Tuesday, July 30, 2013

7 Easy Tips to Fight Credit Card Blocking

Have you ever had a “hold” place on your credit score?  If so, you were a victim of credit card blocking. Credit card blocking occurs when a business places a hold on your credit card sometimes for more than the total amount that is owed for a reservation such as a hotel or rental car.  Some companies that use credit card blocking are Diners Club cards and Visa.  When you use your credit card at registration for a hotel or to rent a car, the cashier will contact your credit card company and provide an estimated total of your bill. If the transaction is approved, then that amount is held in reserve. In addition to the actual cost of staying in the hotel or renting a car the clerk may add on reasonable "incidental" costs for items such as food or gasoline.  

Some experts believe that credit card blocking is helpful because it makes sure you don't exceed your credit limit before checking out or returning a car.  Using credit card blocking means that the company you receive these services from can be assured that your bill will be paid. If your balance is far enough below your limit you usually will not have a problem. Unfortunately, if your balance is near the credit limit, it may be an inconvenience by tying up credit that you may need and can cause a denied transaction for an item that is purchased after the block is placed.

If you pay the bill with the same credit card used when you checked in or returned the car, the purchase will replace the block usually in one or two days. However, if you pay using a different credit card or with cash the block may be held for up to 15 days after you've checked out. This happens because your credit card company was not notified that you used another form of payment and assumed they had to continue to hold that amount in reserve on your credit card. This can be avoided by asking the merchant to notify your credit card company and remove their block promptly.  Here are 7 ways to protect yourself against credit card blocking:

1.      Pay for a hotel or rental car with the same card you used at check-in.
2.      Ask the merchant the amount that will be blocked, how they determined the amount blocked and the time period the block will be held.
3.      Use two credit cards, one to make a reservation and one to pay the final bill.
4.      Pay with cash.
5.      If you pay using another method, ask the clerk to call the credit company and have the block removed. Get the clerk's name and ask for proof that the block was removed if possible. Also contact your credit card company to ensure the block was removed.
6.      Pay for hotel reservations in full prior to check-in so that a block is not placed on your credit card.  However, if a block is placed after arrival it will only be for a small amount to cover incidentals.
7.      Complain to your state Congressman regarding credit card blocking.
Credit card blocking is not illegal as long as the amount blocked isn't above what the customer is likely to pay at the end of the transaction. Most consumers are not aware that it happens at all because the blocked amounts may not come close to their credit limits. Some businesses will remove a block at the consumer's request if they see the bill has been paid.

Credit card blocking ensures the business will get paid if the consumer does not pay the final bill and prevents the consumer from exceeding the credit limit before checking out of a hotel, returning a rental car or making another type of purchase.

To prevent credit card blocking: use the same credit card the reservation was made, pay down your credit card to allow room for extra items that you may need to purchase in addition to the reservation costs, ensure the block is removed from your credit card after the reservation amount is paid in full.  For more information write to: Credit Card Blocking, Correspondence Branch, Federal Trade Commission, Washington, DC 20580.

Friday, July 26, 2013

The Real Deal on the New Student Loan Interest Rates


Financial institutions that have private student loan workout programs are requested to provide student loan borrowers with information that clearly explains the programs, including eligibility criteria and the process for requesting a loan modification. This week the federal bank regulatory agencies issued a statement encouraging financial institutions to work with private student loan borrowers experiencing financial difficulties. This is a good start but stricter penalties should be implemented.  Financial institutions should be fined if they refuse to assist private loan borrowers with an affordable repayment plan.

Congress finally approved a plan to address the interest rate for federal student loans. New student loan interest rates will be set according to the 10-year Treasury yield plus a few percentage points. Under the plan, undergraduates taking out federal loans in 2013 would pay about 3.86%, graduate students would pay 5.4% and parent PLUS loans would pay 6.4 %. This only provides relief for this year.  If the Treasury yield increases so do student loan interest rates which will affect 11 million borrowers.

Under Congressional Budget Office projections, the interest rate is expected to increase over the next couple years, forcing student loan interest rates near 7% by 2017. Undergraduate loans are capped at 8.25% instead of 3.4%, graduate loans are capped at 9.5% instead of 6.8%, and PLUS loans at 10.5% instead of 7.9%. This would not be needed if the cost of college tuition was regulated. 

“We are opposed to the current deal,” Minnesota State Colleges Student Association president Kelly Charpentier-Berg said. “In the long-term, it’s actually going to cost students more. With it being market-based, when the economy goes up, the interest rate goes up.”

Unfortunately the Pell Grant does not provide enough money to cover one semester of tuition and forces students to obtain student loans. Tuition has become so expensive some students cancel their plans to go to college. Some experts believe that college tuition has become so expensive due to several factors such as:  declines in state or federal funding, increasing health care costs, soaring costs for labor productivity, colleges don’t and are not required to compete on tuition prices - Ivy league and other well-known colleges compete on academic reputation, hundreds of new rules, regulations and requirements that require colleges to change their business practices; other requirements that require colleges to hire additional administrators and compliance officers to ensure that they are not in violation of various new rules.

However, college tuition has also increased due to  food choices  including well-known fast food restaurants such as McDonalds, Starbucks, Pizza Hut, etc., more variety of bachelor degrees, new construction – at least 50% of construction cranes in America are on college campuses, elaborate student centers with theaters and bowling alleys, state of-the-art recreation facilities with rock-climbing walls; cable TV and wireless Internet access, online access to washing machines and dryers, and high college executive salaries, bonuses and exit payments.

Some experts state that the more aid colleges give the more they increase tuition. Colleges charge as much as someone is willing to pay.  Colleges that don’t accept federal loans have tuition that is half that of similarly-ranked colleges. The Minerva Project, a for-profit university in California stated that it will refuse Federal aid in order to keep tuition costs low. Cooper Union keeps tuition costs down because they don’t have a gym, swimming pools, climbing walls or a major cafeteria. Dormitories only house freshmen.

Students have been bamboozled to think that if a college charges a high tuition it must be a good school; this is not always the case.  If you have student loans take advantage of student loan forgiveness programs and demand affordable student loan reform from Congress and tuition reform from colleges.

Monday, July 22, 2013

15 Money Saving Tips to Stay Cool

This has been a hot summer and many people have become dehydrated and overheated due to lack of air-conditioning in their homes and the hot temperatures and the high heat index in some areas reaching to 115. It’s no fun being hot.

Many homeowners incur lots of money during the summer to keep their homes cool.  Refrigerators and air conditioners are the largest consumers of energy. Air conditioning contributes to approximately 16% of the average household’s annual electricity bill. The amount of air conditioning you use depends on where you live and how many days a year you need to use your air conditioner.  The average costs spent on an air conditioning per year is $2,643 and the average home air-conditioning unit costs $280 per year. 

There are several alternatives to using air conditioning such as whole-house fans and evaporative coolers; however, they do not perform well in all climates. If you live in a state that has a lot of humidity, evaporative coolers are not a good option. If you don't have an attic a whole-house fan is a good option. If you have a hot attic an evaporative coolers is a good option.

Saving on air conditioning costs can also help the environment.  Cutting back on your air conditioning reduces your CO2 (carbon dioxide) emissions by 5.4 lbs a week. The more electricity you use, the more carbon dioxide gets released into Earth’s atmosphere. An average household central air conditioner uses enough electricity each year to release of over 2 tons of CO2 into the air.  Here are 15 tips to stay cool this summer.
  1. Turn up the thermostat.  Each degree higher you turn up your thermostat allows it to use 1-3% less electricity. Set your thermostat at 76 or 78 degrees F during the day.
  2. Turn it off.  If you aren’t home during the day turn the air conditioner off. Program the thermostat to turn the air conditioner on an hour before you get home.
  3. Room a/c.  Turn the room air conditioner to a warmer/cooler setting during the day when you are not at home.  Put room air conditioners in windows that are facing north or that are in the shade. A room air conditioner that sits in direct sunlight uses 5% more electricity.
  4. Clean.  Clean or replace your air conditioner’s air filter every month when it’s in use. The harder the air conditioner has to work pulling air through the filter, the longer it runs and the more electricity it uses.
  5. Usage. If the temperatures outside is cool at night turn your air conditioner off and open the windows or turn it down to a lower setting.
  6. Fans. A ceiling fan provides added air circulation and can help keep your air conditioner set at higher temperatures. Make sure the ceiling fan is reversible and that it blows air down in the summer. Window fans and floor fans can provide cooling by getting the air moving or by helping move cooler outside air into the house at night.
  7. Solar window film. Replace plastic window film with solar window film to help keep your home cooler by reducing utility costs.  The film prevents the sun’s rays from entering your home and reduces the need for air conditioning.   
  8. Electrical Devices.  Don't place lamps, televisions or computers near your thermostat.  The thermostat can sense the heating coming from the appliances and will run longer than necessary.
  9. Lights.  Don't turn lights on if your home gets natural sunlight.  Keeping lights off keeps your home cool.  Turn lights on only when necessary.
  10. Insulate.  Seal any cracks or leaks around and inside your home and insulate your attic floor.  Install storm windows to save on energy costs.
  11. Fresh air.  If you live in an area where it is hot during the day and cool at night, turn off the air conditioner and open the windows to get fresh cool air. In the morning close the windows and blinds to retain the cool air.
  12. Cover windows.  Install window coverings to prevent heat gain through windows.
  13. Ventilation.  Make sure you home is well ventilated.  Make sure bathrooms and the kitchen have vents that lead outside.
  14. Maintenance.  Perform regular maintenance or air conditioning, heat pumps or other cooling devices.
  15. Install a metal roof. Aluminum reflects sunlight. Metal reflects up to 70% of the sun’s radiation and loses its heat easily which helps keep the roof cool.