Category Archives: Money & Credit

Prescreened Credit and Insurance Offers

By Barbara Parrott McGinity, LMSW

If you are like me, you get lots of different, unsolicited offers in the mail nearly every day. New credit card offers, loans, insurance, and they often say you are “prequalified” and have been “pre-screened.” The following is information is from the Federal Trade Commission about what these offers mean and how you stop the receiving them in the mail.
What is a “prescreened” offer of credit?
Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer. Prescreened offers — sometimes called “preapproved” offers — are based on information in your credit report that indicates you meet criteria set by the company.

How does prescreening work?
Prescreening works in one of two ways:
• a creditor or insurer establishes criteria, like a minimum credit score, and asks a consumer reporting company for a list of people in the company’s database who meet the criteria; or
• a creditor or insurer provides a list of potential customers to a consumer reporting company and asks the company to identify people on the list who meet certain criteria.

Can I reduce the number of unsolicited credit and insurance offers I get?
If you decide that you don’t want to receive prescreened offers, you have two choices: You can opt out of receiving them for five years or opt out of receiving them permanently.
• To opt out for five years: Call toll-free 1-888-5-OPT-OUT (1-888-567-8688) or visit http://www.optoutprescreen.com. The phone number and website are operated by the major consumer reporting companies.
• To opt out permanently: Begin the permanent Opt-Out process online at http://www.optoutprescreen.com. To complete your request, you must return the signed Permanent Opt-Out Election form, which will be provided after you initiate your online request.
When you call or visit the website, you’ll be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential and will be used only to process your request to opt out.
If you don’t have access to the Internet, you may send a written request to permanently opt out to each of the major consumer reporting companies listed here:
Experian, Opt Out, P.O. Box 919, Allen, TX 75013
TransUnion, Name Removal Option, P.O. Box 505, Woodlyn, PA 19094
Equifax, Inc., Options, P.O. Box 740123, Atlanta, GA 30374-0123
Innovis Consumer Assistance, P.O. Box 495,Pittsburgh, PA 15230-0495
Make sure your request includes your home telephone number, name, Social Security number, and date of birth.

Why would someone opt out — or not?
Some people prefer not to receive these kinds of offers in the mail, especially if they are not in the market for a new credit card or insurance policy. This reduces the mailbox clutter. But please remember, some companies send offers that are not based on prescreening, and your federal opt-out right will NOT stop those kinds of solicitations.

If I decide to opt out, how long will it be before I stop getting prescreened offers?
Requests to opt out are processed within five days, but it may take up to 60 days before you stop receiving prescreened offers.

Will calling 1-888-5-OPTOUT or visiting http://www.optoutprescreen.com stop all unsolicited offers of credit and insurance?
Calling the opt-out line or visiting the website will stop the prescreened solicitations that are based on lists from the major consumer reporting companies. You may continue to get solicitations for credit and insurance based on lists from other sources. For example, opting out won’t end solicitations from local merchants, religious and charitable associations, professional and alumni associations, and companies with which you already conduct business. To stop mail from groups like these — as well as mail addressed to “occupant” or “resident” — you must contact each source directly.

What other opt-out programs should I know about?
The Direct Marketing Association’s (DMA) Mail Preference Service (MPS) lets you opt out of receiving unsolicited commercial mail from many national companies for five years. When you register with this service, your name will be put on a “delete” file and made available to direct-mail marketers and organizations. This will reduce most of your unsolicited mail. However, your registration will not stop mailings from organizations that do not use the DMA’s Mail Preference Service. To register with DMA’s Mail Preference Service, go towww.dmachoice.org, or mail your request with a $1 processing fee to:
DMAchoice
Direct Marketing Association
P.O. Box 643
Carmel, NY 10512

The DMA also has an Email Preference Service (eMPS) to help you reduce unsolicited commercial emails. To opt out of receiving unsolicited commercial email from DMA members, visit http://www.dmachoice.org. Registration is free and good for six years.

Some people have told me they “just throw” the offers away and do not want to take the time to “opt out.” Just remember, these offers can be stolen by mail box thieves and they can then steal your offer and your identity.

On a personal note, while I have not taken this step because I like to see what is coming to people, my husband did register. He seldom gets any offers, but I do.

Deferred Interest Deals – Understanding the Pitfalls

No-interest or deferred-interest deals you see at retailers sound fantastic when you need to get a new TV or dishwasher or piece of furniture. You get to save money and make small, manageable monthly payments. But with every good deal, there is a catch, and these come with expensive traps if you do not understand how they work.

About one in five people who sign up for no-interest deals on big-ticket items actually wind up owing finance charges, usually hundreds of dollars, because of tripwires in the terms of the credit cards that are used to finance them. “No interest if paid in full” the ads shout in large type. The small type tells a different story.

First, you will notice that the deferred interest actually starts to build up on your store card the day that you buy the item. The interest rates can vary from 20% to 25%, which are different from the normal rate tied to the card you are using.

Avoiding the finance charges is not a sure thing. If you fail to pay off the purchase by the deadline or make one late payment, the card issuer will dump months of back interest on your balance. But what really gets people is they fail to understand that if you buy other items with the card, you’ll have to track those balances separately from what you owe on the no-interest deal.

If have a balance on your card or if you buy items on your card while you have the deferred interest, these do not get combined. If you make the suggested minimum payment each month, part of the payment gets applied to the no-interest loan and part of it gets applied to the carry over balance. This means, if you only make the minimum payment you will not pay off the interest free loan and you will end up paying all of the deferred interest.

Here are some ways to avoid the common mistakes people make with deferred-interest deals on store cards:

• Divide the amount owed for your purchase by the number of months in the interest-free period to see if you can afford the payments.
• One late payment will invalidate the deferred interest deal, so make these payments a priority. If you are sending a check, make sure you mail it 12 days before the due date. If you are paying online, make the payment date three days before the due date.
• Remember that the minimum payment noted on your statement will not be enough to avoid deferred interest charges. The store will never set up the payments to make sure you pay it off in time. You have to do that calculation then pay more than the minimum amount due.
• Double-check the end date of the deferral period, and give yourself plenty of time to meet the deadline. Best practice is to make your first payment right away so you are really a month ahead.
• Keep an eye on statements to make sure that fees, such as for payment protection premiums, are not throwing off your calculations. In fact, you should always refuse those offers of “protection.” These are unnecessary add-ons that rip you off.
• Avoid using the card for other items. This makes it easier to track the deferred interest balance. The only balance you should carry is the one for your big ticket purchase. Before you use the store card for a deferred interest item, pay off any existing balances. Then put the card away in a locked drawer and never use it again until the deferred interest item is paid off.

Finally, remember to pay attention to the details. It is your responsibility as a consumer to read and understand the terms and conditions of any deferred interest deal. When you sign something you are agreeing to these terms and it is up to you to understand them. The store is under no obligation to help you understand the terms.

In reality, everything is there in the fine print. Not reading it because the print is small is not a defense. New rules and regulations by the Consumer Financial Protection Bureau to make the language clearer and easier to read will likely be coming soon, but you are still responsible for understanding all contracts you sign.

The bottom line..these are great deals and can save you lots of money if you are smart and careful. They can cost you hundreds of additional dollars if you fail to pay attention. Feel free me anytime with questions or to share your experiences, 713-341-6184.

Staying in Financial Control While You are in College

Going to college can be exciting, fun…and expensive, and we are not just talking about tuition, room and board. There can be a lot of unexpected, small expenses that can add up. New clothes, school supplies, books, furniture, a computer, and spending money can quickly add up to alot more money you will need than you might originally think.

Get a good start on your higher education by learning some personal finance skills while you’re hitting the books.

Here are a few tips to help you stay on top of your expenses and be financially fit come graduation day:

  • List all your sources of money, the amounts, and all the categories of expenses that the money has to pay for (i.e. tuition, room and board, books, phone bill, food, transportation).
  • Remember to note how long each source of money has to last. For example, a loan may have to pay for more than just one year’s worth of expenses. You don’t want to think you can spend money now, when in reality it has to be used for future expenses.
  • Don’t let debt “sneak” up on you. You don’t want to arrive at graduation day and suddenly realize how much income you will need in order to pay back your student loans and credit card debt.
  • Keep track not only of what regular expenses you have (rent, car insurance, gas, tuition, food, etc.) but also of your large debts such as financing for school (student loans, private loans, financial assistance from family members, etc.).
  • Be very careful about using credit cards. It can be easy to start school with student loans, take a job or get some financial assistance from your family for regular expenses, and still feel like you’d like a little more financial “breathing room.” It can also be hard when new friends – some of whom have more spending money than you – want you to go out and do things with them. Things that cost money. That’s when it gets hard to ignore those credit card applications filling your mailbox.

It can seem like an easy answer to get a credit card to help make ends meet, finance small or “fun” purchases, or a night out with friends, but it doesn’t take long using a credit car card becomes a habit to finance your lifestyle.  Once you are living and spending above what your financial situation can sustain, credit cards are a hard habit to break.

The first thing to remember is an offer of a pre-approved credit card does not mean you have the income to pay for the bills you ring up.  If you do apply for and receive a credit card, get a clear picture of how much you are charging by subtracting your charges from your checkbook (if you have a checking account).  When the bill comes in the mail you will already have the money set aside to pay the full amount.

If you find yourself not paying the full amount after three or four months, consider cutting up your credit card and instead using a charge card (that requires payment in full every month) or using a debit card that withdraws money directly from your designated (checking/savings) account for each purchase or charge.

There’s something about actually taking the money out of your wallet that can quickly put spending into perspective. Instead of paying with a credit card or by check, try paying for all of your expenses (or at least your day-to-day miscellaneous and entertainment expenses) with cash. Decide in advance how much miscellaneous spending money you need for a week and take out only that much cash at the beginning of the week (or for each pay period). Having to pay cash for items or services will make you much less likely to overspend.

Be wise. Identity theft is on the rise. Identity theft can be more than a nuisance. If someone obtains your personal or financial information, they can create serious problems that can take you years to resolve. Protect your personal and financial information — and that includes your account numbers, your ATM pin number, your Social Security number and your on line passwords — by keeping a close eye on your wallet or purse at all times, shredding receipts or bill statements, and safeguarding your online and bankcard passwords…even from your friends.

Balance your checkbook before you “bounce.” If you’ve never had, or used, a checking account, it’s a very good idea to learn how to balance your checkbook before writing a flurry of checks and finding you don’t have the money to cover them all. Take a minute to ask a clerk at your bank for help, or family or friends.

If you’ve had problems bouncing checks in the past, get overdraft protection to avoid costly “insufficient funds” fees. Make sure you understand and agree with the terms of your bank’s policy. Often the protection is considered a “loan” that a bank extends to you to cover the amount of the check. You will pay interest on that loan until you pay it back by putting enough money into your account to cover the check and the loan.

If you’re wondering where the money is going and how you can cut back on costs, first keep a journal of how you spend your money for a few weeks. You might find some easy ways to save right off the bat, such as:

  • Make coffee instead of paying a premium price at coffee shops.
  • Make your own lunch or dinner instead of eating out.
  • Shop at discount stores or online for used items like furniture.
  • Buy used textbooks and sell your textbooks at the end of the semester.
  • Look for people to share a ride home over weekends.
  • Consider taking on an additional roommate.
  • Check to see how much you’re spending monthly on long-distance phone calls. Shop around for a better rate with a different long-distance carrier, cell phone service or pre-paid calling cards.
  • Consider your skills or talents to “swap” with friends: typing term papers, cooking meals, etc.
  • Look for on-campus jobs.
  • Park your car and try walking more or using campus or public transportation.

Stay focused on your future…not someone else’s bank account.You’re always going to meet people who have more money than you and people who have less. You can take control of your own financial future by taking steps now to establish how you’ll handle your finances responsibly.

When you are starting college, meeting new friends, and paying for things you haven’t had to before, it can be easy to take more notice of other people’s financial situations than planning your own. Take responsibility for your own financial well being in the context of your own financial picture, not someone else’s.

YOU will have to pay back the debt you incur, not the person who encourages you to spend money you don’t have.  Remember this is about your future.  Getting an apartment, a job, or loans for a car or house can be affected by how you handle money now.
College is a great time to discover what you want your future to look like. Begin charting a course to financial security by developing some basic personal financial habits now…you’ll be glad you did.

SOURCE: http://www.tomorrowsmoney.org/section.cfm/more_about/control_in_college