Forget Mortgages Now. One Agency Tells You (Free) 51 Ways To Save

As the government interference in the free market mortgage economy sorts itself out over the coming hours and days, we'll share our thoughts on this big piece of consumer news. There are still several battles looming and today's Wall Street reaction before a true temperature can be taken of the unilateral government actions being taken.

Meanwhile, the FCIC, one of our favorite federal or local agencies, does an excellent job with a new publication on saving on loans and credit cards. As always, the agency and its content partners do a great job describing an issue and its solutions (or prevention) in plain ole' English.

(from their release)

For many, nothing says the holidays more than shopping: hitting the sales, taking in the sights, searching for the perfect gift for everyone on your list.

But it's very easy to shop yourself into more debt than you can handle. This year, resolve to keep your expenses in check and your credit intact -- it's a gift you'll appreciate the whole year through.

Check out 51 Ways to Save Hundreds on Loans and Credit Cards from the Federal Deposit Insurance Corporation (FDIC) and the Federal Citizen Information Center to get advice you can use now and to start the new year off right.

BUDGET: Set a budget whenever you shop. Decide how much you can spend, and don't go over that limit. Paying with plastic? Look at how much you already owe on your cards. One of the quickest ways to run up debt is to only pay the minimum amount owed on your credit cards. Late fees add up, too, and so does going over your credit limit. 51 Ways to Save has other helpful tips for paying less in credit card fees and interest.

BEWARE QUICK CASH LOANS: Proceed with caution if you're looking for quick cash for a shopping trip. Car title or "payday loans" can get you money fast, but they come at a steep price -- the interest rate on a payday loan can be as high as 391 percent! Instead, start a savings account where you can put just a little bit from each paycheck throughout the year. You'll have saved plenty for gifts in time for the next holiday season. If you're considering other loan options for extra cash (like a home equity loan), make sure to check out 51 Ways to Save to learn how to shop for the best deal, compare Annual Percentage Rates (APR) and read the fine print to save even more.

You can get 51 Ways To Save three ways (four, if you count sending us a $25 money order...we're just joking, don't do that)

* Send your name and address to 51 Ways to Save, Pueblo, Colorado 81009.

* Visit www.pueblo.gsa.gov/rc/n7051waystosave.htm to order online or to read or print these and hundreds of other Federal publications for free.

* Call toll-free 1 (888) 8 PUEBLO weekdays 8 a.m. to 8 p.m.

Labels: credit, FCIC, financial

posted by George Bounacos at 8:30 AM | 0 comments
(opens in new window) | links to this post

  Levin Committee Opens Hearings On Credit Card Interest Hikes

Powerful Senator Carl Levin (D-MI) opened Senate hearings today that put credit lending giants on notice that sudden rate hikes would soon come under greater scrutiny.

Levin chairs the Subcommittee on Investigations under the Homeland Committee and criticized the industry from the credit bureaus to the credit lenders for a lack of transparency in the process. Citing multiple examples in which the interest rate on a consumer's credit card could suddenly and retroactively increase, Levin announced that the Subcommittee would review the process.

Using the occasion to describe legislation he has been co-sponsoring with Senator McCaskill (D-MO) almost all year, Senator Levin said, "When a credit card issuer promises to provide a cardholder with a specific interest rate if they meet their credit card obligations, and the cardholder holds up their end of the bargain, the credit card issuer should have to do the same."

Amen.

The Michigan senator referred to the mysterious FICO credit scores many lenders use to determine interest rates and said that he would advocate that the underlying data used to generate those scores be kept so that a consumer could challenge an increase. Consumers currently are advised of an increase, but Levin said that many are unaware of the increase's trigger, including spending within an individual account's limit, but at a higher percentage of that limit.

Senator Levin chastised lenders and called the practice "offensive".

We think this is the first step in more transparency to credit reporting laws, a long overdue overhaul of how lenders operate now. We certainly don't expect lenders to issue credit to bad credit risks and we respect a lender's light to charge a premium interest rate to protects itself when granting credit to consumers with poor credit.

But full disclosure in plain English with no retroactive increases makes sense to us too. And if someone is issued a credit limit by a lender, their interest rate on another account shoudn't rise if the consumer spends that money. Credit is a privilege, not a right, but consumers ultimately pay for that privilege through interest, card fees and higher prices when merchants have to keep prices higher rather than absorb the fees credit card companies charge them for each transaction.

Cheers to Carl Levin. Read up on S. 1395, (pdf file) and call your own Senator about signing on to the bill. This is a good one.

Labels: credit, Levin, McCaskill

posted by George Bounacos at 4:27 PM | 0 comments
(opens in new window) | links to this post

  Credit Problems? Freeze!

One of the better protections available to identity theft victims is now globally available. Credit reporting agency Experian was the last holdout among the three major companies processing credit information in the United States.

A freeze simply means that no new companies can access your credit records. This means a new account can't be opened in your name. TransUnion and Equifax already offered the service, which is mandated by state law in multiple jurisdictions for identity theft victims.

Experian announced that any consumer would be able to freeze their account -- even permanently -- for a fee of $10 for any reason other than identity theft.

This is a major boon for consumers, one that was fought by Consumers Union, who later issued a statement criticizing the charge but supportive of the move.

Labels: Consumers Union, credit, Experian

posted by George Bounacos at 4:21 PM | 0 comments
(opens in new window) | links to this post

  Countrywide Goes Proactive

We're still not backing down from pushing a healthy dose of the blame for the mortgage crisis on consumers who overextended themselves. When a recent piece on Capital One aired, an middle-aged couple explained how the credit card giant kept offering them cards even though they were overextended and couldn't pay their existing cards.

Let's be clear, and let's be smart consumers.

Stop digging when you're in a hole. The slanted piece somehow blamed CapOne instead of irresponsible consumers who kept applying for credit cards they couldn't afford to pay. The same issue is rampant in the subprime mortgage crisis that is damaging the American economy. Banks and financial institutions sell mortgage and other financial products. If you can't afford them, you shouldn't be applying, much less accepting, them.

That said, Countrywide Financial (NYSE: CFC), the nation's largest mortgage lender, has announced that it will proactively rewrite more than 80,000 mortgages. The amount is an unfathomable number with a lot of zeroes. This is after Countrywide was forced to grasp at an $11 billion line of credit offered by Bank of America and after thousands of people lost their jobs.

Consumer advocates have been excessively critical of the mortgage lending industry for making loans to consumers who may not have been unable to pay them back. We think that forces too much responsibility at the business world. If a consumer has diabetes, one shouldn't sue the baker for making lovely cakes and pies available. Likewise, if a consumer has a driver's license that restricts night driving, don't go after the auto manufacturer for putting headlights on the car.

Consumers knew or should have known the risks involved with a variable mortgage. Many seemed positively snobbish about the low, low, low rates they were receiving. The smart consumers we knew all either planned to sell before the first adjustment period and needed a place to park the proceeds of their previous sale or locked into a fixed rate.

We're reminded of one of the smartest people we know who once asked us, "Should I apply for a 30 year or 15 year fixed mortgage?" Our answer remains the same: why lock in a higher rate when, with discipline, you can create even less than a 15 year mortgage provided you don't have a pre-payment penalty for some reason.

This is all opinion from consumer advocates, not financial advice from any sort of planners or consultants. You should talk with a professional before becoming involved in a mortgage. And if you can't afford one, look in the government listings of your telephone book for a local or state agency who can help you.

But don't sign for a mortgage you may not be able to afford in the future and then chastise the company for offering you the opportunity. Perhaps the biggest part of being a smart consumer is knowing when to say "no". And if you don't have the knowledge, find a professional who does.

Meanwhile, hats off to Countrywide for being a smart consumer-friendly company. Yes, they are taking a licking from those who want to blame the fast food restaurant for serving hot coffee. We prefer consumers take more responsibility and let us help them fight the battles against the companies who do them wrong.

If you think you were hurt in this recent financial crisis, think of the consumers who no longer have a job because Countrywide laid them off. And think of the small investors who owned CFC as part of their retirement funds, and saw the healthy stock's value get halved.

And put down the doughnut unless you're planning to work out later.

Labels: Countrywide, credit, financial, mortgage

posted by George Bounacos at 7:19 AM | 0 comments
(opens in new window) | links to this post

  Levin, McCaskill Lead Charge On Credit Card Protections

Two US Senators, Carl Levin (D-MI) and Claire McCaskill (D-MO) have introduced a bill that will help protect consumers against aggressive credit card practices. Especially targeted in the proposed legislation is the ability to raise rates on one account if an account at another entity is paid late.

"Lenders have a legitimate concern if someone is not properly managing their credit, but once credit is granted, that concern needs to be limited to the consumer's relationship with the lender, not continually re-evaluated," said Consumer Help Web President Joan Bounacos. "Making a late payment on a single credit card is not good, but should not cause other lenders to automatically raise rates. That's a poor excuse to take advantage of a consumer who is already having trouble."

Multiple consumer advocates endorsed the legislation, known as "The Stop Unfair Practices in Credit Cards Act". The bill's other protections are also consumer friendly:

Interest Rates

* No Interest on Debt Paid on Time. Prohibit interest charges on any portion of a credit card debt which the card holder paid on time during a grace period.

* No Trailing Interest. Prohibit added interest charges on credit card debt which the card holder paid on time and in full.

* Limits on Penalty Interest. Prohibit interest rate hikes on a credit card account unless the card holder agrees to them at the time, and in any event, limit penalty interest rate hikes to no more than a 7% increase.

* Apply Interest Rate Increases Only to Future Debt. Require increased interest rates to apply only to future credit card debt, and not to debt incurred prior to the increase.

Credit Card Fees

* No Interest on Fees. Prohibit the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees.

* Restrictions on Over-Limit Fees. Prohibit the charging of repeated over-limit fees for a single instance of exceeding a credit card limit, and allow such fees to be charged only when a card holder’s action, rather than a penalty, causes the limit to be exceeded.

* No Pay-to-Pay Fees. Prohibit charging a fee to allow a credit card holder to make a payment on a credit card debt, whether payment is by mail, telephone, electronic transfer, or otherwise.

* Reasonable Currency Exchange Fees. Require currency exchange fees to reasonably reflect the credit card issuer’s actual costs.

Other Protections

* Prompt and Fair Crediting of Card Holder Payments. Require consumer payments to be applied first to the credit card balance with the highest rate of interest, and to minimize finance charges. Prohibit late fees if the card issuer’s action caused the delay in crediting a payment.

* Fixed Credit Limits. Require that card issuers must offer consumers the option of having a fixed credit limit that cannot be exceeded.

“Credit card issuers too often sock consumers with sky-high interest rates and excessive fees, making it harder and harder for families to climb out of debt,” Levin said. “The goal of this legislation is to put an end to unfair and abusive credit card practices that outrage so many American families. I’m afraid these practices have become too entrenched and too profitable to the credit card companies for the companies to change them on their own. Congress needs to enact pro-consumer legislation to put an end to these unfair practices.”

Labels: Bounacos, credit, legislation, Levin, McCaskill

posted by Consumer Help Web Editorial Team at 9:18 AM | 0 comments
(opens in new window) | links to this post

  Your Credit Card Rights

Think resolving credit problems is as difficult as
finishing a five-star Sudoku puzzle? Then check out Credit
Card Rights, a new, informative package of publications
from AARP, the Federal Reserve Board, and the Federal
Citizen Information Center. It's filled with helpful tips
and advice on how you can protect your credit history and
fix any errors that may occur.

Your credit report includes information on where you live,
how you pay your bills, whether you've been sued or
arrested, or if you have filed for bankruptcy. And mistakes
on it can affect your ability to get insurance, a loan, an
apartment, or even a job. That's why it's important for you
to check your credit report annually with all three of the
nationwide consumer reporting agencies. Find out how to
order your free report and what to do if you discover
inaccurate information with this useful package.

You should also be on the look out for errors on your
credit card statements. Billing errors include incorrect
credits for payments, charges that you didn't make, and
charges for goods or services that you didn't receive or
that weren't as promised. Under the Fair Credit Billing
Act, you have the right to contest the mistake within 60
days after the bill's statement date. If you think your
bill has an error, follow the steps outlined in the Credit
Card Rights package to help dispute the amount.

And what if your credit card is lost or stolen? Do you know
what to do? Once you discover your card is missing,
immediately notify the card company. By doing so, you won't
have to pay more than $50 for unauthorized charges. And
remember this protection is guaranteed so there's no need
to buy "credit card insurance." It's also a good idea to
make a list of your account numbers and the corresponding
toll-free phone numbers and keep them in a safe place.

Order the Credit Card Rights package today and be an
informed consumer. This package costs $2.00. There are
three easy ways to get your package:

* Send your name, address, and a check or money order for
$2.00 to Credit Card Rights, Pueblo, Colorado 81009.

* Visit www.pueblo.gsa.gov/money.htm to read or print more
credit-related publications and hundreds of other Federal
publications for free.

* Call toll-free 1 (888) 8 PUEBLO. That's 1 (888) 878-3256,
weekdays 8 a.m. to 8 p.m. Eastern Time and ask for Credit
Card Rights. Have your credit card handy.

Labels: credit

posted by Consumer Help Web Editorial Team at 12:40 AM | 0 comments
(opens in new window) | links to this post

  Experian Subsidiary Settles FTC Charges Related To Mock Consumer Site

Consumerinfo.com, doing business as Experian Consumer Direct, will pay $300,000 to settle Federal Trade Commission charges that ads for its “free credit report” offer failed to disclose adequately that consumers who signed up would be automatically enrolled in a credit- monitoring program and charged $79.95. The FTC alleged that the failure to clearly disclose the enrollment and charges violated a previous settlement.

In August 2005, Consumerinfo.com, paid $950,000 to settle FTC charges that it deceptively marketed “free credit reports.” According to the FTC, Consumerinfo offered consumers a free copy of their credit report and added that they would provide “30 FREE days of Credit Check Monitoring.” The FTC alleged that Consumerinfo’s advertising and Web sites failed to explain adequately that after the free trial period for the credit-monitoring service expired, consumers automatically would be charged a $79.95 annual membership, unless they notified the defendant within 30 days to cancel the service. Consumerinfo billed the credit cards that it had told consumers were “required only to establish your account” and, in some cases, automatically renewed memberships by re-billing consumers without notice. In addition to the $950,000 payment, the settlement required Consumerinfo to pay redress to deceived consumers, barred deceptive and misleading claims about “free” offers, and required clear and conspicuous disclosure of terms and conditions of any “free”offer.

The FTC alleges that Consumerinfo.com ran ads after the settlement that violated the disclosure requirement. The settlement requires Consumerinfo to give up $300,000 in ill-gotten gains, and bars it from misrepresenting any affiliation with the annual credit report available to consumers under the Fair Credit Reporting Act.

The stipulated judgment and order named Consumerinfo.com, Inc., doing business as Experian Consumer Direct, Qspace, Inc., and Iplace, Inc.

The Commission vote to accept the supplemental stipulated judgment and order was 5-0. It was filed in United States District Court for the Central District of California in Los Angeles.

NOTE: Stipulated judgments and orders for permanent injunction and monetary relief are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Stipulated judgments have the force of law when signed by the judge.

Labels: credit, Experian, FTC

posted by Consumer Help Web Editorial Team at 7:56 AM | 1 comments
(opens in new window) | links to this post