Don't fall for subprime credit cards

McLEAN, Va. (12/12/07)--In an effort to improve their credit history, many consumers are unknowingly signing up for subprime credit cards--often with disastrous consequences (USA Today Dec. 9).

Targeted to young adults with no or little credit history, as well as to those with a tarnished credit history, issuers of subprime credit cards--referred to as predatory by some critics--are taking advantage of vulnerable consumers who can least afford the excessive fees.

How excessive? In one example, with a low credit limit of $250, some applicants were socked with an array of fees that totaled $178, leaving the user just $72 to spend on that card during the year. Instead of improving their credit history, victims are sinking deeper in debt.

The National Consumer Law Center, Boston, issued a warning to consumers on Nov. 1 that these high-fee, low-credit predatory credit cards are merely a way for some issuers to extract as many junk fees as possible from consumers desperate for credit.

What should you watch for?

• Low limits. If the card carries an unusually low line of credit--say, only a few hundred dollars--that's the first clue it may be a predatory credit card.
• Phrases that may not sound like fees. In the fine print, look for phrases such as account maintenance, account set-up, program, participation, and activation fees.
• Fees that put you over the limit. Excessive fees--which add up quickly--reduce your available balance right off the bat. Cardholders who don't deduct those fees from their available balance increasingly are slapped with over-the-limit fees.
• "Good-guy" claims. The issuer may make the claim that it's going out of its way to help users get out of debt trouble and give credit to subprime borrowers. One issuer justified its predatory credit card by stating that its "mission" is to bring affordable banking services to minority communities. And with millions of cash-strapped homeowners facing foreclosure, claims like these may sound enticing.

Looking for an alternative? Get a secured credit card, says Susan Tiffany, director of personal finance information for adults at the Credit Union National Association's Center for Personal Finance. "You'll have to deposit money with your credit union or other reputable lender, and then use that line of credit to build a good credit history. Repay purchases in full and on time each month. Then after a time, say six months to a year, apply for a traditional unsecured card with a higher limit."

courtesy of cuna.org

Energy audit can light the way to greater savings

McLEAN, Va. (12/11/07)--Unless you have an extra $1,000 lying around, you might want to read this. The $1,000 is almost how much the average U.S. winter heating bill is expected to be for October 2007 through March 2008, according to the Energy Department (USA Today Nov. 30).

Of course the amount of your bill depends on where you live. If you live in the Northeast and use heating oil, your bill may be as high as $1,900; if you live out West and use natural gas, your bill may only be $600.

Regardless of the amount, you might reduce your energy expenses by taking advantage of an energy audit--either hiring a professional energy auditor or performing one yourself.

If you decide to go it alone, the Energy Department suggests keeping a checklist of areas you've inspected and listing problems that you've found. Here's what you should check:

• Lighting. Try to maximize the use of daylight. Task lights illuminate only the area you need to light. Shut off lights you're not using and install motion detectors in your garage and other areas where you might forget to turn lights off. Consider switching to compact fluorescent bulbs--they're more efficient and longer lasting than incandescent bulbs. It's estimated that a compact fluorescent bulb that makes as much light as a 100-watt incandescent bulb would save about $63 during the bulb's 4.5-year lifetime--assuming the bulb is on six hours a day.
• Insulation. Inspect insulation in the attic, walls, and basement. Make sure that insulation isn't blocking the attic vents and that the water heater, hot water pipes, and furnace ducts are insulated.
• Heating and cooling equipment. Inspect equipment annually or as often as the manufacturer recommends. Check filters and replace as needed--most likely every month or two. Have professionals clean equipment annually. If your furnace is older than 15 years, consider replacing it with one that's more energy-efficient. Insulate ducts or pipes that travel through spaces that aren't heated.

For more information, read "Start an Energy Diet: Save Money Around Home" in Home & Family Finance Resource Center.

courtesy of cuna.org

Consumer brief

SAN FRANCISCO (12/6/07)--High gasoline prices are pushing the standard Internal Revenue Service (IRS) mileage-rate deduction for business-related driving to a new all-time high in 2008: 50.5 cents a mile, up from 48.5 cents in 2007. Other variables affecting the rate increase include vehicle maintenance, repairs, registration and insurance. Remember that the standard mileage deduction only is for companies using four or fewer vehicles; other companies use the IRS standard as a benchmark to set their own reimbursement rates. If you plan to claim a deduction for medical or moving expenses, the rate--calculated differently than the rate for business driving--will drop to 19 cents a mile, from 20 cents a mile in 2007. And if you plan to claim a deduction for charitable-related driving, your rate will stay the same in 2008 at 14 cents a mile (http://www.marketwatch.com Nov. 27)...

Flex your money smarts and use up your FSA

McLEAN, Va. (12/5/07)--Don't get so caught up in the holiday hustle and bustle that you forget to use the remaining dollars in your flexible spending account (FSA). Now's the time to consider purchasing cold medicine, pain reliever, and extra contact lenses if you have money left in your account (USA Today Nov. 27).

FSAs let employees set aside pretax dollars to pay for things not covered by insurance such as certain over-the-counter (OTC)/drug store items, co-payments, and eyeglasses.
The catch: If you don't spend the money by the end of the year--or, in some cases by mid-March--you forfeit the money and it goes back to your employer.

Check the list at fsafeds.com/forms/OTC_QRG000.pdf to see what items qualify. Simple things such as ointment and bandages qualify, so give the list a good look or you may miss out. Generic brands of items also might be eligible. OTC items purchased to treat a general medical condition that are not preventative or cosmetic in nature are eligible expenses to claim. No toiletries are allowed.

For other ideas of how to tie up 2007 using sound money management skills, get registered and join the Home & Family Finance Resource Center's Financial Fitness Challenge.

courtesy of cuna.org

Free tools check for dangerous websites

McLEAN, Va. (12/3/07)--Surfing the Web is risky--click on one corrupt site and sophisticated cyberthieves could hand you a sentence of life with spam and malware. Fortunately, just as we dive into the heaviest online shopping time of the year, free tools are available that take some of the guesswork out of surfing the Net (USA Today Nov. 26).

Using color-coded icons, these free products flag search results and rate the safety of websites:

• McAfee Site Advisor. The color-coded search results are based on automated safety tests combined with feedback from volunteer reviewers. A red icon warns you the site may contain spyware, spam, viruses, or online scams. A yellow icon indicates the site is questionable. And a green icon indicates the site is clean. Mouse over the icon for more details.


• Scandoo. The analysis is less detailed than that of Site Advisor, and it won't block sites that are questionable, but Scandoo's advantage is that you can flag sites using one of 26 different Web category filters, such as nudity (pcworld.com).

Jason Masterson, information technology analyst at Credit Union National Association, Madison, Wis., leans toward McAfee Site Advisor. "It can be used as a 'browser plug-in,' and it integrates well with both Internet Explorer and Firefox," he said.

For more information, read, "Stay Safe When Shopping Online" in Home & Family Finance Resource Center.

courtesy of cuna.org