Friday, October 30, 2009

Can the CARD Act Stop Creditor Tricks to Keep You in Debt

Credit card companies use hundreds of tricks and gimmicks to keep consumers in debt. According to R.K. Hammer, the credit card penalty fees revenue will reach $20.5 billion in. Credit cards generate more than $2.5 trillion a year. The credit card industry is one of the largest fraud industries in the country. Here are some common traps credit card companies use to keep consumers in debt.

1. The minimum payment trap keeps consumers in debt and in most cases is not enough to cover the interest and finance charges that accrue each month which is why when you send in a payment your balance either doesn't go down or only goes down by a few dollars.

2. No maximum interest rate for credit cards and is not government regulated. Interest rates are regulated by each state.

3. High late fees are charged either when payments are sent after the due date or sent on the due date although the payment was received on time.

4. Credit card monitoring and credit card insurance. There is no need to purchase credit card insurance because there are so many stipulations when signing up for the insurance that it is to your advantage live below your means to pay down debt.

5. Some credit card term change as the wind blows and makes it difficult for consumers to keep up with the changes.

6. The credit card agreement or disclosure is created using fine print to make it difficult for most consumers to read and those who try to read it get frustrated because of the fine print. However, this document is very important and should be read because it tells you all of the restrictions and guidelines for using the credit card.

7. The payment address or due date may change as a way to confuse consumers so their payment arrives late and they get charged a late fee.

The CARD Act of 2009 will eliminate many of these creditor tricks but the credit card companies will still find ways to work around the law to make money. It is best that you read everything you receive from your credit card company, ask questions and know your rights as a consumer. You can find information on the site.

Tuesday, October 27, 2009

Want a 79.9% Credit Card Interest Rate

There is no federal limit on credit card interest rates so consumers can be charged any rate. Credit card interest rates are usually between 6-36%. Unfortunately, the CARD Act of 2009 that goes into effect in February 2010 will not address this issue that has been plaguing consumers for years. According to NBC San Diego, the First Premier Bank also known as Premier Bank is offering some consumers a pre-approved credit card with a 79.9% interest rate.

The card also requires additional fees such as an account setup fee, program fee, monthly servicing fee and additional card fee which total an additional $199 a month without making any purchases. The credit card offers a limit of $250. The fees are charged on the first month's bill leaving only a $51 remaining balance.

Credit card interest rates are regulated by each state and as we can see interest rates can be any rate a credit card company desires.

Previously the highest interest rates I knew of were 32-36% by a former client of mine. I thought that was insane but 79.9% beats that by a landslide.

This is a real example of why consumers need to repair their credit, pay down their debt and increase their credit score so they won't ever receive these types of pre-approved offers in the mail.

Saturday, October 24, 2009

Have You Considered Moving to Detroit

Many Americans are losing their homes to foreclosures and many states are losing tax revenue. Some states are begging for homebuyers. Michigan has had 119,134 foreclosures so far in 2009. However, compared to California's 841,947 or Florida's 484,635 it doesn't seem so bad.

Detroit had 9,000 home up for auction in their tax sale last week for properties with unpaid taxes in 2006 with more homes in 2007 and 2008. Unfortunately, there are only a small number of buyers, even though the minimum bid was a mere $500.

Since 2007, the total number of Detroit properties in tax foreclosure has more than tripled and may continue to increase. Detroit currently has a $300 million budget deficit.

Bidding on homes at an auction takes skill and money. The average person usually doesn't have enough money to bid against investors and usually becomes frustrated after attending just one auction. Investors can go anywhere in the country and buy properties at several venues. However, there are only a few venues where average residents can purchase foreclosed homes or homes that owe unpaid taxes.

Cities and states should have auction for non-investors only. This will increase the turnouts to the events and help those who want to become homeowners find a low priced home. Once residents start returning to abandoned neighborhoods it creates a ripple effect: crime decreases, residents take pride in their neighborhoods, tax revenues increase for the city, property values increase, and community outreach programs can be developed to help residents of the community.

Wednesday, October 21, 2009

Medical Bankruptcy Act

The Medical Bankruptcy Fairness Act of 2009 is a bill that would amend title 11 of the United States Bankruptcy Code (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) sponsored by Sen. Whitehouse which would: 1) provide protection for homeowners with medical debt, 2) restore bankruptcy protection for individuals experiencing financial distress who serve as caregivers to injured, ill, or disabled family members, 3) and to become exempt from taking the bankruptcy means test for those whose financial problems were caused by serious medical issues.

If the bill is passed it would waive the “means test” and credit counseling requirements for those who to wish file bankruptcy at a by hearing Sen. Russ Feingold (D-W.I.). Without health care reform, a family’s yearly health insurance payments could exceed $30,000 by the end of the 2020. Forty-seven million Americans are uninsured including 9 million children.

A recent study shows that based on the effects of the recession alone approximately seven million Americans will lose their health insurance coverage between 2008 and 2010. Researchers at the Urban Institute estimate that if unemployment reaches 10%, another six million Americans will lose their health insurance coverage. Employee spending on health insurance coverage has increased 128% between 1999 and 2008.

Economists have found that increasing health care costs show a connection with decreases in health insurance coverage. National studies show that the main reason many people are uninsured is due to the high costs of health insurance. According to the National Coalition on Health Care, a recent study found that 62% of all bankruptcies filed in 2007 were linked to medical expenses. Those who filed for bankruptcy, almost 80% had health insurance coverage.

A married couple lost their son to a fatal medical disease, in addition lost their home and their retirement income trying to pay medical bills related to their son's medical disease. Although they had health insurance, their health insurance company refused to cover all of their son's medical costs. They borrowed to file for bankruptcy. This is a clear example of why we need health care reform. Even if you don't support the president and don't support all of the features of the health care reform bill you must provide support to overhaul the current health care industry.

We are the only developed country that provides health insurance but have the largest number of deaths due to lack of medical insurance or lack of appropriate medical care.

The constitution states that "We the people of the United States… promote the generate welfare, and secure the blessing of liberty to ourselves and our Posterity…"

General welfare includes health care which as a country we are lacking in. How can health insurance companies claim that they will provide care for a patient yet deny them insurance because of a pre-existing, non-treatable or terminal condition. Health care is not about treating only healthy people, health care includes treating non-healthy people so they can become healthy.

Sunday, October 18, 2009

Most banks that fail are taken over by the FDIC but not all. The FDIC provides information to customers about their accounts and loans and contact information regarding bank failures. Although the recession has ended the banking industry is still feeling the effects. Since January 1, 2009, ninety-nine banks have failed. A total of 24 banks failed in July 2009, 15 in August 2009 and 11 in September 2009.

The latest bank failure was the San Joaquin Bank in Bakersfield, CA on October 16, 2009. All deposit accounts were transferred to Citizens Business Bank, Ontario, CA. On Monday, October 19, 2009, the former San Joaquin Bank locations will reopen as branches of Citizens Business Bank.

Other banks that closed in October 2009 were Southern Colorado National Bank in Pueblo, CO; Jennings State Bank, Spring Grove, MN and Warren Bank, Warren, MI.

When a bank fails the FDIC acts as the insurer of the bank’s deposits and pays insurance to the depositors up to the insurance limit. The FDIC also acts as the receiver of the failed bank and sells or collects the assets of the failed bank and settles its debts.

The total amount insured per depositor per bank is $250,000 which includes principal and accrued interest on the account. The types of deposits insured are: savings, checking, NOW account, money market deposit accounts and certificate of deposits.

Any person or business is entitled to FDIC insurance on a deposit. The depositor does not have to be a U.S. citizen or a resident of the United States. This is why many foreign investors are able to deposit money in U.S. banks and why many of the foreign depositors were angry about the banking industry failure.

If a bank fails the FDIC notifies each depositor in writing. If a failed bank is acquired by another bank, the new bank notifies the depositors of the change.

I moved most of my accounts to my credit union. I prefer credit unions and am much happier with the customer service I receive. Consider moving at least part of your money to a credit union account so in the event your bank does fail in the future you will still be able to access cash quickly.

Thursday, October 15, 2009

Is Bank of America Good for Consumers

Although Bank of America was applauded for cutting costs and has been known for keep salaries moderate, it has been a forerunner in charging customers outrageous banking fees. Bank of America was the first bank to increase its ATM charges to $3. Their credit card minimum payment structure makes it easy for consumers to exceed their credit card limits and then get charged a 30% interest rate (universal default). Unfortunately most consumers were not aware that they had the option to opt-out of rate increases.

Bank of America has been slow in offering loan modifications for its customers. Although Bank of America made billions of dollars from late payment and other fees it still required a government bailout. What did they do with all that money if they were supposedly so frugal and cost contentious?

Bank of America has to pay $33 million to the Securities and Exchange Commission to settle charges that the bank misled investors with false claims of not being involved in the Merrill Lynch bonus payments.

The financial stability of a bank cannot be sustained when bank executives continue to earn millions of dollars each year in salaries and bonuses. Greed has caused many bank executives to forget the reason why they were hired – to help their customers and at the same time figure out how to make a profit. Executives are more concerned about maintaining their lifestyle than ensuring that they retain their customers. Maybe one day they will wake up and smell the Starbucks.

Monday, October 12, 2009

The New Soda Tax

The Senate Finance Committee is considering imposing a new tax on soda and other naturally sweetened drinks to help pay for the Health Care Reform. The committee states the taxes would slow sales of unhealthy products that contribute to rising medical costs.

Thomas Frieden, director of the Centers for Disease Control and Prevention states that "obesity is a growing problem and taxpayers pay for half the cost through Medicare and Medicaid and soft drinks are the single largest contributor. A penny-an-ounce tax could reduce consumption by more than 10% and raise $100 billion over 10 years".

Early this year, a public uproar forced Governor Paterson of New York to abandon his plan for an 18% state tax on soda and other sugary drinks. Last year a proposal caused Maine voters to halt a plan that would impose a tax on soda. Arkansas, Missouri and California have considered the idea in the past.

This fall, San Francisco Mayor Gavin Newsom will introduce legislation that would charge a fee to retailers that sell sugary drinks. Mayor Newsom legislation would charge grocery stores but would not affect restaurants that serve sodas.

A September study released by UCLA showed a link between soda and obesity and found that: adults who drink at least one soft drink a day are 27% more likely to be obese than those who don't, soda consumption is fueling California's $41 billion annual obesity problem, 41% of children ages 2-11 drink at least one soda every day, 62% of teens 12-17 drink at least one soda every day, 39 pounds of sugar are consumed in a year if you drink one soda a day and 17 teaspoons of sugar is contained in a 20-ounce serving of soda.

President Obama has said he is open to the idea of a tax on soda and other sugary drinks. "I actually think it’s an idea that we should be exploring,” President Obama said in a recent interview. “There’s no doubt that our kids drink way too much soda."

Michael Jacobson of the Center for Science in the Public Interest stated that "soft drinks are the only food or beverage that has been shown to increase the risk of overweight and obesity, which, in turn, increase the risk of diabetes, stroke, and many other health problems".

Health care reform is expected to cost as much as $1 trillion over the next ten years. The Congressional Budget Office estimates that a three-cent tax on soda would generate $24 billion over the next four years.

According to the American Journal of Clinical Nutrition a 12 ounce soda has 150 calories and 40-50 grams of high fructose sugars equal to 10 teaspoons of sugar. Think twice before buying your next soda.

Friday, October 09, 2009

Recent Law Updates That May Affect You

In 2009, there have been many updates by Congress to existing laws that affect Americans. Some laws that have been updated in 2009 are: credit card laws, teen driver's laws, cell phone laws and DUI (driving under the influence) laws. Check your state's website or contact your state representative to find out how the updates to these laws affect you. Here are some updates to these laws for Maryland residents.

The updates to the Teen Driver Laws in the state of Maryland are:

1. The minimum age a teen can obtain a provisional driver's license or driver's license requires fingerprinting and a criminal history records (background check) check and authorizes a driver improvement program for young drivers.

2. A learner's permit can be issued to a teen who is 15 years and 9 months of age.

3. A provisional driver's license can be issued to a teen who 16 years and 6 months of age.

4. A driver's license can be issued to a teen who is 17 years and 9 months.

The updates to the DUI Laws in the state of Maryland as of October 1, 2009:

1. The Motor Vehicle Administration will suspend the driver's license of a person who has been convicted of drunk driving within a specified time period after a previous drunk driving conviction but does allow a restricted license upon request to a person who participates in the Administration's Ignition Interlock System Program. The program uses an Ignition Interlock Device (IID) that is installed on the driver's dashboard which tests for alcohol on a driver's breath. The driver has to blow into a small handheld alcohol sensor. The driver's car will not start if the breath alcohol level is above a certain level usually .02 to .04.

2. Any person who is convicted of a DUI violation is subject to a fine of not more than $500 or imprisonment for not more than 2 months or both.

Congress is changing the way you drive. The updates to the cell phone laws in the state of Maryland are:

1. An individual cannot write or send a text message while operating a motor vehicle or in the travel portion of the roadway. If you are convicted of a misdemeanor of the new text messaging law you will receive a fine of up to $500. However, the new law does not apply to emergency situations for texting 911 or global positioning systems (GPS).

2. The cell phone laws also prohibits drivers including those with a driver's license or provisional drivers license under the age of 18 from using a cell phone while operating a motor vehicle. This also includes usage of hands free devices.

3. The law can only be enforced as a secondary offense and a driver must be pulled over for another primary violation such as speeding or running a red light to be ticketed for the cell phone violation.

Tuesday, October 06, 2009

Financial Tips for Women

For every dollar a woman earns she is paid only 60% of what a male counterpart is paid. Many women who are single parents struggled greatly during this most recent recession. Many women had to get part-time jobs, go without eating or make other sacrifices to make ends meet and take care of their families. Many women have gone through various personal crises and now have to find a way to get themselves out of their crisis. Here are some financial tips for women in different stages of their life.

Single Mothers

1. Reduce spending
2. Pay bills online
3. Use direct deposit for paychecks
4. Purchase life insurance
5. Start a retirement account
6. Create a will
7. Don't tap into your retirement to pay off debt
8. Develop a support network to get advice, support and encouragement

Domestic Violence Victims
1. Reduce spending
2. Open a savings account and open a checking account with overdraft protection
3. Pay bills online
4. Use direct deposit for paychecks
5. Update beneficiary paperwork for insurance
6. Open one new account in your name
7. Close any joint accounts and cancel the cards
8. Purchase life insurance
9. Remove your name as an authorized user from accounts

Divorced Women

1. Start a savings account
2. Open a new checking account with overdraft protection
3. Pay bills online
4. Update beneficiary paperwork for insurance
5. Open one new account in your name
6. Close any joint accounts and cancel the cards
7. Remove your name as authorized user from all applicable accounts
8. Start a retirement account
9. Create a will

1. Notify companies of your spouse's death
2. Don't fall for money scams
3. Pay your bills on time
4. Look for financial paperwork
5. Research tax laws
6. Determine if your spouse had a life insurance policy, trust, will, etc.
7. Remove your spouse's name from joint accounts
8. Open a new account in your name

Saturday, October 03, 2009

Has the Recession Ended

The unemployment rate is now 9.8%. Several banks and financial institutions went out of business. Over two million foreclosures and counting. Over one million personal bankruptcies as of September 2009 and counting.

This is the longest recession in the history of the country which lasted for 18 months. The next longest recession lasted 16 months. The recession officially ended in June 2009. Some signs that the recession ended are:

1. Shares price began to increase
2. For the past two months there have been less employee layoffs and unemployment filings
3. Some businesses are getting stronger
4. There was a slight increase in sales of manufactured products
5. The Americans savings rate is positive
6. Economic issues developed in other countries
7. Value of the dollar has begun to increase
8. The price of gas is going down

The recession is over but if you find yourself still having financial troubles that is a sign that you have to change the way you think about money and you have to change your spending habits by living well below your means. Here are a few ways to help you live below your means and ensure that you are able to survive a future financial crisis:

1. Bring your lunch to work
2. Pay down debt
3. Create a budget or spending plan
4. Reduce spending
5. Create an emergency fund