The IRS has announced that there will be a delay in processing returns from taxpayers submitting forms related to the AMT. This could potentially delay refunds for millions of taxpayers.
Congress' late enactment of the Alternative Minimum Tax "patch" will affect up to 13.5 million taxpayers using forms related to the AMT. The IRS estimates that February 11, 2008 as the potential starting date for taxpayers to begin submitting the five-related returns affected by the legislation. The IRS needs time to update and test its systems to accommodate the changes.
Returns that include the following forms cannot be filed until Feb. 11, 2008:
* Form 8863, Education Credits
* Form 5695, Residential Energy Credits
* Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers
* Form 8396, Mortgage Interest Credit
For more information, visit the IRS Website
Friday, December 28, 2007
The IRS has announced that there will be a delay in processing returns from taxpayers submitting forms related to the AMT. This could potentially delay refunds for millions of taxpayers.
Thursday, December 27, 2007
The Christmas blitz is over and now is the time to take stock of your Christmas debt. Did it all go on the credit card this year? Unfortunately, for many of us, it did. We probably spent more than we meant to, as is usually the case when we put the Christmas shopping on the card. When we get that statement next month, how will we go about paying for it?
Well, if you're planning on paying your minimum payment, expect it to take about 26 years to pay off your balances. The right way to do it would be to pay the entire balance, but most of us won't be able to do that. Second best is to pay as much of it as you can each month until it is wiped out. But if you can't afford to do that either, try adding just 1% of your principal balance to your minimum payment. You will decrease the balance each month and therefore, slow the accruing interest as well.
However, you plan to pay for your Christmas indulgences, here's wishing you financial health and a happy and solvent New Year!
Sunday, December 23, 2007
A new publication from the Federal Trade Commission called "How to Manage Your Mortgage if Your Lender Closes or Files for Bankruptcy" gives consumers the facts on what to do in the event that their mortgage company or mortgage servicing company goes under. The Facts for Consumers publication contains advice related to servicing transfers, escrow accounts, and payment disputes.
The new publication is available at FTC.gov.
Did you know that 80% of employers use the Internet to search for job candidates? The Internet is changing the way we search for jobs and the way prospective employers choose which candidates to interview. Computers are now the front line for screening resumés and deciding which are passed on up the line.
You may have carefully prepared a resumé in years past that you mailed or presented to an employer whom you wished to have consider you for a position. Today you are going to need a resumé that will be easy to transmit electronically and be one that will be selected by the company's computer.
Remember that a computer is going to read this first and it is going to be looking for specific keywords. When writing of your experience and qualifications check the listing to get an idea of what the position you are applying for entails. Then read over your resumé to see how many words coincide. The computer is going to scan for keywords, so your eloquence and charm are not going to get you in the door.
Saturday, December 22, 2007
More and more consumers did at least part of their holiday shopping online this year, and most of them rate online shopping as a positive experience. Over 80% of consumers who shopped online this year report being "Very Satisfied". This is the result of a poll done by Nielson Online.
Online shopping has so many advantages over going out to crowded malls and fits so much more easily into anyone's schedule because it's available 24 hours a day, 7 days a week. Retailers benefited greatly from the online sales this year and can only expect the numbers of shoppers who choose this option to grow.
If you did any part of your shopping online this year, how would you rate it? I did order some of my holiday gifts online, and I would say it was very easy and although I didn't pay for express shipping it appears that my gifts will arrive before Christmas. I definitely would give the experience a thumbs-up.
Friday, December 21, 2007
This story about a soldier in Iraq whose credit card company unfairly applied late charges to his account while he was overseas shows how fees can add up without ever having used the card. Ben Singer applied for the card before he was shipped overseas but it was never activated because he was deployed. An initial $20 payment was sent late because of the lag time between the soldier receiving the bill and his father sending in the payment for him, and late fees began to be charged until he owed $220 on a credit card he had never charged anything on.
The story prompted me to remind all military personnel who may be deployed overseas that they should check out the protections afforded to them under the Servicemembers Civil Relief Act. The Servicemembers Civil Relief Act(SCRA) signed into law on December 19, 2003 amended the Soldiers' and Sailor's Civil Relief Act. The SCRA provides certain protections for those serving in the military who are on active duty, such as relief from mortgage payments, eviction and places a 6% cap on interest rates for servicement who are serving overseas.
For more information on debt relief and protection for members of the military who are on active duty, see the SSCRA website.
Wednesday, December 19, 2007
Adding a spouse or child as an authorized user to your credit card accounts, called "piggybacking" will cease to be a way to raise their score when the three top CRAs - Experian, Trans-Union and Equifax - switch to a new formula for determining credit scores next year. The new system will not regard their credit history as an authorized user on other people's accounts, only accounts in their own name and those jointly held will be counted towards their FICO score.
If you're a consumer who has counted on the beneficial effects of "piggybacking" on your credit score and haven't much credit in your own name, you will see a difference in your credit score next year. But, you can still take advantage of the piggybacking boost. Because you have until spring before the new FICO formula takes effect, it is still possible to use your current credit score to open new accounts in your own name and establish your own credit score.
Monday, December 17, 2007
Some more help is on the way for homeowners burdened with subprime ARM loans. In a 93-1 vote the Senate has given its support to legislation that will allow some homeowners to refinance their ARM loan into an FHA loan.
Concerned about the collapse of the subprime market and the rising foreclosure rate, lawmakers have taken this step to help Americans save their homes. The Senate also voted to lower down payments on FHA loans and raise the limit on FHA-backed mortgages to $417K in an effort to include more homeowners in the program.
The Bush administration is also backing a plan that would allow homeowners to get a "loan freeze" on ARM loans for up to five years. This could potentially keep more houses out of danger of foreclosure by keeping loan payments in a range that the homeowner can continue to pay. It will only apply to homeowners who are now keeping current with their mortgage payments but could fall behind when the adjustable rate takes effect.
When you go to do your taxes in January, consider your charitable contributions. It's possible to lower your tax responsibility with charitable contributions but some changes in the law means you may have to provide more receipts in order to claim the deductions.
If you donate to your church, for instance, you will need to prove all cash donations. If your church uses individual envelopes that you can write your name on, then your cash donations will be recorded for you and most church organizations will provide you with a tally receipt at the end of the year. But if this is not the case where you worship, consider making your donations by check so that you have a record.
Donating used clothing items is still allowable as a charitable contribution, but you will need to be able to prove that the items were in good condition and their value. If you can, get a receipt from the organization you donate these items to for your tax returns.
Taking a few extra, precautionary steps now can save you money at tax time. It's not too late to make some extra donations now for this year, and keep these tips in mind for next year as well.
Sunday, December 16, 2007
Here's another case of credit card numbers being stolen at a restaurant - the only time that people let their credit card go out of sight.
The three Texas women whose numbers were stolen and used in a $2500 shopping spree, say that only the waitress at a restaurant could have stolen the magnetic strip on the cards. The theft is especially painful, as it comes at Christmas and will keep them from using the cards for gift shopping.
Some restaurants are introducing portable card readers that allow the customer to swipe their credit cards right at the table. But if you are planning on going to a restaurant that doesn't have that option, you might want to consider a stop at the ATM on the way and pay in cash.
Tuesday, December 11, 2007
Consumers are borrowing more than ever. Credit use is on the rise, with consumer credit having grown at an annual rate of 2.3 percent as compared with 1.6 percent growth in September.
Revolving credit in October rose at an 8.3 percent rate and overall consumer credit was up by $4.7 billion.
The increase in the use of credit cards may be a reaction to the slowdown in refinancings in the housing market. Auto loans also shrank during the same period of time.
Monday, December 10, 2007
If you are late with payments on one of your credit cards, you could fall victim to "universal default" and find other credit cards you hold raising your interest rates.
It's a widespread practice, credit card companies can track your credit history and if they find your debt increasing or your payment record unsatisfactory elsewhere, even if you have faithfully paid the credit card account you have with them, they could decide to raise your rates.
For consumers struggling under a load of personal debt, this practice pushes them further under by increasing their debt. For consumers who have an account that is kept current but are penalized anyway because of some difficulty or default on an unrelated debt, it's a bitter pill to swallow.
Senator Griffo of New York believes it is worse than that, calling the practice "disgusting" and "appalling" and tried to outlaw the practice in New York State. The governor vetoed that bill, but hopes are that Congress will soon move on legislation to ban the practice on a national level.
Saturday, December 8, 2007
If you used a credit card outside the US in the last ten years, you may be owed a refund. Recently, several credit card companies were sued in a US District Court in New York over fees charged to customers for transactions in foreign countries. The fees were not disclosed to the cardholders.
The story on this lawsuit has been reported in many places on the internet and has been widely debated as many were afraid it was an elaborate scam. 35 million mailings went out, informing cardholders of their eligibility for part of the $336 million settlement. Based on my research, it appears that this is legitimate class action lawsuit.
If you received a mailing and are eligible, you can go to ccfsettlement.com.
Senators Barack Obama and Ron Wyden think that consumers need to have more easily understood credit card agreements. Because the devil is in the details, that is the fine print, they believe that the language and transparency of the agreements is key to consumers having the information they need to make decisions about credit card offers. To this end, they have introduced the Credit Card Safety Star Act of 2007.
The bill would provide a rating on credit card agreements, based on how easy they are to understand. The legislation would provide that every credit card, billing statement, agreement, application and all marketing material will be required to display the credit card's safety star rating. Ratings would be from one to five stars, with five being the safest credit card.
Thursday, December 6, 2007
President Bush is expected today to announce the details of a plan to help homeowners avoid foreclosure on subprime loans by freezing the rates on some subprime mortgages.
The plan will assist homeowners with adjustable rate mortgages who are making their mortgage payments on time at the lower introductory rate but are due to have their rates go up substantially. The plan has been worked out between the Bush administration, banking regulators, banks, and consumer groups who fear another wide sweep of foreclosures on subprime mortgages without the rate freeze.
Monday, December 3, 2007
Having your credit card automatically debit your minimum payment from your bank account may save you money over time. What if you want to pay more than the minimum? That can easily be taken care of by making a second payment of whatever amount you can afford or want to pay down on your debt.
It could be that your due date is inconvenient and you are not assured of having the money in your bank account on that date. Many card issuers will let you adjust your payment due date to ensure on-time payments and especially if you enroll in an automatic payment plan. Call the credit card company and ask them if you can set the payment date for the day after a payroll direct deposit, for instance. Enrolling in the automatic payment debit will increase your chances of your request being honored.
Late fees can be costly and mailing in a payment can result in delays, even if you mail on time. By making automatic minimum payments, you prevent the possibility of getting hit with hefty late fees and keep your credit history in good standing.
Sunday, December 2, 2007
The IRS says that 38 million tax refunds could be delayed this filing season due to a tax bill that still lingers in Congress. The IRS has delayed finalizing and printing some forms and may have to delay the start of the filing season.
At issue is the AMT, the Alternate Minimum Tax. Congress needs to pass a bill that will temporarily stop the AMT from expanding and applying to millions more taxpayers. But due to disagreements over other taxes tacked onto the bill, it was not passed before the Thanksgiving break.
The delay will disappoint some who usually file early and count on refunds to pay for necessary expenses and holiday bills.
Saturday, December 1, 2007
Choosing the right credit card is the first step to handling your finances well. There's no one-card-fits-all when it comes to credit. The wrong card could end up costing you money, not providing the services you need or giving you the interest rate you deserve.
If you're an Australian consumer looking to compare Credit Cards, there's an easy way to compare and contrast features, interest rates and fees to assist you in making an informed decision. At CreditCards.com.au, you'll find a comprehensive list of credit cards available in Australia as well as helpful information on how to choose the credit card that's right for you. There are also calculators that help you compare advantages and savings for each card based on how you will use it. You can even apply online.
Thursday, November 29, 2007
In addition to the hidden fees on gift cards, there's something else you need to watch out for if you decide to purchase them this holiday season. Thieves.
The practice of taking down the numbers on the backs of gift cards, waiting until they are activated and then using them to make purchases online has escalated. In fact, thieves may not even verify the activation of any specific number, but rather just keep trying numbers until they find one that has been activated.
If you are going to buy a gift card for someone this year, make sure that you ask for a card that is kept behind the counter or register and not hanging on a display. Don't buy a card that could have been compromised by a thief collecting card numbers.
Otherwise, the recipient could find the entire value of their gift gone before they even try to spend it.
Wednesday, November 28, 2007
This story made me laugh - but then it made me sad to see how money makes people behave, even at Christmas.
Kmart customers in a store in Wauwatosa, Wisconsin started a brawl over credit card applications. It seems a computer malfunction was giving out Kmart credit cards with a $4000 limit to anyone who applied, regardless of their credit standing. The card offer was supposed to be a $10 credit for only qualified applicants.
Once word got out about the easy $4000 credit, the store was flooded with customers all demanding a credit card application. When the store ran out of credit card applications, two women started fighting, some other customers tried to break it up and more than a dozen police cars were called to the scene. When the police arrived, they found an enterprising customer who had gone to another Kmart store to get more applications and was selling them in the parking lot for $20 each.
Yep, 'tis the season to be jolly.
Tuesday, November 27, 2007
A new survey done by Charles Schwab, Teens and Money 2007 reveals that most teenagers would rather pay with a credit card than use cash. 51% said that using a credit card for purchases is easier than using cash and 29% would prefer to buy things with a credit card.
How do teens handle money? Well, the survey also reports that 29% of teens are already in debt and only 25% feel they handle a credit card responsibly. Teen star Miley Cyrus of the popular Disney Show Hannah Montana recently told Oprah that she lost her credit card within days of getting it.
Can you give your kid a credit card and still teach responsibility and the value of money? I think you can. The main attraction of a credit card for a teen is status among peers, second is the actual monetary value.
If you want to introduce your teen into the world of credit, you could try it out with a pre-loaded credit card. This type of card is only good for the amount you put on it and so, an afternoon at the mall cannot leave you more in debt. Perhaps the amount can be an allowance, even better, put part of the allowance into savings and the difference on the card. Your teen will soon learn how and when to use a credit card if he or she starts running short before the end of the week.
ANZ, the third largest financial institution in Australia, has introduced a new kind of credit card, that instead of offering reward points for money spent, awards them on repayments.
Reward points will be awarded on interest repayments, fees, cash advances and balance transfers. The interest rate on the card will be 13.99 percent.
It's an interesting concept and if it goes over well, it could be that US banks may start offering similar credit card deals. We will have to wait and see.
Monday, November 26, 2007
Gas prices are rising, the credit crunch looms, the housing market is falling apart and subprime mortgages fuel even more foreclosures. Still Americans seemed to have put aside economic worries and turned out in numbers that retailers are saying made the start of the holiday shopping season a strong one.
Electronics were at the top of the list apparently, and retailers reported strong sales. However, many shoppers went out over this long weekend with the intention of getting all their Christmas shopping done in one go. If a large percentage of them achieved that goal, retail sales might not continue at this high level for the rest of the season.
Did you go out on Black Friday and over the weekend to do your holiday shopping? If so, did you get it all done? How many more shopping trips do you intend to make, or, are you one of the many who will do most shopping online this season?
I will be attempting to do as much shopping online as possible to avoid the crowds and take advantage of deals only offered to online customers. I will be watching to see if this move saves or costs me money this year.
Sunday, November 25, 2007
There's some good news for 50 million Americans receiving Social Security benefits. A COLA (cost of living adjustment) will raise their benefits come January 2008, but some of that increase will be absorbed by the raise in the 2008 Medicare Part B monthly premium increase.
The 2.3 percent increase in benefits will still make your social security check bigger overall, as the average increase for Medicare Part B premiums is only about $3. However, some Medicare deductibles will be going up in 2008.
To effectively plan for retirement you need to fully understand what you will be entitled to from Social Security when you retire, how early retirement affects your benefits, and what you will be allowed to earn in addition to your social security benefits and the taxes those earnings may be subject to.
For more information on the COLA increase for 2008 and all your benefits, visit the Social Security Administration website.
Let's face it, even with all the home budget and accounting programs out there, even if you never leave home without your calculator, to develop good financial sense and habits, you need to have an understanding of the basic underlying math concepts.
These concepts are learned when we are young and in school, but what if your son or daughter has difficulty with math studies? My daughter is one of many girls for whom math is tedious and because she doesn't feel confident in her abilities, it is the homework most avoided. This leads to failing grades, but worse, it can lead to a lifetime of believing that she is a math failure.
That's when it is time to consider seeking out the help of qualified Math Tutors. Often a tutor can do more to reach a child than a parent or teacher. Score Learning centers, for instance, employ innovative methods to inspire your child to learn. When a child finally grasps a difficult math concept, the confidence gained is priceless.
It's no secret that better grades open up better opportunities in life, including acceptance at better colleges and universities. Providing your child with the right tutoring service now is truly an investment in their future.
Saturday, November 24, 2007
If you're planning on buying gift cards for one or more people on your Christmas list, consider this: A national survey conducted by Pizza Hut showed that 70% of respondents said a gift card to a restaurant would be their first choice, scoring well above department, clothing and electronics stores.
It stands to reason, everyone likes to dine out and free meals are more tempting than going to a store and shopping with the possibility that you won't find anything you want to spend your gift card on. But everyone has a favorite restaurant. For the person who is hard to shop for, it's an easy choice. Most restaurants have gift certificates available as do several fast food chains. McDonalds has their Arch Card and now Pizza Hut is issuing their own gift card. Another idea would be a gift card to a favorite coffee shop, if you have a coffee lover on your list.
The best news is that people no longer consider a gift card to be a cheesy way of getting out of choosing a gift (although we hope the pizza gift card is cheesy). 95% of respondents to the survey said they think gift cards are acceptable as gifts and that knowing how much the giver spent didn't bother them at all.
Friday, November 23, 2007
With the hustle and bustle of the holiday season and all that shopping, it becomes even easier to lose track of what you are spending. Its a budget-busting time and it takes determination and sometimes a few tricks, to keep your budget in the black.
Read sales circulars: The ones that come in a big bunch every week that you normally toss in the trash. Look them over carefully as you may get some helpful suggestions for Christmas gifts, as well as finding what you want at a lower price, rather than just buying it wherever you happen to be shopping.
Only buy the sale item: The temptations are there, to pick up this item or that and you end up spending a lot more than you planned to. The stores hook you will sale items to get you in the door then make their money on all the other full-price items you buy.
Bring a calculator: Set it at the amount you
want can afford to spend and then subtract each item as you pick it up. When you hit zero, stop. If you haven't covered all the people on your Christmas list, it might be time to reconsider some of those higher-priced items you tossed in your cart.
Have a checkbook calculator: If you are using a debit card to make purchases, you need to see the impact on your bank account in hard numbers. Writing down all the receipts in your checkbook at the end of the day keeps you from seeing the bad news while you are shopping and you might spend more than you would if you kept a running tally. Checkbook calculators can help you record the purchase real time, and give you added incentive to shop smart and save.
Keeping your budget doesn't necessarily mean you have to be miserly. Just let your good sense temper your generosity, otherwise you could be paying for it until next Christmas.
Wednesday, November 21, 2007
At every employer you will be required to fill out a W-4 form for the purpose of tax withholding. But the worksheet on the W-4 is limited and perhaps you have been burned before - finding out too late that you had not had enough tax withheld. If you want to find out what your withholding status should be to avoid owing tax or to keep more of your income now rather than collect it later - with no interest - as a refund, you might want to check out this handy tool from the IRS.
The can be especially useful for:
* Employees who would like to change their withholding to reduce their tax refund or their balance due;
* Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
* Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.
In order to use the calculator, make sure you have this information on hand:
* Your most recent pay stubs
* Your most recent tax return
Complete with all information that applies to your situation and when you are finished, print out the final calculations so that you can take a copy to work and fill out a new W-4.
Recently I told you about a waitress who was helping her boyfriend collect credit card numbers for fraudulent use. The waitress was skimming credit card numbers through a magnetic strip reader that she carried in her pocket, so that when she took the card to the register to process payment, she was also recording the numbers.
This article in the New York Times points out how a new device can eliminate the dangers of having your credit card taken by a third person and carried out of your presence, indeed, out of sight, where it is possible that the security of your card could be compromised.
The device is a wireless and portable card reader that allows customers to swipe their credit cards and sign the receipts right at the table. It should be popular with restaurant owners as well as customers, because it will cut down on the time it takes to process payments - no waitresses standing in line to use the register. Customers will feel more secure and businesses will save money.
The device is already being used in Europe and is being introduced into the US where it is expected to gain in popularity over time.
Tuesday, November 20, 2007
If you like to spend time on the internet (and who doesn't?) you want to make sure your internet service provider is the right one to suit your needs. A casual user who just accesses the internet for email may be satisfied with a limited dial up ISP whereas a student who uses it for research will probably be looking for something faster. If you are an inveterate online addict, then your ISP is of ultimate importance.
If you're looking for internet service providers, want more info on ISP services from Comcast, Adelphia, Cox, Road Runner and Charter, want to compare DSL, broadband and satellite providers or even get helpful advice on how to keep your wireless connection secure, then you need GetISP.info. There are a lot of choices out there, including Voice Over IP phone services that route telephone calls through your computer.
Even if you have an ISP that you are satisfied with, you should also consider how much down time you can afford. It's always a good idea to have a low cost back up ISP to cover times when your regular ISP is down. Amazingly, there is still one free ISP out there. Others are available for fairly low fees.
To get the most for your money, compare features and services before choosing an ISP, protect yourself against down time and consider how well each service will meet your requirements.
As consumers grow more savvy online to possible email scams, fake lotteries and phishing expeditions, scammers have had to be more clever and find new angles to catch unsuspecting victims for their criminal schemes. One of the newest is "vishing".
This scam involves a notification to the victim that their credit card has been deactivated for some reason. The victim is then instructed to call a phone number that purports to be the credit card company, and enter his card number in order to reactivate it.
But the card was never deactivated and the victim is not calling his credit card company, he's calling the scammers and punching his card number in on his phone pad. The scammers now have what they wanted.
Scammers are getting better at disguising themselves, too. Routing their emails through legitimate companies' email systems makes it harder to trace them and keeps them looking respectable. Read more about these tactics in this article in The Cincinnati Post.
New rules on 401K plans go into effect December 24. These new rules will allow companies to auto-enroll employees in 401K plans. The employees are not obligated to participate, but they will have to purposely opt out of the plan. The hope is that more people will start saving for retirement. The plan provides for default investment options for auto-enrollees and a safe harbor legal protection for the company in case the employee does not like the performance of the investments.
With more and more companies discontinuing pension plans and with the uncertainty of social security as the baby boomers begin to retire, saving for retirement on your own becomes more important. If you are not already enrolled in your company's 401K or have an IRA of your own, now is the time to set one up.
Monday, November 19, 2007
The FTC has stopped a major sweepstakes scam that used counterfeit cashier's checks to persuade victims to wire money to the scammers which were ostensibly to cover taxes and fees on their winnings. The FTC complaint named Cash Corner Services, Inc.; Family Choice Store, Inc.; and their principals, Odowa Roland Okuomose and Evelyn Okuomose, based in British Columbia, Canada.
Victims of the scam were mailed the counterfeit checks and instructed to deposit them to their bank accounts. The checks were often accepted by the bank and credited to the victim's account until they proved to be counterfeit. By that time the victim had already wired the money for "fees" to the scam company. Some victims lost as much as $24,000 in the scam.
The FTC is asking the court to order the defendants to give up the money they made through the scam.
If you have a complaint or wish to report a fraud, go to http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357.
Is your financial data secure when making POS (point of sale) transactions at retailers? When you pull out your credit or debit card, you assume that only the store's computer and the bank's computer are involved in the transfer of your data. However, according to Airdefense, an Atlanta-based maker of security products for wireless data systems, there may be others who are listening in.
A survey of over 3,000 stores in Boston, Atlanta, New York, Chicago, LA, San Francisco, London and Paris, shows that during wireless transactions processed in at least half of them, your data could be stolen by hackers because of outdated security systems or lack of security systems. 25% of wireless access points were exchanging data with no encryption at all and another 25% were using easily hacked systems. The other half were using newer encryption methods which are harder for hackers to break into.
Saturday, November 17, 2007
Will you take advantage of the new tax credit for savers? To help low and moderate income workers save for retirement, the IRS offers a special tax credit in 2007 and the years ahead.
The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Formally known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.
Who can claim the saver's credit?
* Married couples filing jointly with incomes up to $52,000 in 2007 or $53,000 in 2008;
* Heads of Household with incomes up to $39,000 in 2007 or $39,750 in 2008; and
* Married individuals filing separately and singles with incomes up to $26,000 in 2007 or $26,500 in 2008.
The saver’s credit can increase a taxpayer’s refund or reduce the tax owed.
You cannot claim the credit if:
* You are not at least 18 years of age.
* You are a student.
* You can be claimed as a dependent on someone else's return.
Be aware that some distributions will reduce the amount of contributions used to figure the tax credit.
For more information, visit the IRS website.
Friday, November 16, 2007
Are you due a refund from the IRS that you never received? The IRS is looking for you and 115,477 other taxpayers who are due refund checks that were returned to the IRS as undeliverable. The returned checks total about $110 million.
To check on the status of a refund, go to Where's My Refund? or call 1-800-829-1954. You can update your address with the IRS to get your refund check, but to prevent undeliverable checks in the future, opt for direct deposit of your refund from now on. It's easy and your money gets to you faster.
Consumers are expected to spend more time shopping online this season than ever before. People find it's an easy way to avoid the crowds at the mall and still get their holiday shopping done. However, the FTC warns that increased online sales activity brings increased risk from hackers and identity theives. The FTC and the National Cyber Security Alliance ask you to follow some simple guidelines for safer online shopping.
First, check out the seller to be sure it is a reputable site by keeping these tips in mind:
* If it’s your first time on an unfamiliar site, call the seller’s phone number, so you know you can reach them. If you can’t find a working phone number, take your business elsewhere.
* Type the site’s name into a search engine: if you find unfavorable reviews posted, you may be better off doing business with a different seller.
* Consider using a software toolbar that rates websites and warns you if a site has gotten unfavorable reports from experts and other Internet users. Some reputable companies provide free tools that may alert you if a website is a known phishing site or is used to distribute spyware.
Read the return policies, make sure that you know whether or not the item can be exchanged or if they charge fees for exchanges or returns. Make sure the item you are ordering is for real - if you are getting too good of a deal, it could be a counterfeit. Look for security signs on the site you are dealing with. Is there a closed padlock on the browser's status bar? Do they use encryption when you are making payment? Look for the URL address to change from http to shttp or https which will indicate that the transaction is secure. Print out receipts or confirmation numbers and keep them to compare against credit card statements.
Equally important is to make sure your computer is secure. Keep anti-virus and anti-spyware software up to date. If you don't have a firewall, install one. When you are done shopping, turn off the computer so that it cannot be remotely accessed.
Online shopping can be convenient and time-saving. It can also be done safely if you keep these tips in mind and shop smart.
Thursday, November 15, 2007
This article in The Californian points out some of the pitfalls of using store credit cards for holiday shopping. The biggest disadvantage of course, is the high interest rate. It is easier to get a credit card at a store because of those rates, but much harder to pay the debt off.
To entice shoppers into opening new accounts, many retailers are offering initial savings of 10-20% off the initial purchase if the customer opens a credit account. Initially, the customer will save money, the larger the purchase, the more they save. However, over time the higher interest rate will wipe out those initial savings.
The best way to prepare for Christmas shopping is to save ahead, of course. But if you do use credit cards to fund your holiday spending, be sure to use the lowest interest card you can and pay it off timely or you could end up still paying for that spree when next year's holiday season rolls around.
Wednesday, November 14, 2007
According to a survey by Consumer Reports National Research Center, a lot of money is being spent on gift cards that are never redeemed. 27% of those surveyed said they had never used one or more gift cards received last year during the holiday season.
Why did people neglect to spend their gift card? Some simply lost them or forgot about them. Others held onto the card and then found it had expired. But large number, 58%, said they didn't spend the card due to lacking time to shop. Another 35% said they didn't find anything they wanted to buy.
Unpsent gift cards are a windfall for retailers who pocket the money spent on them without ever having to exhange merchandise for the value of cards not redeemed.
Remember, before you spend money on a gift card, be sure you know the recipient is likelyy to frequent that retailer and find something there that they want to buy. Purchases gift cards wisely and mind your money this holiday season.
It sounds almost too simple, but one way to improve the outlook of the family budget is to make more meals at home. Eating at home instead of dining at restaurants or ordering take-out really does cut dollars off the food expense column. A great plus is that it's fun and everyone can help out.
In my family even the kids made a lot of their own meals out of what we could find in the pantry. My specialty was making cake from scratch instead of a mix. As long as we had the necessary ingredients (and we usually did) I could whip up a cake at a moment's notice. A homemade cake has more substance and texture than a boxed cake mix produces, but my secret was to add pudding to the mix for added moistness.
Of course, I had to make do with an old portable mixer whose beater attachments were warped and somewhat ineffective. I always wished that I owned a stand mixer, like the professionals. The Eclectrics® Mixer from Hamilton Beach® would have completely fulfilled my dream. It's got 12 speeds, much more than the standard slow or fast of my handheld. With 400 watts of power, it can do the job for most any recipe, even tough jobs like bread or cookie dough. With the special attachments, like the wire whisk and flat beater, it's completely versatile. It comes in designer colors as well, to match any decor.
For a basic yellow cake, you will need 2 cups of all-purpose flour, 1 1/2 cups of sugar, 3/4 teaspoon of salt, 1 tablespoon baking powder, 1/2 cup shortening or butter, 2 eggs, 1 cup milk and 1 teaspoon of vanilla extract. Sift the dry ingredients together, then add shortening and fold in until crumbly. Add the rest of the ingredients and beat until smooth, about 1 minute on a low speed and 2-3 minutes on high. If you like, you can add one small package of vanilla pudding mix to the dry ingredients.
If you decide to start baking more and buying fewer prepared foods, I strongly recommend that you invest in a superior appliance. Having the right tools is the most important step to accomplishing any job.
Here's a new twist on rewards points earned on credit card purchases. MBNA Canada Bank has launched a new "green" credit card and promises that for every purchase customers make using their card, the bank will buy carbon offsets. They don't promise, however, that these offsets will actually help the environment.
The bank will donate 50 cents for every $100 purchase made on the Eco-Logique credit card.
This may be an interesting new choice for consumers in Canada who are environmentally conscious or concerned about global warming. However, the carbon offsets are base on a monetary system, not on actual offsets needed to neutralize the consumer's purchases.
Tuesday, November 13, 2007
Lost or stolen credit cards, ATM card and debit cards can be a nightmare for the consumer, but if the loss is reported promptly, you can limit your liability.
Federal law provides that your maximum liability for unauthorized use of your credit card is $50. If you report the loss before the card is used, you cannot be held responsible for any unauthorized charges. Often, a credit card company will notice unusual charges and contact you. Be sure to review your monthly statement and report any unauthorized use of your card immediately.
Your liability for debit and ATM cards can be more or less depending on when you report the loss or theft of the card. If you report it within two days, again your liability is limited to $50 of the unauthorized charges. But that amount of liability soars to $500 if you don't report the loss within two days. If the number is used in a transaction not requiring the physical card, such as online purchases, you need to report the unauthorized transaction within 60 days after you receive your bank statement containing the unauthorized charge. Failure to do so could result in your being held liable for all the unauthorized charges.
For more information on your rights and responsibilities in the event of credit card, ATM card or debit card loss, see the Federal Trade Commission's consumer protection pages.
With gas prices poised to go up by as much as 20 cents over the next few weeks, saving gas and getting good gas mileage is more of a survival technique that just environmentally sound. Saving gas though, can be as easy as changing a few habits or rearranging and consolidating a few trips.
Here are a few tips for lowering your gas usage:
* Plan ahead - don't make several trips to the store for milk, bread or other items. When you do your main shopping, make sure you have enough to last until your next big shopping trip. Bread can be bought ahead and frozen until needed. Buy milk with the furthest sale date and buy gallons, not in smaller containers. Calculate 7 days from the "sell by" date, that's how long it will stay fresh and buy enough to last until that date.
* Drive slowly and evenly. There's no need to be the first one to the red light. When the light turns green, don't put pedal to the metal - why waste gas on accelerations that don't really get you further ahead?
* Drive 55, it saves gas and remember that constant lane changing and angling to get a little further ahead just wastes gas. Plan trips so that you have enough time to get there and take it easy.
* Walk more. That can be as simple as walking to the local store instead of driving or taking a parking space just a little further from the door instead of driving around the lot for ten minutes.
* Get a tune-up so that your car burns gas as efficiently as possible. Make sure the air filters are clean.
* Get an oil change.
* Make sure tires are inflated properly, under-inflated tires will decrease your gas mileage.
* Lessen the load. Check the trunk for unnecessary items that increase the weight of the vehicle and cause it to use more gas.
* Buy gas at night or the coolest point of the day. Gas becomes denser at cooler temperatures and you get more fuel for the volume.
* Don't drive extra miles to save a tenth of a penny on gas but do keep your eyes open for the lowest price at a station you are regularly in the area of. You can negate any savings on the per gallon price by driving too far to get it.
* Stop and think about your daily trips, then make a list. Check off those which are necessary and cross out or consolidate the ones that are least important.
Sunday, November 11, 2007
A new car is one of the most important and expensive investments a consumer makes, second only to the purchase of a home. It's a serious venture to find the right vehicle - the one that fits your needs, lifestyle and budget.
The best way to start is to thoroughly research the make and model of car you want, based on your criteria, and then to find the best price and the best car loan online. Say you've decided upon your desired vehicle. You can then do your research online. Don't pay full price for a new car, there are many sites, like Carsblvd.com where you can compare quotes and let the dealerships compete for your business. It's fast and free and in most cases you will get up to two quotes. Just enter the make and model of the vehicle you're looking for along with your zip code and let the internet bring the quotes to you.
In 2010, the state of Ohio will be adding mandatory personal finance classes to the schedule of all high school students. The idea is to equip kids with the financial know-how they need to make decisions that will affect their credit future and financial picture before they make big mistakes that take years to fix.
In the UK, a similar program has been instituted in the schools, but they are starting much younger - with grade school children. Educators hope that by teaching children about money matters and saving, they can give them financial skills for the future.
The initiative is due to a bill bill sponsored by Ohio Treasurer Richard Cordray.
"Every one of us knows we don't know as much as we'd like to know about managing our finances. If we don't make good financial decisions, we're in trouble all of our lives," Cordray says.
Saturday, November 10, 2007
An article in the Arizona Star warns of a very convincing telephone scam involving credit cards. The victim will receive a call from someone claiming to be from Visa or Mastercard and who is calling to investigate a suspcious purchase on the victim's card. The scam is convincing because the caller will already have important personal information including the credit card number and the victim's address.
When the victim rightly asserts that they did not make the suspicious purchase, the caller will ask for the three numbers on the back of the card, ostensibly this will prove the victim still has the card in his/her possession.
Do not give out those numbers. Those numbers are a Verification Code necessary for purchases transacted online and it will give the caller complete access to us your card. Instead, tell the caller you will contact your credit card company directly and then hang up and call the company's customer service immediately.
Friday, November 9, 2007
Scammers are trying out a variant of an earlier email scam, again purporting to come from the IRS. The scammer lures the victim with the promise of an refund for which he is eligible. The email states it is from the IRS and the Taxpayer Advocate Service. The Taxpayer Advocate Service is a program of the IRS that provides an independent system to assure that unresolved tax problems are promptly and fairly handled.
The email is a scam and directs the recipient to click on a link that leads to a fake website, obviously as a phishing expedition from which they will gain valuable personal information from the recipient.
The IRS never contacts taxpayers by email, nor do they ever ask for personal information like pin numbers or access to bank accounts or credit card accounts.
If you receive an email claiming to be from the IRS, you are asked to forward the email to firstname.lastname@example.org. The IRS also warns taxpayers not to click on any links in such an email or open any attachment that come with it.
Do you need expensive personal finance software to make and keep a budget? A lot depends on you.
If you are convinced that you need a personal finance software program to properly budget and track finances, make sure that you are not expecting the program to change your habits. Any program is only going to be as effective as you allow it to be.
Good accounting for your own expenses starts with little things, like always remembering to record ATM withdrawals and POS purchases made on your debit card. These need to be entered into your checkbook just as much as checks do. You probably write few enough checks that you can remember the ones you wrote recently, but you might forget that swipe of the debit card at the coffee shop or the convenience store.
What a personal finance software might do is help you see where your money is going. You can compare expenditures to income, in many cases you can produce charts and graphs that will show you which expenses are costing you the most and maybe find areas in which you can cut down. Some provide online services and you can import banking data directly into the software. You can set goals and they can be more useful than just tracking upcoming bills and income on a spreadsheet program.
But if you are going to invest in personal finance software, make sure you have already the mindset to make a budget and stick to it, otherwise, it's just another number in the expense column.
Thursday, November 8, 2007
A new report issued by Demos, called Borrowing to Make Ends Meet, shows that more and more American households are going into credit card debt and very often it is not because they are spendthrifts or buying expensive items they don't need. For many households, the truth is that they just don't have enough income to meet the costs of living and credit cards are being used more and more in tough financial times to make ends meet.
Key Findings of the report (all figures in 2004 dollars unless otherwise noted):
* Between 1989 and 2006, Americans’ overall credit card debt grew by 315 percent from $211 billion to $876 billion (2006 dollars).
* From 2001 to 2006, homeowners cashed out $1.2 trillion in home equity, often in an effort to cope with mounting credit card debt and to cover basic living expenses (2006 dollars).
* Nearly six out of 10 households with credit cards revolved their balances in 2004. The average amount of credit card debt among those households reached an all-time high of $5,219, an increase of 89 percent from $2,768 in 1989.
* From 1989 to 2004, the percentage of cardholders incurring fees due to late payments of 60 days or more increased from 4.8 percent to 8.0 percent.
* In 2004, the average credit card-indebted family allocated 21 percent of its income to servicing monthly debt compared to the 13 percent dedicated to debt payments among all households.
* In 2004, 46 percent of very low-income (under $9,999) credit card-indebted households spent more than 40 percent of their income to pay off debt.
* From 1989 to 2004, credit card debt among very low-income households quadrupled from an average of $622 in 1989 to $2,750 in 2004.
* While white households carry more credit card debt, African Americans and Latinos have a higher percentage of credit card-indebted households. In 2004,of those with credit cards, 84 percent of African-American households and 79 percent of Latino households carried credit card debt compared with 54 percent
of white households.
* Over 90 percent of African-American families earning between $10,000 and $24,999 had credit card debt.
* Since 1989, Americans in the age group of 65 and over have experienced the greatest increase in the amount of credit card debt carried. The average balance for this age group increased 194 percent from $1,669 in 1989 to $4,906 in 2004.
Gift Cards are an extremely popular choice for giving at this time of year, and can be purchased for individual stores as well as mall-wide gift cards. Highmark, a Pennsylvania-based health insurer has partnered with Visa this year to offer a unique type of gift card - the Healthcare Gift Card.
These gift cards will cost $4.95 and can be purchased in amounts from $25 to $5000. They will be good for purchasing health related services at businesses like physicians, dentists, pharmacies and even health gyms. It's a novel idea that helps the recipient pay for needed health services. College students, seniors and those without health insurance through an employer could benefit greatly from this gift that will help with rising medical costs or just pay for a necessary prescription.
The cards are currently being marketed in Pennsylvania only but they expect to open it up to a wider market. The cards are available at http://www.givewell.com or you can call 1-877-850-3774.
Tuesday, November 6, 2007
The IRS is extending the dates for tax returns and payment deadlines for victims of the California wildfires. Taxpayers in the affected Presidential Disaster Area, will have until January 31, 2008 to file returns and pay taxes. This deadline is applied to itms due on or after October 21, 2007. It covers estimated tax payments for the fourth quarter and the federal withholding tax return, Form 941.
In addition, the IRS is waiving the failure to deposit penalty for employment and excise deposits due on or after Oct. 21, 2007, and on or before Nov. 5, 2007, as long as the deposits are made by Nov. 5, 2007.
Affected taxpayers in a presidentially declared disaster area also have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. If you are claiming the disaster loss on last year's tax return, put the Disaster Designation "California Wildfires" at the top of the form to expedite processing of your refund.
For more information, go to the IRS website.
Sunday, November 4, 2007
The best way to build credit? Borrow. In order to establish credit you must incur debt that you promptly pay back. Nowadays it could be difficult for young people starting out with no credit history, or for those with tainted credit histories to build or re-establish credit but there are a few things you can do to get started.
One is a secured credit card where the amount of your credit is the amount of a cash deposit that you have made to the account. Often these cards will eventually increase your limit to beyond your deposit amount after a time if you exhibit good and timely payment behavior.
Another option is a store credit card. If you have absolutely terrible credit, this might not be an option but if you just have little to no credit you could qualify. Stores use slightly less strict criteria than banks. Start slowly and build credit by using the card and then promptly making payments and clearing balances.
It doesn't take long to get into financial hot water but it's a slow process to rebuild so be patient and diligent about paying on time and eventually you will be able to establish your credit worthiness.
Saturday, November 3, 2007
Customers at a restaurant in Memphis TN were surprised and dismayed to discover that the waitress was padding her tip by stealing their credit card numbers. SecretService agents say that Jessica Holden stole 150 credit card numbers by using a magnetic card reader. When she collected the tab and the credit card from the customers, she did more than run it through the register's card reader, she ran it through her own private reader that stored the credit card numbers which could be downloaded later by her boyfriend who persuaded her to be part of the scheme.
It's not something we think about often. We are more likely to be concerned about people recording our pin numbers over our shoulders at a swipe machine in a department store, or gaining access to our private account information on internet transactions through hacking. Certainly there have also been a rash of incidents of companies accidentally destroying or releasing customer data and in one instance, Monster.com was hacked and the personal information of job-seekers was compromised.
But card readers are not hard to come by and neither is information on how to commit credit card fraud. In one quick search I was able to find a site that sells magnetic credit card readers that are the size of a lighter and fit in your hand as well as numerous handbooks on hacking techniques and credit and bank account numbers.
Remember, if you discover fraudulent activity on your account and report it early enough, you may have your liability limited to $50. But if the thieves get your debit card number, you could suffer the entire loss.
So, maybe the rule is never to let your card out of your sight. Offer to bring the check and the card to a cashier personally. Never allow a debit card out of your sight. Perhaps the best answer is to visit an ATM first, and use cash to pay for your meal.
Scammers are always looking for new angles to phish information from unsuspecting victims, and in their schemes often pretend to be legitimate businesses and government agencies. If you have an email in your inbox that says it's from the IRS, look again.
In any disaster situation there are scammers who will find a way to take advantage of people's suffering or compassion. According to an IRS news release on November 2, scammers are now sending out phony emails that purport to be from the IRS and ask for donations to a charitable fund for victims of the California wildfires. The link in the email leads to a phony site that is designed to look like the IRS website. There, the recipient will be asked for personal information that will allow the scammers to access their financial accounts. The IRS states it does not send email solicitations for charitable contributions.
Other recent scams:
Sept. 19, 2007 — Another recent e-mail scam tells taxpayers that the IRS has calculated their "fiscal activity" and that they are eligible to receive a tax refund of a certain amount. Taxpayers receive a page of, or are sent to, a Web site (titled "Get Your Tax Refund!") that copies the appearance of the genuine "Where's My Refund?" interactive page on the genuine IRS Web site. Like the real "Where's My Refund?" page, taxpayers are asked to enter their SSNs and filing status. However, the phony Web page asks taxpayers to enter their credit card account numbers instead of the exact amount of refund as shown on their tax return, as the real "Where's My Refund?" page does. Moreover, the IRS does not send e-mails to taxpayers to advise them of refunds or to request financial information.
Aug. 24, 2007 — The Internal Revenue Service today warned taxpayers of a new phishing scam, in which an e-mail purporting to come from the IRS advises taxpayers they can receive $80 by filling out an online customer satisfaction survey. The IRS urges taxpayers to ignore this solicitation and not provide any requested information. The IRS does not initiate contact with taxpayers through e-mail.
Friday, November 2, 2007
California's Department of Justice officials will be on the look-out for anyone trying to profit from the misery of victims of the recent spat of wildfires. California's anti-price gouging statute is designed to keep contractors, repair services, hotels and those who sell food, gasoline, medical supplies or building supplies from charging any price more than 10% over what the price was prior to the state of emergency being declared.
Violating the anti-price gouging statute by overcharging for goods, services or hotel accomodations, carries a penalty of up to one year in jail and a fine that could go as high as $10,000.
The state task force is also on the lookout for unlicensed contractors who may try to drum up business from desperate fire victims who have damage to their homes. The DOJ warns this is a felony and those convicted could face up to three years in prison.
Thursday, November 1, 2007
I wrote recently on Truth About Credit.org's campaign, FEESA, an attempt to try to curb credit card marketing to students on college campuses. But some colleges are defending the practice, saying that students need credit to get by.
Iowa State University Alumni Association president Jeffrey Johnson says that students have to conduct normal business in an adult world and they need credit to do that. Iowa's three public universities have a contract with Bank of America to market university-branded cards to alumni, but two of the institutions also market to students.
Because of the exclusive contract, students don't deal with large numbers of credit companies soliciting on campus.
Although students have complained about universities giving their addresses to credit card companies, but Doug True, a University of Iowa senior vice president, says that it's information that is available readily on the Internet.
True and Johnson testified Tuesday before a legislative committee studying the issue.
Some legislators feel that the true financial burden carried by students is student loan debt.
Wednesday, October 31, 2007
Whether you enjoy your job or not depends a lot on the people you work with, and most importantly, who your boss is. It's one thing to have personality and professional conflicts with co-workers but you can't afford to have a combative or disintegrating relationship with the boss. So, how do you get along with the boss and keep your job when your working and social styles are so different?
Inc. com neatly categorizes the different types of bosses by personality and management style and gives some insightful advice on dealing with each in "The 9 Types of Bosses You'll Encounter in Life". Whether your boss is the Energizer Bunny who is always at the office come hail or gloom of night, or whether your boss is the MIA, who can't be found when needed, you will learn some valuable tips on how to succeed in your job, while surviving your boss.
Tuesday, October 30, 2007
There's a lot of personal satisfaction in blogging. You have the opportunity to share knowledge and engage readers. So why carry ads, you ask? Because blogging in some ways is like any other job, the more you put into it, the more you get out of it and we all would like to make a tidy second income.
Recently, I signed up for Pay Per Post. If you read my disclosure policy on this blog, you'll see that along with my usual content, there may be the occasional sponsored post.
Does this mean that I will be endorsing products and services just for the money and abandoning my principles? Not at all. There are just as many posts that I am not compensated for where I provide links to sites that provide excellent and useful information.
In many ways, I consider Pay Per Post to be of great benefit to both my readers and to me. As I peruse the opportunities, I often find valuable sites, products and services that I was not aware of and that both I and my readers may find useful. It's just another means of finding these sites and bringing them to my readers. Because there is such a wide variety of sponsors to choose from, I never have to write about anything I don't believe would be of interest to my readers.
If you're interested in bringing quality, relevant content to your readers, introducing them to services and products of interest to them and being able to make money for your blogging efforts, sign up for Pay Per Post.
If you've been saving your nickels and your dimes to buy that new iPhone, don't bother. Apple won't let you pay in nickels and dimes, nor in paper money. In fact, you can't even use Apple gift cards. Apple will not sell you an iPhone unless you use a debit card or a credit card to pay for it.
Apparently Apple wants to know exactly who has purchased the iPhone. Is this an invasion of privacy? Is it even legal?
Certainly, it would seem that a consumer has a right to purchase an item without having to prove identity, as long as it's a legal item or not one strictly controlled. You expect to provide ID to buy cigarettes and liquor, but no one takes down your name. You expect to have your name taken when you buy a gun, but a phone?
Apple has already made customers unhappy this year when they dramatically decreased the price of the iPhone to $399 for the holiday season, after having sold them to first-comers for $599.
In this case, being first wasn't best.
I wonder how long it will take for there to be customer backlash on their credit-card-only sales policy. At least one customer is suing them over the price cut, and she wants a whopping $1 million in damages.
Are you a financial wizard or a financial flop?
Everyone believes they know how to handle money, even when our financial situations seem to indicate otherwise. But in order to make good financial decisions, you need solid financial knowledge. For instance, what are the differences between a Roth IRA and a traditional 401K plan? When may you withdraw money from each? When must you take distributions from each? If you sell your home, are you subject to capital gains taxes?
To test your financial acumen, take the Kiplinger.com Personal Finance Quiz. There are some basic questions on everything from taxes to the stock market. Then check out how your score compares to others taking the test. You might discover you are a financial wizard after all, or you might pick up some valuable tips.
Monday, October 29, 2007
Nowadays, social convention holds that a gift of cash is crass, but since finding the right gift for some people is more difficult than for others, the giving of gift cards has gained popularity over the years. But what people may not realize is that gift cards can come with hidden "dormancy fees" and expiration dates.
Many gift cards have expiration dates, and the issuing company may impose dormancy fees on unused balances after six months. In some cases, use of a card after the expiration date requires a "reactivation fee". All of these fees will devalue the card and your gift. Some states, like Connecticut, have put a ban on these gift card fees, but retailers are still fighting these bans in court cases.
The dormancy fees seem excessive and punitive, especially if you consider that at least $8 billion in unused balances are retained by issuing retailers every year. Some people never use their gift cards, others leave small balances on them that are never spent.
Gift cards are not an inherently bad idea when buying for someone who is hard to shop for, but keep in mind some guidelines when choosing a gift card.
Be sure the recipient of the gift card actually shops at the store where you purchased the card, or better, buy a card that is good for any store in a large mall that you know they frequent. You might also check the card for an expiration date and point it out to the recipient so that neither of you loses the value of your gift. You can also opt for Travelers Checks that don't lose value and from which the spender can get the unspent balance back in cash, rather than having a tiny balance on a gift card that may never get spent.
Or perhaps a nice money holder card with cash is really the best gift. Perhaps we can start an etiquette revolution by giving gifts that are actually useful.
Sunday, October 28, 2007
You're changing jobs, and you need to make a decision about your 401K. For better or worse, you have decided not to roll it over into an IRA account. If you are planning on taking a distribution from your 401K and you are under 59 1/2, be aware that you will be subject to taxes and penalties that will affect the amount you receive.
You may have good reasons why cashing in your 401K is the option for you, but you could lose a substantial amount if you are under age 59 1/2. A 20% withholding will be taken on the amount you cash out. That 20% withholding will be applied to any tax you owe for the year but you will pay any taxes owed above that amount. Additionally, you will be subject to a 10% penalty tax.
If your 401K is worth $10,000 you will receive only $8,000. In addition to the $2,000 withholding you will pay any other taxes that apply plus $1,000 for the 10% excise tax.
The 10% excise will not apply however if one of the following applies:
* Made to a beneficiary (or to the estate of the participant) on or after the death of the participant.
* Made because the participant has a qualifying disability.
* Made as part of a series of substantially equal periodic payments beginning after separation from service and made at least annually for the life or life expectancy of the participant or the joint lives or life expectancies of the participant and his or her designated beneficiary. (The payments under this exception, except in the case of death or disability, must continue for at least 5 years or until the employee reaches age 59½, whichever is the longer period.)
* Made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55.
* Made to an alternate payee under a qualified domestic relations order.
* Made to a participant for medical care up to the amount allowable as a medical expense deduction (determined without regard to whether the participant itemizes deductions).
* Timely made to reduce excess contributions.
* Timely made to reduce excess employee or matching employer contributions.
* Timely made to reduce excess elective deferrals.
* Made because of an IRS levy on the plan., or
* Made on account of certain disasters for which IRS relief has been granted.
For more information on 401K distributions, see the IRS website.
Monday, October 22, 2007
A poll conducted by HSBC Bank and the Personal Finance Education Group of 1,369 children in the UK aged 7 to 11, revealed some surprising results. HSBC and PEFG recently launched a primary school program called What Money Means in a effort to teach young children about handling finances early.
Only 18% of seven to 11-year-olds said they would trust their parents to save for them, while some worried that mum and dad would spend the money by mistake.
But 42% of pupils said they saved in a traditional piggy bank or money box.
About three-quarters of the age group said they were saving money, some for a car and others for university costs.
Friday, October 19, 2007
College students are some of the most vulnerable consumers out there. Credit card companies know this and regularly market credit cards on college campuses. Students often fall deeply into debt, and it could take them years to get themselves out again.
Credit card companies market to college kids using free gifts and promotional items. Students are often unaware of the high interest and penalty fees that can be charged to them, and the credit card companies do not disclose this information in these campaigns to snare young consumers.
Truth About Credit and US PIRG are working together on the campaign "FEESA: Free Gifts Now, Huge Fees Later".
They are working to get colleges to adopt the Principles of Responsible College Credit Card Marketing:
1. Prohibit use of gifts in marketing on campus.
2. Control passive marketing techniques.
3. Block acquisition of student lists.
4. Stop group sponsorship.
5. Increase financial education.
6. Credit card contractual terms and conditions that take advantage of students as consumers shall be discouraged.
Read more about the campaign at Truth About Credit.org.
Tuesday, October 16, 2007
With energy costs rising, nearly anyone would be happy to receive an email from the Department of Energy alerting them of their eligibility for a refund on their utility bills. But if you receive one of these emails, beware, it's a scam.
The email states that the recipient is due a refund of $480.58 and instructs the recipient to click on a URL to receive the refund. Clicking on that link infects the recipient's computer with malware.
The email erroneously claims to be from the Department of Energy forging the email address email@example.com. According to the DOE, this email account does not exist.
Here is the text of the phony email:
From: Deparment Of Energy
Subject: Urgent Notification!
After the last annual calculations of your bills we have determined that you are eligible to receive a refund of $480.58. Please submit the refund request and allow us 2-3 business days in order to process it.
To access the form for your refund, please click here link deleted
Note: For security reasons, we will record your ip-address, the date and time. Deliberate wrong inputs are criminally pursued and indicated.
© Copyright 2007, U.S. Department of Energy All rights reserved.”
The Department of Energy states that they do not collect revenue from, or issue refunds to, the general public via email. If you receive this email, delete it and do not click on the link provided or your computer could be infected with malicious programming.
Saturday, October 13, 2007
Have you noticed an increase in your junk mail lately? How about those unsolicited credit card offers? According to Synovate's Mail Monitor, US households will receive 5.3 billion credit card offers through the mail this year. But that's actually down a bit, from a high of over 6 billion in 2005. The applications generated from these mailings are expected to go up only slightly in 2007.
And that may actually be the good news. Despite the overwhelming number of offers being sent out, consumers may be getting a bit better educated about credit cards and choosing their offers more wisely.
There are still a lot of truly bad offers out there, so even if you want to try for one of these pre-screened offers, be careful and be smart. Read the entire agreement, especially the fine print. Watch out for excessive fees that can eat up more than half the offered credit limit (it is often quite low) and note what future fees you may be charged. Don't apply for a card that in the end, will only help you worsen your credit rather than repair it. Remember, there are 5.3 billion offers out there, take time to choose wisely.
Thursday, October 11, 2007
Credit card companies often allocate payments in ways that are most convenient (profitable) for them. 76% of credit cards clear debt on cash advances last. Cash advances usually carry the highest interest rates.
What this means is that while your payments are busy trying to clear the lower interest purchases, the interest accruing on the cash advances is growing and in the end, will cost you much more.
Because credit card company take advantage of "order of payment" rules, they often clear fees for late payments and balance transfers first, followed by debt for purchases, leaving cash advances for last.
A good rule to follow is just to never take a cash advance, especially if your card uses payments to clear the cheaper debt first. But if you want to use your card for cash advances or take advantage of those checks they send you, then do some research and know the true cost. Read the fine print and find out how your credit card company allocates payments. Better still, look for a card that allows you to pay cash advances first, helping you to lower all-around and future debt on the card.
Sunday, October 7, 2007
The purchase of a new car is not a deal to be entered into lightly. Choosing the right car and getting a good price are major factors, of course. But just as important are the loan terms, because if you get stuck with a loan you can't handle, that shiny new car could end up going back or bankrupting you.
Often dealers will offer you the choice of a lower interest rate loan or a cash rebate. Which is the better deal? That depends a lot on the size of the rebate, the price of the car and what interest rates are available. A rebate will lower the total loan amount but a lower interest rate will give you lower monthly payments for the life of the loan.
If you are trying to decide between a rebate or a lower-interest loan, try running it through this handy little tool at Bankrate.com. Just plug in the price of the car, the interest rates with and without rebate, the amount of the rebate and the length of the loan, and it will show you which can save you the most money.
Wednesday, October 3, 2007
No one is comfortable with planning for their eventual demise but as they say, the only two sure things in this world are death and taxes. In fact, taxes follow you after death - and the government could get nearly half your assets if you die without a will in place.
The only way to be sure your property and possessions will be distributed after your death is to make a will. Over half of all Americans die without a will, and it is a simple process to make one. Without a will to document your wishes, the court will decide the distribution of your property. If you don't appear to have any heirs, the state may claim your estate.
If you have children, you may need a will to name a guardian for them rather than leaving it to a court to appoint one. You may also want to designate certain gifts, such as a car or jewelry and name specific beneficiaries for them rather than having everything split between all beneficiaries. Another important point will be naming an executor, someone to carry out your wishes and oversee the distribution of your assets as well as arranging for the payment of any debts or donations as directed by the will.
Laws regarding wills may vary slightly from state to state and a will should be updated whenever changes in your circumstances necessitate it (such as in the event of a new marriage, a new child or a move to a new state). Wills need to be signed in the presence of witnesses, usually the witnesses may not be beneficiaries. When you make a new will, be sure to destroy the old one to avoid confusion.
Everyone needs a will regardless of the size or value of their estate. Prepare one now and you will have peace of mind for the future.