add up to larger sums, setting financial goals, getting a part-time job, and trying not to use more than 10%of allowed credit on a credit card while paying off as much as possible on a monthly basis.

Despite all the risks associated with college students and credit cards, they can be a good tool to start building your credit history, as long as you can be sure to pay off the card each month and act in a responsible manner. If you do make the decision to use a credit card as a college student, make sure to find a card with no annual fee and look for the lowest interest rate possible. Also, you may want to consider if a card offers rewards, but since these cards often carry a higher interest rate it is important to only chose this option if you ensure that you will not carry a balance.

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Giving credit to a friend is dangerous

Posted by Mary Clare McGraw

Q. In 2007, my wife was trying to do a favor for a friend who was down on her luck financially. I strongly advised her against it, but she signed up for a credit card with a second user being this woman. My wife told Chase that she wanted a strict cap on the credit limit of this card set at $1,000. Chase ignored this request and the limit went up to $16,000. The woman made charges up to this amount. My question is: Is my wife liable since she strictly requested that the card be limited to $1,000?

ANONYMOUS

A. Your wife has a big heart, but you were right to advise against this act of generosity. Giving away credit is far more dangerous than giving away cash.

At stake is her credit rating and ability to get the most favorable terms, not to mention being put in this awkward situation of having a bill in her name for the charges of someone else.

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