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Experts predict surge in holiday fraud

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WASHINGTON (12/1/08)--For cash-strapped consumers, finding the best holiday deals this year is a high priority. It’s expected, though, that financial stress could lead to a significant increase in fraud this shopping season (Identity Theft Assistance Center, Nov. 6). More consumers are looking to the Internet for holiday deals, but it’s not a good deal if you hand over personal information to a crook. To safeguard your credit card numbers, purchase only from sites displaying a closed padlock on the browser frame. And on the payment page, look for https in the URL. The National Fraud Information Center and Internet Fraud Complaint Center offer more tips for staying safe during online holiday shopping:
* Avoid cash payments. If you pay with a credit card, you can dispute fraudulent charges if the goods are misrepresented or never delivered. * Understand how an online auction works. Know the obligations of buyer and seller in the transaction, including delivery time, return policy, warranty and service. Depending on the item’s value, you may consider insuring it. * Get contact information. Obtain the seller’s name, street address, telephone number and e-mail address. Also, glance at the feedback section on an auction site to gauge the seller’s credibility. But be wary: Sellers can post their own reviews in their favor. * Be wary of overseas transactions. It’s more difficult to resolve problems when dealing with buyers from other countries.
Wherever you do your shopping, the Identity Theft Assistance Center reminds you to protect your PINs (personal identification numbers) as well as any document that contains sensitive personal information. To spot suspicious activity, monitor your accounts online and obtain one free credit report annually from each of the three major credit reporting agencies--TransUnion, Experian, and Equifax--at annualcreditreport.com. For more information, read “Retailers revive layaway to counter credit crunch” in Home & Family Finance Resource Center.

What budgeting system is best for you

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MADISON, Wis. (11/26/08)--Budgeting is the last priority of a procrastinator. Everyone knows--because of the experts’ constant reminders--how important it is to track personal expenses, conserve income, and save the difference. Yet many people don’t. The annual “America’s Financial IQ” report from Consumer Action and Capital One consistently shows that one out of three U.S. consumers do not use a budget regularly. “Creating a personal or family budget is usually near the bottom of people’s to-do lists no matter how guilty we feel about it,” says Philip Heckman, Credit Union National Association’s director of youth and young adult programs. “Not everyone can marry a meticulous accountant. We need an incentive, a reward for doing the right thing. It helps to use a budget as a way to find the money to enjoy a favorite activity or treat without guilt.” It’s also useful to look for the most painless system for managing personal finances. Here’s what to consider when looking for the method that works best for you:
* Budget manually. Budgeting by hand has worked since the invention of paper and pencil. A manual budget is cheap, infinitely adaptable, accessible whenever you have a few minutes, and lends itself easily to involving your spouse or children. Manual budgeting can generate a lot of clutter, however, and you’ll need to organize and file your worksheets carefully. Your public library has dozens of budgeting guidebooks to assist you. * Budget electronically. Computerizing a task can make it more bearable, as well as ensure that you don’t overlook important details.
Whether you choose stand-alone software or an online service, evaluate these areas:
* Security. Software programs that store your financial data on your home computer behind a firewall are more secure than online programs that hold your data on a central server. Online budgeting can be safe with proper encryption and password protection, so read the vendor’s security statement carefully. Avoid accessing your online account from a public or shared computer or using a public-access wireless connection. * Functionality. Ideally, budgeting software should be designed well enough to allow you to learn it as you go. Icons, labels, and navigation should be logical. You should be able to update information, such as account balances, with few steps. You should be able to analyze your data in several ways. And you should be able to modify worksheets and reports to match your lifestyle. * Expense. The cost of online budgeting ranges from free to a fee of a few dollars a month. One-time software charges range up to $40 or so. Cheaper usually means fewer features and less flexibility. And more expensive doesn’t necessarily indicate easier or more effective.
But remember, choosing a particular budgeting method or tool is less important than finding the discipline to use it. Ultimately the best personal finance management system for you is the one that’s most likely--for whatever reason--to become a habit.

Retailers revive layaway to counter credit crunch

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NEW YORK (11/24/08)--This holiday season, national retailers, regional chains and stores have upped advertising for their layaway options, and many consumers are beginning to turn to this once-considered-obsolete payment method (MSNBC.com Nov. 10). The widespread availability of credit cards is what put layaway to rest years ago, according to MarketWatch.com (Oct. 22). But with today’s tightened credit limits, holiday shoppers are increasingly wary of using plastic and are turning to other options such as layaway. Until recently, Kmart Corp. was the only major retailer regularly using layaway, but TJ Maxx Corp., Marshalls Inc., and Burlington Coat Factory have now followed suit. How does layaway work? A retailer holds an item for a customer while she pays off the purchase price in installments, plus a small service fee, before taking it home. For instance, Kmart requires a $5 service fee and a $10 refundable cancellation fee upfront, or 10% of the item's cost, whichever is greater. If a customer fails to follow through, the transaction is cancelled and the customer receives a refund, less the $15. If you put these purchases on credit and don’t pay off your bill right away, your interest could be more than the layaway fee. To buy from smaller retailers, visit eLayaway.com, a website that organizes layaway services for more than 1,000 retailers nationwide. Representatives said traffic on the site almost doubled in the past year. The site charges a fee of 1.9% of the sale price. To help you boost your credit score, eLayaway.com files a report with Fair Isaac Corp. every time you pay an installment on time. Be advised: The only payment option on eLayaway.com is a direct debit from your share draft/check account, so make sure you have funds available to cover the cost of installments. The company charges a $5 fee after the first unsuccessful payment and a $25 cancellation fee after more than one failed attempt. For more information, read “Tough Times Series: Steer Clear of Credit Counseling Bad Guys” in Home & Family Finance Resource Center.

HandFF Radio guests include NCUA official tax experts

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WASHINGTON (11/21/08)--This Sunday’s H&FF Radio show lineup of guests includes National Credit Union Administration (NCUA) board member Gigi Hyland discussing how higher share insurance limits benefit consumers. Other guests give end-of-year tax and charitable giving tips.
National Credit Union Administration board member Gigi Hyland told consumer listeners about share insurance's benefits on a recent Home & Family Finance Radio Show. (Photo provided by CUNA)
Home & Family Finance airs Sundays at 3 p.m. EST on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Charitable Giving: How to Check Up on Charities,” with Laurie Styron, analyst, American Institute of Philanthropy, Chicago, Ill.; * “Federal Insurance of Consumer Deposits in Financial Institutions,” with Gigi Hyland, board member, NCUA, Alexandria, Va.; * “Income Taxes and Military Service Members,” with Eric Smith, national spokesman, Internal Revenue Service, Washington, D.C.; * “Your Income Taxes: What to Do Before Dec. 31,” with Ethan Ewing, president, Bills.com, San Mateo, Calif.; and * “Put Cash Flow on a Calendar,” with Susan Tiffany, CUNA's director of personal finance information for adults, Center for Personal Finance, Madison, Wis.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Visa; and Western Corporate FCU and its member credit unions. For more information, read “Special Bulletin: Credit Union Federal Insurance Coverage Rises to $250,000” in Home & Family Finance Resource Center.

Switching to Roth may ease conversion taxes

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NEW YORK (11/19/08)--For some investors who’ve taken a beating in recent months, converting from a traditional Individual Retirement Account (IRA) to a Roth IRA may yield significant tax savings (The Wall Street Journal Nov. 2). Why act now? When you convert, you pay the income taxes right away on your account’s value. With some accounts looking thin, converting now instead of later would reduce the taxes you pay as your IRA balance increases when the economy turns around. Understand the basic differences between a Roth IRA and a traditional IRA. Roth IRA contributions are not tax deductible, but there are generally no taxes on future earnings and withdrawals, as long as you’ve held the assets for five years. In contrast, traditional IRA contributions are tax deductible, but you pay taxes on withdrawals. Unlike the traditional IRA, which requires you to begin withdrawing money at age 70 ½, the Roth has no such age requirement for withdrawals--the earnings can keep growing tax-free for as long as you like. For tax-year 2008, you can contribute up to $5,000 a year to a traditional or Roth IRA (combined) if you are younger than age 50, and $6,000 if you are 50 or older. For additional information, visit irs.gov and search for Publication 590. If you’re thinking of converting from a traditional IRA to a Roth IRA, consider these guidelines:
* Your income must be $100,000 or less--until 2010, when this income requirement goes away. * If you are age 70 ½ or older and wish to convert to a Roth IRA, you’re still required to take this year’s required distribution, although Congress soon may pass legislation suspending the required distribution rules for 2008 (USA Today Nov. 11). If the legislation passes, middle-income retirees who don’t need the money now would be in a better position to make their savings last as long as possible. * To make penalty-free withdrawals from converted funds, you must wait five years or until age 59 ½, whichever comes first. However, any interest earned on those funds carries a five-year window before it can be taken out tax-free. * If you convert funds after age 59 ½, you can withdraw the actual assets you converted at any time, but again, you must abide by the five-year requirement on the earnings in those accounts. * It isn’t necessary to separate converted funds from earnings--when you do withdraw from your account, money is drawn first from contributions, then from conversions, and last from earnings.
For more information, read “Avoid Conversion Confusion With Roth IRAs” in Home & Family Finance Resource Center.

Shop now for best car deals

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NEW YORK (11/17/08)--It’s a buyer’s market on automobile dealer lots right now, thanks to too many 2009s, too many leftover 2008s, and a glut of used vehicles. But if you wait too long, you may miss out on the short-lived perfect storm benefiting buyers (MarketWatch Nov. 5). As automobile dealers struggle to stay in business during tough economic times, now is the time to bargain. Before you head to the lot, lay out your game plan:
* Check your credit. A good bill-paying history and a credit score higher than about 720 will give you an edge over customers without them. * Understand your choices. If you want a small vehicle, you won’t have much negotiating power--they’re in short supply and the dealer has leverage. Large cars, on the other hand, will yield the best deals, but you’ll pay at the pump for poor gas mileage. * Consider certified, pre-owned vehicles. These used cars have warranty protection, and they also have the most costly years of depreciation behind them. * Set your strategy. Once you decide on a model, use one dealer against another. J.D. Power & Associates recommends you get a price from Dealer A, then use that price to bargain with Dealer B (BusinessWeek TV Oct. 10). Be prepared to go back and forth between the dealers. * Understand financing options. Despite the lure of 0% financing and rebates, have a credit union loan officer run the numbers before you sign on any dotted lines.
For more information, read “Are You Ready for a Really Small Car?” in Home & Family Finance Resource Center.

ID theft experts on radio warn of new improved scams

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WASHINGTON (11/14/08)--This Sunday’s H&FF Radio show includes a lineup of identity theft experts issuing new warnings about how crooks manipulate you--and hack into databases--to steal your personal information. Home & Family Finance airs Sundays at 3 p.m. EST on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Deter, Detect, Defend--Avoiding ID Theft,” with Joanna Crane, identity theft program manager, Division of Privacy and Identity Protection, Federal Trade Commission, Washington, D.C.; * “America’s No. 1 Crime: Identity Theft,” with Gail Cunningham, senior director for public relations, National Foundation for Credit Counseling, Wichita Falls, Texas; * “Synthetic ID Theft: The Toughest to Solve?” with Adam Levin, chairman, president, co-founder, Credit.com; and chairman and founder, Identity Theft 9-1-1, San Francisco; * “Security Breaches Affect Everyday People,” with Jay Foley, executive director, Identity Theft Resource Center, San Diego; and * Q & A.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Visa; and Western Corporate FCU and its member credit unions. For more information, read “Identity Theft: Getting Back to Square One” in Home & Family Finance Resource Center.

Dont let fake check scams fake you out

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NEW YORK (11/12/08)--Scam artists are using legitimate and familiar names--such as Publishers Clearing House, Martha Stewart Living, and Oprah Winfrey’s O Magazine--to lure you into falling for a fake check scam, and you’re left holding the bag (MSNBC.com Oct. 30). How do fake check scams work? There are many variations, but all involve someone asking you to deposit a realistic-looking check and send money elsewhere in return. In the Publishers Clearing House scam, the fraudster promised a $15 million sweepstakes award to one unsuspecting victim--as soon as she covered $5,889 in fees with the “advance check” the sweepstakes sent her. She discovered the check was a fraud only after wiring the “fee money” and draining her bank account of nearly $6,000. Federal law requires you to have access to funds from deposited checks or money orders within one to five days. The check processing, however, can take weeks or months, giving a thief ample time to take your money and run. You are responsible for any transactions you make--whether you’re wiring money or depositing money orders or checks. Many consumers have seen thousands of dollars in losses. In addition to the “Sweepstakes Scheme,” watch out for these phony offers, warns fakechecks.org:
* Scheming suitor. Scammers find a way to your heart--by befriending you, using children, or employing the word “love”--and then ask you to cash a fake check as a favor. There’s no reason the crooks couldn’t use their own financial services provider to do so. * Overpayment offer. Crooks offer to buy something you are selling, but send you a check for more than you are asking. They then ask you to wire them or another party the difference. Some will claim they sent the wrong amount by mistake. * Work at home offer. Con artists posing as employers hire you to work from home, and ask you to help them “process payments for clients” as part of your job. You end up depositing bogus checks and sending the money back, minus your “pay.” This isn’t how legitimate companies do business. * Foreign business offer. Scam artists offering you a foreign business deal send you a check or money order and ask you to send back a portion for taxes, customs, bonding, processing, legal fees or other expenses that must be paid before they can send you the rest.
Remember: There is no valid reason for a person who is giving you money to ask you to wire some back. If you are doing business with strangers, have them write a cashier’s check for the exact amount. Also, be wary of an offer arriving by regular mail, phone, fax, or e-mail. Legitimate checks will arrive via certified mail. You can report fake check scams to the National Consumers League Fraud Center, at fraud.org. For more information, listen to “What You Should Know About Fake Check Scams” in Home & Family Finance Resource Center.

A good credit score puts you in drivers seat

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NEW YORK (11/10/08)--If you're one of those consumers who kept a high credit score--750 or better--you’re in position to negotiate for bargains (Business Week Nov. 3). Retailers already have begun cutting prices, long before holiday spending officially kicks off. And the growing number of foreclosures and bankruptcies are changing underwriting standards for most lenders. That's putting folks with higher credit scores in prime position to capitalize. Two years ago, lenders granted people with a credit score of 650 their most competitive interest rates for mortgages. Today it takes at least 750 points to get the best deal. And it wasn't that long ago that consumers could keep their credit card balances below 35% of their credit limit to maintain a high credit score. Now 20% is the maximum allowed for a top credit score ranking. With the soft housing and auto markets, consumers with a high credit score are in position to negotiate. If you’re buying a home, you might be able to get a contingency clause giving you an out if you can't secure a mortgage rate that fits your finances. And vehicle buyers with top credit scores report they are able to negotiate on both the cost and interest rate for a new vehicle. On the other end of the spectrum, consumers with marginal credit scores often are turned down or asked to put up more collateral. Last month, GMAC, the finance arm of General Motors, announced it would require that borrowers have a credit score of 700 to borrow money for a vehicle (CNNMoney.com Oct. 20). The Credit Union National Association’s Center for Personal Finance, Madison, Wis., offers tips for improving your credit score:
* Pay all bills on time. Payment history makes up about 35% of your score, according to Fair Isaac Corp. Mail bills earlier, pay bills online, or set up auto-pay for bills to be paid directly from your share draft/checking account. * Use less than 25% of your credit limit. A higher utilization rate indicates you’re a high risk for default. It’s best to keep account balances low. * Don’t close all old accounts. Doing so decreases your total line of credit available, resulting in a higher utilization rate. * Maintain a healthy mix of credit. This includes a mortgage, a credit card or two, a personal loan such as a car loan, and perhaps a retail card. * Don’t open a flurry of new accounts. This is especially important right before you apply for a mortgage or other loan. * Pay library fines and parking tickets. Unpaid fines may be reported to a credit reporting agency and viewed negatively by potential lenders.
For more information, read “Tough Times Series: Credit Savvy Is Key to Avoiding Costly Missteps” in Home & Family Finance Resource Center.

Honoring vets Gen. Petraeus spouse on HandFF Radio

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WASHINGTON (11/7/08)--Holly Petraeus--the spouse of Gen. David Petraeus, head of Central Command and former top U.S. commander in Iraq--joins the lineup of guests on H&FF Radio to discuss military benefits, just in time for Veterans Day and a week honoring military members worldwide. Home & Family Finance airs Sundays at 3 p.m. EST on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Ways to Cut the Cost of Your Groceries,” with Sgt. Shopper, aka Karen Jowers, contributor, Military Times, Springfield, Va.; * “U.S. Better Business Bureau Military Line,” with Holly Petraeus, Council of Better Business Bureaus, Arlington, Va.; * “Veterans Benefits Programs,” with Keith Pedigo, associate deputy undersecretary for policy and program management, Department of Veterans Affairs, Washington, D.C.; * “Navigating the Veterans Benefits Maze,” with Shad Meshad, founder/president, National Veterans Foundation, Los Angeles; and * Q&A: Executive order eases federal employment for military spouses.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Visa; and Western Corporate FCU and its member credit unions. For more information, read, “Tough Times Series: Services, Sites Help Veterans Navigate Benefits Maze” in Home & Family Finance Resource Center.

Fed warns of questionable loan solicitations

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WASHINGTON (11/5/08)--The Federal Reserve Board alerted the public Tuesday to instances of questionable solicitations aimed at consumers that promise access to personal loans through a nonexistent Federal Reserve lending program. The scam tells individuals they can work through a broker to access a Federal Reserve program that extends sizable secured loans to consumers. It encourages them to deposit large sums of money into an account, under the guise of a security deposit, to receive the purported loan. The Federal Reserve advised consumers that it is not involved with the solicitations and does not directly sponsor consumer lending programs. The Fed urged consumers to verify the legitimacy of potential service providers before entering into a business transaction. Individuals seeking personal finance options should do business only with reputable lenders, and shop around for the most favorable loan terms, the Fed said. For more information, use the link or call the Federal Reserve Board Help Center at 1-888-851-1920.

Financial tips for turbulent times

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McLEAN, Va. (11/5/08)--Whether you’re an older worker with seemingly few options to recoup significant investment losses, or a younger worker with minimal or no investment savings at all, don’t let the financial crisis scare you into not taking any action at all. Now is the time to take stock of your situation, learn from others’ mistakes and formulate a plan to tough out turbulent times (USA TODAY Oct. 31). Heavy investment losses are disproportionately affecting baby boomers, the oldest of whom turn 62 this year. Although there’s less time for you to recoup losses, that’s not a reason to pull all your money out of the stock market (Moneycentral.msn.com Oct. 17). Even if you’re already in your sixties, to have enough cash to fund 25 years to 35 years of retirement requires a long-term plan. Most important, don’t panic. Regardless of your age, start with the basics and vow to stick with your plan:
* Rebalance your portfolio. Do your investment choices reflect your risk tolerance and investment strategy? * Keep some liquidity. Consider stashing some cash--three to six months’ of living expenses--in a money market account at the credit union, which is insured to at least $250,000 by the National Credit Union Administration at credit unions having federal share insurance. * Increase your contributions. Most stock prices are at low, bargain-basement levels. If possible, bump up your contribution. * Diversify. Don’t put all your investment eggs in one basket. Spread your wealth among a variety of investments: domestic, international, financial services, technology, health care, and so on. * Use dollar-cost averaging. By having, say, $50 each paycheck automatically directed to a mutual fund, your contributions will purchase more shares when the price is low, and fewer shares when the price is high. * Pay down debt. Reduce the choke-hold that credit cards have on your budget. Pay off the highest interest-rate card first, and then apply that payment to the next-highest interest-rate card. Stop charging. * Spend less. Identify needs versus wants, and then set priorities. You’ll be surprised how many needs that you’ve identified are actually wants in disguise. * Work longer. If you’re close to retirement, consider hanging on to your current job longer than planned, if you can. Or, secure part-time work after retirement. This reduces the number of years you’ll dip into savings, and helps build additional savings.
For more information, read “Key to Investing in Recession: Stay Calm” in Plan It: Retire Ready Toolkit.