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Tips for Celebrating the Fourth of July on a Budget

July 3rd, 2009 · Budgeting, Consumer Info

Celebrating the birthday of the good ole U.S.A. doesn’t have to be a budget breaker! Utilize some of these tips to find ways for you and your family to enjoy the upcoming holiday in a fun, yet frugal fashion.

  • Pick up your party goods at the dollar store. You can find inexpensive paper and picnic goods, decorations, and even sparklers at these budget shops (which, incidentally, seem to have sprung up on every corner).
  • Organize a 4th of July block party. Gather the neighbors for a BYOB — barbeque, beer, etc. You’ll enjoy a party and social atmosphere yet only be responsible for costs for your own family’s needs.
  • Take the family to the park for a kite-flying day.With the wind cooporating, this can be a fun, unique way to spend the day as a family.
  • Have a patriotic movie marathon. Hit the local video store or better yet get together with friends and combine your personal selections of appropriate patriotic flicks. Combine with popcorn and your beverage of choice!
  • Follow gas-saving tips if you must travel. There are a number of excellent ways to improve your fuel economy if you are traveling by car: read this article for details.
  • Attend a free community or local event. Many cities offer free fireworks displays, festivals, nature walks, arts and crafts fairs, etc. Check with your local chamber of commerce or local newspaper online for ideas.
  • Enjoy the outdoors. Plan a day at a lake, river, hiking area, zoo, botanical garden, or any of many other great outdoor venues.
  • Have an ice cream social. Remember the days of sitting outside eating great homeade ice cream? Invite friends and have each family bring a unique ice cream recipe or type of fruit or additive for their flavor of choice. Experiment and enjoy!

Whatever you decide to do, do it safely and responsibly…  Happy Birthday, America!!!

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Credit Score Based Ad Targeting Being Tested by Google

July 2nd, 2009 · Consumer Info, Credit Bureaus and Scores, Credit Cards

Whether you consider it an ingenius marketing tactic, or an invasion of privacy, google users with high FICO scores may soon start seeing ads for more expensive luxury goods and services than those with lower scores.

A credit score is an extremely important, influential statistic which plays a major role in the life of all consumers. This complex numerical value affects our ability to secure a home, automobile, or even employment opportunities. But the latest move by google indicates that in the near future it is possible that your credit score not only may impact what you can buy, but also to dictate what ads you see as you surf the web.

Google has partnered up with Compete, a web analytics firm, to develop and test this ad targeting campaign. Using data from approximately 2 million individuals who voluntarily opted into the project,  Google tracked the search behavior of participants who applied for a credit card between January and March of this year.

The senior industry marketing manager for Google, Masha Korsunsky, made this statement to Mediapost regarding the project:

“Let’s say we have an advertiser who wants to reach consumers with a high FICO score who applied for mortgages in the first quarter. We can provide the advertiser with a list of Web sites on our Google content network that index against this segment. Google’s Content Network can reach 70% of credit card applicants with a high FICO score, 87% of mortgage applicants with a high FICO score, and 90% of the people who visit small business sites who have a high FICO score”.

Some of the interesting findings from the Compete research found that consumers with more elite credit scores ( in the 720 range and above) used similar, specific approaches as they shopped for credit cards. They tended to take more time in their research and selection process, and they used the keyword string “best credit cards” in their search three times more often than consumers with lower credit scores. Additionally, they were more likely to steer away from searching with branded terms. Instead, they more frequently utilized generic phrases which outlined the benefits that they were seeking such as “low rate“, “travel rewards”, or “balance transfer”.

So how worried should consumers be with yet another collection of personal information as we cruise down the information superhighway? According to google representatives, consumer privacy is not an issue, and it is unlikely that a large number of individuals would give user permission to allow google to access to their credit scores. Nonetheless, the concept may be a little disconcerting to some individuals.

Readers, what are your thoughts on this FICO score ad targeting project?

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Pre-Paid Credit Cards Not Covered by New Credit Card Legislation

July 1st, 2009 · Banking, Credit Cards

People turn to prepaid credit cards for different reasons. For example, they are unable to get a checking account or they are teaching their children to be responsible with money by limiting what they spend.

Unlike credit cards, prepaid reloadable cards aren’t covered by the federal statutes that protect credit-card holders from fraud or limit their losses when cards are lost or stolen. Though many prepaid card companies do offer some consumer protections, they do so voluntarily.

Recently, Congress passed the Credit Card Accountability Responsibility And Disclosure Act, which regulates consumer credit cards. These protections do not extend to pre-paid cards. Consumer advocates want to change that and are urging the Federal Reserve to strengthen guidelines affecting prepaid cards. However, no bill strenthening protections has of yet been introduced or proposed in Congress.

Currently, paying with pre-paid cards offer no protection from VISA and Mastercard (who process transactions against the cards) against unauthorized purchase, forcing consumers to take a risk when paying bills or buying things online. Another disadvantages is that no statements are sent to the holders of cards; it is , making it difficult to know what was charged against the card.

What types of cards are covered under Federal Law from fraud, identity theft and stolen cards1:

  • Credit Cards
  • Debit Cards
  • ATM Transactions
  • Payroll Cards
  • Electronic Funds Transfers
  • Direct Deposits and Withdrawls

What types of cards are NOT covered under Federal Law:

  • Prepaid Cards
  • Gift Cards Cards
  • Wire Transfers
  • Payroll Cards
  • Securities and Commodities Transfers
  • Checks

1Source: Wall Street Journal.

The WSJ article mentions that between 2003 and 2007, prepaid transactions jumped from less than $5 billion a year to somewhere between $39 billion and $113 billion (isn’t that a big margin of error?). Paying for things with a credit card is a necessity for many Americans. Industry experts agree that prepaid card usage will rapidly increase in the future as they are the only refuge of people who want to use plastic but have poor credit.

Have you been a victim of fraud or identity theft while using of a prepaid card? Tell us about your experience by leaving a comment!

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Debt Settlement or Pay Off Credit Cards with Remaining Cash?

June 30th, 2009 · Debt Settlement

Many people are confused about the best way to handle any cash they have when facing huge credit card balances. Should they pay off some cards and keep making payments on the rest? Or settle debts with the credit card companies for less than owed and save some cash for emergencies? Here is a typical scenario:

Q. I am a small home builder. I have good credit and always have. I have amassed most of my debt (90% of it) from the last house I built and took a $100,000 loss (on a $750K spec house). After the market crashed in Oct of 2008, I started to put items on my credit cards in order to finish the house (some in company name but attached to my ss #) to preserve cash and to be able to service the construction loan. Good thing I did.

I recently sold the house and have some cash to pay off the cards. I have $90,000 on 6 cards with $28,000 on another Visa (I think its run by BOA). I have never in my life even considered charging off debts. Now I feel that I have to look at all options. I am completely current on all payments. I realize that I have no leverage and do not want the late payments on my credit. As a builder I HAVE to have some capitol to work with so cannot just pay off all of the cards. Before I blow my cash, I have some very specific questions:

  1. How much worse are late pays than a “settled for less than owed” on my credit report? Are we talking talking a 50 point FICO hit? 100?
  2. I do not want to miss any payments and compound any problems that i may incur in the future but realize that gives me no leverage to induce a settlement….unless I tank on another house….in your opinion will they settle with impending doom?

A. My response:

  1. I get asked this question all the time, “if I do X (insert action here: pay off cards, miss a payment, file a bankruptcy), how much will my credit score drop. My response usually runs along the lines of “if I knew, I’d be a millionaire”. The truth is, your credit score is dependant on many factors in your credit file. I’ve seen people with perfect payment history have scores in the high 600s and people with a couple of collections in the low 700s. You might want to read this credit scoring article to learn more what goes into a score.
  2. If you settle with your credit card companies, they will put a notation on your credit card account that says “Settled for Less Than Owed”. This is the equivalent of a “Paid Chargeoff”, and is worse than late pays. That being said, In order to get credit card companies to deal with you, you’ll need to miss several payments which will incur late pays on your credit report. If you do a debt settlement with them, your late pay history may or may not be replaced with “debt settlement for less than owed”.

I know it’s tough to swallow a $100K loss. However, my personal opinion: if you really feel you need cash, then you should keep what you think you need, payoff whatever cards you can and make payments to keep current on the other cards . You need to protect your credit rating and think long term. Good credit is worth a lot of money.

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