Friday, June 8, 2012

MORE Cowbell!

This has nothing to do with credit, but every once in a while, you need MORE COWBELL!

Thursday, July 2, 2009

Credit Card Companies Spike Interest Rates Before New Law Goes Into Effect

The law of unintended consequences: the Credit Card Trifecta -- lower limits, higher rates, higher minimum payments."

Credit card companies are raising interest rates and fees seven months before new rules go into effect that will limit their ability to do so, much to the irritation of Congress and consumer advocates.

Congress passed, and President Obama passed, a new law in May that would prevent credit card companies from raising interest rates on existing balances unless the borrower was 60 days or more past due. The new law also requires the original interest rate to be restored after a 6 month period of on-time payments.

While it's true that the credit card companies are engaged in practices that border on loan sharking, the facts are disclosed to the consumer ahead of time (though usually written in legalese and printed in 6pt type). However, there is ALWAYS the law of unintended consequences when Members of Congress (most of whom have never run a business or know very little about the economy) start meddling in private enterprise.

Monday, June 29, 2009

The Washington Post has an excellent article on the greater role credit scores are having in the financial fortunes of consumers all around this country. As banks are making it increasingly harder and harder to get a loan, they are demanding higher credit scores. But the economic crisis – rising unemployment and falling real estate prices -- have sent credit scores plummeting and consumers are having a harder time than ever getting loans.

For other consumers, it’s not that they aren’t able to get loans, but the banks are closing down existing accounts and slashing credit lines in order to mitigate their risks. Millions of Americans have used up most of their credit which left them maxed out, which lowers their credit scores even more.

And then add confusion to this crisis by not allowing consumers to know what their credit scores are or how calculated and how lenders actually use them to evaluate the credit worthiness of their potential borrowers. From The Washington Post article:

The FICO score, which was developed by a company formerly known as Fair Isaac, is the dominant player in the industry. It is calculated based on the information contained in credit reports, which list a consumer's debts and payment history. Three bureaus -- TransUnion, Experian and Equifax -- keep those credit reports.

However, to compete with the FICO score, the three bureaus united in 2006 to create VantageScore, which ranges from 501 to 990, which they sell to lenders.

Complicating matters is that Experian and TransUnion have developed their own scores, which the agencies call educational scores because they are intended to help consumers gauge their own creditworthiness. Lenders cannot even buy Experian's score. They can buy TransUnion's but tend to go with the FICO score instead.

On its Web site,, Experian gives people their Plus score if they pay $14.95 a month for a credit-monitoring service, which they can cancel after a seven-day trial period. They have to dig through the terms and conditions before getting to this disclosure: "The PLUS Score is not a so-called FICO score, and may differ for a variety of reasons."

TransUnion also offers a $14.95-a-month credit-monitoring service with a 30-day trial period on That gives consumers access to the bureau's scores. Like Experian, TransUnion discloses on its Web site that its score is not the same as a FICO score.

Equifax gives FICO scores to anyone who pays $14.95 a month for its credit-monitoring service.
Susan Henson, a spokeswoman for Experian, said the educational scores are still a good tool for consumers even if they are not what lenders use.

"The most important thing is they're really measuring the same thing, which is that consumer's level of risk, whether they are an extremely low-risk consumer or whether they are a high-risk consumer," she said.

But some consumer advocates say the educational scores are of little use and too expensive.
Ulzheimer likens them to faux designer bags. "It's like selling a Gucci bag on the streets of New York," he said. It looks like the real thing, but it's not.

"It exposes something two of the three bureaus don't want people to know," he added. "They make a whole lot of money selling scores."

For those of us who use The Credit Secrets Bible, this last bit on the "faux credit scores" that are being sold by these Websites comes as no surprise. The Credit Secrets Bible has been making this information on this expensive hoax being perpetrated on the public for years.

While The Washington Post article makes it appear that consumers are completely at the mercy of the credit bureaus, this is false as well. Education is empowerment and the information you will get from The Credit Secrets Bible will put most consumers back in the driver's seat when it comes to their credit.

You can order The Credit Secrets Bible here with a full 90-Day Money Back Guarantee:

The Official Credit Secrets Bible

Saturday, June 27, 2009

Facts You Need to Know Before You Hire a Law Firm or Credit Repair Company to Repair Your Credit

Have you ever wondered about those ads you see from companies and law firms which offer to fix your credit for a low monthly fee? People with credit problems often ask me when it comes to improving their credit score whether they should hire a credit repair company or do it themselves? Unfortunately, there is no simple or universal answer to this question. However, I will shed some light on the subject if you're in need of a little enlightenment.

According to the Federal Trade Commission (FTC) "Everything a credit repair clinic can do for you legally you can do for yourself at little or no cost". While I agree with the FTC I also understand some consumers do not have the time, patience (or knowledge) to do the work themselves and the thought of "drive-thru-we-do-it-all-for- you-credit-repair" becomes very appealing. After all, everything a mobile oil change service can do for me I can also do myself at little or no cost (but you won't find me changing the oil in my car this weekend!).

Although some things are better done yourself, only you can determine if doing your own credit restoration work will be one of them. This is why understanding both the advantages and limitations of a credit repair company and the structure from which it operates are VERY important.

REFERENCES: Any legitimate company or individual doing credit restoration work for consumers will be able to provide you with at least half a dozen references. If the company or person is local you should be able to call these references. This is without question the most important point of consideration when hiring a professional to do the work for you.

If possible, I suggest you ask friends, family, relatives and professional contacts if they know of someone who does credit restoration work as a side business. By far the highest percentage of successful stories I hear from consumers are those which come from those who found a credit consultant via personal referral. I cannot stress this enough. It's the difference between going on a vacation with a close friend instead of a stranger.

CONTRACT: Unlike painting a house or putting in a driveway, credit restoration work (and results) are extremely broad. Therefore, the use of a contract is imperative. Most likely your credit challenges didn't occur overnight and they won't be improved overnight either. A good contract protects you as well as the service provider. The contract should be easy to understand without an Attorney and spell out the actual services which will be rendered as well as the service providers' limitations (i.e. they cannot guarantee the removal of any one particular item but can guarantee an overall increase in score overtime).

One of the most critical elements which affects "how" a credit restoration company operates is determined by its' payment structure. One of the most common payment structures of large companies or law firms doing credit restoration is that of the monthly "auto-debit" fee. In this structure the consumer usually pays $49 to $99 up front and then a monthly fee of $39 to $49 per month.

While there is an advantage to this method (affordability) with it comes many disadvantages.

1.) The first disadvantage this structure creates is that it gives the company absolutely no incentive to work quickly or aggressively on behalf of the consumer. In fact, the opposite is true. The longer they take the longer they will continue to collect their monthly fee! In most cases this structure leads to slow results over a very long period of time. Looking at it logically, this shouldn't come as a surprise.

2.) The other challenge within this structure is the actual amount of time, effort and resources which a company or law firm can reasonably allocate on a consumer's behalf. Remember, any large business has a tremendous amount of overhead which quickly chews up most of that monthly fee. Out of that $39 to $49 there are monthly expenses including but not limited to:
Advertising, Office Rent and Utilities, Employee Payroll and Taxes, Health Insurance, Phone Service, Office Supplies, Refunds, Computer Maintenance and Programming, Website Administration, Office Supplies and let's not forget postage for mailing letters to creditors, collection agencies and credit bureaus. A much simpler way to think of this is by imagining if you had a client paying you $39 a month; how much work would you be willing to do?

3.) One of the biggest challenges credit repair companies charging low monthly fees run into is being forced to rely on the use of Automated "Boiler Plate" Dispute and Correspondence Letters. Boiler Plate Letters are simple form letters which are used for ALL consumers (one format fits all). Once set up in a computer program with the consumers' information they are "shot out" automatically based on the consumers needs (i.e. late pay, charge-off, judgment etc).

The problem here is that when a credit repair company has thousands of clients they are shooting these form letters out for, the creditors, collection agencies and credit bureaus can take notice of these letters being used over and over and discover your correspondence is coming from a third party (i.e. credit repair company or law firm) and in some cases ignore it or (worse yet) mark the dispute frivolous and flag your credit report. I spoke with a man recently who was on the inside of a large credit repair company who informed me they had an archive of over 10,000 boiler plate letters on file to avoid this problem.

Of course, they charged customers by the month.

One of the most troubling issues with 95% of large credit repair firms (especially law firms) is their non-disclosure of dispute tactics and methods. As a consumer it is vital that you are made aware of the methods they are using in dealing with your creditors, collections and the credit bureaus. If the organization or law firm violates laws or makes errors (I have witnessed both) you could be held liable for their negligence. In addition, this can actually make your credit worse and create problems which are very difficult to clean up. Anyone doing credit restoration for you should disclose "what" they are doing since you are paying for a service. If they won't, you better run the other way as they could be pouring gas on a blazing camp fire.

LOCATED IN HOME STATE: This is one of the most overlooked keys to successful third party credit restoration which consumers miss. It is absolutely vital when having someone else do your credit restoration work for you that they operate within your home state. Here's why: if a credit repair company or law firm mails dispute letters or correspondence on your behalf from another state, that mail will be postmarked from that state. If the credit bureau catches this they can (and in many cases will) mark the dispute as frivolous and flag your credit file.

It is known that many Credit Repair Companies and Law Firms will resort to or create a method to avoid and out of state postmark in order to get disputes postmarked from the consumers' home state (potentially violating postal regulations). For example. If they are in NY and you are in CA they will first have to mail your dispute letters inside an envelope from NY to CA. Once in CA someone opens the envelope and then mails your dispute letters from CA so they postmarked from your home state. I am not an expert on postal regulations but had one postal employee tell me the concept sounded extremely shady at best.

CUSTOMIZATION: It's for this reason that some of the most advanced forms of credit restoration are done completely customized for the client and even (in many cases) by hand. The best credit restoration companies I've seen are usually run by one person or a small number of people and are extremely customized for each client. The is the most effective but with effectiveness comes cost. Every one of these services I have seen charges a very large upfront fee and works entirely off of referrals. This type of service is simply impossible to perform for $39 or even $49 a month.

Unfortunately, if you are unable to find someone in your area (preferably an individual) by way of referral through a friend, relative or professional contact, then I recommend you take matters into your own hands and do it yourself. I realize most consumers do not want to hear this but the good news is that it will almost always turn out to be the highest paid work you will ever do in your life.

How high? How does $500 to $2500 an hour sound? I understand that's a bold claim but not one I am unable to back up. If you're ever going to finance a first or second home (which everyone eventually should for the tax breaks) the difference between good credit and poor credit will affect your interest rate. If you secure a $200,000 mortgage on a 30 year term and your interest rate is only 2% lower because of a high credit score, that 2% will save you $96,934.11 over the course of the loan (just because you had better credit). Take that $96,934.11 and divide it by the 30 to 50 hours you may spend working on your credit situation and you'll quickly realize credit restoration when done properly does not cost - it pays!

Wednesday, May 27, 2009

Struggling Consumers See Credit Scores Drop Due to Recession

As Americans are losing their jobs and struggling to pay their bills, their credit scores are also taking a hit. USA TODAY is reporting that "from the third quarter of 2008 to the first quarter of 2009 — the latest data available — the average TransUnion credit score dropped 6 points to 651, the credit bureau says. Scores fell more dramatically in states hardest hit by the housing bust: California saw a 10-point drop, for example, and Arizona, 11."

The article also reports that "foreclosures also are ruining credit. But in general, credit card problems take a greater toll on overall scores than mortgage woes. That's because only 50.6 million households have first mortgages, while nearly all of the nation's 114 million households have at least one credit card, says Mark Zandi, chief economist at Moody's

Monday, May 18, 2009

Free Webinar: How to Boost Your Credit Score 100 Points in 90 Days or Less

Suzanne Morris will be sharing information about a home-study course she has been using since 2004 to raise her credit score more than 100 points in less than 90 days. She has used this system again and again over the years with outstanding results!

This extremely affordable home-study course has saved her $$ thousands of dollars by lowering her interest rates and insurance costs. And she has used the system to help dozens of friends, family and colleagues remove bankruptcy, late payments, collections, repossessions, liens, judgments, and more!

While Suzanne will be telling you about how you can purchase the home-study program at the end of the Webinar, this is an education session! Make sure you have a pen and paper handy because Suzanne will be telling you about how the credit system works, how to beat it using the process set up by the U.S. Congress and also giving you tips you can implement immediately to improve your credit score.

Wednesday, May 27

6:00 PM Pacific


or paste this link into your browser:

Sunday, April 12, 2009

10 "Financial" Identity Protection Tips

10 Extra "Financial" Identity Protection Tips

1.) Keep a list of all credit card and bank account numbers with bank phone numbers so in case of loss or theft they can be notified immediately.

2.) Use only one credit card for personal expenses and one card for business expenses and monitor accounts online weekly.

3.) Always send or receive mail only through secure and locked mail boxes.

4.) Never give out any sensitive information (SSN, Acct #, Pin #, Password Etc) via an email solicitation. Always type in and visit the website directly.

5.) Limit the information on your checks to your first initial, last name and address
(nothing more).

6.) On all credit cards instead of signing your name write "Check ID!".

7.) Never use a debit card or Visa/Master Check card as recovering fraudulently accessed funds from these accounts can be extremely difficult.

8.) Store all credit cards, bank statements and passports etc in a secure and locked place.

9.) Never give out your Social Security Number, Drivers License Number or Date Of Birth unless they have just cause and really need it.

10.) For details about establishing and initial fraud alert on your credit
reports visit:,,

Tuesday, April 7, 2009

Is Real Estate in Suburbs is Making a Comeback?

Forbes Magazine reports that areas hardest hit by the real estate bubble -- California's Inland Empire for example -- seem to be turning around. This area just east of Los Angeles with approximately 3 million people has been negatively impacted with one of the highest foreclosures and the largest surges in unemployment in the nation.

Forbes quotes top agent George Guerrero from Advantage Real Estate in Chino Hills who says he sales are increasing and inventories are finally starting to decline. "There's been a real surge in sales," Guerrero says. "The market has come back to where it should be. I think we are ahead of the curve here of the overall recovery."

Across the nation, existing home sales (mainly in the suburbs) have been rising for the past few months. The highest rate of growth is happening in Sunbelt states, like Arizona, Nevada and Florida, as well as in California. While loans are harder to find, these homes are much more affordable than they were a few years ago. Buyers with good credit are finding they can purchase for 50 percent below the peak. And with gasoline prices having dropped to more reasonable levels, families are, and will continue, to move out to the suburbs.

Read the entire Forbes article here.

If you are a first-time home buyer -- or if you are looking to take advantage of record low interest rates coupled with great bargains in the home market -- you need to make sure your credit is in order. You should always start evaluating and repairing your credit about 6 months before any major purchase. The Credit Secrets Bible takes you through the steps to help repair your credit. I was able to raise my credit score -- using The Credit Secrets Bible in the last two instances -- and save myself $$thousands in points and interest.

Saturday, March 28, 2009

In Today's Economy, Saving Your Cash May Be Better Option Than Paying off Debt

USA Today has an article on how the current financial crisis is hitting segments of society normally not impacted during previous economic downturns. They call it "the perfect storm" because not only are we experiencing massive layoffs, but the stock market has lost around 40 percent and the largest asset most families own (their home) in now their greatest depreciating asset.

The experts cited say that many people caught in this perfect storm will never get out of debt and that at this point in the recession, it's better to cut back dramatically on your expenses and save for a rainy day, versus paying off debt. If you lose your income, you will quickly need to make decisions about how to allocate your savings.

For example, if you are less than 6 months late on a credit card bill, that's not a crisis. They have charged it off and you lose is your credit rating. This is not a catastrophe and if you have a good tool -- like The Credit Secrets Bible -- you can delete bad credit from your credit report.

However, if you are 6 months late on your mortgage, you have most likely received a notice of default and are about to lose your home. And if you are one month late on your car payment, you may be in jeopardy of losing your transportation to job interviews.

Tuesday, March 24, 2009

Health Insurance Options for the Self-Employed

With the downturn in our economy, many people are choosing (or forced into) self-employment. But what are your options for health insurance? Frugaldad has posted the following options in response to a reader's question:

1. Continue current coverage under COBRA. According to the Department of Labor website, you, your spouse, and your son may continue health insurance coverage based on your “voluntary or involuntary termination of employment for reasons other than gross misconduct.” COBRA is expensive because you’ll have to pay both sides of the insurance premium (your employer probably used to pay the majority of the costs), and you may only be eligible for up to 18 months, so it is not a long-term solution.

2. One spouse continues to work and receive benefits. Something my wife and I have discussed is the idea that she could return to work to receive benefits if I ever branch out on my own. This might be a tough sell, particularly if there are child care issues to consider.

3. Work part time for an employer that offers benefits. They are few and far between, but there are a few employers out there that offer benefits to part-time employees. Starbucks and UPS come to mind. It might be possible to do your “side hustle” during the day, sling a few boxes at night, let mom stay at home and still get benefits. This one may be a long shot.

4. Consider membership in trade associations, unions, etc. When investigating this option for myself a few months ago someone recommended joining various freelance associations (such as the “Freelancers Union,” and various groups for writers), which offers group health care options for its members. I also noticed places like Sam’s Club offer group policies to their members through providers such as Blue Cross Blue shield, etc. You will probably pay more than you did as an employee, but less than you would for COBRA.

5. Consider a high-deductible plan along with a Health Savings Account (HSA). If you and your family are relatively healthy, you might investigate an HSA with a high-deductible, or catastrophic, health insurance plan. Basically, a catastrophic plan has low premiums because it only pays for things over several thousand dollars (think heart attacks, accidents, etc.). The health savings account is established to help pay anything and everything up to that high deductible. This option requires a good chunk of cash to fully fund the HSA up front. It’s also a risky plan, but a lot cheaper alternative to traditional health insurance, and a lot safer than having no insurance at all.

Sunday, March 22, 2009

How to Make Yourself Virtually Identity Theft Proof in 60 Minutes or Less

The FBI has called it "The fastest growing crime in America." Close to 10 million Americans every year are victimized by it and the costs are estimated at 50 billion dollars annually. Many criminals get off easy while the victims spend years working to restore their damaged credit reports and reputations. Worse yet, there seems to be no end in sight.

"The popularity of the crime is simply growing faster than the solutions to stop it" many experts conclude. The task of recovery is so time consuming and tedious, multiple states have resorted to creating "Identity Theft Passports" for victims in an attempt to ease the pain for them as they endure the lengthy and frustrating clean up process.

By the end of this article I will share with you the secrets of making yourself virtually identity theft proof in 60 minutes or less (for free). I use the term "secrets" because less than 1% of the country are aware of these techniques (let alone practicing them).

If Americans took these preventative steps up to 99% of all identity theft would be eliminated. However, "why" this beneficial approach is not being made common knowledge in the mainstream media is something I will not disclose in this article (more on that another time). For the moment I believe the biggest crime one can commit is to not share this information with their friends and family (by the end of this article you will understand why).

Unlike other authors covering this subject I will not insult your intelligence by sharing common sense tips like "Don’t carry your SSN Card or ATM PIN# in your wallet or purse" or "Keep all data sensitive documents like credit card and bank statements locked up in your home or office". This is elementary advice at best. The key to protecting yourself from identity theft is to look at what the masses are doing and then do the opposite (to say the least).

Almost 60% of Americans are now shredding all their mail and documents and many are even subscribing to credit monitoring services or buying identity theft insurance in an attempt to protect themselves from becoming victims. While this is better than doing nothing it’s a far cry from TRUE security.

Study The Past To Predict The Future

Contrary to popular belief statistics show the majority of identity theft does NOT result from the internet as most consumers have been led to believe. In fact, less than 10% of identity theft cases (where data compromise can be determined) originated online. In almost 50% of cases consumers are the ones who detect the breach.

In nearly 40% of cases the criminal was someone who was in close contact with the victim (friend, relative, neighbor, coworker, in-home employee, waiter/waitress or financial institution employee). In then end, nearly one third of identity theft cases come from a stolen wallet/purse, checkbook or credit card.

More interesting, the age of the primary victim has lowered. If you are between the age of 25 to 34 you are now the largest target for the crime (65+ has become the smallest). The bad news is that while identity theft nationwide is on the decline (8.9 million victims last year down from 9.3 million in 2005) the dollar amount per victim is going up ($6,383 last year, up from $5,885 in 2005) and so are the number of hours victims spend cleaning up the mess (40+ hours last year, up from 28 hours in 2005).

We’ve all heard the saying "An ounce of prevention is worth a pound of cure". Yet, no one is practicing it in the pandemic of identity theft. Credit monitoring is nice but only 11% of consumers ever catch identity theft through this means. Identity Theft Insurance (according to many experts) is even more of a hoax. A product marketed by playing on the fears of American consumers which does nothing more than assist them in cleaning up the mess only AFTER their identity has been stolen.

A Different Approach

The following is a completely different approach to preventing and protecting yourself from identity theft. It is based on the reality that we live in a world now where there is zero privacy of personal data. Meaning that your name, address, phone number, social security number, date of birth (even your mothers maiden name) can be obtained by ANYONE for a fee.

If you’re one who feels this is paranoid thinking let me tell you about Amy Boyer. In 1999 Miss Boyer had an old high school classmate (Liam Youens) come back into her life many years later. Mr. Youens obtained Amy’s SSN and other personal information after paying Docusearch Inc. $150. After Youens shot Miss Boyer to death he then turned the gun on himself. Today the company tells visitors to its website that "not all searches are available to the public" and some are reserved for the investigative and legal industry. How’s that for homeland security?

With this "different" approach we break down identity theft into two distinct categories. 1.) Basic Identity Theft, and 2.) Credit Hijacking. By definition "Basic Identity Theft" is when the perpetrator steals your identity and then uses it to obtain NEW credit accounts for their personal gain. "Credit Hijacking" falls under a
criminal stealing your identity in order to access and use your EXISTING credit accounts. Each type of fraud is different and therefore so is your plan of defense.


So now with the initial fraud alert established on your credit reports (and later extended) as well as the personal security code set up with all your bank and credit card accounts, you are virtually identity theft proof in under 60 minutes for free. Sure, someone canalways "steal" your identity but the real joke will be on them. If they try to open a new credit account anywhere in the country the creditor is going tohave to call YOU at the phone number listed on your report in before it can be approved and it’s GAME OVER. If they try to hijack your credit by changing the address on your credit accountsthey will be asked for not only the last four digits of your SSN and mother maiden name, but also your personal security code which they will NOT know and again it’s, GAME OVER.

Please understand that this article deals only with the topic of "financial" identity theft which is by far the most prevalent today. However, you should be aware you also have the following "5 MAJOR" identities in computers across the nation which are your:

1.) Driving Records/History (DMV Databases).

2.) Medical Records/History (Medical Information Bureau Database).

3.) Social Security Records/History(SSA Database).

4.) Insurance Claims/History (C.L.U.E. Database).

5.) Criminal, Legal and Public Record databases from birth records and realestate deeds to corporations, trusts and court cases. Yes, we are in the information age but all information is stored in databases. I think we are now living in the database age.

Saturday, March 21, 2009

Why You Should Never Pay With a Debit Card

Debit cards have become a very popular way to pay for everything from fast food to rental cars. The Federal Reserve reports that debit card transactions have been growing more than 20 percent annually and have surpassed credit card transactions.

The appeal is understandable. Debit cards are quick and easy to use.

But using a debit card can cost you hundreds and even thousands of dollars. We'll show you why you should never carry a debit card.

More Risky than Carrying Cash

In its 2007 Debit Issuer Study, PULSE EFT Association reported that U.S. financial institutions lost an estimated $662 million to debit card fraud in 2005. There is no end in sight.

You'd be safer carrying cash. Although you don't have much recourse if it's lost or stolen, but at least your loss is limited to the amount of the missing currency.

Carry a debit card, and you put the entire balance in your bank account at risk. If you link your checking account to your savings account to avoid overdrafts, you put the balance in both accounts at risk.

If a thief gets your credit card, the federal Truth in Lending Act limits your liability for any fraudulent credit card charges to $50. You may not have to pay even that amount, as many financial institutions don't impose any charge on their defrauded customers. And while the theft is being investigated, you can refuse to pay any part of the unauthorized charges.

Debit cards fall under a completely different law, the Electronic Fund Transfer Act. To limit your liability to $50, you have to notify your bank within two business days of discovering that you're debit card has been lost or stolen. Wait longer than that, but give your bank notice of the fraudulent transactions within 60 days of when your statement is mailed, and your maximum liability jumps to $500. Miss that deadline and you could lose all the money in your account.

Because the debit card accesses fund directly out of your account, you can be left without your grocery money while the fraud claim is being investigated.

The $350 Taco

One trip to Taco Bell was enough to send Joseph Rizk's checking account into freefall.

Rizk made the mistake of paying for fast food with his debit card. He figures he spent only about $5 more than he had in his account. Unfortunately, by the time he realized there was a problem, the bank had hit him about $350 in overdraft fees. At $25 to $35 per occurrence, it's easy to rack up hundreds of dollars in needless NSF fees.

"I overdrew, and they pretty much pummeled me with charges," said Rizk.

The Center for Responsible Lending, a consumer group, estimates that overdraft charges cost people about $17.5 billion each year. The center's research reveals that about 45 percent of those overdrafts are the result of using a debit card or taking out cash from the ATM.

Banks used to refuse any debit card transaction that would overdraw a depositor's account. But not any more. Banks could warn depositors when their accounts are close to being overdrawn. But they don't.

Instead most financial institutions automatically enroll their depositors in a program that loans them the amount of the overdraft—but at a steep price. The Center for Responsible Lending estimates that Banks that offer these lending programs can expect a sharp increase in overdraft revenues, as much as 200 to 400 percent.

Calculated as an interest rate, rather than a fee, the cost of these loans is astronomical. The average amount of a point-of-sale purchase that overdraws an account is $14.75. The average fee is more than double that amount. According to the agency, most consumers only use these loans for a few days. So on an overdraft loan, the annual percentage rate can be as high as 20,000 percent.

In defense of this practice, bankers like to point out that it's the responsibility of the account holders to monitor their account balances and avoid overdrafts.

Of course, that requires the account holder to know how much money is in their account.

How Can You Know Your Account Balance?

R. C. Welborn, learned the hard way about the risks of using debit cards.
To make sure he didn't overdraw his account, he checked his online bank statement. Since it showed $80 in his checking account, he fell free to make several small purchases a few days before his paycheck was deposited. Using his debit card, he bought two gasoline fill-ups, snacks and cigarettes, totaling about $65.

Although the balance in his account was more than enough to cover the price of what he bought, when he checked his account about ten days later, he found he had incurred $120 in overdraft fees.

"I couldn't figure out what was going on, I knew I had money in the bank," Welborn remembered.

Like most people, Welborn didn't know that merchants can place a pre-authorization hold on a customer's account. In situations where the exact amount of the transaction isn't settled when the approval is given, it makes sense a merchant would want reserve a little more to cover their transaction. If you give your debit card to a waiter, hotel clerk, car rental company, or gas station, the merchant is likely to get an approval of a higher amount—to cover any tip on their service, higher purchase amount, or room service. Car rental companies that accept debit cards routinely place holds in the amount of $300 to $500.

Now Welborn understands that the pre-authorization hold the gas station put on his account resulted in overdrafts on at least six other small transactions. He estimates that he paid over $2,000 in overdraft fees because he used a debit card.

"The quickest way to bankrupt yourself is not knowing what's going on with your debit card, but if you don't get a warning when you're doing it, how to you know?" Welborn asked. "I won't touch a debit card anymore. I do everything with cash."

Pre-authorization holds placed by merchants are just one of the factors that make it difficult, if not impossible for a depositor to know his or her available account balance. It's becoming more difficult to tell when a transaction hits an account.

Some debit cards allow for both signature-based debit card transactions, that, like a check, take a few days to clear, and PIN-based transactions, which hit the depositor's account instantly. Take into account paper checks that merchants and service providers frequently convert into electronic drafts, and, without real-time account information, it's impossible to know what's in any checking account.

Nessa Feddis, senior federal counsel for the American Bankers Association in Washington explains that even the banks don't have up-to-the-minute information. "We don't have real-time transactions. There will always be outstanding transactions that the consumer has authorized but have not hit the bank."

Comparing debit card transactions to a plastic checks, some financial institutions instruct depositors to keep track of their purchases, just like in the old days when checks and drafts were the only way to draw funds from a checking account.

But in the old days, a depositor could wait for their bank statement to reconcile their balance. Now, by the time the statement arrives, the damage may already be done.

"The debit card is really where it's a serious problem," argues Ed Mierzwinski, the consumer program director of the U.S. Public Interest Research Group in Washington. "It's harder to keep track of your balance because of the tricks banks use."

In addition, there are no regulations or statutes that limit the amount of a pre-authorization hold, or the length of time that it can be imposed on an account.

When Penny Chaisson's bought $20 worth of gas, the station put a hold of $75 on her account, more than 3 times the amount of her purchase. She contacted both the gas station and her bank, but each pointed a finger at the other. Even after escalating her complaint to management, it was 72 hours before the hold was released.

These holds stay in place until the bank or the requesting merchant gets around to releasing the amount held in excess of the purchase amount. Generally this takes a few days, but it could be longer.

How You Can Protect Yourself

Promptly reconciling your account to the monthly statement or monitoring your account balance on-line won't always prevent loses associated with the use of a debit card.

There is only one solution—Don't carry a debit card. When opening a checking account, it is standard practice for a bank to send the depositor a combination debit/ATM card. However you can pick and choose the services you want to accept. If you want to avoid the risks of having a debit card, but would like the convenience of ATM access, you bank will issue you a card for just that purpose, without the debit card function.

You can always pay for your purchases with cash or a credit card, since both are safer than using a debit card.

Friday, March 20, 2009

How to Boost Your Credit Score Using The Credit Secrets Bible Home Study Course

Watch this brief video to learn about how The Credit Secrets Bible works. This home study course is the most effective tool to help your rapidly boost your credit score. I have been using it since 2004 and personally have raised my credit score more than 100 points in less than 90 days. I have also recommended this book to hundreds of friends, family, clients and associates who have done the same.

If you are ready to save thousands of dollars in interest by boosting your credit score, click here to order the home study course.

Saturday, March 14, 2009

Credit Card Companies Are Cutting Credit Lines to BELOW What is Currently Owed

Have you had this happen to you yet? Your credit card company can cut your credit line to below what you owe -- without notice -- and charge you over-the-limit fees. And for now, this practice is perfectly legal (the federal law forcing lenders to give consumers 45 days notice before reducing credit lines doesn't go into effect until 2010).

Smart Money wrote about this practice in their March 11 edition. You can read it online here.
The motivation among issuers to make such deep cuts that they plunge below a cardholder's balance amount isn’t very clear. . . One possibility is that this is yet another attempt by card issuers to get consumers to close their accounts (while bringing in a little fee income in the short term), says Dennis Moroney, research director and senior analyst for consulting firm Tower Group. “I can’t rationalize in my mind what other motivation there would be,” he says.

Even cuts that are close to the balance have the potential to devastate if they’re not caught quickly. Luckily for Carol Gressett of Decatur, Miss., she noticed the reduction in her Discover-branded Sam’s Club card limit just days after it happened. The limit was cut to within $100 of her $3,000 balance. The official letter notifying her of the reduction arrived three weeks later. “We could easily have gone over if I hadn’t been paying attention,” she says.
While this practice may still be legal, it is unscrupulous. It can also lower your credit score. As consumers, we must do everything we can to protect ourselves, our money and our credit rating. If you use your credit card regularly, check your balances daily. If you haven't done so already, sign up for online access to view your credit balances. Finally, keeping your credit score above 720 and your total balances under 30 percent will reduce the chances of this happening to you. All of these techniques are outlined in The Credit Secrets Bible.

Who is Getting Those Low Mortgage Rates?

The Washington Post features an analysis of who is getting those advertised 5.5% interest rate mortgage rates. Here are some of the requirements stated in the piece:
  • 20 percent down;
  • borrow $417,000 or less;
  • boast a high credit score (730 to 750, out of 850 total, as determined by your credit history);
  • carry low debt relative to your reliable income (confirmed by two years' worth of tax returns and probably not counting bonuses);
  • buy in an area where home prices are relatively stable (wherever that is);
  • and use a community bank, not a national bank.
The article goes on to state that all the "exotic" loans from the bubble years are gone, including stated income (where you don't provide documentation of your income), pick-your-payment mortgages (where one month you can pay interest only), 100 percent mortgages (where the lender provides both the first and second mortgage).

Most lenders in declining markets like California, Florida and Nevada are not only requiring a minimum of 10 to 15 percent down, but a minimum credit score of 720 as well.
Fannie Mae and Freddie Mac add a quarter-point "adverse market delivery charge" because of declining home prices. They have also initiated "risk-based pricing," which raises fees on people with less than a perfect borrowing profile. You will pay more if your credit score falls below about 720, you are buying a condominium or you are putting less down than 15 percent.
However, if you are a veteran or farmer, there is some good news for you. The Department of Veterans Affairs and Agriculture Department loans in rural are still offering loans with zero down and no PMI (mortgage insurance).

Read the entire Washington Post article here.

Friday, March 13, 2009

Take Free Online Classes at Yale, MIT and Other Top Universities

Some of the finest universities in the country provide free and open access to a selection of introductory courses taught by distinguished teachers and scholars. This Website provides links to college "opencourseware" websites and course directories. From there, you’ll be able to find the individual subjects you’re interested in.

Self Education Resource List

Thursday, March 12, 2009

The Law of Attraction on Eliminating Debt

Business building expert John Assaraf and author Bob Proctor appear on the Ellen DeGeneres Show to discuss how you can be more successful at eliminating debt using the Law of Attraction.

Pay close attention to the Fed Ex example -- it will blow you away!

The Ellen Degeneres Show 12/01/06 Bob Proctor And John Assar - More amazing video clips are a click away

Saturday, February 28, 2009

Protect Yourself Against Credit Hijacking

Most online merchants now utilize a security feature known as "Address Verification Service" or "AVS". AVS is a security feature for online merchants allowing them to only authorize credit card transactions for merchandise to be shipped to the same address which appears on the consumers credit card billing statement.

If the address does not match that of the credit card billing statement the transaction will automatically be declined. In other words, if someone gets your credit card number, expirations date and CVV code (the three digit code on the back of the card) the only way a transaction can be authorized online is if the merchandise if shipped to the SAME address that your credit card billing statement is currently sent to.

This is what makes credit hijacking so dangerous.

When a criminal hijacks your credit they call up the banks (posing as you) and change your address on your credit cards with your personal information (i.e. last for of SSN and mothers maiden name) as if you were moving. They then proceed to order thousands of dollars in merchandise(online or over the phone) to be shipped to the "new" address. Because they changed "your address" on your credit cards they will bypass the AVS security from online merchants and the charges will be approved.

The only real defense against credit hijacking is to establish a personal security code with all your bank accounts and credit cards. This is a form of security which goes beyond your SSN, Zip Code, Date of Birth or Mothers Maiden Name to give you a whole new tier of personal security.

This is a unique number or group of letters and numbers which you create and give to every credit card provider you have. For example. The number could be as simple as "JACOB2801" which is a combination of your best friend as child and the numerical address of the home you lived in growing up.

By establishing this auxiliary passcode with all your credit card providers no one will be granted access to your accounts without it providing it to them. Since you are the only one who knows it and it is non public it is truly secure. I have yet to find a credit card company which will not allow you to create a such a passcode and added layer of security.

Wednesday, February 11, 2009

Basic ID Theft Defense

The best proactive defense against basic identity theft is through the placing of an "Initial Fraud Alert" on all three of your credit reports.

This "Initial Fraud Alert" accomplishes three important factors:

1.) Your name and personal information can no longer be sold by the credit bureaus to ANY third parties for any marketing purpose (i.e. credit card offers, loan solicitations or credit prescreenings).

2.) No one can be approved for credit with your personal information until the creditor personally calls you at the telephone number you list on your consumer credit report. And,

3.) Requesting this initial fraud alert entitles you to a free copy of all three of your credit reports(one copy from each of the three major credit reporting agencies).

Please be advised that this is an "Initial Fraud Alert" which lasts only 90 days. To extend the fraud alert and obtain the above mentioned benefits for 7 years you will need to write to each credit bureau at the address provided within your initial fraud alert confirmation letter.

(Note: It is likely credit bureaus will make the extended alert harder to obtain as a great deal of their revenue comes from the third party rental and sale your information).