Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

I realize it's important to stay up-to-date on your credit score, but is it necessary to pay for a credit monitoring service?

Jeff

Want to learn more about protecting and improving your credit score? Visit our Credit Center at Dolans.com.

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Folks, we might have a new winner in the contest for the most hated consumer industry. For years, the hands-down winner was car dealers.

But we think that credit card companies are giving them a serious run for their money!

Most credit card companies are downright ingenious when it comes to cooking up sneaky new credit card fees and dirty tricks that take more money out of your pocket. If you've had enough, keep reading because today we are going to reveal seven of the industry's dirtiest tricks. We hope this list will help you protect yourself, slash your costs and be credit card smart.

Dirty Trick #1: Say "Bye-Bye" to Your Grace Period

No grace period means that you'll start accruing interest the moment you charge something. That can cost you a bundle of "extra" interest.

If you want to see my beautiful wife throw a complete fit, just mention any of these scandalous fees in her presence! These fees are the lowest of the low because they penalize you for being a responsible credit card user.

Some of the biggest offenders include charging you a fee for:

• Closing your account
• Failing to use a card for a period of time (such as six months or a year)
• Not carrying a balance (how DARE you!)
• Every transaction each and every time that you use your card

If your card charges you any of these fees, it's time to look for a new card! Click here for our tips on how to find the best card for you.

Credit cards often send you "convenience" checks so that you can write checks against your credit card account. Isn't that nice of them? Please!

DON'T do us any "favors"!

What they bury in the fine print is that these checks usually carry very high interest and fees -- even higher than regular credit card charges. Some cards also give you no grace period on convenience checks, so you start paying interest from the day you write the check! Shred these little "gifts" whenever they arrive.

In their infinite generosity (ha!), some cards will "invite" you to skip making a payment. This "helpful" offer, which sounds great at first blush, often comes after the holidays when your balance is big and your wallet is feeling stretched. DON'T DO IT!

Skipping that payment can lead to a host of trouble -- from a higher interest rate to possibly having to make extra payments in the future.

Are you starting to notice a pattern? You should be skeptical whenever your credit card company does something "nice" for you without you asking for it.

Dirty Trick #5: Lowering your minimum payment due.

Another way some cards try to jack up their profits and lure you deeper into debt is by lowering the minimum payment due on your balance. It used to be cards required a minimum monthly payment of about 4% of your balance, but many now require as little at 2%. Don't fall for it!

Going from a $40 payment to a $25 payment on a $2,500 balance means it will take you an extra 19 months to pay off the debt.

Dirty Trick #6: It's 5 o'clock... Do you know where your payment is?

We all know that our payment is due on a certain date or it's late, right? But a new twist being thrown into the mix is having your payment due by a certain time on the due date. If your payment is due at noon and gets processed at 12:01, you get socked with a late fee AND likely a higher interest rate.

Gimme a break! Carefully check your statement so you avoid this trap.

Dirty Trick #7: "Over the limit" fees

Credit cards charge you a hefty fee for going over your credit limit. Look, we don't have a problem with penalties for that. But now these fees have gotten excessive -- almost $40! Plus, credit card issuers don't exactly discourage you from going over your limit when they approve charges and balance transfers that put you over your max.

Dolan Smart Credit Moves

So there you have it: Seven tricks and traps you now know how to avoid. But credit card companies will keep dreaming up new ones. So here's the bottom line on how to protect yourself:

Don't sign on with a card until you have a list in writing of all fees that the company charges. You can find these in the small-print section of your credit card application. Or, if you apply online, you will have to agree to all of the terms and conditions as part of your sign up process. You can always call the company, too. Whether in print, online or on the phone, read carefully before you agree!

Also be sure to actually read any notices your credit card company sends you about changes to your card agreement. That's your chance to catch any changes before they come back to bite you.

For more tips on being credit smart and successfully managing your debt, visit Dolans.com.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

My husband and I have $7,000 in credit card debt. Should we take out a home equity loan?

Lyndajoy

Ken and Daria Dolan offer advice on all of your debt concerns at their Credit Resource Center.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

There is a lot of controversy over closing credit card accounts after the balance is paid. What should I do?

Alethea

Ken and Daria Dolan offer advice on all of your credit questions and concerns at Dolans.com.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

My husband and I are 62. We are debt- and mortgage-free. Our savings, however, are not as high as we'd like. What can we do to make sure we still have money for when we retire in a few years?

Joyce

Ken and Daria Dolan offer advice on all of your retirement questions and concerns at Dolans.com.

Click here to ask Ken and Daria your question.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

I have some credit card debt and have been approached by a debt-reduction company, which says it can reduce my debt 60%-70%. Is this the best way to do it, or should I go to a nonprofit credit counseling firm instead?

Bruce

Ken and Daria Dolan offer advice on all of your debt management questions and concerns at Dolans.com.

Click here to ask Ken and Daria your question.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria ,

I want to bypass my husband in my will (with his permission!) to leave everything to my three children. Can I write a will myself? Can I change it?

Darlene

Ken and Daria Dolan offer advice on all of your estate planning questions and concerns at Dolans.com.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

Without our knowledge, our 23-year-old daughter ran up $5,000 worth of credit card debt on three different cards. She defaulted and now the collection agencies are coming after my wife and me. We could pay the debt off, but does it make sense to do that?

Jay

Ken and Daria Dolan offer advice on all of your credit card and debt management concerns at Dolans.com.

Click here to ask Ken and Daria your question.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

I have a 30-year mortgage. Am I better off paying ahead on it or taking that money and investing it for a higher return?

Richard

Ken and Daria Dolan offer advice from mortgages to debt management to insurance at Dolans.com.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

I have a little bit of money left over at the end of each month. What's the smartest way for me to put it to work? Should I invest? Pay off debt? Something else?

Glen

Ken and Daria Dolan offer much more advice on everything from debt management to investing wisely at Dolans.com.

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Ken and Daria Dolan are widely known as America's First Family of Personal Finance.

This time of year, we are all well aware of how much we pay Uncle Sam in income taxes. And we all can clearly see the sales tax we pay when we go shopping or enjoy a nice dinner out. We're not happy about them. But at least we know that we're paying those taxes.

But most of us have no idea just how many hidden taxes we pay every day that take a serious bite out of our wallets. We pay little known-taxes on everything from travel to peanut butter (Ken's favorite), to life insurance to liquor. Often, we don't know, specifically, what federal tax we are paying on goods and services because that tax (such as excise tax on imports or 'sin' taxes on liquor), is built right into the price, and doesn't appear anywhere on the sales slip as a tax.

And boy, does it add up! We consumers pay hundreds of billions of dollars in "hidden" taxes each year. It's estimated that our federal income tax represents less than half of the taxes we pay each year. So let's expose eight hidden taxes you probably didn't even know you were paying...

1. Gasoline tax. Next time you fork over big bucks at the gas pump, remember that you are paying nearly 46 cents per gallon in federal, state and local taxes. That's nearly 15% of the cost of a gallon of gas!

2. Gas guzzler tax. If you are driving an SUV or other large vehicle, you have a tax double whammy. Not only are you paying that big gasoline tax, but you also got socked with a special tax dealers are charged - and pass right along to you on the sticker price - for gas guzzlers. This tax can be as much as $7,700!

3. Hidden taxes on travel. Airfare, hotels, your rental car -- you are paying a hefty tax on each one of them. You pay a 7.5% tax on a domestic ticket and a $3 tax for each segment of a flight. Hotel and rental car taxes vary by state, but can be as much as 40% of your overall cost. Ouch!

4. "Sin" tax on beer, liquor, gambling and cigarettes. The federal tax on a pack of cigarettes is 39 cents, but there are many state and local taxes that increase the price. Tobacco taxes contribute more than $7 billion to the Treasury every year. Almost half of the cost of beer and liquor comes from excise taxes.

5. Catching a fish or two isn't free. A fishing enthusiast pays 10% of the sales price on sport-fishing equipment in taxes. That's enough to make you switch to another sport. Maybe archery? But wait, an archer pays 40 cents tax per arrow. And quivers are taxed at 11%! If you buy a shotgun or other firearm, you'll pay 11% of the sales price in federal tax on the gun as well as any ammunition. Handguns are taxed at 10% of the sales price.

6. State taxes on insurance premiums. This little doozy brings in $9 BILLION in revenue a year! States charge insurance companies a tax on the insurance premiums they receive from customers in that state. And who do you think the insurance companies pass that cost along to? You got it. You and me.

7. Excise tax on imports. The sneakiest of all the hidden taxes that we pay is in the form of excise taxes on many of the products we import. The tax makes the prices of imported products artificially high to make it easier for domestic products to compete.

Here are just a few of the items and the percentage that their prices are jacked up by import taxes:

• Bicycles 11%
• Brussel sprouts 12%
• Cotton hammocks 15%
• Infant formulas 18%
• Flashlights 18%
• Peanut butter 143%
• Girdles and panty girdles 24%
• Brooms 32%
• Plastic school supplies 5%

8. Payroll taxes. Forget about your income tax withholding. When is the last time you looked - really looked - at all the other taxes coming out of each and every one of your paychecks? You've got your Social Security tax, your Medicare tax, your unemployment tax, your workers compensation... It all adds up to a serious percentage of your money going into someone else's pockets.

That's eight hidden taxes and there are 80 more where those came from! The bottom line is all these hidden taxes are nickel and diming us to death. And with so many Americans already struggling, every dollar counts.

Ken and Daria offer more tax tips - including 10 Tax Changes You Need to Know Now - through their web site and free newsletter at Dolans.com.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Dolans,

I've followed your advice and actually paid off the balance on one of my credit cards. I'm very excited! Should I cancel that account now?

Maya

Great question, Maya. This is a situation we hear about a lot.

First, let us congratulate you. You've been smart with your money, worked hard and accomplished something significant by paying off one of your credit cards. Well done!

We understand your desire to cancel that account, but that may not be the right thing to do.

There are two very important questions to consider here:

• Is it in your best interest to cancel the card? (It's not always.)
• If you do cancel the account, are you doing it the right way?

The answer to the first question depends on how often you use that card and how long you've had it. If you've had it for a long time and have a good history of making your payments on time, don't cancel it! It's good for your credit history. Canceling that card could actually work against you.

Instead, we recommend that you either use it and pay off the balance each month or cut it up and throw it away if you don't want to go back into debt. Either way, be sure to leave the account open.

On the other hand, if this is one of those cards that's relatively new to you or that you don't use very often, you're probably better off canceling it IF you have too many open lines of credit, which isn't good for your rating either...and could even result in a higher interest rate!

Which brings us to the second key point: Make sure you cancel the account the right way!

Simply cutting up the card is NOT the right way to get rid of it. You need to show the credit rating agencies that you are canceling the card and not having it canceled by the credit card company because you're a deadbeat.

We can't emphasize this enough!

All you need to do is send a letter with the pertinent information on it to your credit card company. We've made it easy for you and have prepared a sample credit card cancellation letter for you. Just fill in the blanks and you're all set!

Ken and Daria Dolan offer much more advice on everything from debt management to saving money to retiring in style at Dolans.com.

Click here to ask Ken and Daria your question.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

I'm about 65 years old and will retire soon. When I do, my company will cancel my life insurance policy. I've been hearing about these burial insurance policies. Should I buy one?

Penny

Ken and Daria Dolan offer much more advice on all things insurance at Dolans.com.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Ken and Daria,

My credit score is 657. My wife and I want to refinance our mortgage, but we need a higher score to get a good interest rate. What can we do to boost our credit score before we talk to our lender?

Joe

Ken and Daria Dolan offer more advice on living credit smart in their new special report,"8 Secrets Your Credit Card Company Doesn't Want You to Know." Download it now.

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Ken and Daria Dolan are widely known as America's First Family of Personal Finance.

Here's a little tax trivia for you...

How many pages long is the United States Tax Code? If you guessed 18,500, you win the prize. It's no wonder that so many of us make mistakes when filing our federal income tax forms.

A mistake or two on your tax return can bring you unnecessary stress, delay your refund and subject you to more pesky paperwork -- or worse yet, an appointment with an IRS agent to fix the problem.

But here's the good news... The most common taxpayer mistakes are, for the most part, very simple to avoid once you know to watch out for them. So let's look at the Dolans' Dirty Dozen. Here are 12 common taxpayer mistakes you can easily avoid:

1. 2 + 2 = 5. Math mistakes are one of the leading reasons the IRS adjusts returns. We know this sounds basic, but PLEASE double-check all figures on your return and use a calculator!
2. Incorrect address. If you choose to file a paper return, be sure to use the address label off the tax return the IRS sent you. (You can make any necessary corrections right on that label). If you do not have a peel-off label, fill in all requested information in your very best writing so it's clear as can be. An incorrect address can lead to a delay in processing your return, or worse, IRS correspondence and refunds being sent to the wrong address.
3. Incorrect filing status. Check only one filing status on the tax return and check the appropriate exemption boxes. Claiming the wrong status could negate your ability to claim the child tax credit, the earned-income credit and dependent exemptions.
4. Using the wrong tax table. If you use the IRS tax tables, be careful to use the correct column for your filing status.
5. Omitting or using the wrong Social Security number. The IRS computers will automatically reject your credits and deductions if your Social Security number is wrong.
6. Direct Deposit errors. If you are asking the IRS to deposit your refund directly into your account, you must be sure you provide the right information. If your account number or routing number is off, your money will float forever between financial institutions!
7. Incomplete/missing documentation. A complete set of supporting documents is vital to the efficient processing of your return. If the IRS can't verify the information that you provide, it may decide to make its own adjustments--and we don't want that now, do we! Be sure to attach your W-2, Wage and Tax Statement and any other forms that show any tax withheld throughout the year to the front of your return. Attach all other necessary forms and schedules (1099s, etc.) and especially receipts that back up your deductions/credits to your return as well.
8. Failure to include payment. If you do owe money...enclose a check or money order with your tax return and write your Social Security number, tax form number and tax year on the payment.
9. Failure to take tax credits and "above the line" deductions. Each year the IRS collects millions of dollars in overpaid taxes thanks to taxpayers who don't claim all the deductions and credits available to you whether you itemize or not. Such credits and deductions include child and dependent care expenses, student loan expenses, moving expenses, alimony paid and tuition expenses.
10. Sending the IRS your only copy of important tax documents. Be sure to make a copy of your return and all documentation for your records in case you have to go into battle with the IRS.
11. Failure to report ALL income. Unreported income is a serious mistake that can lead to civil and criminal sanctions, even if it was an accident. DON'T CHANCE IT -- double check that you have reported any and all income.
    
    And... finally:
    
    
12. Failure to sign and date the return. The EASIEST part of filing... but one of the most common mistakes people make. As far as the IRS is concerned, if you don't sign the return, YOU HAVEN'T FILED. And we all know not filing means all kinds of problems and penalties! Don't forget--BOTH spouses must sign a joint return.

There you have it --12 common mistakes to avoid when filing your taxes this year. Keep this list handy. A five minute run through it once more as you finish up your return can save you a lot of headaches and possibly some big bucks!

Ken and Daria Dolan of Dolans.com have hosted their own national radio program for 22 years, anchored their own television shows on CNN, authored six books on money matters, served as money contributors on CBS This Morning and have now launched a comprehensive web site and free e-letter at Dolans.com.

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your questions every Friday.

Ken and Daria,

I'm transferring my credit card debt to cards with a 0% introductory interest rate. There are a few fees involved, but I figure I'm saving more on the interest charges. Is this a smart idea?

Jeff

Great question, Jeff (and you might be surprised at our answer). The credit questions are really pouring in, so be sure to check back as we will be answering many more of them in coming weeks. Click on the video below for this week's answer!

Ken and Daria Dolan offer expert advice on debt management and living credit smart at Dolans.com.

Click here to ask Ken and Daria your question.

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Ken and Daria Dolan, America's First Family of Personal Finance, help you with your money questions every Friday.

Hey Dolans!

Please help! I'm drowning in student debt. What can I do?

Nancy

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Ken and Daria Dolan, America's First Family of Personal Finance, answer your questions every Friday.

Dear Ken and Daria,

I filed for bankruptcy and have recently gotten remarried. I wanted to know if my credit rating will hurt my new husband's credit. (He has excellent credit.) Thank you for your help!

Monica

Ken and Daria Dolan offer advice on debt management and living credit smart in their special report "8 Secrets Your Credit Card Company Doesn't Want You to Know," free from Dolans.com

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Ken and Daria Dolan are widely known as America's First Family of Personal Finance.

Do you hear that sound? Listen closely... it's the sound of American consumers tightening their belts.

The endless barrage of troubling economic news and a badly bruised stock market have finally gotten everyone's attention. (Anyone still want to argue that we aren't in a recession?)

To protect your family and your finances during these very uncertain times, it is critical that you batten down the hatches and prepare to ride this out. One critical way to do that is by tackling your credit card debt.

Now let's be clear about something before we start... you DON'T need a lot of money to make an immediate dent in your debt. Armed with these three simple steps and even $10 extra a month, you can take a big bite out of your credit card debt. So let's get started.

STEP 1: Make more than the minimum payment. 47% of credit card customers are making only minimum payments each month.

At that rate, a $1,000 balance with 18% interest and a $10 minimum payment will take you -- GULP -- 7.3 years and $516 in interest to pay off!

But here's the good news: Add just an extra $10 a month -- less than the cost of a trip or two to Starbucks -- and you will shave off almost 4 years and save more than $200 in interest!

Click here to use a handy little calculator that will figure out exactly how much you will save if you make more than the minimum payment on your balance.

When you make extra payments, pay off your highest interest rate cards first. This will give you the most bang for every extra buck and will actually eliminate your debt faster than paying off the card with the highest balance.

STEP 2: Lower your interest rate TODAY. If you are paying more than 15% interest, you can save hundreds if not thousands of dollars by lowering your rate.

Credit card companies are pulling out all the stops to sign up customers. And they're not just after new customers... they're doing cartwheels to keep existing customers. Use this competition to your advantage.

Over the next few days, take a peek at any credit card offers you get in the mail rather than throwing them right in the shredder. As soon as you find one with a lower interest rate than you're currently paying, you have the ammunition you need.

Most of these flashy offers are only introductory interest rates that go up after six months or a year. To find out what your real interest rate will be, look for the "disclosure box," or as we like to call it, the "all the things we don't really want to tell you but we're required to by law" box. In this box, you'll find the card's normal interest rate after the teaser rate ends.

With your account number in hand, call your credit card company and say, "I'm calling about account number XYZ. I have been a good customer for X number of years. I have gotten offers for credit cards with much lower interest rates than you are charging me. I would like to keep giving you my business but cannot do so unless you can lower my interest rate today."

The person on the other end of the phone will probably say something like, "Oh, those are just introductory rates... you'll end up paying much more when the real rate kicks in." We want you to respond by saying, "I understand that this is an introductory rate, but even after the permanent rate kicks in, their rate is still lower than what you charge me. Can you lower my rate or should I take my business elsewhere?"

Worst-case scenario: They say no, and you still lower your interest rate by opening a new account someplace else. Is that so terrible? We don't think so! Best-case scenario: They say yes and you immediately start saving money with a lower interest rate on your balance!

STEP 3: Eliminate temptation. Purge your wallet of unnecessary credit cards. Americans carry an average of 15 cards per household. You really need only two or three, so apply scissors liberally.

Which cards should go first? Say goodbye to your department store cards. They usually charge outrageous interest rates, and almost any store today will accept MasterCard and Visa.

Next up on the chopping block: any card with an annual fee. With all the card options out there, you simply don't have to pay an annual fee these days. No ifs, ands, or buts about it.

There you have it: three simple steps to taking a BIG bite out of your credit card debt today. Please, please don't put it off. We expect rough waters ahead for some time, and getting rid of credit card debt is one of the smartest things you can do today for your family's financial well-being.

Ken and Daria Dolan, America's First Family of Finance, offer advice on everything from debt management to taxes to insurance at Dolans.com. This post is part of a series offering consumers advice on what to do during a recession.

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Ken and Daria Dolan are widely known as America's First Family of Personal Finance.

Dear Ken and Daria,
I have my IRA savings all invested in CD's. What are other low risk income investments that you would recommend now?

--Helga

Click here to ask Ken and Daria your question.

Ken and Daria Dolan, widely known as America's First Family of Personal Finance, offer advice on all things money at Dolans.com.

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