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Archive for December 2010

12 easy steps to use eBay and pay down holiday credit card debt

Published 12/30/10  (Modified 3/9/11)

12 easy steps to use eBay and pay down holiday credit card debt By Jim Sloan

Our family loves the holidays, but every year after the tinsel and pine needles have been vacuumed up, we find ourselves with a couple of small problems: Too much credit card debt and a couple of heart-felt gifts we really don't want and can't return.

The answer for us has been pretty simple: eBay. By selling some of our unwanted stuff--sometimes it's Christmas gifts and sometimes it's just items we find in the garage when we put the decorations away--we're able to put a dent in that debt, even when we've used zero percent credit cards.

If this sounds like something you'd like to try, here's a 12-step program to help you use eBay to whittle down that credit card debt:

1. Start small. If you're new to eBay, begin by selling something that's easy to price, easy to photograph and easy to ship. This way you can practice setting up an auction, monitoring your sale and making sure you get good feedback from your first buyer right off the bat. This small transaction will also give you an idea about how costs and commissions work on eBay.

2. Sell something new. New goods are easier to price and sell than used goods. If your Aunt Florence gives you linen napkins every year and you're starting to

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Overdraft protection: when it hurts, when it helps

Published 12/28/10  (Modified 3/9/11)

By Priscilla McEver

Now that you've graduated from school, you may find yourself acquiring not only a diploma, but also heaps of debt and a whole new set of responsibilities. Credit card payments, car insurance, utility bills and maybe even student loans that were once covered by your parents are now resting squarely on your shoulders. You have a lot of choices to make and perhaps not a lot of money to make them hastily.

So, if you've decided to use a debit card to track most of your spending, you know there is nothing more infuriating than getting hit with an overdraft fee. And now you may be asking yourself, "Should I sign up for overdraft protection?"

Why overdraft protection?

Here's help to decide if enrolling in overdraft protection is right for you. Overdraft protection may be a good option for you if:

  • You have a lot of traffic in your account. If multiple checks or several automatic payments go through your account each month, overdraft protection can provide you with an extra layer of safety to ensure that everything clears your account. Now that you're on your own or starting over, you may notice that everything seems to be due all at once: high-interest credit card debt, compounded by your student loan payments, utilities, cell phone bill, and rent payments. If you're feeling unsure about making withdrawals from your account because of
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The alternative minimum tax: Coping with the AMT iceberg

Published 12/22/10  (Modified 3/9/11)

The alternative minimum tax: Coping with the AMT iceberg By Richard Barrington

Think of it as the iceberg of the tax code. And your tax return may be the next Titanic.

The alternative minimum tax (AMT) is like an iceberg because it often represents a hidden danger, and one that can have severely damaging effects. You can be sailing along, thinking you've conscientiously filed your tax return and paid your taxes. Then, BOOM! You get a letter from the IRS, assessing penalties because you failed to pay the alternative minimum tax. You've just hit the AMT iceberg.

If you want to avoid hitting the AMT iceberg, you'll need to know a little background about the alternative minimum tax, and how to cope with it.

Defining the alternative minimum tax

Think of the alternative minimum tax as an alternative tax code, existing outside of normal federal tax brackets and rules. The AMT was created in 1969 to prevent people from claiming so many deductions that they paid little or no tax.

Basically, the AMT is a tax calculation which ignores many common tax deductions, and also ignores lower federal tax brackets for certain types of income, such as capital gains. Your taxable income is re-calculated under AMT rules, and then a standard AMT exemption is subtracted -- $33,750 for single tax payers, $45,000 for married tax payers filing jointly, and $22,500 for married tax payers filing separately. An alternative minimum tax rate is then applied to the remainder -- 26 percent on the first $175,000 for

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Pay off debt with 0 interest balance transfer credit cards, but read the fine print

Published 12/21/10  (Modified 3/9/11)

Pay off debt with 0 interest balance transfer credit cards, but read the fine print By Lisa Tortorello

If you are like most people, you probably cringe when it is time to pay the bills. It is a chore almost as dreaded as spending a Saturday afternoon at the post office and dry cleaners. Perhaps the most frustrating and stressful bills to open are those from credit card companies.

If you carry a balance like most of us do, every month you may be battling the disappointment of a cemented balance. This means that you are actively trying to reduce your credit card debt by sending more than the minimum payment each month, and have vowed to no longer use your cards unless absolutely necessary, but your balance does not budge - it seems to be stuck in the cement. In fact, it may even increase due to steep interest rates that outrank the amount you are paying every month.

Several years ago, the credit card bills stuffed in your mailbox were probably accompanied by an equal number of offers to transfer your higher-interest balances to zero interest credit cards with no balance transfer fees. This could have certainly helped you chisel your balances out of their concrete cells.

While those zero percent balance transfers are no longer weighing down your mail carrier's bag like in years past, there are still a few out there that can help you pay down your balances more quickly.

Zero interest credit cards - not zero risk


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Charge cards vs. credit cards: 3 reasons to charge it

Published 12/18/10  (Modified 12/10/13)

Charge cards vs. credit cards: 3 reasons to charge it By Tom Tennant

The other day, someone asked me, if given the option, which I preferred: charge cards or credit cards. My answer: "There's a difference?"

There is. And who knew? (If you knew, kudos, because I always thought "charge card" was what our ancient ancestors - Mom and Dad - called the plastic we carry around in our wallet.)

In short, charge cards offer no revolving credit and no interest rate. Sure, you can borrow up to your limit, but only for about 30 days. After that, the balance is due in full (that's why there's no interest rate). Can't pay? You'll likely incur a fee - it could be hefty - and your account could be suspended.

Credit cards, on the other hand, give you the option of making a monthly minimum payment. If you don't pay your balance in full each month, the balance rolls over (or revolves) into the next month. This "convenience" comes with a catch. Interest is levied on the balance, making your purchase cost more than its original price. This can be painful if all you do is pay the minimum.

Which is better?

The answer depends on your financial goals and the type of spender you are. If you're a student trying to establish credit for the first time, for example, or you are rebuilding credit, then opt for a charge card. Here are three reasons

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Pre-paid credit cards: Why you should give them a second look

Published 12/15/10  (Modified 7/2/12)

Pre-paid credit cards: Why you should give them a second look By Ann Cameron

Today, it's often difficult for anyone to get a credit card - whether it's a zero percent balance transfer card or a best cash back credit card. And if you're just starting out -or starting over - getting an approval based on your credit score can be even more of a hassle. This is what makes pre-paid cards so attractive if you want to use them for online shopping, travel or even just everyday expenses.

As more and more of us are embracing the "card-only" lifestyle, a pre-paid card can be a great alternative to using a debit card or zero interest credit card.

If you need any more reassurance, take a friend's recent example. She attended an industry conference for a few days and needed to secure her room with a card - standard operating procedure for any hotel. She'd used her debit card to cover incidentals that she incurred, such as meals, Internet connection and minibar snacks. No problem.

But later that night at dinner, her debit card was rejected for being over her bank account limit. Apparently, the hotel was holding $150 on her debit card for those "incidentals" for each of the three nights she planned to spend there. Although the $450 was credited at the end of her

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