Wednesday, September 30, 2009

New Guidelines for College Students and Credit Cards

There have been several bills proposed in the past to combat the unfair and deceptive practices of credit card companies soliciting college students to obtain credit. The Credit Card Accountability Responsibility and Disclosure Act of 2009 signed by President Obama on May 22, 2009 goes into effect on February 22, 2010.

The law states that no credit card may be issued to a consumer who is not 21, unless the consumer has submitted a written application to the card issuer: (1) by providing the signature of the parent, legal guardian, spouse, or any other individual over the age of 21 who can repay debt incurred by the consumer; (2) submission by the consumer of financial information indicating an independent means of repaying any obligation; or (3) completion of a financial literacy or financial education course designed for young consumers.

The law will ensure the following for students under 21:
1. Students under 21 will require a co-signer or proof of repaying credit card debt. Previously, a college student only needed a mailing address and their signature to get approved for a credit card.

2. College students will no longer receive from iPods, iPhones, car rides, CD/DVDs, food or other gifts in exchange for a free credit card. No more freebies or knickknacks on-campus.

3. Prescreened offers cannot be sent to students under 21 and credit card limits cannot be increased without the permission of the co-signer.

4. Colleges and universities and alumni organizations will have to annually disclose the terms of any marketing or promotional agreements they make with credit card companies. Schools often receive millions of dollars from credit card companies in exchange for soliciting credit cards to college students. Credit card companies also must file annual reports with the Federal Reserve Board detailing all marketing, promotional agreements with colleges and universities, alumni associations and school-related foundations.

5. The law encourages colleges and universities to adopt policies that restrict credit card marketing on their campuses. The law also encourages the colleges to require credit and debt management seminars as a part of new student orientation programs.

This is a huge step for college students and consumers under age 21. When I went to college I was bombarded by credit card companies on campus and signed up for a credit cad in exchange for a free t-shirt.

I had no income and was only 17 but was approved for my first credit card and by the time I was 21 I had 13 credit cards. This law will greatly help other college students who made or will make the same mistakes I did while in college. This will also help college students better manage their finances and be more accountable for their spending so when they graduate they will owe less money in credit card debt and hopefully be in a better financial situation.

Sunday, September 27, 2009

Is Cash for Gold a Scam

On the rare occasions when I watch television I always see this commercial from a company called Cash for Gold with the saying - Trade in your unused gold for cash. The commercial shows several people who turned in gold and received money usually a few hundred dollars. I went to the company's website and did some research. The company sends you a kit to mail your gold in a pre-paid envelope insured via UPS. Payment is based on the weight and karat of the gold and the daily price of gold. You can receive a check in a few days.

If you recently participated in the Cash for Gold program and had a few ounces of gold you would have at least $2,000-$3,000 considering the current price of gold is $1,004.00 per ounce.

One couple participated in the "Cash for Gold" program and mailed in a two 18K gold diamond wedding rings and received a total of $67 although their local pawn shop offered between $300-$350. If the rings were 1/4 of an ounce in total weight they should have received at least $250.

A good friend told me you always have to find out a company's motive. Cash for Gold's motive is to make money so you will never get the full price you should be getting for selling your gold because they want to make as much money off of each customer as possible.

There are several ways you can be scammed by this company and similar companies: the company offers you less money for your gold than what it is really worth, the company claims the karat of your gold is less than what it really is, i.e. your gold is 18 karat but the company tells you it is 10 karat or they tell you the weight of your gold is less than what it really is.

Due to the recession several fraudulent companies were started and have scammed Americans out of millions of dollars. Don't be a victim. Here are 4 tips to protect yourself if you do business with Cash for Gold or similar companies.

1. Take a picture of your gold before mailing it and record the karat that is inscribed on the inside of the jewelry.

2. Weigh your gold at a jeweler and ask them to verify the karat, weight and price before mailing it in and get it in writing. Compare with the information provided by Cash for Gold.

3. Beware of fraudulent checks. Ask the company to send you a money order instead of a check. This reduces your chances of cashing a fraudulent check and the company having access to your bank account.

4. If you feel you were a victim of a scam report the incident to the Better Business Bureau, Federal Trade Commission, FBI and US Postal Service.

Thursday, September 24, 2009

Check out my interview in the October issue of Essence Magazine

Check out my recent interview in the October issue of Essence Magazine.

I discuss tips on how couples can survive a financial crisis.

Monday, September 21, 2009

8 Ways for Single Parents to Save Money

In 2006, according to the US Census Bureau, there were approximately 14 million single parents in the United States. Eight three percent of single parents are mothers and 30.3 percent of all single parents receive public assistance.

Child care subsidies and public health insurance can help with closing the gap between low income and what it takes to make ends meet. Not all low-income families receive the benefits for which they are financially eligible. Families who receive multiple work supports can lose assistance before they reach self-sufficiency. Single parents often struggle with buying basic necessities and paying bills and usually live paycheck to paycheck.

As a single parent you have to cover all the household expenses and when a financial crisis occurs it can be devastating to your family. Develop a support system to help you through this difficult time and develop a plan to reduce your expenses to pay off debts and pay for basic necessities. Here are 8 ways for single parents to save money:

1. Downsize. Buy or trade in your current car for a used car with a cheaper note. This will either eliminate your car note or save you $50 to $200 a month on your car payment.

2. Buy Generic. Buy everything generic: household items, clothing, prescriptions, toiletries, dry goods, canned goods, paper products, etc. This will save you on average $10 to $50 a month.

3. Buy Washable Clothes. Buy clothes that do not require dry cleaning. This will save you on average $50 to $150 a month.

4. Personal Care. Do you own hair and nails and buy your makeup from the drugstore such as CVS or Riteaid. Watch, style and cut your child's hair. This will save you on average $40 to $100 a month.

5. Shop at Discount Stores. Buy household items in bulk such as paper products, cleaning supplies at discount stores such as Target, Walmart, Costco, etc. This will save you on average $10 to $50 a month.

6. Reduce expenses. Reduce or cancel your cable plan, cell phone or internet service or get the cheapest plan available. This will save you $20 to $100 a month.

7. Buy groceries at superstores. Buy your groceries at superstores or wholesale stores such as Walmart, Costco, Sam's Club, etc. Buy nuts, grains, spices, legumes at wholesale or health food stores. This will save you $30 to $200 a month on processing costs charged at regular grocery stores.

8. Fun with Kids. Check your local library or newspaper to find free activities that you can do to with your kids. This will save anywhere from $10 to $100 a month.

Friday, September 18, 2009

5 Tips When Dating During a Financial Crisis

The recession has impacted several areas of American life. It has caused families to spend less money, downsize or downgrade their lifestyle, generate multiple streams of income and be more accountable with their spending including money spent on entertainment. Many sources say dating is recession proof but only for those who have lived below their means. For those who still continue to live off of their credit cards or live above their means dating has changed. Many daters are making cutbacks in their dating life when spending money on their dates.

Men who spend lots of money on their dates have been forced to rethink their approach to win a woman's heart. Money is not a measure of love and one should not fall in love with someone because of the things they can get or because of the lifestyle they can live.

Men have made cutbacks when dating due to the recession. Some men no longer offer kind gestures of sending a dozen roses on a frequent basis or offer to go to dinner a movie. You may just get movie or dinner but probably not at a fancy restaurant. Men have begun to be more creative in how to save money or show their dates they are interested. Instead of going out to eat a man may suggest cooking dinner at his house, or having lunch in a park. Unfortunately some men how gone too far and have no idea what it means to be a gentleman and be frugal.

I was talking to a friend recently who told me that she met a guy online and he stated he didn't want to waste time by chatting on email and really wanted to meet her. At first she was flattered until her date said he wanted to meet her (for the first time) in the parking lot at a neighborhood Safeway grocery store later that night. My friend was speechless. Needless to say she didn't go out on a date with that guy but that is an example of how some men make poor decisions when making cutbacks on dating during a financial crisis.

Here are 5 tips to follow when dating during a recession or other financial crisis:
1. Be honest

2. Don't change plans you made with your date on the way to pick her up discuss plan changes prior to meeting

3. If you suspect your date feels uncomfortable or is short on cash offer to split the bill. Sometimes men are afraid to admit they are having financial problems.

4. If you don't have money or your funds are limited due to the recession be honest with your date, she will understand but don't mislead her by saying you want to take her out and met her at a grocery store, parking lot or hotel. If you tell her you want to see her be specific about where you want to meet, i.e. at her house, at your house, a Starbucks, bookstore, park, etc.

5. If you are running late call before the time you were supposed to arrive or meet to let your date know and inform your date the time you will arrive.

Tuesday, September 15, 2009

8 Check Fraud Prevention Tips

The internet has allowed for an increase in identity theft and has resulted in many crimes being conducted on unsuspecting victims. The average number of fraudulent checks written daily is approximately 1.4 million or $27.3 million worth of fraudulent checks written everyday. According American Bankers Association Deposit Account Fraud Survey Report in 2006, attempted check fraud at banks was estimated at $12.2 billion.

There are many types of check fraud that occur every year. One such crime is check fraud. Check fraud includes check theft, check washing, counterfeit checks, and taking over a someone's checking account.

Check washing is a crime where thieves erase the ink on a check with chemicals usually found in common household cleaning products. The victim's check information is erased chemically or electronically which allows a thief to rewrite the amount of the check and the name of the payee. Check washing is very successful because many banks accept the check at face value due to the legitimacy of the signature.

A valid check is prepared for check washing by placing a protective seal over the signature line usually using a low adhesive tape or sticker. The check is held with tongs and placed in a pan usually containing acetone (nail polish remover), paint thinner or bleach. The solution dissolves standard ballpoint pen ink. Once the ink has dissolved completely from the check it is hung up to air dry. Here are 8 tips to reduce your checks from being check washed.

1. Don't leave outgoing mail in an unlocked mailbox especially on holidays and the weekends. Drop off outgoing mail in a regularly visited collection box or take it directly to the post office.

2. Don't leave post office boxes full, empty them frequently especially on the weekends.

3. Pick up newly ordered checks directly from your bank or have them delivered by postal mail.

4. Shred canceled checks.

5. Check bank statements immediately after receiving them.

6. Print a return address on all outgoing mail that contains a check. A forged signature can be traced.

7. Do not leave blank spaces on the payee or amount lines.

8. Use a blank water-based or gel pen. Use gel pens when writing checks to pay bills.

Saturday, September 12, 2009

Upcoming Events

Visit me at these upcoming events.

September 2009
September 15, 2009, Interview with News Channel 8, Washington, DC, noon,
September 19, 2009, Panelist, Wisdom, Wealth and Wellness Program, Reginald Lewis Museum, 830 East Pratt Street, Baltimore, MD, 9:00-3:00pm
September 20, 2009, Montgomery County Financial Fair, Silver Spring, 12-3pm
September 25, 2009, Booksiging, Walden Books, CNN Center, One CNN Center, Atlanta, GA 2-4pm

October 2009
October 5-6, 2009, Financial Literacy Forum, Washington, DC, 8am-noon
October 21, 2009, Financial Seminar, Thurgood Marshall Center, Washington, DC, 7-9pm
October 28, 2009, National Savings Forum, Washington, DC, noon-3pm

Wednesday, September 09, 2009

Another Option for Money - Peer to Peer

Due to the recession many Americans are searching for various ways to get extra money to make ends meet, get out of debt, or buy items that they need or want. Many Americans now have bad credit because they got behind on their bills due to sickness, unemployment, reduction in hours or living above their means. Unfortunately because of their bad credit they can no longer go to traditional banks and get a loan or get approved for credit. Another option is peer to peer lending, social lending or person to person lending. Borrowers and lenders transact business without using a traditional bank over the internet.

Peer to peer loans can be obtained from several companies such as: Prosper (formerly Circle One), Zopa, Virgin Money, Lending Club that is available on Facebook, eBay's Microplace that provides (loans to people in other countries and PeerMint that provides loan to people in Canada, Australia and New Zealand.

They offer products similar to banks such as: are real estate loans, personal loans, business loans, debt consolidation, loans to pay off credit card debt and more. The average loan amount approved is $7,000. The lenders make money on loan origination fees instead of interest payments so they constantly need repeat or new users. Americans make 6 million peer to peer loans a year.

Loans are based on collateral, credit score and personal assets. Owning property and having equity in a property can be used as collateral for a loan. Your credit score has to be at least 620. Your chances of approval are also better if you have some money in the bank. If you default on the loan you lose your equity and/or your money in the bank.

There are two main types of lending models used: marketplace and the family or friend model. The marketplace model enables lenders to located borrowers and vice-versa. This model connects borrowers with lenders where the lender that is willing to provide the lowest interest rate wins the borrower's loan. The family and friend model is based on borrowers and lenders who already have a business relationship or business co-workers who formalize a personal loan.

Many of the sites password protect their data and are PCI compliant. If a lender suspects that one of their loans belongs to a person who has committed ID theft, they will work with law enforcement authorities to track down and prosecute anyone who has committed identity theft. However, there are risks to the lenders and borrowers both in terms of loan defaults and fraud.

Sunday, September 06, 2009

Hope for Job Seekers

A credit score or FICO score developed by the Fair Isaac Company is used to determine if a consumer will pay their bills on time. It is using by most business when considering approval for a loan, credit card or service provided. A credit score is calculated using five main factors. Payment history accounts for 35% of your credit score, the total amount of debt owed accounts for 30%, the length of credit history (how long you have had credit) accounts for 15%, new credit (if you have opened any new accounts within the past 24 months) accounts for 10% and types of credit (revolving or installment) accounts for 10%.

Many employers use credit scores as a factor in hiring applicants but must have the applicant's permission before pulling their credit report and/or credit score. If you have bad credit you may not be hired for a job or may lose your job after being hired. In many cases potential applicants have bad credit due to a layoff, illness, medical bills or unfortunate circumstances but does not necessarily mean they can be bribed or will not be honest hard-working employee on a job.

For those of you who feel that using your credit as a factor in hiring is unfair you will be happy to know that Wisconsin State representative Kim Hixson recently authored a bill to have credit scores added to the list of discriminatory assessments in addition to race, gender, age, and disability which is prohibited under the Equal Employment Opportunity Act of 1972.

The bill called Assembly Bill 367 would remove individual credit history as a factor in hiring unless it was related to the job for which the applicant applied such as those who seek employment in the financial industries.

Contact your state representative and ask them to support representative Hixson's Assembly Bill 367. This will be one less thing for job seekers to worry about.

Thursday, September 03, 2009

A Victory for Mortgage Borrowers

Many Americans shopping for a home experience obstacles such as: lenders or mortgage companies losing paperwork, administrative delays, unexpected errors on credit reports, unexpected fees and settlements costs, predatory lending, and unethical and deceptive practices. Buying a home is one of the most frustrating, scary and stressful processes in life. As the saying goes "only the strong survive" and only the strong are able to handle the pressure that is felt when trying to purchase a home.

The amount of paperwork provided to potential homeowners at settlement ranges on average from 30-70 pages of documents that must be read and signed. Although many homeowners neglect to read the paperwork which can hurt them in the future. Even if you take the time to read the paperwork, all of the technical jargon used is difficult to understand and it takes a lawyer to help you decipher the jargon.

Well, help is here. The Federal Reserve board implemented new rules that prohibit deceptive lending practices involving loans that are made on or after October 1, 2009 but unfortunately does not help those who were misled during the past two years.

The new rules require that disclosures must be provided in a timely manner, ensuring accurate appraisals are provided which will prevent a potential homeowner from borrowing too much money or overpaying for a home, handling of loan payments in a timely manner to prevent unnecessary late fees (in some instances borrowers are charged late fees although their payments were received on time), and inform borrowers about deducting late payment fees from their monthly mortgage payment.

Lenders will continue to be required to provide early disclosures to borrowers for loans to purchase a primary residence but will also have to provide early disclosures for refinances and home equity loans.
Additional protections include protecting subprime loan borrowers from receiving expensive mortgages by ensuring early disclosures of mortgage terms and costs and to verify the borrower's income, assets and other debts when offering a subprime loan.

A minimum of seven business days must pass between when a lender delivers the early disclosures to a borrower and closing. The borrower must receive a corrected disclosure at least three business days before the loan closing if the Annual Percentage Rate (APR) increases by a certain amount above what was previously disclosed to the borrower.

Starting October 1, 2009, Federal rules will ban several deceptive or misleading advertising practices. The rule prohibits any advertisement from indicating that a rate or payment is "fixed" when it can change. The new rule also requires advertisements to show all interest rates or payment amounts with equal spacing and in close proximity to any low promotional rate or payment.

Starting January 1, 2010, the Department of Housing and Urban Development (HUD) will require lenders and mortgage brokers to use the same form to provide good faith estimates of settlement costs and disclosures. It will also include changes to HUD's Uniform Settlement Statement (HUD-1 form) that will make it easier for borrowers to compare estimated costs to actual costs. HUD's rules will limit how much actual costs can increase above the estimates and hopes the new rules will each homeowner approximately $700 at closing.