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Archive for March 2011

Credit card debt: The less you pay, the more it costs

Published 3/30/11  (Modified 4/21/11)

Credit card debt: The less you pay, the more it costs By Richard Barrington

In George Orwell's "1984," the totalitarian regime often confused the populace by using contradictory phrases such as "war is peace" and "freedom is slavery." The common credit card term "minimum payment" might contain a similar sort of contradiction, because by making minimum payments, you'll find yourself shelling out the maximum amount of money.

The reason is that the longer it takes you to pay down a credit card balance, the more interest you will pay on that balance. Thus, making the minimum payment each month will mean racking up more in the way of interest charges. Just how much more may surprise you.

The true cost of minimum payments

Suppose you shell out $1,500 for a home theater system. It's a big investment, so you put it on your credit card so you can pay it off over time.

For this example, let's assume your credit card charges a minimum payment equal to the larger of 3 percent of your outstanding balance, or $10. These are fairly typical minimum payment terms.

Under those terms, if you make just the minimum payment every month (and assuming you add nothing else to your balance) it will take you over ten years to pay off that $1,500 purchase. Meanwhile, interest charges, at a fairly typical 15 percent rate, would have totaled $810.41. Thus, you would have increased the total cost of that

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You vs. the average American credit card user

Published 3/30/11  (Modified 4/21/11)

You vs. the average American credit card user By Joe Taylor Jr.

In college, grades are given out based on how you rank against your peers, and credit scores work the same way. So how do you stack up in terms of credit history?

Researchers working for major credit bureaus and scoring agencies, including Experian and Fair Isaac Corporation, regularly review data from their company's comprehensive collection of personal credit reports. Their statistics can shed light on whether your own credit history stacks up with that of the typical American consumer.

Ask yourself these questions to find out:

Do you use more than two credit cards? If so, you're packing more in your purse or your wallet than the typical American consumer, according to Experian. For the first time in years,

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Can't wait for a refund? Refund Anticipation Loans will cost you

Published 3/21/11  (Modified 8/5/11)

Can't wait for a refund? Refund Anticipation Loans will cost you By Tom Tennant

You've got bills to pay and a creditor or two reminding you that you're a couple weeks behind on your payment. Maybe your car is in desperate need of repair. Or, heck, could be that vacation is around the corner and you'd like some extra "walkin' around" money.

No matter the reason, the promise of quick cash by way of an "instant tax refund" is pretty darn alluring. The problem is, that fast federal tax refund isn't a refund at all. It's a loan - and an ultra-expensive one at that.

We're talking tax preparation fees, interest rates that could soar into the triple digits, and the possibility that your refund will be less than your loan amount.

Which begs the question, if you can file your taxes electronically, possibly for free and with help from local non-profit groups and the IRS, and then have Uncle Sam direct deposit your refund straight into your checking account in under two weeks, why give so much of that refund away to get cash in your pocket the same day?

It just doesn't make sense.

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How do the new credit card rules affect you?

Published 3/16/11  (Modified 3/29/11)

How do the new credit card rules affect you? By Jim Sloan

In recent months Americans in general have been making a determined effort to pay down their credit card debts. Maybe you've been part of this, changing your spending habits, and using your paycheck to pay down your credit card debt along with your student loans. That effort will only be helped by new legislation passed last year to combat some of ham-fisted habits of credit card companies.

How do these new regulations affect you?

New financial regulations to limit customer exposure to fees and rate hikes

New restrictions on credit card companies--and credit card users, for that matter--come from a combination of the 2009 Credit Card Accountability Responsibility and Disclosure Act and new Federal Reserve regulations mandated by the law. The Fed's rules, according to the law, must make sure that late charges and penalties--a major source of taxpayer headache and credit card company income in recent years--are "reasonable and proportional." The rules apply to many types of credit cards, from high interest credit cards to zero balance transfer cards to even the best cash back credit cards.

Just how effective the new law and regulations will be remains to be seen. But as a consumer, it's important for you to keep in mind what your rights are.

Credit cards and credit scores

Some of the new regulations are related to not only to credit cards but also to your

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Learn how to get your federal income tax refund fast

Published 3/14/11  (Modified 3/29/11)

Learn how to get your federal income tax refund fast By Jim Sloan

I drove by one of those sign wavers dressed up as the Statue of Liberty this morning. Maybe you've seen one or two of them in your town. They wear green costumes and direct people to the offices of their employer, Liberty Tax Service, which prepares tax returns for people.

Weird thing was this particular sign waver had a beard. The Statue of Liberty endures some pretty harsh conditions there in New York Harbor, but last time I checked things weren't so bad that the towering lady had grown a beard.

Other changes expected in your federal income tax return

There are some other things about this federal income tax season that are off kilter, as well. For one thing, outfits like Liberty Tax Service and other businesses that figure out your tax deductions for you are not likely to be making as many refund anticipation loans as they used to.

Those loans are attractive to many people who can't afford to pay to have someone prepare their return. With a refund anticipation loan (RAL), though, they can have their return completed and e-filed and the company will give them a check right away--minus the "processing fee" and the tax preparation fee.

The tax preparation companies' RAL business has been handicapped this year by the IRS's decision to stop providing tax preparers with "debt indicators," which let the companies know when their client's refund might be withheld for

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Looking to travel? Capital One's Venture Rewards card might be your ticket

Published 3/12/11  (Modified 8/7/14)

Looking to travel? Capital One's Venture Rewards card might be your ticket By Jim Sloan

Editor's Note: Thank you for your interest, this offer expired and is no longer available.

For those just out of college or starting fresh, a break in the form of traveling to another state or country is usually near the top of wish lists. Finding ways to fund traveling however, can be a significant barrier to actually realizing this. If you're good with credit cards, though, a new promotion from Capitol One may be able to help you with your travel ticket.

Traveling in reach?

Capital One has rolled out a new Venture Rewards credit card promotion with a "Match My Miles" promotion that will match the number of miles you have accumulated on another airline credit card up to 100,000 miles.

You earn the additional 100,000 miles--the equivalent of $1,000--if you put at least $1,000 on the card in the first three months.

The offer is good for new Venture and Venture for Business primary account holders. Current Capital One cardholders who want to upgrade to the Venture Rewards card or swap their existing Capital One card will get the mile match if they get approved, said Sukhi Sahni, a senior communications manager with Capital One.

The company will continue the offer this until they've given away a billion miles or until May 13, 2011, whichever comes first--it's a first-come, first-served proposition.

Miles on top of miles: How does it work?

If you have airline miles on one of 13 airline credit cards currently on the market, Capital One will match

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