Over the past few weeks I’ve taken to task some of the more stubborn credit myths that simply won’t go away, in part because their authors refuse to acknowledge their mistakes. The most recent blatant inaccuracy being circulated is that cash flow is a factor in your credit scores. However, once you start dissecting the issue of cash flow and other wealth metrics it becomes pretty clear that not only is it not a factor in your credit scores but it’s impossible for it to even be considered in a credit bureau based scoring system. Read on… read more »

Now that this hurricane is somewhat of a memory, there is much assistance needed for the victims.  There are generous and giving people that want to help by donating money to those in need. On the other hand, there are crooks and fraudsters who want to take advantage of the victims. The Federal Trade Commission (FTC) has advice on the scams that follow disasters.  There are two main categories charitable contributions and fraudulent home repairs. read more »

MoneyRates.com conducts a semi-annual study on banking trends on checking and Automated Teller Machine (ATM) charges in the U.S.  The latest study was conducted in July 2012 and revealed that checking account fees at banks increased in every major category, compared to December 2011.

Checking account fees increased

The categories in which bank checking fees increased were minimum amount required to open a checking account, monthly service fee, minimum balance required to waive checking account fee, overdraft fees, ATM fees and proportion of checking accounts that were free. read more »

I received my first 1099 for tax year 2012 last week.  And while the weather suggests “It’s beginning to look a lot like Christmas” it’s also a reminder that we’re only 3 months away from our mailboxes filling up with tax forms, including 1099s.  And while 1099 is normally reserved for non-employee income, like contractor work, it has an evil stepsister that many of you will or have already received…IRS Form 1099-C.

A 1099-C is sent by your credit card issuer.  It represents debt that they have forgiven, or a “cancelation of debt.”  It means you cut a deal with your credit card issuer and they accepted less than you really owed and considered the balance to be settled in full.  What, did you really think you were out of the woods when you settled that debt?  That debt settlement company you hired didn’t tell you that settling debt would create a taxable event for you? read more »

I’ve recently addressed the increases in revenue and new accounts for the credit union industry.  This piece will address similar increases in the banking industry.  This information was provided by commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC). Overall the banking industry is in recovery mode and has increased in income, revenue and loan balances.  Charge-offs and loan losses have decreased.

Highlights read more »

Back to school is an annual ritual that includes buying new notebooks, packing lunches, coordinating transportation, and filling out forms: registration forms, health forms, permission slips, and emergency contact forms, to name a few. For me, personally, it involved learning how to navigate a carpool line properly.

Many school forms require personal and, sometimes, sensitive information.  In the wrong hands, this information can be used to commit fraud in your child’s name. For example, a child’s Social Security number can be used by identity thieves and other criminals to apply for government benefits, open bank and credit card accounts, apply for a loan or utility service, or rent a place to live.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, cautions that when children are victims of identity theft, the crime may go undetected for years — or at least until they apply for a job, a student loan or a car loan, or want to rent an apartment. read more »

Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB), announced he will propose a change to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 and Federal Reserve regulations that critics have charged bars stay-at-home mothers from obtaining credit cards.  The issue at hand is the requirement that credit cards only be issued to people who have an individual income, rather than those who have access to household income.

Today a non-working spouse cannot get a credit card because she or he doesn’t get a paycheck, despite possibly having free access to the household’s income. The agency will propose the rule before Congress reconvenes after the election, according to Bloomberg.  This change would affect all major credit card issuers in a positive way but especially retail credit card issuers.  One of the hardest things to do as a credit card issuer is to acquire a new customer.  Here you have people with the ability to pay their bills who have to be denied because of a poorly constructed provision of the CARD Act. read more »

Since it was formed a year ago in July 2011, the Consumer Financial Protection Bureau (CFPB) has issued the first violation to Capital One. This bureau’s purpose is to protect consumers against unfair, deceptive, or abusive practices in consumer financial products and services.

Settlement terms

Capital One agreed to the consent order, which means that they didn’t admit or deny the allegation. The consent order requires Capital One to pay approximately $210 million – $150 million to over two million consumers and a $60 million penalty. Of the $60 million, $25 million goes into the Civil Penalty Fund, which was created under the Dodd-Frank financial reform law as a reserve to reimburse victims and for consumer education and financial literacy programs. read more »

The Independent Community Bankers of America conducted a study of 3,000 consumers concerning overdraft payment services.  Even though the costs are high (averaging $35) for overdraft protection, consumers still want this service.  They understand the costs involved and the alternative service available to avoid overdraft charges, such as account transfers and lines of credit. Overdraft fees are preferred over other short term funding, by consumers with four or more overdraft transactions in the past twelve months.

You have to request overdraft protection from your financial institution. If you signed up (opt in) for overdraft protection and you don’t have the funds in your checking account to cover the amount of your check, the financial institution covers the check and charges you a fee, which averages $35. read more »

According to data from Mintel Comperemedia, a market research firm, credit card direct mail solicitations reached the lowest volume in 25 months.  The volume was 260 million in April 2012, compared to 390 million in April 2011 or a decrease of 33 percent.  The volume in first quarter 2010 was 220 million per month and in June 2011 was 407 million.

“April marks a new low for the credit card direct mail decline that began in December 2011,” says Andrew Davidson, senior vice president at Mintel Comperemedia. “Issuers have adopted a more cautious approach due to an uncertain economic environment. The latest downturn likely reflects a pause in activity rather than signifying a permanent reduction in direct mail.” read more »