Month: February 2012

Debt Management Credit Counseling Corp (http://www.dmcconline.org), a nonprofit charitable organization (“DMCC”), receives recognition for supporting South Florida schools by teaching students financial literacy. Focusing on teaching students the importance of credit, this educational program has been a part of DMCC’s mission since 2001. Covering topics from how credit is established to how to use a credit card, DMCC speakers make the presentation fun and easy to understand. The program is also offered online to high schools and colleges. South Florida teachers have integrated this course as part of their curriculum.

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FEATURE ARTICLE:  Secured Credit Card Marketing Scams

Secured and unsecured cards can be used to pay for goods and services. However, a secured card requires you to open and maintain a savings account as security for your line of credit; an unsecured card does not.

The required savings deposit for a secured card may range from a few hundred to several thousand dollars. Your credit line is a percentage of your deposit, typically 50 to 100 percent. Usually, a bank will pay interest on your deposit. In addition, you also may have to pay application and processing fees — sometimes totaling hundreds of dollars. Before you apply, be sure to ask what the total fees are and whether they will be refunded if you’re denied a card. Typically, a secured card requires an annual fee and has a higher interest rate than an unsecured card.

Deceptive Ads and Scams

The Federal Trade Commission (FTC) has taken action against companies that deceptively advertise major credit cards through television, newspapers, and postcards. The ads may offer unsecured credit cards, secured credit cards, or not specify a card type. The ads usually lead you to believe you can get a card simply by calling the number listed. Sometimes the number is not toll-free. A ‘900’ number service, for which you are billed just for making the call, may instruct you to give your name and address to receive a credit application, or give you a list of banks offering secured cards. It also may tell you to call another ‘900’ number — at an additional charge — for more information.

Deceptive ads often leave out important information.

• The cost of the ‘900’ call — which can range from $2 to $50 or more;
• The required security deposit, application, and processing fees;
• Eligibility requirements like income or age;
• An annual fee or the fact that the secured card has a higher than average interest rate on any balance.

How to Avoid the Scam

To avoid being victimized, look for the following signs:

• Offers of easy credit. No one can guarantee to get you credit. Before deciding whether to give you a credit card, legitimate credit providers examine your credit report.
• A call to a ‘900’ number for a credit card. You pay for calls with a ‘900’ prefix — and you may never receive a credit card.
• Credit cards offered by “credit repair” companies or “credit clinics.” These businesses also may offer to clean-up your credit history for a fee. However, you can correct genuine mistakes or outdated information yourself by contacting credit bureaus directly. Remember that only time and good credit habits will restore your credit worthiness.

Credit Reporting

If you’re considering a secured card as a way to build or re-establish a credit record, make sure the issuer reports to a credit bureau. Your credit history is maintained by companies called credit bureaus; they collect information reported to them by banks, mortgage companies, department stores, and other creditors. If your card issuer doesn’t report to a bureau, the card won’t help you build a credit history.

For More Information

To build a credit record, you may want to apply for a charge card or a small loan at a local store or lending institution. Ask if the creditor reports transactions to a credit bureau. If they do — and if you pay back your debts regularly — you will build a good credit history.

If you cannot get credit on your own, you can ask a relative or friend with a good credit history to act as your cosigner. The cosigner promises to repay the debt if you don’t.

If you’re having problems paying bills, you may want to contact a credit counseling service. Non-profit organizations in every state counsel consumers who are in debt. Counselors try to arrange a repayment plan that is acceptable to you and your creditors. They also can help you set up a realistic budget. These counseling services are offered at little or no cost to consumers. You can find the office nearest you by checking the White Pages of your telephone directory.

Sometimes, non-profit counseling programs are operated by universities, military bases, credit unions, and housing authorities. They are likely to charge little or nothing for their services. Or you can check with your local bank or consumer protection office to see if it has a list of reputable low-cost financial counseling services.

Where To Complain

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

www.ftc.gov

MONEY SAVING TIP:   Take fewer trips to the grocery store

Making bigger shopping trips less often will cut down on your impulse buys. In fact, almost half of all shoppers go to the store three or four times per week. Shoppers making a “quick trip” to the store usually purchase 54% more than they planned, according to a study published by the Marketing Science Institute.

If you go to the store three times a week and spend $10 on impulse buys each trip, that adds up to $120 extra per month. But if you go only once a week, you’ll spend $40 per month on impulse buys. That saves you $80 per month, or $960 per year.

www.klipinger.com

DID YOU KNOW…Closing and old account will hurt your credit score?

You should think twice before officially closing that credit card you opened back in college, especially if you’re getting ready to apply for a new line of credit.  Closing an old account can have a negative impact on your credit score since it can lower your credit to debt utilization ratio, which is essentially how much credit you have at your disposal versus how much credit you are actually using.

According to FICO, it can also cost you points you might have been netting by having an ideal number of credit cards in your wallet and by building that 15% of your score that comes from credit history.

The exact effect this has on your score will vary, depending on the rest of your credit profile, but the advice is consistent.

FEATURE ARTICLE:  Gift Cards: Use Them Before You Lose Them

The holiday presents have been unwrapped and most of us received at least one gift card. Now is the time to shop with these cards while they’re still fresh in our hands.

The National Retail Federation predicts that 80 percent of people have purchased gift cards this holiday season, and shoppers will spend an average of $43.23 per card. Total holiday spending on gift cards in 2011 will reach $27.8 billion. That number grows each year because gift cards are the easiest present to give, saving time and shopping stress for the giver.

Surprisingly, it’s also a present that often goes unused. Last year, 113 million Americans received gift cards during the holidays, but at the start of the 2011 holiday shopping season, a quarter of recipients still had an unused gift card from last year (according to Consumer Reports).

“For some reason, gift cards aren’t spent as quickly as a cash gift,” says Bill Hardekopf, CEO of LowCards.com. “We slide them into a wallet or drop them in a drawer, lose them, or forget about them. We let that money waste away. The best time to use a gift card is soon after you receive it. Use them before you lose them.”

What happens to unused gift cards? The Securities and Exchange Commission allows companies to count unused gift-card money as income once they can reasonably say the card won’t be redeemed. However, some states require unused gift cards to go to an unclaimed-funds account. Those states can then use the unclaimed funds for general purposes until someone claims it.

Here are some consumer tips for using a gift card…

• Use them before they expire. Merchant and bank-issued gift cards must now be good for five years, thanks to the CARD Act provisions. Reloadable cards can expire five years after the money was last added.
• Research the fees. Some cards, like bank-issued cards, also charge fees, such as a monthly fee after 12 months of inactivity.
• If you will not use the card, or would prefer to have the cash, you can resell the card. There are several sites, such as PlasticJungle.com and CardPool.com, that are a marketplace to buy, sell, or exchange gift cards. You may receive as much as 80 to 90 percent back for your gift card. Some cards are worth more than others and the price can vary between sites.
• Turn your gift card into cash for investing or saving. GoalMine.com trades unused gift cards for cash to fund your GoalMine account. Receive 150 percent of the initial $50 of card value on your first card if you’re opening a new account, and market value for the rest.
• Donate your gift card to charity and get a tax deduction. Many national charities and foundations, like the Kidney and Urology foundation, accept gift card donations.

www.moneytalksnews.com

MONEY SAVING TIP:  Saving on Gas.  Gas station chains often partner with other businesses, such as supermarkets, to create rewards-earning opportunities. For example, Shell has a deal with some of the nation’s biggest grocery companies, including Giant and Kroger, so that every $100 you spend at the supermarkets gets you a 10-cent-a-gallon rebate on your next fill-up. Tack that on to the 5% cash back offered by the PenFed Card and you’re looking at saving around 7.6% per gallon the next time you buy gas at a Shell station. The trick is to find savings opportunities that fit your spending habits, rather than changing where you shop or going out of your way to save.

DID YOU KNOW…about the different saving strategies for military personnel?

Even though those who stay in the military for 20 years or more can qualify for a pension, it’s still important to save on your own. In truth, few people actually stay in the military long enough to claim a pension, and, unlike civilian pensions, there’s no “partial vesting” to guarantee that workers who leave “early” get something. With the military, if you leave before 20 years, you get nothing. Even if you qualify, pension payments probably won’t be enough to cover your bills—you’re usually entitled to 50% or less of your base salary if you retire at 20 years (and more if you stay beyond two decades). See militarypay.defense.gov for options based on when you joined the service.

Instead of worrying about what might happen, take charge of something you can control: your own savings. The younger you are when you start setting aside funds for your future, the easier it will be to build a healthy nest egg. And while you’re in the military, there are special investing opportunities and tax breaks to help you supercharge your savings. It’s up to you to make the most of your options.

For more information check up on the government’s Thrifty Savings Plan and tax-free earnings from a Roth IRA.

www.kiplinger.com

PORT ST. LUCIE – “Small things add up fast” and “manage your spending” are pieces of good financial advice.

What makes this advice even better is it came from high-school students.

The Allied Health Assisting students at St. Lucie West Centennial High School recently completed a financial literacy program that consisted of 12 modules throughout the school year.

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