Credit: Use it or lose it?
March 31, 2009
Consumers must feel like they just can’t win when it comes to credit cards right now.
Those who engaged in the overuse of credit cards and reckless spending with credit have been blasted for their irresponsible financial behavior. Many people have found themselves digging out of a mountain of credit card debt as a result. Now they’re scaling back their spending and trying to avoid plastic.
I always recommend people really consider how they use credit, especially if they are in debt. The best advice to someone who is struggling to get out of credit card debt is to pay down their balances and quit using the plastic.
Now, consumers who have cut back their card use are seeing a backlash from the credit card companies. There’s a good chance if you haven’t used your card lately, your credit issuer will close your account.
MSN Money recently posted this story.
If your reaction to this is anything like mine, it’s probably something along the lines of “What? Huh?”
We know that those who have been deemed risky customers are seeing their credit lines lowered and interest rates increased. But, now it seems if you’re what one might call a “good” customer who rarely uses credit and pays bills on time, you might not be able to keep your account at all.
The message the credit card companies are sending is basically one of use ‘em or lose ‘em. And a closed account will lower your credit score.
So what is a credit card holder to do?
Please keep in mind that there are no guarantees. The best thing to do is use your plastic wisely and cautiously. If you have a card that you want to keep and you haven’t used it in awhile, dust it off and use it. But, make sure that you only charge what you can afford to pay off at the end of the month.
Also, read your mail. I can’t stress this enough. If a change is being made to your account, your creditor will notify you in writing. The notification won’t help you prepare if it got thrown in the trash without being read.
Disney teaching personal finance?
March 27, 2009
I am an advocate of teaching children about money. I think it is critical for parents and/or caregivers to start teaching financial lessons to children as soon as they are able to understand that either: A) Money gets us things; or B) That little plastic card in mommy’s wallet will get me that.
Unfortunately many parents don’t talk to their children about money. And many schools don’t have the time to teach personal finance either. So where is a child to look for financial advice?
In – what I think – is a strange twist, the answer is apparently Walt Disney.
T. Rowe Price, an investment management group, is joining forces with Walt Disney World in
According to the CBS story, the exhibit is going to focus on four themes that include goal setting, smart spending and saving, staying ahead of inflation and diversifying your investments. (My guess is the last two themes are more for the benefit of the parents. I don’t know many 7-year-olds who are worried about diversified investing.)
I would be very curious to see exactly what this exhibit entails and how it teaches financial lessons. I’m also curious to know if kids, or adults for that matter, are actually going to absorb any real lessons from the exhibit between touring the aquarium, riding the Maelstrom and snacking on schnitzel at Sommerfest in
I give Disney and T. Rowe Price credit for trying. It’s going to be interesting to see if the effort makes any kind of a real change on how visitors to the theme park think about money.
What are your thoughts?
“Credit repair” companies charged by the FTC
March 20, 2009
The Federal Trade Commission is cracking down on companies that are making false promises to repair people’s credit.
The FTC charged seven “credit repair” companies with “violating federal law by falsely promising to remove negative information from consumers’ credit reports, even information that is accurate and current, and by charging an up-front fee and failing to provide written disclosures.”
The FTC is trying to make the companies stop committing the violations and pay restitution to consumers.
You can read a complete copy of the FTC’s news release about the charges here.
This was welcome news to my ears. There are so many of these companies making promises they can’t keep. Some of these companies even disguise themselves as law firms to gain the consumers’ trust.
No one can remove accurate information from your credit report. If there is inaccurate information contained in your credit report, you can dispute the information yourself. You do not need to pay someone to perform this service for you.
It’s up to the consumers to help agencies like the FTC find these companies.
If you suspect a company is engaging in deceptive business practices, it’s very important that you report the company to the FTC.
You can file a complaint at (877) 382-4357. You can also file a complaint online by going to the FTC’s Complaint Assistant.
Beware of foreclosure rescue scams
March 18, 2009
Any time the economy is bad, it opens the door even wider for shady businesses, scams and fraud.
Unfortunately, it’s no different during the current housing crisis. With the news of government help for homeowners, there are plenty of people who are ready and willing to take advantage of people who are in a vulnerable position.
Here are a few things that should raise a red flag when dealing with a company that is promising to help you with your mortgage:
· The company solicits your business. Be wary of any company that initiates contact with you if you haven’t already contacted the company first.
· The company offers to find out who your mortgage loan holder is … for a fee. You can find out who holds your loan for free. Fannie May and Freddie Mac have web sites to help you obtain this information. (www.fanniemae.com/homeaffordable) (www.freddiemac.com/avoidforeclosure)
· The company is charging upfront fees and/or high fees. Reputable housing counseling agencies offer their services at no charge or for a minimal charge.
The Federal Reserve has also published a list of tips to help you avoid a foreclosure scam. You can find the list here.
The best place to go for help is to a non-profit credit counseling agency that is also approved by the U.S. Department of Housing and Urban Development to offer housing counseling. Advantage Credit Counseling Service is a HUD-approved housing counseling agency that can work with consumers in
If you do not live in one of those states, you can find an approved agency in your area at www.hud.gov.
These agencies offer housing counseling at no cost and can direct you to other reputable services in your area.
Also, before you do business with any company check their rating with the Better Business Bureau (www.bbb.org). And read all paperwork before you sign anything. Do not give out any personal information – like your Social Security number or bank account information – unless you are absolutely certain of who you are dealing with.
Splurge a little and treat yourself … without breaking your budget
March 16, 2009
I was excited when I saw the headline of a money story on MSN.com not long ago that promised to write about “mini splurges to make you feel rich.”
The subhead of the story said, “Luxury may be out of fashion right now, but almost every budget has room for small indulgences here and there. These offer a big punch without breaking the bank.”
I love the idea of luxury, and I love the idea of treating myself, so I delved in.
(I should note that my idea of a splurge is eating Hagen Daaz out of the carton or getting a manicure once a year.)
Clearly “almost every budget” was the operative phrase. The majority of splurges were out of budget range for many people. Lunch at a
The price of some these indulgences surely has something to do with the fact that the writer is splurging in
So, I would like to offer up some “splurges” that may be more affordable to those of us with budgets that don’t have as much wiggle room.
Splurge on your time. Let’s face it, for most of us time is a luxury. A lot of us spend our days running from place to place and trying to cram in more activities than there are hours in the day. Set aside a couple of hours of peace and quiet for just you. Make a cup of tea, grab a good book or put on a favorite movie and snuggle up for a few hours. Try to forget about the laundry, the dishwasher that needs to be emptied or the errands you have to run. Just relax for a bit. All of those other chores will still be there.
Look for free events. For example, once a month on in
Penn Avenue
Have a joint cocktail party. Get together a group of your friends and ask everyone to bring their most appealing appetizer or decadent dessert and a bottle of wine. One person with the most space can host, but since everyone is pitching in on food and drinks, it will defray the cost for everyone.
Eat dinner by candle light with the “good” plates and silverware. Some people have wedding china or silver stashed away in a closet. There’s no reason you can’t have a frugal yet romantic dinner at home. Dim the lights and use the china and real silver. Pick an item to “splurge” on for your dinner. If you like steak, spend extra to get some good steaks. If you love dessert, order your favorite dessert from that great bakery in town.
What ideas for “luxury” splurges do you have?
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