Car rental alert: You may need insurance after all

BOSTON (10/30/07)--For years, you've made the wise decision not to buy expensive collision damage waivers (CDW) for car rentals if your credit card company already has identical coverage. Now, despite what seemed like good advice, many consumers are finding out the hard way that they're not covered for loss-of-use (LOU) charges (smartertravel.com Oct. 25).

SmarterTravel.com expert Ed Perkins did some investigating, and discovered some gaps in credit card coverage (PR Newswire Oct. 25). Many people believed that if a credit card covers collision damage repair, it also covers loss of use charges. However, some credit card companies require that the car rental company provide a vehicle log for the credit card company's coverage to work. If the car rental company refuses to supply the log, the credit card company can refuse to cover any charges for loss of use, and you're stuck with the bill.

Anecdotes posted on the SmarterTravel Website provide several expensive scenarios. In one, some car rental companies charged LOU at the full, undiscounted, short-term rental rate rather than using the discounted rate on the renter's contract. In another example, the car rental company imposed LOU charges even though there were plenty of other cars in the lot and it didn't lose any revenue while the damaged car was being fixed.

Which companies aren't sharing vehicle logs? Perkins writes that Avis, Budget and Hertz don't share logs with either credit card or insurance companies. Although American Express and MasterCard must have logs to honor their coverage, Visa--according to Perkins--indicated it will try for an equitable solution. And even if you have American Express' Premium Car Rental Protection plan, you'd still need the vehicle log to be covered.

Here's some advice:

• If you want to rent from a car rental company that does provide vehicle logs to credit card issuers, stick with Alamo, Enterprise or National. Others may provide logs--check before you rent.
• Using Visa may give you the opportunity to negotiate coverage for LOU; using American Express and MasterCard won't.
• If you want to avoid financial exposure, buy CDW when you rent, or purchase separate travel insurance that covers rental car damage--you may pay a fraction of what you'd pay the car rental company for the same coverage.

For more information, read, "Research, Plan, and Budget for That Special Vacation" in Home & Family Finance Resource Center.

courtesy of cuna.org

Disaster preparation key for some peace of mind

MADISON, Wis. (10/29/07)--Whether it's fires in California or more floods in New Orleans, each disaster brings another reminder--no matter where you live--to develop a personal or family disaster plan (CUNA Center for Personal Finance).

Don't know where to begin? Check out these resources:

• ready.gov. California residents can access links about evacuation procedures, wildfire preparedness and local resources. Before a crisis hits, click to start a kit, make a plan, be informed, and watch a video.
• redcross.org. Get general tips on protecting your home before a disaster strikes, including what to do when a wildfire threatens your home, what to include in an emergency supply kit, and how to create a family disaster plan. Links can help you find missing loved ones and help you donate to relief funds.
• fema.gov/areyouready/. Access step-by-step, in-depth guides in both English and Spanish to help you prepare.
• prepare.org. This site contains disaster preparedness tips for vulnerable populations: seniors, children, people with disabilities, people with mobility issues and pet owners.

If you wish to donate to relief efforts, call 800-REDCROSS or contact the local American Red Cross chapter. To find the nearest chapter, visit redcross.org.

For more information, read, "Disaster-Proof Your Important Papers" in Home & Family Finance Resource Center.

courtesy of cuna.org

Stopping junk mail, lowering utility costs

WASHINGTON (10/26/07)--Experts on Sunday's H&FF Radio show will offer tips to help you significantly reduce the amount of junk mail and e-mail you get, get a handle on the high cost of utilities this winter, build a good credit record, and keep kids safe on the Internet.

Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

Sunday's show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

• "How to Stop Getting Junk Mail You Don't Want," with Pat Kachura, senior vice president for corporate responsibility, Direct Marketing Association, Washington, D.C.;
• "Kids.gov--The Official Kids' Portal for the U.S. Government," with Mary Levy, director, Federal Citizen Information Center (FCIC) Consumer Information and Outreach Division, Washington, D.C.;
• "Building Credit With a Secured Credit Card," with Linda Sherry, director of national priorities, Consumer Action, Washington, D.C.;
• "Ways to Lower Your Utility Costs," with Mike Wilson, marketing and communications coordinator, Eastern Illini Electric Cooperative, Paxton, Ill.; and
• Listener E-mail Questions.

Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, makers of cheddar cheese; and Visa. For more information, read "Keep Kids Safe Online" and "Start an Energy Diet: Save Money Around Home" in Home & Family Finance Resource Center.

courtesy of cuna.org

How to spot a counterfeit bill

WASHINGTON (10/23/07)--Creating fake money with a PC, scanner, and inkjet printer is easy, but counterfeiters are discovering that the latest, high-tech counterfeit-proof bills from the U.S. Treasury are making fake bills easier for consumers to detect, and punishment is swift (secretservice.gov).

It pays to know how to spot a fake. New $20 bills printed by the Treasury contain three key security features:

1. The number "20" located in the bottom right corner made of color-shifting ink that changes from copper to green;
2. A plastic security strip with the words "USA TWENTY";and
3. A smaller version of President Andrew Jackson's portrait that's visible if you hold the bill up to a light.

The U.S. Secret Service offers advice to protect yourself from counterfeit scams:

• Check for duplicate serial numbers.
• Hold bills up to the light. A counterfeiter rarely can replicate the color-shift ink.
• Be suspicious of bills of larger denominations and those that bear pre-1996 designs; nearly all pre-1996 money has been taken out of circulation and destroyed.
• Take time to make sure the bills you receive look--and feel--legitimate. If the colors are off or the paper is not like papers on other bills, contact local authorities.

If you can't see any of the security features on the new bill, you may be holding a fake. Counterfeiting is a felony handled by the U.S. Secret Service. Anyone facing counterfeit charges could face up to 15 years in prison and stiff fines.

For more information, read, "Catching the Bad Guys: Credit Unions Look Out for Members' Safety" in Home & Family Finance Resource Center.

courtesy of cuna.org

Laddering CDs: Some peace of mind for market volatility

KANSAS CITY (10/22/07)--Given recent ups and downs in the market, are you looking for an investment strategy that gives higher dividends than a regular savings account, is federally insured, and offers predictable returns? Consider laddering your certificates of deposit (CDs) (The Kansas City Star Oct. 13).

Mary Rhodes, director of deposit services at CommunityAmerica CU, Lenexa, Kan., emphasizes that wary investors shouldn't shy away from CDs in today's shaky economic environment--particularly when they consider the benefits of laddering.

Rhodes' recent article in the Kansas City Star explains that laddering CDs helps you insulate some of your investments from recent economic events. She stresses the importance of regularly expiring CD terms so your money is available to you as often as you like, while giving you a stable investment return.

Industry experts agree. In addition to a stable source of income, laddering can help give you more liquidity (Bankrate.com).

Here's an example of how laddering works: If you have $5,000 to invest, put $1,000 each into certificates maturing in one, two, three, four, and five years. Then, one year later when your first certificate matures, you either can cash it in or reinvest that sum in a new five-year certificate. When your two-year certificate matures the next year, you can reinvestment in a new five-year certificate, and so on.

The result: Each year you have a certificate maturing and can opt to take the cash or invest it for five years. This means by the end of the fourth year, all your money is earning dividends at the five-year rate.

Not crazy about tying up your money for long periods of time? For more frequent rollovers, try laddering in three-month, six-month, or nine-month terms. Regardless of the time period you choose, if interest rates increase, you can reinvest each period at the new, higher rate. If interest rates fall, only a portion of your money is locked in at the previous higher rate.

Remember: Structure your ladder to meet your needs, and use the same term for each certificate when you roll it over at maturity.

For more information, read, "Ladder Your Way to Bigger Savings" in Plan It: Retire Ready Toolkit.

courtesy of cuna.org

New law provides financial relief for college students, families

WASHINGTON (10/17/07)--Families with college students finally are getting a break, thanks to new legislation signed into law Sept. 27 that will provide more than $20 billion in federal aid (Kiplinger's November 2007).

The College Cost Reduction and Access Act will offer grants to students who plan to teach, help struggling graduates pay off student loans, and gradually reduce interest rates on federally subsidized loans for low-income students to 3.4% over five years (The Washington Post Sept. 28). It offers loan forgiveness for graduates who have held public service jobs for 10 years and caps payments on federal loans at a certain percentage of the graduate's income.

The lending industry doesn't support the reforms, saying the new law--which slashes federal subsidies to private loan companies--could result in fewer loan benefits for students. One example given by the lending industry was that some borrowers may not be offered interest-rate reductions for timely payments.

Student advocates hail the new law as a victory, particularly given the increase in Pell Grants--need-based federal grants given to low-income students--by $490 next year and $1,350 in the next five years. More students will be eligible for Pell Grants because the income limit increases to $30,000 from $20,000, giving more students help with the high cost of college.

For more information, read "Stay Up-to-Date to Claim Deductions, Credits for College Costs" in Home & Family Finance Resource Center.

courtesy of cuna.org

Small blunders contribute to retirement catastrophes

NORTH PALM BEACH, Fla. (10/15/07)--How many ways can you ruin your retirement? Bankrate reporter Carole Moore compiled nine of them, based on interviews with financial experts across the U.S. (Bankrate.com Oct. 9).

Here are some no-no's when it comes to preparing for your later years:

• Neglect to include inflation in your retirement estimates. Something that costs $10,000 in 2008 will cost $22,628 in 2038, assuming an inflation rate of 2.2% that rises to 3% starting in 2017. And don't forget something else: longer life expectancies. It's likely more people will outlive their resources unless they boost their savings now.
• Buy more house than you can afford. With all costs of home ownership on the rise--property taxes, insurance premiums, and upkeep--you can't afford a fancy estate. Strive to be mortgage-free before you retire, and consider moving so a sizable chunk of your retirement income isn't directed to housing expenses.
• Dip into—or cash in—your 401(k). Cashing in your 401(k) when you leave a job is tempting, but it should be a last resort. Find other ways to pay off credit card debt or other bills.
• Count on a pension. Employees of Lockheed Martin Corp., General Motors Corp., IBM, and others can attest to the fact that promised pensions can go away. These companies--representing the tip of the iceberg--have frozen their pension plans and ceased developing future benefits for some or all of their employees. However, the 2007 Retirement Confidence Survey conducted by the Employee Benefit Research Institute revealed that among workers who have personally experienced reductions in the retirement benefits offered by their employer, nearly two out of five admit they have done nothing in response to these reductions (EBRI News April 11). Set up plan B and set aside your own funds for retirement.
• Count on your spouse or partner's income to always be there. Death and divorce change everything, particularly for those who assume someone else will take care of them.
• Rely on Social Security. There are no guarantees, particularly as the first wave of 3.2 million baby boomers turns 62 next year at the rate of 365 an hour, with 49% of men and 53% of women projected to choose early retirement (USA Today Oct. 8). The strain on the Social Security system is good reason for diversifying your retirement income sources with tax-favored investment vehicles such as 401(k)s and IRAs.
• Save for kids' college at the expense of your retirement. If you do this, you may be working until you die. Instead of letting your kids' college fund have the advantage over your retirement fund, pay yourself first. Consider loans, grants, scholarships, and part-time jobs to get Junior through college.
• Count on good health. You may be in great shape or perfect health now, but aging often brings declining health—even if you eat old-fashioned oatmeal with ground flaxseed and raisins every morning. And don't count on Medicare covering everything: Retirees often are underinsured for the expenses they'll encounter.
• Plan to work indefinitely. Be careful: Some professions have mandatory retirement ages, and age discrimination is alive and well. And don't forget that disability, disease, and other aging conditions may cut your career short.

For more information, read "401(k) Rollovers at Retirement" in Home & Family Finance Resource Center.

courtesy of cuna.org

Consumer brief

NEW YORK (10/11/07)--Talk is cheap--or, in this case, free--as long as you're willing to sacrifice some privacy. A new Internet phone service made by Pudding Media is free. But there's a tradeoff: Your phone conversations are monitored. Instead of paying for the length of your web-based phone conversation with a service such as Skype, Pudding Media's service is paid for by advertisements related to what you're talking about in your phone calls, monitored by voice recognition software. When you sign up for the service, you'll be asked for your age, sex, language, and ZIP code (The New York Times Sept. 24) ...

Who rules your roost?

SAN FRANCISCO (10/10/07)--Buying a home is an exciting, yet stressful time. And if you're moving into a community governed by an association, know the rules to avoid misunderstandings that could have legal and financial consequences (MarketWatch Sept. 30).

More than 57 million people lived in association communities in 2006, according to Community Associations Institute, a trade group in Alexandria, Va. Of that total, homeowners associations and other planned communities account for 52% to 55%, condominiums account for 38% to 42%, and cooperatives make up the remaining 5% to 7%.

Madelyn, a former condo association president in the Midwest, told News Now there are pros and cons to association living. "It's definitely a pro that there's consensus when things are decided. The majority wins," she said. Her biggest frustration: "There was kind of a good ol' boy network. For example, the cousin of one of the condo owners became the handyman. He wasn't responsible ... you get what you pay for."

Research and do your homework before moving into a community governed by an association. Ask about:

• Exterior items on the home or in the yard. Many associations have bylaws restricting TV antennas, satellite dishes, basketball hoops, clotheslines and fences. Something inside your unit that's visible to neighbors--like a political poster in a window--also falls under the "exterior" rules.
• Vehicles. There often are restrictions on parking boats, snowmobiles, RVs, or collector automobiles at your residence. Make sure you can make other arrangements for storage if this is the case. If you run a home-based business, check on restrictions for parking commercial vehicles or regarding increased vehicle and foot traffic from your clients.

For condo owners in particular, check on:

• Pet or pet-size restrictions. Some associations do not allow pets, or will limit the type or size of animals.
• Landscaping. Know what the association covers and what you'll have to pay for and do yourself. Madelyn said basic lawn care was included in her association's agreement, but when it came to tree-trimming, she had to do it herself or hire someone. Another Midwest condo owner, Mike, ended up paying $2,000 to have overgrown trees removed that he no longer wanted in his yard. They looked awful, but the association wouldn't agree to remove them, he told News Now.
• Age restrictions for owners and guests. For baby boomers looking toward retirement or for those already retired, builders have created housing areas for those age 55 and older. Check restrictions on times and how many grandchildren are allowed to visit at once, and whether they're allowed in the swimming pool and fitness center.

For more information, use the "What Will My Monthly Mortgage Payment Be?" calculator in Home & Family Finance Resource Center.

courtesy of cuna.org

Bundled bills may contain costly traps

SAN FRANCISCO (10/8/07)—If you're trying to save money by bundling your phone, Internet, and cable all in one bill, be on the lookout for costly traps (Consumer Action News Fall 2007).

Despite the convenience of having one bill for all three services, Consumer Action, a nonprofit advocacy and education organization based in San Francisco, recommends caution before you sign a contract for this type of bundled service:

• Watch for time-limited offers. If the package lasts only for three months to one year, the advertised low price may jump 20% or more after the promotion ends. Ask what the price will be when the initial pricing ends.
• Find out if the advertised price is good where you live. If the high-speed Internet service isn't accessible in your neighborhood, don't sign up.
• Find out what happens if you terminate the contract early. Some companies charge an early termination fee up to $250.
• Ask about limitations on long-distance minutes. Some companies offer packages that limit direct-dial calls from your home to 100 minutes a month. Know your calling pattern before signing up for any bundled package that has limitations on minutes. Ask what the rate will be if you go over the limit.
• Read the fine print. Are there restrictions in the contract? For example, if you need to switch just one service in the bundle, will you lose the deal on all the other accompanying services? Also, make sure you understand all the fees and equipment charges on top of the bundle's advertised price.
• Know your customer service options. If you have problems with more than one service in the bundle, will you need to call more than one repair person—and make more than one appointment?
• Be on the lookout for "change of terms" notices. For example, a company may send you a notice telling you that in return for service you need to settle disputes using binding mandatory arbitration instead of the courts. That notice may include a 30-day window for you to opt out of arbitration agreements. If you don't opt out, you give up your right to sue the company in court for any claim of negligence, fraud, or intentional wrongdoing.

For more information, read "State Consumer Protection Agencies Look Out for Your Best Interest" and "Arbitration Clause Denies You Your Day in Court" in Home & Family Finance Resource Center.

courtesy of cuna.org

Consumer brief

SAN FRANCISCO, Calif. (10/4/07)--If you've had a negative online shopping experience lately, you're not alone. A new survey by Harris Interactive revealed that nearly nine out of 10 online shoppers have experienced problems while making transactions online. Some of the most common problems consumers experienced with retail, banking, travel, and insurance websites: receiving error messages, having problems logging in and navigating the site, receiving incorrect or confusing information, and getting stuck in endless loops that block transactions (PCWorld.com Sept. 17) ...

Price of Halloween costumes enough to scare you silly

WASHINGTON (10/3/07)--It's goblin and ghost time--fun for all. But if you're not careful, what you spend on Halloween can be a trick instead of a treat (National Retail Federation Sept. 24).

Consumers are expected to spend an estimated $5.07 billion on Halloween this year, with the average person planning to spend almost $65--$5 more per person than last year.
Before running out and spending more than you have to:

• Shop around. One frugal mom in Madison, Wis., trying to grant her son's wish to be Davey Jones from the Pirates of the Caribbean, was astonished to find the costume selling for almost $80 on the Internet and at Halloween specialty stores. She found the same costume for $12.97 at a national chain retailer in town. The coveted Black Spider-Man costume ranged in price from $14 to $59.99 for a kid's size seven to eight at different stores. It may be time-consuming, but taking time to comparison shop can save you a lot of money.
• Make your own. Use items around your house to make costumes. Who doesn't have a pair of old funky earrings and a scarf to be a hippie from the '60s? Old bib overalls, a flannel shirt, and a hat can make a farmer. An old bed sheet still makes a great ghost.
• Host a costume exchange. Invite parents and children to your house for a costume exchange party. Kids usually start thinking of what they want to be by early September, so send invites ahead of time and plan for the exchange in early October. Set up a room in your home for the "costume store." Have kids write their names on their original costumes so they get them back after the holiday. Turn the event into a Halloween party. Have the kids bob for apples and decorate pillowcases to use for trick-or-treat bags.
• When possible, avoid Halloween specialty stores. These stores typically have a varied inventory, but because they have only a few months to make a profit, you'll rarely find discounted items. If you must shop at these stores be sure you love what you're getting and check return policies--because the stores are temporary, many are not set up to do returns or exchanges, or even offer merchandise credits.
• Shop after Halloween for next year's costume. This isn't always a win-win situation. If your kids are young enough to not care what they are or you're putting something away for yourself, you might be able to get by. But kids as young as two and three can be very particular about what they want to be. The frugal mom is stuck with a devil costume her three-year-old was supposed to wear this year--he's insisting on being Captain Jack Sparrow.

And, if it's not enough trying to find the perfect costume for your kids, what about your pet? One out of 10 households that celebrate Halloween plans to dress up the pampered pooch as well. Devils, pumpkins, witches, princesses and angels are the top five costumes this year. Miss Frugal Shopper once dressed up her eight-pound Pomeranian as a cat--using a marked-down baby's hat and bib.

courtesy of cuna.org

Coming soon: Do-it-yourself credit file freezes

NORTH PALM BEACH, Fla. (10/2/07)--In an effort to give consumers more control over their credit files and to deter identity theft, two major credit reporting agencies announced plans to grant credit freezes to all consumers (Bankrate.com Sept. 25).

Beginning Oct. 15, TransUnion will give consumers in all 50 states the ability to freeze credit files. Equifax announced it will have a similar plan in place sometime in October, with Experian expected to do the same (Atlanta Journal-Constitution Sept. 21).

The TransUnion plan allows free freezes for identity theft victims. Non-victims will pay $10 each time they wish to place a freeze on their credit file, and another $10 fee to unfreeze the file, all done by telephone and with a personal identification number (PIN).

The plans announced by TransUnion and Equifax won't preempt state laws establishing state-set prices on freezes.

Credit file freezes are different from fraud alerts, which last for 90 days and notify potential credit grantors to verify your identification before extending credit in your name in case someone is using your information without your consent.

In contrast, file freezes prevent third parties from receiving a copy of your credit report or credit score, making businesses less likely to grant credit to the identity thief trying to set up false accounts in your name.

Despite the added protection, file freezes don't prevent identity theft entirely, because of the many types of ID theft perpetrated by thieves.

Thawing your credit freeze won't take much time; credit bureaus can unfreeze your account in as little as 15 minutes.

Guidelines for tapping retirement assets

McLEAN, Va. (10/1/07)--If you're retiring soon but clueless about which pot of funds to tap when, become familiar with a few rules of thumb (USA Today Sept. 24).

Remember: There are exceptions to every rule and each person's situation is different. Combine this general advice with professional help from a trusted adviser to make sure your withdrawal plan is right for you.

• Withdraw taxable money before tax-deferred accounts. This allows tax-advantaged money to continue to grow tax-free and build a bigger nest egg. There are exceptions--for example, if you have a particularly large Individual Retirement Account (IRA)--so consult with a professional about your circumstances.
• Take as much or as little from your Roth IRA as you need--tax- and penalty-free--once you reach age 59 ½ and the account has been opened for at least five years. There's no minimum distribution schedule, and--unlike regular IRAs--a Roth IRA can be used to build up a stash of cash to leave for beneficiaries.
• If you're working in retirement and temporarily in a high tax bracket, consider withdrawing Roth IRA assets before you dip into your 401(k).
• Try to wait as long as possible to take monthly Social Security payouts. The longer you wait, the higher your monthly payouts will be, based on every year you wait up to age 70.
• Avoid the 10% early withdrawal penalty on traditional IRAs by taking substantially equal periodic payments (Alanat News June 1). Annuitize for five years, or until you turn age 59 ½ (whichever is longer), by taking annual cash withdrawals based on your life expectancy as predicted by the Internal Revenue Service (IRS). Visit irs.gov for more information. For example: If IRS actuarial tables predict you'll live another 20 years, you can withdraw 1/20th of your balance the first year, 1/19th of your new balance the second year, and so on. But if you change your distribution schedule, you'll be socked with the 10% penalty (SmartMoney.com).

courtesy of cuna.org