New credit card rules take effect today
February 22, 2010
You’ve probably heard about the new credit card rules that are officially in place as of today under the CARD Act of 2009. These new laws are meant to offer protections to consumers like you who use credit cards.
Here are some of the highlights on the new law:
- Creditors can no longer randomly raise your interest rate. The law says the new act puts a stop to “unfair” rate increases, though I haven’t found a definition of what’s fair or unfair.
- Creditors must give 45 days notice before raising your interest rate.
- If your interest rate is increased, you can opt out of the increase. If you choose to “opt out,” your account will be closed and you will pay off your existing balance under your current interest rate.
- If you do accept the rate increase, your creditor cannot make the increase retroactive to your old balance. The new rate will only be applied to new charges going forward, not what you’ve already charged.
- The language on your credit card has to be plain and visible.
- Your creditor must show you on your monthly statement how long it will take you to pay off your balance if you pay only the minimum payment each month.
I think that last point is really going to grab the attention of a lot of people. Some people think as long as they are paying the minimum payment that they’re doing fine. In reality, paying the minimum is not a good idea, especially if you have a high balance and a high interest rate. In some cases, paying the minimum on your credit cards means you’re barely covering the interest payment and doing little to nothing to chip away at your principle balance.
It’s important to stress that, while these new rules offer protections for the consumer, it’s still up to the consumer to take responsibility. Consumers have to open and read their mail and their credit card contracts. Consumers also have to be cautious about using credit cards and only charging what they can afford to pay off each month.
There are many more consumer protections in the new law. You can learn more about the new act at CreditCards.com. The White House also put out a Fact Sheet about the new act. And you can find tons of information by Googling “CARD Act.”
Dress your children well without breaking your budget; Baby clothes on the cheap
February 17, 2010
Children grow out of clothes quickly. It can get very costly to keep your child in clothing, but there are ways to save.
If you have a pretty good idea of what size your child will be during future seasons, buy their clothing off-season. This time of the year, stores are putting their fall and winter clothing on deep discounts to clear the racks and make room for the new spring and summer clothing. You can find name brand clothing at very low prices. I recently bought my baby pajamas and pants for next fall for $3 each at a department store. And, if you can combine the sales with coupons, you can really save a bundle. I’m buying everything on clearance now to get a jump start on next year.
Likewise, last summer I bought clothing for this coming summer. Around July and August, the stores start to really discount their summer merchandise. By September prices were drastically lowered.
Do you have friends, family or co-workers to give you hand-me-downs? Children grow out of clothing so quickly that often times clothes are still like new. If you don’t know anyone with older children to pass clothing along, start shopping at yard sales. The same principle applies as with the hand-me-downs, clothing that is like new for yard sale prices. Keep an eye on your local classified ads. Often times people will specifically say if they are selling baby clothing and gear.
Check out your local consignment shops. There are some stores that carry only baby and children’s clothing, furniture and gear. Some of these stores even deal in high-end apparel at thrift store prices.
With a little thought and planning ahead, you can keep your kids dressed to the nines, even on a tight budget.
Do you pay attention to grocery store prices?
February 15, 2010
How much do you really pay attention to grocery store prices?
I will admit that I am not a particularly frugal shopper when it comes to groceries. (I love to bargain hunt for clothes and household items, but not food!) In our house, we know what we like and what we need. We buy what we like and need. I do try to get coupons for the things we buy frequently. And if our grocery store has things on sale — like roasts that are Buy One, Get One Free — I’ll buy extra and freeze it. But, on the whole, I don’t pay much attention to prices.
I realized this today when I checked out The Dollar Stretcher web site and saw a link to an article titled “Homemade Laundry Soap: Are you revolted by the cost of laundry soap?”
That’s when I realized that I can’t be revolted because I have no idea what laundry soap costs. I don’t view this as a good thing. Even if I’m willing to pay whatever price they’re asking, shouldn’t I at least know what that price is? At the very least if I know the regular price of an item and it’s advertised as a special, I could determine if it’s a good sale price and stock up on extras. I do shop at different stores. If one store carries an item that is considerably less expensive, I should always buy that product at the store with the better price.
This reminds me that there is one item that I do know the price of, and I do look for sales: baby formula. Formula is the single most expensive thing I purchase, or have ever purchased, at the grocery store. I know which store has the best price, and I collect as many coupons as possible. A good price on baby formula is a must.
Do you pay close attention to prices? Do you use coupons? Do you have tips to help me, and our other readers, become more frugal shoppers?
Unsecured debt vs. secured debt
February 12, 2010
It is not uncommon for people to ask about the difference between unsecured debt versus secured debt.
Unsecured debt is debt that is not guaranteed or “backed” by any collateral. Essentially this means that if you default on an unsecured debt there is nothing that the creditor can take back to recover their costs for non-payment of the loan. Interest rates tend to be higher on unsecured debt because there is no collateral for the creditor to seize. Credit cards fall into the category of unsecured debt. A credit card company cannot seize any of your possessions if you do not pay off the balance. Creditors attempting to collect on a delinquent unsecured debt typically turn the account over to a collection agency.
Secured debt is debt that is backed by some type of collateral such as assets or revenue from the borrower. Mortgages and vehicle loans are two examples of secured debts. If the borrow allows the loan to become delinquent, the lender can foreclose on a home or repossess the vehicle for non-payment. Because there are assets the lender can use to recoup their loss in the event of a loan default, interest rates are generally lower on secured loans.
Tax time tip
February 4, 2010
Tax time is just around the corner. If you think you might need help from Uncle Sam and plan to the IRS’s toll-free hotline to get that help, the best advice might be to call early and carve out some time to wait on the phone.
A story in the Washington Post says that the IRS only expects to answer 71 percent of the calls to their toll-free help line. That means that 29 percent of people (not a paltry number) who call are not going to get a person on the phone.
On top of that, the article goes on to say that the estimated hold time a caller will spend on the phone before speaking to a person is going to be 12 minutes.
The toll-free hotline number is (800) 829-1040. You can also find answers to a lot of tax questions at www.irs.gov.
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