Looks like more of us are cutting up our credit cards, or putting them in the freezer for safe keeping.

The Associated Press is reporting that the Fed says consumers cut debt by a record $21.6 billion in July from June, the most since 1943.

Looks as if the bad economy could be making people think a little harder about how they use credit. Perhaps, the free spending ways of the last decade are behind us.

Anyone else finding that they are depending less on credit? Where else are you cutting back?

Posted by Andrea Walker at 5:38 PM | Permalink | Comments (1)
Categories: Budgeting, Credit cards, Credit reports, Debt
        

Sears and Kmart today announced the introduction of a Christmas Club card that the retailers claim will help shoppers save for holiday shopping. Shoppers can put aside money on the card from now until Nov. 14. They can earn rewards of up to $100 on the car based on how much they save.

The announcement comes as retailers are bracing for a slow Christmas season and consumers are depending less on credit cards. The retailers have also been touting their layaway program.

Susan Ehrlich, president of financial services for Sears Holding said in a press release: “We heard our customers were concerned about how they are going to pay for their holiday shopping this year and we wanted to provide a way to ease their concern.”

But the card is also good for Sears and Kmart sales. It guarantees people who sign up for the card will have to shop their stores when the holiday season hits.

I’m all for the notion of saving. Too many people are probably still paying for their holiday purchases from last year. But consumers can save on their own too. Open a savings account you don’t have easy access to. Or put 50 bucks a week aside in your drawer if that’s what makes you save.

The rewards Sears and Kmart are offering are good if that’s the only place you plan to do your shopping. Then you might consider signing up for the card. But I bet there will be pretty good deals at all the retailers given the gloomy holiday shopping season that is expected.

Posted by Andrea Walker at 5:54 PM | Permalink | Comments (0)
Categories: Budgeting, Credit cards, Debt, Holiday shopping, Shopping
        

The Debtors Assistance Project is a bankruptcy assistance program that emerged to address a huge contradiction: people consider bankruptcy if they owe creditors lots of money, but can't afford the legal advice to steer them through a process that has grown more complicated (and thus expensive).

The Sun's personal finance columnist Eileen Ambrose talks in her column Sunday about the growing number of DIY bankruptcy filers working without a lawyer, known in legalese as filing "pro se". 

She talked to Jeff Sirody, a lawyer who volunteers with the Debtors Assistance Project, giving free bankruptcy advice in 30-minute sessions scheduled through the program. The bankruptcy court in Maryland also offers these tips for people filing for bankruptcy on their own.

Got some bankruptcy questions? Sirody will be Eileen's guest for her live chat at noon Tuesday about filing for bankruptcy. E-mail your queries to her at eileen.ambrose@baltsun.com beforehand, then tune in at noon to get the answers from the legal expert. 

Can't make that time? You can still send your questions and check back later for the transcript.

Posted by Liz Kay at 9:04 AM | Permalink | Comments (0)
Categories: Debt, Personal finance
        

This economy is no joke. If you're straining financially due to debt caused by medical bills, a job loss or other dilemmas, perhaps you've considered filing for bankruptcy.

Got questions about how it works: what debt would be covered, or how your credit history might be affected?

Send them to Sun personal finance columnist Eileen Ambrose at eileen.ambrose@baltsun.com. She is hosting a live chat at noon Tuesday with Jeff Sirody, a bankruptcy lawyer in Pikesville.

Sirody will be available for the half-hour to answer any questions you have about the process, benefits and drawbacks.

UPDATE: And don't forget, Eileen will take questions on other personal finance topics as well. 

Posted by Liz Kay at 11:25 AM | Permalink | Comments (4)
Categories: Budgeting, Debt, Personal finance
        

I fell for it. The lure of a 20 percent discount on the spot and the promise of more coupons in my mailbox convinced me to open a Macy’s credit card even though I knew better. What I didn’t know is that I was opening two credit cards in one.

My new credit card is used as a Macy’s card when I shop at the department store. But it can also be used as a Visa card anywhere else.

How did I find this out? I paid my bill online, only to get a paper bill saying I hadn’t paid. I was charged a late fee and an exorbitant interest rate on the “unpaid” balance.

 When I called Macy’s, the customer service guy said I paid the Visa bill, but not the Macy’s. Can we say, confusion? I didn’t even know I had a Visa bill. And with a very high limit too.

The guy transferred my payment to the Macy’s bill. But I have to say I’m still a little peeved. Like a lot of people, I’m not using much credit these days. And I definitely don’t want that much open credit.

It just reminded me to be very, very careful with credit cards. Credit card companies are raising interest rates and cutting limits as they prepare for more stringent rules to take effect in February. Banks also say they are seeing higher default rates because of the economy. Read what my colleague Eileen Ambrose recently wrote about one man’s experience. 

Here are tips from Consumers Union about credit card traps to avoid.

(Photo courtesy of AP)

Posted by Andrea Walker at 9:13 AM | Permalink | Comments (1)
Categories: Banks, Consumer protection, Credit cards, Debt, Shopping
        

The other day, we were talking about Starbuck's abysmal earnings report and how it really might be true that consumers are taking seriously that advice about how cutting one cup of coffee from your daily expenses will help you save lots in the long run.

Reader Don said he's been limiting the number of nights he goes out every week. Vegas Charlie said he and his friends are hanging around at home more. And the wonderful aeb says that packing lunches, bringing coffee from home has done wonders for the budget, although reining in shopping hasn't been quite so easy.

Continue reading "In tough economy, what goes first? Eating out or Pay TV?" »

Posted by Dan Thanh Dang at 2:50 PM | Permalink | Comments (11)
Categories: Budgeting, Cheap/Frugal, Debt, Economy, Personal finance
        

How many of you are still trying to pay off what you spent last holiday season? Consumer Reports says 12 million Americans are still carrying debt from last year, which is causing 76 percent of consumers to say they're cutting back spending this year on gifts, travel, entertaining, decorations, charitable giving, holiday cards, and tipping, according to a new Holiday Shopping Poll.

Among the poll results? About 59 percent said they will be giving fewer gifts, and nearly half (49 percent) will be cutting their travel plans.

Most consumers (84 percent) said they were willing to sacrifice buying gifts for themselves this year. But Fido will still make it out OK. Only 23 percent of respondents plan to cut back on gifts for their pets this season — far fewer than those willing to cut back on buying for friends and families (40 percent), service providers (30 percent) or co-workers (29 percent).

Continue reading "Shoppers Will Cut Back Holiday Spending This Year" »

Posted by Dan Thanh Dang at 10:30 AM | Permalink | Comments (1)
Categories: Budgeting, Debt, Economy, Holiday shopping, Shopping
        

I'm convinced instant gratification is behind our economic downfall.

Allright, it's not the entire reason why, but I'm thinking it's got to play a significant role in the current credit crisis? Let me explain.

In the old days when you saw something you really liked but couldn't afford, you didn't just charge it and take that sucker home. You put it on layaway. Over a period of some weeks or months, you could make payments in installments -- which was a little easier than forking out all the dough all at once. This meant you couldn't take what you wanted home right away, but it was yours once you paid in full. It was a great concept that went the way of the dinosaur once credit started getting handed out like so much candy corn on Halloween.

Continue reading "The Return of the Layaway" »

Posted by Dan Thanh Dang at 7:00 AM | Permalink | Comments (0)
Categories: Budgeting, Debt, Economy, Loans, Shopping
        

How can you avoid turning credit repair into credit despair? Here are a few suggestions from the Federal Trade Commission:

Avoid any company that wants you to pay for credit repair services before they provide any services. It is against the law.

Avoid any credit repair company that will not tell you your legal rights and what you can do, yourself, for free.

Avoid any credit repair company that tells you not to contact a credit reporting company directly.

Avoid any credit repair company that advises you to dispute all of the information in your credit report.

Avoid any company that suggests creating a 'new' credit identity - and then, a new credit report - by applying for an Employer Identification Number to use instead of your Social Security number. That is against the law. If you follow illegal advice and commit fraud, you also may be subject to prosecution.

Be safe out there.

Posted by Dan Thanh Dang at 9:11 AM | Permalink | Comments (3)
Categories: Consumer protection, Consumer safety, Credit reports, Debt, How To, Personal finance
        

Ever wonder if those TV ads claiming to help you repair your credit are legit?

Here's what the Federal Trade Commission and 24 state agencies said:

"Companies that promise they are able to scrub your credit reports of accurate, negative information for a fee are lying - plain and simple," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. "Under federal law, accurate, negative information can be reported for up to seven years, and some bankruptcies can be reported for up to 10 years."

Earlier this month, the FTC and the state agencies launched "Operation Clean Sweep" to go after 33 operations that deceptively claimed they can remove negative information from consumers' credit reports, even if that information is accurate and timely. The FTC sought to halt the companies' allegedly unlawful business practices, prohibit further violations, and make them pay consumer redress and give up their ill-gotten gains. The FTC said it received thousands of complaints from consumers. Keep reading for the list of companies that they took action against.

Continue reading "FTC Crackdown on 36 Credit "Repair" Companies" »

Posted by Dan Thanh Dang at 7:01 AM | Permalink | Comments (2)
Categories: Consumer protection, Consumer safety, Debt, Naughty businesses/NBotW, Personal finance, Scams
        

So you know how we try to tell you about naughty businesses every week? Well, here's an interesting twist on that thought. There's a new Web site out there that wants to tell you about naughty consumers out there.

Instead of complaining about companies, uradeadbeat.com allows businesses to post the names of naughty people. Maybe someone who stiffed them on a bill. Or a customer who refuses to pay even after the court has ordered them to do so. In this little role reversal, instead of customers bad-mouthing a business, businesses can bad-mouth an individual by name, for a fee.

I can definitely see why something like this has popped up. It's very similar to that other Web site we told you about, DoNotRentTo.com, which allows landlords to post the names of bad renters on the Web site. Both sites, of course, allow the other side a chance to vent against bad consumers... and we are firm believers here that there is such a thing as a bad consumer.

With that said, I'm troubled by what I'm seeing on the so-called Deadbeat List.

Continue reading "Are you a bad consumer? uradeadbeat.com might think so." »

Posted by Dan Thanh Dang at 7:01 AM | Permalink | Comments (1)
Categories: Complaints, Debt, Naughty businesses/NBotW
        

Continue reading "Will the Fed Rate Cut Help Consumers?" »

Posted by Dan Thanh Dang at 1:30 PM | Permalink | Comments (0)
Categories: Credit cards, Debt, Economy
        

Are you looking for advice on how to lower your debt and increase your savings?

On Friday, Your Money Bus is coming to Baltimore's Inner Harbor, offering fee-only financial advisors who will be holding free advice events and symposiums where you can learn how to get your financial life in order.

Continue reading "Your Money Bus Tour coming to Baltimore" »

Posted by Dan Thanh Dang at 2:07 PM | Permalink | Comments (0)
Categories: Budgeting, College/Financial aid, Debt, Economy, Personal finance
        

The House of Reps passed the Credit Cardholders' Bill of Rights today by a vote of 312-112.

We've told you about efforts to rein in bad credit card practices before, here, and here .

The White House agrees that there are abusive credit card practices, but opposes the cardholders' rights bill for fear that it could further discourage lending.

The American Bankers Association agrees. Edward L. Yingling, ABA president and CEO, said:

“The American Bankers Association is very disappointed by the action today of the House of Representatives. The so-called “Credit Cardholders’ Bill of Rights” (H.R. 5244), while well-intentioned, will increase the cost of credit for consumers and small businesses across the country, result in less access to credit for consumers and businesses alike, and may further roil the securities markets – all at a time when our economy can least afford it.

Continue reading "House of Reps passes Credit Cardholders' Bill of Rights" »

Posted by Dan Thanh Dang at 4:43 PM | Permalink | Comments (2)
Categories: Complaints, Consumer protection, Credit cards, Debt, Economy
        

Did you catch Wonk-esse Jamie and her blog post today? It's about people who are angry that "all the housing-related bailouts are handing a bill to taxpayers who played by the rules and are paying their mortgages or their rent."

I've been watching the housing meltdown and the political reaction to it, and I have to agree with the readers on Jamie's site and the people quoted in the AP story. I'm angry, too, that we seem to be rewarding the reckless.

As the story says about the government bailout of Fannie Mae and Freddie Mac:

Meanwhile, tens of millions of people pay their mortgages on time, don't max out their credit cards and put money into retirement funds. They may even save a little extra on the side.

In return, they get rates on their savings that don't even keep up with inflation. They also are witnessing the horror of their nest eggs shrinking as the value of their homes plummets and the stock market tumbles.

Washington policymakers seem more focused on rescuing those who behave badly by putting at risk taxpayers who have played by the rules.

Continue reading "Rewarding the reckless" »

Posted by Dan Thanh Dang at 6:14 PM | Permalink | Comments (1)
Categories: College/Financial aid, Complaints, Debt, Economy, Loans
        

So here are some of the nasty tricks and traps that credit card companies use to increase the likelihood that you'll end up paying fees and penalties, according to Americans for Fairness in Lending.

Fees and More Fees – On any given month, you might pay a late payment fee, overlimit fee, cash advance fee, balance transfer fee, foreign exchange fee, bill payment fee, Western Union fee, and whatever else your lender can devise. Not to mention monthly and annual fees.

Tricks to Make You Pay Late – These come in many varieties. If you’re late you’ll pay a hefty fee and your interest rate may go up. Check each statement carefully and pay your bill as soon as it arrives.

Changing Due Dates – Your bill will not be due on the same day every month.

Early Due Dates – Bills may be due just a few days after you receive them.

Weekend Due Dates – If your due date is on the weekend and your payment arrives on the date, it won’t be processed until Monday and you’ll be considered late.

Morning Due Times –Your payment may be due at 9am on the due date, not 5pm.

Approved Overlimit Charges – If a purchase puts you over your limit, your credit card company will approve the charge then hit you with an overlimit fee and maybe even raise your interest rate. Keep careful track of your balance and know that even approved charges may put you overlimit.

Universal Default – Pay Card A on time but pay late to Card B (or anything else monitored by your credit score) and your interest rate on Card A may jump!

Continue reading "Credit Card tricks and traps" »

Posted by Dan Thanh Dang at 11:30 AM | Permalink | Comments (0)
Categories: Credit cards, Debt, Naughty businesses/NBotW
        

Here's some disturbing news from a new report called Generations of Struggle from the AARP.

Researchers Deborah Thorne of Ohio University, Elizabeth Warren of Harvard Law School, and Teresa A. Sullivan of the University of Michigan say that the "rate of bankruptcy filings among those ages 65 and older has more than doubled since 1991, and the average age for filing bankruptcy has increased."

Other findings in the report include:

Americans age 55 or older have experienced the sharpest increase in bankruptcy filings.

Americans age 34 or younger have experienced the greatest decrease in bankruptcy filings.

The influence of Baby Boomers on bankruptcy filings has moderated substantially.

Posted by Dan Thanh Dang at 2:30 PM | Permalink | Comments (0)
Categories: Debt
        

On Sunday, I wrote about BlueHippo and the unending complaints that are still coming in about the Woodlawn-based retailer that sells computers and other electronics to people with poor credit.

Maria Allwine of Baltimore wrote in to say:

How about a story on who owns Blue Hippo and its history. I think publishing the names of the owner(s) and the history, finances, etc. of this company might be helpful.

The bad news is that I didn't include that information because I only have 25 inches of space to work with for my Sunday column. The good news is that The Sun and fellow blogger (a.k.a. Financial Guru) Eileen wrote a terrific story on this very question back in 2006.

But, being the generous, thoughtful soul that I am, I'm going to copy and paste the lengthy article after the jump instead of making you search and pay for it in our archives like my bosses would like for you to do. Why? Because it's all about you readers, that's why.

Continue reading "BlueHippo Blues" »

Posted by Dan Thanh Dang at 3:14 PM | Permalink | Comments (14)
Categories: Complaints, Computers, Consumer protection, Debt, Naughty businesses/NBotW
        

See those people there? It's a line for food rationing distributed by the United Nations World Food Programme in Nairobi.

The reason why I bring this up on a beautiful Friday morning is because reader PastorTim said something yesterday that depressed the heck out of me. On my post about rice rationing by Sam's Clubs because of concerns about shortages, he commented that:

This is only the start of food rations in the USA. We need to wake up to the times we are living in. We're in a Greater Depression.

As I keep telling you, I'm a worrier. So when I saw the Sam's Club story and read about retailers limiting consumer purchases of flour, rice and cooking oil, it made me worry. C'mon. I've been worried for awhile now... about the availability of wheat and now rice, rising food prices, rising gas prices, rising debt levels and of course, the mortgage crisis as documented by my terrific colleague Jamie and her Real Estate Wonk blog. 

Continue reading "A Great(er) Depression: The end of cheap food, energy and credit" »

Posted by Dan Thanh Dang at 7:00 AM | Permalink | Comments (7)
Categories: Budgeting, Cheap/Frugal, Debt, Energy/Utilities, Food, Gas prices, Shopping
        

Bank of America said yesterday it would stop peddling risky mortgages, including subprime and other non-traditional loans, after it completes the $4 billion purchase of Countrywide Financial Corp.

In our sister paper, the Chicago Tribune, BofA's global consumer credit executive Bruce Hammonds said, "We recognize this tightening restricts the availability of credit to some borrowers, but this will help ensure that those who get loans can afford to repay them."

Among other things, BofA announced in public testimony on its proposed purchase of Countrywide that the combined company will halt making option adjustable-rate mortgages, drastically cut back on low-documentation loans and limit prepayment penalties.

It won't solve the subprime mortgage mess we've got on our hands right now, but it's a step in the right direction. This goes back to my Sunday column where I said we're all for people getting credit limits they can afford on their credit cards... or at least curbing the ease of credit for people who can't afford it in the first place.

Posted by Dan Thanh Dang at 11:51 AM | Permalink | Comments (2)
Categories: Consumer protection, Debt, Loans
        

Did you catch my column yesterday on the credit card industry and how Congress is trying to rein in abusive practices? Here's some of the issues that the Credit Cardholders Bill of Rights would deal with:

•Universal Cross Default Clauses: If you are declared in default by any other creditor, be it your landord, utility company or a library fine, then that automatically represents a default on your credit card. You can be charged penalty interest rates even if you have been making payments on-time to the card issuer.

•Arbitrary Interest Rate Changes: Carry a balance too close to your credit limit and wham, your interest rate goes up. Open up another credit card and wham, your rate goes up. Pay late once and wham, your rate goes up. Sneeze and your rate goes up. Why? Because your contract includes a clause that says, “Any term can be changed at any time for any reason, including no reason.”

Continue reading "Credit Card Reform" »

Posted by Dan Thanh Dang at 7:38 AM | Permalink | Comments (0)
Categories: Complaints, Consumer protection, Credit cards, Debt, Naughty businesses/NBotW
        

Debt collectors aren’t supposed to be able to garnish your Social Security benefits.

Contrary to federal law, they still manage to do so.

Last summer, three senators asked the Social Security Administration’s Inspector General to investigate the problem. A report on the inspector general’s findings is supposed to be out in the coming weeks.

Meanwhile, the senators introduced the Illegal Garnishment Prevention Act. The bill, the trio say, “would prevent the U.S. Department of Treasury from promoting the use of direct deposit for Social Security beneficiaries until they put a stop to the illegal garnishment of government benefits from the bank accounts of private citizens.”

Legislation is good, but it may come too late if debt collectors are draining your account now. It can help to know your rights, though. They are:

A creditor or debt collector can’t make a claim on your future Social Security benefits. And if you deposit that money in the bank, they can’t pull the benefits then if it’s possible to identify the money as government benefits.

Your creditors can’t ask your employer to pull money out of your pension or 401(k), either. Once you deposit retirement money in a bank account, though, they can go after it.

Each state determines protections on IRA money. Maryland protects all IRA money from creditors.

There are always exceptions, of course.

If you owe child support or alimony, your Social Security benefits garnished.

And the IRS can always get its hands on your money if you owe back taxes.

Are you having problem with this issue?

Posted by Eileen Ambrose at 3:10 PM | Permalink | Comments (0)
Categories: Debt
        

We've been talking a lot about managing our money and the slowing economy. For anyone who thinks you may need some help getting your finances back in order, here's good advice on how to find a credit counselor from writer Gregory Karp at our sister paper, The Morning Call, in Allentown, Pa.:

Determine whether you're a good candidate. Sometimes a credit-counseling agency doesn't do anything you couldn't do for yourself.

Evaluate all of your options before entering credit counseling, including developing a better spending and savings plan and negotiating with creditors yourself.

Enlisting a credit counselor will be noted on your credit report. It can do significant damage to your ability to borrow money at good interest rates, because creditors will see that notation.

But credit counseling doesn't directly affect your three-digit credit score. Many distressed people seeking counseling have badly dinged up their creditworthiness, so an additional bad mark is perhaps only incremental.

 

Continue reading "How to find a credit counselor" »

Posted by Dan Thanh Dang at 11:23 AM | Permalink | Comments (0)
Categories: Debt, How To, Personal finance
        

Anyone out there wondering how we got into this mess? By mess, I mean the slowing economy, which might or might not be in recession. Officially, we're not in a recession, as the msnbc story says. But, and this is a big BUT, things are definitely not rosy.

I read a great story in the WPost yesterday about why we've got this mortgage mess on our hands. We're leverage addicts. Writer Michael S. Rosenwald sums it up quite well:

The simple answer, according to personal finance experts, is that we want more -- more money, more house, more car, just more, more, more. We often think we deserve more. Leverage gets us more. With historically low interest rates, leverage is the easiest and quickest tool to get more stuff.

The problem is that too much leverage has a downside that is easy to overlook. When everyone else is using leverage so successfully to get more, do we wonder what will happen if interest rates go up? Not so much.

Continue reading "Borrowing 'til it hurts" »

Posted by Dan Thanh Dang at 11:22 AM | Permalink | Comments (3)
Categories: Budgeting, Debt, Investments, Loans, Personal finance
        

Anyone catch "The Secret History of Credit Cards" on Maryland Public Television last night?

It's all about how credit card use took off in the U.S.

If you haven't seen it, you should check it out. Really fascinating stuff about fees, interest rates and why credit card companies moved to certain states. If you missed it, here are some really interesting points from the piece, written by Robin Stein, that you should know:

Even if you make your credit card payments on time, the credit card bank can raise your interest rate automatically if you're late on payments elsewhere -- such as on another credit card or on a phone, car, or house payment -- or simply because the bank feels you have taken on too much debt.

This practice is called the "universal default" clause and increasingly is becoming a standard clause in credit card agreements. According to credit card executives, the logic behind universal default is that the bank is not being unreasonable in raising rates when it has reason to believe that the risk of being repaid by the customer has increased. [Note: Credit card banks can now easily track your everyday financial activities and monitor your credit score.]

Your credit score -- known as a FICO score -- has become a vital statistic for many Americans and can be widely shared. It is used to determine how much you can borrow, how much you pay for life insurance, if you can rent a home, and, as already noted, it can be a factor in determining the interest rate you pay on a credit card.

Most Americans don't know what their credit score is, nor how it's computed and with whom it's shared. Your credit score is usually determined by five factors, with the most important being the amount you currently owe and your payment history on large debts.

Continue reading "The secret life of credit cards" »

Posted by Dan Thanh Dang at 8:18 AM | Permalink | Comments (0)
Categories: Credit cards, Debt
        

Computer retailer Blue Hippo is not the only company that offers credit to people with poor or no credit histories.   

BH, which settled with the Federal Trade Commission after accusations of taking consumers' money for computers and plasma TVs and not delivering the goods, was featured in a BusinessWeek story last year about businesses that target the poor.

It discusses several companies, including BlueHippo, that extend credit and thus a wider range of consumer goods to poor people. But as the story puts it:

"... this remaking of the marketplace for low-income consumers has a dark side: Innovative and zealous firms have lured unsophisticated shoppers by the hundreds of thousands into a thicket of debt from which many never emerge."

Contrast this with the story of Adam Shepard, a college graduate who takes $25 and a gym bag with him on a poverty experiment, a la Barbara Ehrenreich's "Nickeled and Dimed" ...

Continue reading "Perpetually poor" »

Posted by Liz Kay at 8:02 AM | Permalink | Comments (1)
Categories: Budgeting, Consumer protection, Debt, Loans, Naughty businesses/NBotW, Shopping
        

Have you ever wanted to hire a financial advisor to give you tips on saving and investing money? How much would you pay someone for valuable tips on buying and keeping a home? Would you pay money to listen to someone give you advice on how to start your own business?

Saturday's your lucky day, my friends. The Baltimore CASH Campaign -- which is working with Congressman Elijah Cummings and other community and financial institution partners -- is holding its 3rd Annual Money Power Day on Feb. 16 at the Baltimore Polytechnic Institute, 1400 W. Coldspring Lane, Baltimore, MD. from 10 a.m. to 3 p.m.

This year's theme is "Road Map to Financial Success." The event will feature an exhibit area with over 40 organizations providing information to working families who need help obtaining and understanding a credit report, legal advice on taxes and information about grants to help people purchase homes in the city. There will also be workshops and services on a range of financial topics from credit counseling to tax preparation assistance.

Continue reading "Get Money Smart" »

Posted by Dan Thanh Dang at 8:06 AM | Permalink | Comments (0)
Categories: Budgeting, College/Financial aid, Credit cards, Credit reports, Debt, Personal finance
        

People who earn little money often pay more for financial services because they lack access to low-interest, short-term sources of credit and to banks themselves, according to a report by the Maryland Consumer Rights Coalition. They're also not informed of the high fees they often pay to consolidate debt and for tax refund anticipation loans or payday loans.

The Maryland Consumer Rights Coalition is urging elected officials and government regulators to take more steps to protect the rights of poor consumers and to enforce the laws already on the books.

Interesting to note --- part of the remedy in the 2003 Maryland Debt Management Services Act involves making sure that the print is not-so-fine:

"The consumer must enter into a debt management services agreement
and must receive a copy of the agreement that is in at least 12
point type and sets out the schedule of payments, maintenance
fees and a list of which creditors will receive payments, and a
notice of the right to rescind the agreement by giving written
notice."

Continue reading "Poor? Pay more." »

Posted by Liz Kay at 2:03 PM | Permalink | Comments (1)
Categories: College/Financial aid, Consumer protection, Debt, Loans, Personal finance
        

If you haven't already read Eileen's very helpful story on how the Fed's three-quarters of a percentage point cut affects you, check it out here.

If you're too lazy to read it, I'll sum up for you.

Credit Cards: Don't count on seeing a lower interest rate.

Home Equity Lines: Expect to see a decrease as early as next month.

Mortgages: No change for fixed-rate mortgages, but maybe for adjustable rate mortgages.

Continue reading "How the Fed interest rate cut affects you" »

Posted by Dan Thanh Dang at 1:30 PM | Permalink | Comments (0)
Categories: Credit cards, Debt, Home/Real Estate, Investments, Loans, Personal finance
        

Here's another piece of news I meant to put out earlier. A cluster of consumer advocacy groups in the state are warning Marylanders that even as thousands of homeowners are suffering through the loss of their home through foreclosure, that could just be the beginning your financial troubles.

Here's why: If you, the homeowner, has part of your debt forgiven during the foreclosure process, you're required to include the forgiven amount as income on your tax return. This amount is called a "windfall" and often taxes will be owed on that amount, according to the Maryland Consumer Rights Coalition, Maryland CASH Campaign and Baltimore CASH Campaign.

Forgiven debt in a foreclosure can range from a few thousand dollars to hundreds of thousands, which means the taxes owed can be significant. The groups warned that federal and state tax debt usually cannot be discharged through bankruptcy so consumers should contact their tax preparer immediately if you have canceled debt, known as the "1099 shortfall."

Continue reading "Tax bills on forgiven debt in your future?" »

Posted by Dan Thanh Dang at 11:00 AM | Permalink | Comments (0)
Categories: Debt, Home/Real Estate, Personal finance
        

By now, you must know I'm a pessimist. I figure if I'm always expecting the worst, then maybe, just maybe, if something good comes out of it then I'll consider myself superlucky.  

That's my way of asking you to forgive me for inundating everyone with bad news on a frequent basis. Just remember, I do it only because I'm hoping that by scaring the crud out of you, it will help everyone be extra vigilant about avoiding such pitfalls.

This latest bit of misery comes from an AP story that says Americans are falling behind on credit card payments at an alarming rate.

Experts say this could partly be "a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy."

As the story says, many economist expect deliquencies and defaults to rise more after the holiday shopping season.

Mark Zandi, chief economist and co-founder of Moody's Economy.com Inc., blamed mounting mortgage problems that started after the subprime financial shock, and a weakening job market in the Midwest, South and parts of the West, where real-estate markets have been particularly hard hit, the AP says.  

"Credit card quality will continue to erode throughout next year," Zandi said.

Continue reading "Unpaid credit card bills rising!" »

Posted by Dan Thanh Dang at 4:26 PM | Permalink | Comments (0)
Categories: Credit cards, Debt
        

If you've been following the columns I write, you know I just recently shared the story of Gordon Crooks being harassed for an old debt his son may or may not owe. I'm not sure if the debt is owed because the son didn't talk to me for the column.

Now, some readers left some pithy comments to suggest that I'm OK with the son owing this debt and that I'm OK with consumers not paying their bills. If you know me at all and if you've been a reader of the columns and this blog, you know that's far from the case. I am totally, vehemently, body & soul opposed to consumers racking up debt and not paying for it.

We're all for taking personal responsibility here when it comes to spending money.

The point of that column is that debt collectors can not hound you for a debt you don't owe. They can't even hound you if you do owe a debt. The laws are very, very clear about what they can and can't do to collect on a debt. Why is that important?

Continue reading "Don't get bullied by debt collectors" »

Posted by Dan Thanh Dang at 11:53 AM | Permalink | Comments (0)
Categories: Consumer protection, Debt
        

At this time of year, if you're anything like me, you're trying to remember all the stuff you have to do before you gather with family and friends for the holidays. I have so many siblings and we're all older now so, thank goodness, we skip gifting all the adults. But, there's still a bunch of nieces and nephews who would be sorely disappointed without some presents under the tree or in the mail.

I'll probably avoid the crowds on Black Friday by staying home, but I will be making my lists and checking around for deals on-line. Holiday party season is starting, too, so that means I'll have to plan on stocking up on some wine or gifts-for-the-host so as not to come empty-handed. At the same time, I'm also hoping to take a little holiday vacation.

What does this all mean? I'll be spending more money than usual. In the old days, I just put everything on my credit card and paid it off over time. Debt. No big deal, right?

Wrong.

(Chiaki Kawajiri, Sun photographer)

Continue reading "Smart holiday shopping and the coming consumer crunch" »

Posted by Dan Thanh Dang at 8:43 AM | Permalink | Comments (0)
Categories: Debt, Holiday shopping