WalletPop Blog

Bank of Mom & Dad's Money Coach: The truth about debt

Farnoosh Torabi — Fri, 06 Nov 2009 18:15:00 EST

Filed under: Credit, Debt, Kids and Money, Saving Money, Health, Bankruptcy, Video, Credit cards

My task each week on SOAPnet's Bank of Mom and Dad is to provide young women with solid advice that will improve their messy financial lives. In return I've received quite the education on some of the reasons we, as a society and particularly women, overspend and compile debt.

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How your ex could destroy your credit

Gina Roberts-Grey — Fri, 06 Nov 2009 11:00:00 EST

Filed under: Credit, Relationships, Credit cards

When you're building a relationship, building joint credit feels like a natural rung on the ladder. But if the romance happens to sour, that same joint credit can become the backbone of financial devastation.

Scores of the newly divorced, separated or uncoupled who have co-signed for cars and leases or have joint plastic tucked in their wallets are left holding all -- or most of -- these financial bags post breakup. And those bags can get pretty heavy.

"That means someone may be stuck trying to make payments he or she can't afford," says Dan Danford, principal and chief executive officer at Family Investment Center, a commission-free investment management firm in St. Joseph. And that can impact your credit.

Even though few people enter a relationship with the intention of ruining their new mate's credit, many experience this unfortunate outcome of uncoupling. "Beyond not being able to pay your own bills, an ex not paying his or her share of joint accounts can be especially dangerous," says Danford. "Normally, a person knows they're not paying their own bills. But it's common for people to not know an ex hasn't paid until they're served a summons or being hounded by collection agencies." Which means months of late or missed payments have already been reported to credit bureaus and lowered your score.

"I had no idea my ex wasn't paying off the bills he agreed to take on after we split up," says Chloe Martin of Chicago, Illinois. "I found out by accident, when I tried to make an appointment at the vet's office and was told the account had been sent to collection."

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Ask the Dolans: Can my credit card company change the terms on account I have closed?

Ken and Daria Dolan — Fri, 06 Nov 2009 10:00:00 EST

Filed under: Credit, Debt, The Dolans, Video, Credit cards

Ken and Daria Dolan, America's first family of personal finance, answer your questions every Friday.

Click here to ask Ken and Daria your question

Credit card companies are on a tear, raising rates, slashing credit lines, increasing minimum payments and closing accounts in advance of the new credit card legislation that will restrict their more outrageous behavior. Today, Ken and Daria Dolan of Dolans.com help a WalletPop reader decide if she has any recourse against her credit card company's latest trick.

Dear Ken and Daria,

We got a letter from our credit card saying they were changing the terms on our card. We still have a balance on the card, but we opted out and closed the account. They STILL upped the minimum payment required on our balance. Can they do that?

You'll find simple, proven solutions for managing your credit card debt at Dolans.com.

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Beware the hidden costs of gift cards

Lita Epstein — Fri, 06 Nov 2009 08:00:00 EST

Filed under: Credit, Credit cards

As we start to buy gifts for family and friends, we may decide to go the easy route and get a gift card. But think twice before you choose that route. New studies show gift cards are the most popular presents to give and receive, but the hidden costs may outweigh the convenience of the gift. Be sure you give and use these cards correctly.

"Gift cards are easy to give, but they are also easy to forget. If the card has a monthly fee or expiration date, these can become costly little pieces of plastic," Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook told me in an email interview. "Even though gift cards take the hassle out of holiday shopping, you want to use them wisely. It is important to know the terms of the card you are buying."

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Recession tales: Saving vs. spending a tough battle

Lita Epstein — Thu, 05 Nov 2009 09:00:00 EST

Filed under: Borrowing, Credit, Debt, Saving Money, Recession, Credit cards

There's no doubt that the current downturn has changed people's spending habits.

Since the peak in housing wealth, homeowners lost more than $5 trillion in equity and 15 million homeowners own homes that are now underwater (worth less than they owe). Unemployment is hovering near 10% with no clear signs of falling.

Homeowners' previous piggy bank -- home equity -- is no longer available for spending. Even if people still hold a job, many are worried that their jobs are at risk and won't spend except for necessities.

People, afraid for their future also changed their savings habits. In the first quarter of 2008, before the recession took hold people saved about 1% of disposable income. By the second quarter of 2009 the savings rate soared to 5% of disposable income. But now that we appear to be near the end of the recession the savings rate dropped back to slightly above 3% in the third quarter of 2009, as people see the end of the recession in sight.

While economists now don't believe this recession will be as deep as the Great Depression, its depth and length will certainly change people's spending and savings habits for a long time to come.

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Goldman's new role: repossessing foreclosed homes

Troy McMullen — Tue, 03 Nov 2009 16:00:00 EST

Filed under: Banks, Credit, Real Estate, Investing, Bankruptcy, Mortgages

Goldman Sachs spent years buying hundreds of thousands of subprime mortgages during the real estate boom, packaging them into high-yield bonds. Now that the bottom has fallen out of the property market, the Wall Street behemoth finds itself in a different role: taking homes away from Americans defaulting on their loans.

That's according to a lengthy investigation by McClatchy Newspapers . The report says there are hundreds of cases in which subsidiaries of Goldman have sought to contain bondholder losses by foreclosing on properties and evicting delinquent borrowers.

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Credit card addiction: How to spot the warning signs and break the habit

Gina Roberts-Grey — Mon, 02 Nov 2009 06:00:00 EST

Filed under: Credit, Debt, Recession Diaries, Credit Reports, Economizer, Credit cards

With more than $40,000 in credit card debt and more than 20 credit cards to her name, Diana Ryan didn't think she had a problem -- even though her husband had no idea just how many pieces of plastic she had tucked in her wallet. "It sounds cliche," Ryan says, "but I thought I could stop at any time."

But the lure of special offers and other card deals was much stronger than Ryan's willpower. "I couldn't say no when a cashier asked if I wanted to open a new card to get an instant in-store savings or receive a new promotion," she says.

Ryan represents a growing number of Americans who've passed the point of merely overspending and have entered into the realm of addiction. And, in doing so, they're maxing out a record number of credit cards.

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Pew study confirms unfair credit card practices intensify

Lita Epstein — Fri, 30 Oct 2009 18:00:00 EST

Filed under: Credit, Credit cards

Pew Charitable Trust confirmed what most of us consumers already know: credit card issuers continue to implement their most harmful practices, rushing to beat the deadline of the CARD Act.

The Pew Charitable Trust released "Still Waiting: 'Unfair or Deceptive' Credit Card Practices Continue as Americans Wait for New Reforms to Take Effect," which examines almost 400 credit cards advertisements by banks and credit unions offered in July 2009 and December 2008. The study found that 100% of the credit card companies continue practices that will be outlawed by the CARD Act. The lowest advertised interest rates have increased by more than 20% in the past year. None of the 12 largest banks currently issue cards that would meet the requirements of the CARD Act.

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Sears offers customers a peek at their credit scores

Gina Roberts-Grey — Fri, 30 Oct 2009 14:30:00 EST

Filed under: Bargains, Credit, Credit cards

Sears is unveiling a new payment option for customers: an enhanced Sears credit card.

Giving their branded store card a facelift, Sears says it added more retail value to carrying a Sears card.

One of the most noteworthy features: access to your credit score.

Sears is the first major retailer to offer its cardholders a free credit score. Susan Ehrlich, president of Sears Financial Services, Sears Holdings, said "customers can review their credit score for free at any time."

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Walletpop round-up: Worst credit cards

Martha C. White — Thu, 29 Oct 2009 18:45:00 EST

Filed under: Credit, Debt, Economizer, Credit cards

Break out the rotten tomatoes. This is Walletpop's roundup of the priciest, sneakiest and just plain lousiest credit-card deals out there. Trust us, there are a lot of cards floating around the bottom of the barrel, so it took a lot of effort to find the ones you probably want to avoid at all costs.

Interest rate: If your credit isn't stellar, you can be looking at paying 20% or more for the privilege of whipping out the plastic. (Even if you have great credit, some cards will be oh-so-happy to sock you with a rate of 15% or so.) For real sticker shock, we checked out co-branded store cards, which typically have higher rates. Case in point: The Gap Visa card has rates that start at 18.24%. That could tack quite a bit onto the price of that pair of khakis. We also looked into the Best Buy Reward Zone MasterCard, issued by HSBC, but they won't even give users information about interest rates until they actually apply! Thanks, HSBC; you've forced us to leave it to our imagination, and what we're imagining is pretty scary.

Annual fee: To be fair, several American Express cards made our best list, but we've got a worstie here, too. With a whopping $5,000 initiation fee plus a $2,500 annual fee, the American Express Centurion Card wins this one, hands down. Luckily, this card is issued by invitation only, so you'll probably never be faced with the agonizing decision of whether or not to drop the price of a cheap used car every single year for the privilege of using this card. For that reason, we're nominating a second worstie in this category: the Visa Black Card issued by Barclays. It's got an annual fee of "only" $495 and an APR of 13.24% -- a higher rate by several percentage points than our best pick.

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Looming tax credit deadline spurs return of real estate bidding wars

Troy McMullen — Thu, 29 Oct 2009 17:30:00 EST

Filed under: Credit, Home, Real Estate, Mortgages, Taxes-tax credits

The deadline for first-time home buyers to take advantage of the government's $8,000 tax credit appears in line for an extension. But the popular tax break has already been fueling a phenomenon that many struggling real estate markets haven't experienced in years: bidding wars.

Lower-priced homes on the market in many once-beleaguered areas have seen a flood of offers, say real estate brokers from Boston to Portland, Ore. Though the original tax credit is good on homes sales completed by Nov. 30, because home deals can take months to complete, new buyers are rushing to close escrows so they don't miss out on the credit.

"It's a welcome change from the way things have been around here," says Carrie Novotny, a realtor in Edina, Minn., outside Minneapolis. She says a recent open house for a two-bedroom, Craftsman-style home listed at $213,000 drew several dozen prospective buyers and more than five serious bidders. The home eventually went into contract for $217,000, Novotny says. "It's been a bit crazy," she says. "People really want to nail down a sale to cash in on the tax break."

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Need a credit card? Really? WalletPOP bloggers debate

Zac Bissonnette — Wed, 28 Oct 2009 14:30:00 EST

Filed under: Banks, Credit, Credit cards

Over on our listserv, WalletPOP bloggers and editors occasionally -- and by occasionally I mean daily -- get into heated debates about personal finance topics that are way too boring to think about let alone discuss for the vast majority of people with healthy social lives.

Last week, we ended up debating credit cards -- and whether people really need a credit card. Here's my argument against credit cards:

The more I read about it, think about it, and live it, the more convinced I am that people should not have credit cards.

Fact: People who pay with credit cards spend more money. This has been demonstrated by at least half a dozen studies.

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Beware: 5 credit card pitfalls to avoid

Gina Roberts-Grey — Tue, 27 Oct 2009 10:00:00 EST

Filed under: Credit, Credit Reports, Credit cards

Just when you thought new legislation meant plastic was safe. Credit card companies are finding loopholes in the new Credit Card Act of May 2009. Their motive: Making up for lost revenue and side-steeping the reform.

The first part of the law rolled into effect in August, and required banks to give customers more notice before making major changes, like rate hikes, to their accounts. In February 2010, phase two comes into play with issuers being imposed limits on raising rates on existing card balances. Finally, the third phase will take effect in August 2010, when some penalty fees are capped.

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No gasoline for me: MasterCard cancels my card

Barbara Bartlein — Tue, 27 Oct 2009 08:00:00 EST

Filed under: Credit, Consumer Complaints, Credit Reports

Stopped at my local Shell station recently to fill up my van. I have used my Shell MasterCard for almost six years due to the discount that it offers for Shell purchases.

Much to my surprise, the pump refused to authorize my card and said, "See Attendant."

Well, I HATE going into the stations, that is part of the reason I like to pay at the pump. I talked with the attendant who informed me that my card was declined.

What? I have never missed a payment, never been late, and always paid my balance in full. I quickly got on the phone to the credit card company who informed me that a "recent full review of my credit resulted in the cancellation of my card." When I tried to press them as to what was the issue, they suggested I review my credit information. I informed them that it would have been nice to know I was canceled BEFORE I went to the gas station to get the gas. She said, "A letter will be coming shortly."

Since both of my college kids are on my gas card, I quickly got calls from them wondering if we were going into bankruptcy. I dodged their questions while I looked up my credit information on the internet. Yes, there was a very old bill that I had refused to pay because I didn't owe it from 2006, but also a recent entry from Boston Store. Now, I have no idea why Boston Store reported me to the credit agencies. I don't owe them money, paid them on time, and have never missed a payment.

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Ask the Dolans: How does a debt charge-off impact my credit score?

Ken and Daria Dolan — Fri, 23 Oct 2009 10:00:00 EST

Filed under: Credit, The Dolans, Video, Credit cards

Ken and Daria Dolan, America's first family of personal finance, answer your questions every Friday.

Thanks to rising unemployment and an economy stuck in neutral at very best, more consumers than ever are struggling to pay their debts. Credit card delinquencies and charge-offs are both at record highs. Today, Ken and Daria help a WalletPop reader understand how debt charge-offs impact his credit and share solutions for managing his debt.

I heard that once your debt has been charged off, that your credit score never gets any better.So, is it a good to accept the offers I get to settle my debt by paying off 60-to 70% of it in exchange for charging off the rest?

--Hector

Looking for debt help? Visit Dolans.com to learn more about debt settlement and other debt management options.

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Debt collection practices act needs updating

Lita Epstein — Thu, 22 Oct 2009 16:00:00 EST

Filed under: Credit, Debt, Credit cards

How often have you gotten a robocall or other annoying call from a debt collection agency for a debt you never incurred?

I get them regularly because someone who had my telephone number before me didn't pay her bills. Some of them just won't believe I'm telling them the truth that I'm not that person and just keep calling my number. I quickly report them and their number to the FTC. And my story is tame compared to the case brought by Dianne McLeod in which she says her husband died because of credit collection calls.

So why is that happening more often? The U.S. Government Accountability Office (GAO) just did a study on the Fair Debt Collection Practices Act and found that the Federal Trade Commission (FTC) has limited ability "to address the concerns related to the adequacy of account information, collectors' use of modern technologies, and other issues that arise in an evolving marketplace." The GAO definitely thinks it's time to update the act.

As the numbers of people who are late on their payments continue to rise, we're seeing the highest rate of past due accounts in 18 years, the GAO found. To recover this delinquent debt, credit card issuers use their own collection departments, outside collection agencies, collection law firms or they just sell the debt to someone else.

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Delinquency rates increasing on credit cards

Lita Epstein — Wed, 21 Oct 2009 14:00:00 EST

Filed under: Credit, Credit cards

While we may be seeing some signs of improvement in the economy, credit card companies are certainly not getting any benefit from the improvement. September delinquency rates increased at five of the six top credit card companies when compared to August rates, according the LowCards.com CEO Bill Hardekopf.

American Express is the only one of the top six credit card companies not experiencing an increase in delinquency rates. Its rates stayed the same, according to Hardekopf by email interview. "These high delinquency rates could mean that consumers might continue to see rate and fee increases in the coming months, as well as credit limit decreases on their credit card accounts," Hardekopf said.

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Join the credit card revolution with Fifth Third

Lita Epstein — Tue, 20 Oct 2009 16:00:00 EST

Filed under: Credit, Credit cards

Fifth Third gave the RevolutionCard a big boost by deciding to issue this new emerging credit card. What makes this credit card so special is that your name never appears on it.

If the card is stolen the thief must know your pin number to use it. You can change your pin number as often as you like. This feature can greatly reduce credit card fraud.

When using the card, you press Debit/ATM at check out rather than the credit button, because you will need to enter a pin number.

Your ability to use this new card is limited to the stores currently accepting it, but that does include some big names such as Barnes & Noble, Bed Bath & Beyond, Bloomingdale's, Office Depot, Publix, Rent-A-Center, T.J. Maxx, U-Haul International and about 50 others. As the RevolutionCard network grows you will be able to use it at more stores.

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What your e-mail address says about your credit score

Josh Smith — Mon, 19 Oct 2009 14:00:00 EST

Filed under: Credit, Technology

E-mail addresses can tell people a lot about you.

Your username, or what's in front of the @ symbol can tell potential employers, dates and associates about your political affiliations, year of birth, what school you went to and even your affinity for elf culture.

Did you know that what comes after the @ sign can be more revealing than your cleverly chosen username?

A new trend report published by Credit Karma ranks e-mail domains by the average credit score of Credit Karma users. The data shows that BellSouth and Comcast users have the highest ratings, perhaps because they come with a paid Internet service.

Gmail comes in third, leading the pack of free e-mail services with an average credit score of 681, which is close to the average credit score for 45-54-year-olds and the average credit score for California, Oregon and Washington state.

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How to improve credit terms

Josh Smith — Mon, 19 Oct 2009 13:00:00 EST

Filed under: Credit, Credit cards

When Congress passed the credit card reform act known as CARD many people breathed a sigh of relief, hoping that accountability and responsibility would soon be coming to the credit card industry.

Unfortunately, instead of bringing sunshine and rainbows to the credit card industry, the CARD act has only hastened the ascent of interest rates and fees; causing 56% of consumers wanting Congress to move the Credit Cardholder's Bill of Rights up to December.

In fact, a recent survey by Credit.com shows that 45%, an increase from 33% over June, of consumers have felt the negative effects of the credit industry's grasping for extra cash in one of the following manners:

Increased their interest rate 27% (up from 15% in February survey)
Increased their fees 19% (up from 14% in June survey)
Lowered their credit limit 17% (up from 8% in February survey)
Increased their minimum payment due 17% (up from 12% in June survey)
Reduced their rewards program 12% (up from 9% in June survey)

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