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Protect yourself against credit-rating agency errors

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ARLINGTON, Va. (3/24/15)--After more than a decade of filing complaints about errors--and getting nowhere--consumers are about to get relief. Under a new agreement, credit rating agencies will be required to conduct independent reviews of complaints, correct the reports and change the way they treat medical debt (PBS News Hour March 9).

The three largest credit rating agencies (CRAs)--Equifax, TransUnion and Experian--were relying on lenders to provide data, without conducting independent reviews. Consumers would find errors in their credit reports and submit documentation of proof to the Federal Trade Commission (FTC), but nothing would change.

The new agreement, which begins in six months and lasts three years, brings the changes consumers have been waiting for: The agencies will be required to use specially trained employees to conduct an independent review of every complaint.

In addition to independent reviews, consumers can expect:
  • Help with complex issues. A special team of people will deal with issues like identity theft or file mix-ups.
  • Improved data quality. Lenders, credit-card issuers and collection agencies will use consistent standards for reporting credit data, monitored by the CRAs. 
  • Help with tickets or fines. The CRAs will stop reporting debts such as tickets or fines that do not arise from an agreement to pay.
  • More time to deal with medical debt. Consumers will have more time--180 days--to resolve conflicts over unpaid medical debt. Medical debt accounts for 52% of all debt on credit reports.
  • Favorably resolved medical debt will disappear from reports. After an insurer pays a medical debt, the CRAs will remove the debt from the consumer's credit report.
  • Expanded educational material. Consumers visiting to obtain an annual free credit report will see expanded educational material and, if they dispute a report, no longer will have to wait a year for another free report.
The FTC estimates that 10 million Americans have errors significant enough to affect the cost of borrowing.

Request your free credit report from all three agencies once a year. Always make your requests from, the only site sanctioned by the FTC, or, call 877-322-8228. Better yet, monitor your credit report year round by making one request every four months in rotation among the three CRAs.

For related information, read "Six Slam-Dunk Ways to Trash Your Credit Score" in the Home & Family Finance Resource Center.

Free up cash in 30 days

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McLEAN, Va. (3/17/15)--If you have a tight budget, the thought of finding any extra money can seem unrealistic. But with a few minor tweaks, it might be easier than you think to curb spending (USA Today March 8).
Scrutinize your spending patterns and obligations and you might find simple ways to cut down on debt and actually save money in the long run:
Consolidate debt. Sometimes the key to paying down debt can be as simple as combining it. By consolidating your loans, you might be able to save on interest rates, simplify monthly payments, and actually start saving money. Debt consolidation isn't for everyone--if you know you will use it an opportunity to run up more debt, consolidation is not for you. Talk to a credit union loan specialist to see if consolidation is a good move for you and your finances.
Refinance your house and car. Refinancing your house or car can free up money that you can put toward other bills or put into savings. A credit union loan officer can determine if you qualify for lower rates.
Revisit insurance policies. Compare policies. Check the National Association of Insurance Commissioners website for price comparisons and Insurance Information Institute for advice about picking reputable companies. Consider raising deductibles. Ask about discounts for kids away at college and not using vehicles, and about good student discounts for kids in high school.
Go green. Be environmentally conscious and save money while doing so. Programmable thermostats, fluorescent and LED bulbs, and window coverings are options that can help you save energy--and money. Go green at the credit union as well. Signing up for automatic loan payments might qualify you for lower loan rates. Using automatic bill pay will help you make consistent progress toward financial goals and help avoid late fees. Choosing e-delivery of statements, newsletters and other correspondence is a great "green" option as well.
For related information, read "Practical Ways to Save Money" in the Home & Family Finance Resource Center.

When discount warehouses aren't a good deal

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NEW YORK (3/10/15)--Buying in bulk: It's a no brainer, right?

If you can afford to do it, and the product is something you're going to use and have room to store, it makes sense to buy a lot of it at a steep discount. This is why warehouse clubs like Costco and Sam's Club are popular.

Last year, for instance, an extensive survey by Consumer Reports found that products as disparate as bacon, car batteries, coffeemakers, ice cream and laundry detergent are some of the best deals at Costco.

But while warehouse clubs can offer great deals, not everything is (MarketWatch March 5). Here are some products to consider buying elsewhere.
  • Media. Warehouse clubs still offer books, DVDs and CDs for their impulse-buy appeal, but these items can be found much cheaper online.
  • Perishables. Bulk items are affordable because it's less expensive to offer products at wholesale quantities. But if you're throwing vegetables away or finding that huge jar of mayo expired with only half of it used, you may be paying for products you're not using. 
  • Disposable diapers. These are something you're going to use a lot of, obviously, but they often can be bought as cheaply at stores like Target, Wal-Mart or even Amazon, which offers a discount for a diaper subscription and will deliver to your doorstep.
  • Laundry detergent. After six months detergent starts to become less effective, so it might make sense not to buy in bulk unless you're doing a lot of laundry.
  • Paper products. According to shopping experts, these tend to be some of the items most discounted at stores--particularly if you use coupons--with prices that often best the warehouse clubs.
Additionally, Consumer Reports makes the point that even if a discount warehouse has the lowest price, the product may not be of sufficient quality to make the savings worth it. The consumer review publication found that some of the Costco mattresses, gas grills, gel dishwasher detergents, facial tissue and toilet paper were not up to par.

For related information, read "Ironclad Couponing: Right Coupon, Right Store, Right Time" and "Is This Still Good? What Those Dates on Food Really Mean" in the Home & Family Finance Resource Center.

Better economy drives card transfer offers

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NEW YORK (3/3/15)--A stronger economy has consumers more comfortable taking on debt. And it also means credit card issuers are more comfortable extending tempting balance-transfer offers (The New York Times Feb.20).
Credit card comparison website CardHub looked at offers from 15 major issuers and found that longer zero-interest promo periods, up to 18 months, are available. After the promo period ends, card rates can rise substantially. With a household average of $7,126 in credit card debt, many consumers could save as much as $1,000 by transferring balances from high- to low-rate cards--with some significant caveats.
For one, fee-free transfers are rare. Most of the zero-interest offers charge at least 3% of the amount you transfer and some charge more. Absent a transfer cap--also now rare--you could pay $150 to transfer a $5,000 balance.
A smart balance transfer can help you pay off debt at lower interest rates, as long as you have the discipline and the cash to pay off the balance in short order. Credit union credit cards typically charge 1.5 to 3 percentage points less than other credit cards, so your best bet might be to simply apply for a credit union card.
Here are some other things to consider in a credit card balance transfer:
  • How can I avoid paying high interest on the transferred balance?
    Pay the balance in full before the promotional period ends to avoid paying higher interest rates when the offer expires. If you make only the minimum payment and continue to carry a balance, or to add to the balance with purchases and cash advances, you will just perpetuate a cycle of debt.
  • Is everyone eligible for a zero-percent offer?
    No. Card issuers offer these sweet promotions to borrowers with exceptional credit.
  • Can I transfer other debts to a credit card?
    Some cards allow balance transfers of other types of debt, for example, car loans and even mortgages, as well as credit card debt. Credit card debt typically counts more on your credit score because it isn't secured by collateral, so the shift could have a harmful effect on your credit standing. Car and home loans are available at far lower rates than credit cards so it makes little if any sense to make that kind of transfer.
If you're attracted by a zero-interest transfer offer, make sure you also address your reason for being in debt in the first place. Beware of using the transfer as an opportunity to take on more debt.

In the end you are wise to shop around for the best sustainable rate on any loan, and that usually will be from your credit union. For related information, read "Interest Deferred: Beware Zero-Percent Medical Credit Cards" in the Home & Family Finance Resource Center.

6 ways to score senior discounts

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WASHINGTON (2/24/15)--Aging has its perks, in the form of some outstanding discounts. For example, the National Parks and Federal Recreational Lands senior pass costs $10 and gives adults age 62 and older lifetime access to 2,000 parks and recreation areas.
But senior rates aren't always as good as discounts available to the general public (Kiplinger Feb. 12). Here are six categories worth checking out.
Tourist attractions. Before you take the senior rate, compare it with discounts you might receive from online sources. For example, CityPASS offers as much as 50% off the combined prices of admission to popular attractions in 11 major North American destinations. You occasionally can find better deals by visiting Groupon and LivingSocial.
Checking accounts. Read the fine print. According to a Pew Charitable Trusts study of checking accounts offered at large financial institutions, seniors must maintain a high balance to get a better deal than what is offered for a basic account.
Hotels. Compare hotel chain, AARP, and other senior discounts with what you might get through discount travel websites and apps such as Hotels, Expedia, and EveryLodge.
Phone plans. You might meet the age criteria for a plan offered by your wireless carrier, but first compare the offer with those available to everyone, taking into consideration your actual usage. For example, a senior discount might include 200 minutes talk time and charge extra for text messaging and a data plan, whereas a plan that costs less and is available to everyone offers unlimited talk and text plus two gigabytes of data.
Rental cars. Your AARP discount can help you pay up to 25% less for Avis and Budget car rentals, but first check the deals you can get through an online deal aggregator such as Hotwire, which can be 21% to 31% lower than the discounted rates offered through Avis and Budget.
Double up. Consider pairing discounts with discount gift cards. Visit websites such as CardCash, Cardpool, GiftCards, GiftCardGranny, and Raise to purchase gift cards you can use to pay for goods and services at discounted rates, for example in movie theaters and restaurants.
For related information, read "Shop and Save in Every Season" in the Home & Family Finance Resource Center.

Beware fee-harvester cards; choose CU card instead

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NEW YORK (2/17/15)--You've heard the pitch: "If you've been turned down for credit, we can help!" If you have blemished credit or lack a borrowing history, it might be tempting to fall for an unsolicited credit card offer, but be careful. These cards likely will only worsen your financial situation (The New York Times Feb. 5).
Often called fee-harvester cards, these cards target subprime borrowers--people already economically vulnerable with low credit scores and a tarnished credit history or none. Fees often are misrepresented, making some charges illegal. An example, according to Consumer Reports, would be an initial credit limit of $300 that's immediately reduced by a $50 annual fee and a $200 account processing fee, leaving available credit of only $50.
These fees are on top of others--such as a $15 monthly account-maintenance fee, a $25 charge to increase credit limit, and a $5 fee for online payments--not to mention a replacement fee if the card is lost or stolen, as well as over-the-limit fees. The cards also are notorious for high interest rates.
The Consumer Financial Protection Bureau recently ordered one subprime company to refund $2.7 million to about 98,000 customers who'd been charged illegal fees.
Stay away from fee-harvester cards and build your credit while doing so:
  • Find an alternative to fee-harvester and high-rate cards. Credit union credit cards generally have lower rates and fees than cards from other financial institutions.
  • Consider a secured credit card to help build or rebuild credit. A secured credit card trades access to credit for your commitment to keep a certain amount of money in a savings account. Once you've made, say, 12 months or so of on-time credit card payments, you'll be eligible to apply for a conventional credit card.
  • Develop a strong credit history. Don't charge more than you can afford to pay off monthly, and always pay your bill on time. A strong credit history will pay off in the future when you want to buy a house or purchase other big-ticket items. It even can affect your ability to get a job or rent a place to live.
  • Contact your cardholder immediately if you run into trouble paying your bill. Ask for a session with a credit union financial counselor, or for referral to a counseling service your credit union staff can recommend.
For related information, read "20% Rely on Credit Cards to Maintain Lifestyle" in the Home & Family Finance Resource Center.

The case for involving children in family finances

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NEW YORK (2/10/15)--You should be upfront with your children about how much money you make.
That's the argument The New York Times "Your Money" columnist Ron Lieber makes in his new book "The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money," recently excerpted in the Times (Jan. 29).
Lieber argues that your children will have a pretty good idea of your family's financial situation anyway--the value of your home is a Google search away, for example. Avoiding the topic can make money seem mysterious and off-limits for conversation, Lieber argues, potentially hobbling children's ability to make good financial decisions as adults.
He doesn't recommend sharing your income with your children until they're mature enough to comprehend what it means, to find the information meaningful, and to exercise discretion--most likely when they're teenagers.
And, after all, if they apply for college financial aid a few years later, they'll find out anyway. The FAFSA (Free Application for Federal Student Aid) requires the family's income, assets, and signatures from both applicant and parents. 
But regardless of whether you agree that children should be privy to the family's financial information, preparing your child for eventual financial independence is a good idea.
Lieber has some easy ways to introduce common money concepts to your children:
  • Find out why they want to know. When children ask about money, say "Why do you ask?" This both gives you time to think of a good answer, and helps provide insight into what's on the child's mind, especially if the child is asking out of anxiety about any money problems the family is experiencing;
  • Start with simple expenses. Children as young as kindergarten-age can begin to understand simple financial concepts. At the grocery store, start introducing concepts like wants vs. needs, and enlist the kids' help in looking for deals and savings. Consider giving them a portion of any savings from coupons they find;
  • Explain why you spend your money. They see you using your credit card or making purchases online. Use this as an opportunity to both explain financial necessities--your mortgage payment and utilities--and the values that guide your wants, such as the family vacation; and
  • Involve them in the family budget. Making them part of the decision-making process can instill financial responsibility and investment in the family's financial well-being. Plus, children can become accountability partners. For instance, give them the option of skipping a weekly meal out and spending the money some other way they might find more meaningful.
Staff at your credit union also can help you familiarize your kids with money concepts and financial services.