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Consumer Archive

Consumer

Old 401k Roll it

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WASHINGTON, D.C. (11/30/09)--If you have money from a former employer in a 401(k), 403(b), or other tax-qualified plan, consider rolling it over to a 401(k) with your current employer. Most employers allow rollovers (Kiplinger’s Nov. 19). Once you’ve determined it’s allowed, you can save yourself a lot of trouble--and money--by asking your former employer to send the cash directly to the new 401(k) plan. It’s a seamless process. Directly rolling over the money instead of withdrawing it and then making the move allows you to transfer your money without being subject to state or federal withholding taxes or withdrawal penalties. There are advantages and disadvantages to rolling your money into your new employer’s 401(k). Advantages:
* Ease in diversification. If your 401(k) balance is low (for example, $5,000), it’s easier to diversify the money than if you try to open a new investment account. In the new 401(k), you can spread the money out regardless of how much you have to invest. * Tax break. The money you invest continues to grow tax-deferred until the moment you start to receive payouts.
Disadvantages:
* Loss of flexibility. You’re bound to whatever investment choices your employer offers. You can’t access your funds again unless you want to take a loan (if allowed) or you terminate employment. * The possibility of high fees. Some 401(k) plans have relatively high fees, especially if your new employer is a small business. You may pay 1% or more for each investment, compared with what you might pay for a comparable investment outside of the plan for half that.
If you decide to roll over your old 401(k) to your new employer’s plan, make sure you’re showing up as a terminated employee at the old company; it can’t release the funds until you’re terminated. While you’re checking, ask for the required paperwork. Finally, after you’ve checked with your old provider, call the new one to find out what it requires to accept the rollover. As you fill in the forms, don’t be reluctant to call either provider with questions about how to fill in the information. You could save yourself setbacks and delays for missing something as simple as one checkmark in a box (Generation X Finance Jan. 15).

Investment scams exploit green theme

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McLEAN, Va. (11/25/09)--“Going green” generally has a positive association, but that wasn’t the case for some unsuspecting seniors looking for eco-friendly investments. The Securities and Exchange Commission recently charged four people and two companies with running a $30 million Ponzi scheme targeting elderly investors and people close to retirement who thought they’d found a green opportunity (USA Today Nov. 16). Victims were encouraged through seminars, the Internet, and phone calls to liquidate their retirement plans and home equity, and buy securities promising returns from 17% to more than 100% a year. Rising health-care costs, low investment returns, and increased life expectancy make seniors prime targets of investment fraud, but consumers of any age can fall victim to these tactics. The National Consumers League, Washington D.C., advises:
* Don’t succumb to high-pressure sales--A good investment opportunity today likely will be here tomorrow. Pressure to act on impulse often is a danger sign of fraud. * Beware promises of quick, large profits--No one can accurately predict how an investment will perform. Investments that promise the highest payoff often are the most risky. * Realize there is always risk--All investments carry risk. Know your risk tolerance before investing. * Get details in writing--Representatives from a legitimate company will be happy to provide all the information you need. * Be wary of testimonials from strangers--Someone you don’t know offering investment advice could be a crook trying to lure you into a scam. * Investigate investment offers--Get help from your state securities regulator, the federal Securities and Exchange Commission (sec.gov), and the North American Securities Administrators Association (nasaa.org). * Use caution when receiving investment opportunity e-mails--Many unsolicited e-mails are fraudulent.
To learn more about senior scams, listen to "Investment Scams Targeting Baby Boomers’ Retirement Savings" in the Home & Family Finance Resource Center.

HandFF Radio warns shoppers discusses taxes debt

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WASHINGTON (11/25/09)--Sunday's H&FF Radio program provides information about shielding your financial identity while holiday shopping, making year-end tax moves, and understanding interchange issues and debt settlement reform. 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:
* "Your Identity is Not for Sale on Black Friday or Cyber Monday," with Scott Stevenson, founder and CEO, Eliminate ID Theft, Atlanta, Ga.; * "Your Income Taxes: What to Do Before Dec. 31," with Ethan Ewing, president, Bills.com, San Mateo, Calif.; * "What You Should Know About Interchange," with Caroline Lane, senior vice president, business development and marketing, CO-OP Financial Services, Rancho Cucamonga, Calif.; and * "Federal Trade Commission Proposes Reform of Debt Settlement Industry: How Reform Will Help You,” with Michael Bovee, founder and president, Consumer Recovery Network, Sandpoint, Idaho.
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; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. For more information, read "Debt Settlement Sets a Costly Trap” and see the “How to Prevent Identity Theft” video in the Home & Family Finance Resource Center.

Debit card donts for the holidays

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DULLES, VA (11/23/09)--As more consumers avoid using their credit cards to keep balances low, debit cards are getting a workout. Debit card transactions are predicted to outpace credit card transactions on Black Friday. As holiday shopping starts, consumers need to be cautious when using a debit card for transactions requiring a personal identification number (PIN) (walletpop.comNov. 12). PIN-based transactions are not covered under a card’s liability policy, which means it may take up to 10 days to get your money back for returned or disputed purchases. Before you head to the mall or websites this holiday season, here’s what you need to know about using a debit card wisely:
* Always pay with a credit card online. Paying with a debit card using your PIN is the same as wiring a retailer cash. If you “fat finger” any entries and end up with multiple items in your virtual shopping cart, you may be out of luck getting a refund. * Keep receipts. They won’t get you a refund faster, but getting one will be easier. * Add “copy of my credit report” to your shopping list. This is a good way to ensure there’s no fraudulent activity on your accounts, and it gives you a baseline for future checkups. Federal law lets you access a free copy of your credit report once every 12 months from each of the three major credit reporting companies: Equifax, Experian, and TransUnion. * To check your credit report for errors, call 877-322-8228 or go online to annualcreditreport.com. You can check your report at all three companies at the same time, or order a report from a different company every four months to monitor your report throughout the year. If you find an error in one report, it's wise to immediately check the others for errors as well. * Act fast if your debit card is stolen or used fraudulently. Report it to your credit union or other card issuer right way. Your liability can be as much as $500 if you wait more than two business days. The responsibility to monitor activity on your account is up to you. * Check the status of your checking account before you shop. That way you’ll know your balance and you can avoid overdraft charges for any debit card purchases that would put you over the top. And, you can set a budget for your holiday spending based on the money available. For more information, see the Debit vs. Credit video in Home & Family Finance Resource Center.

HandFF Radio offers ideas for holiday shopping 2009 taxes

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WASHINGTON (11/20/09)--Sunday's H&FF Radio program provides information about tax credits for home improvements, new income tax deductions and credits for 2009, holiday budget ideas and holiday spending projections. Home & Family Finance airs Sundays at 3 p.m. ET 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:
* “2009 Income Tax Credits for Energy Efficient Home Improvements,” with Ronnie Kweller, director of media relations, Alliance to Save Energy, Washington, D.C.; * “IRS Tax Tips on New Deductions and Credits for 2009,” with Eric Smith, national spokesman, Internal Revenue Service, Washington, D.C.: * “Spend Green without Going in the Red This Holiday Season: Create a Holiday Budget,” with Ethan Ewing, president, Bills.com, San Mateo, Calif.; and * “What Consumer Reports Knows About This Holiday Shopping Season That You Don’t--But Should,” with Ed Farrell, director of market research, Consumers Union, Yonkers, NY.
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; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, read "Earn Tax Credits for Energy-Efficient Improvements” and “’Tis the Season for Trouble-Free Shopping, Returns” in the Home & Family Finance Resource Center.

Get the most bang for your charitable buck this season

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NEW YORK (11/18/09)--The economy, while improving, still will take a toll on 2009 holiday observances: 63% of respondents to a recent Discover Financial Services survey aim to spend less this year on gifts due to personal finance concerns (online.wsj.com Nov. 4). Charities also expect to feel the squeeze as U.S. consumers tighten budgets over the holidays. Among the nation’s largest fund-raisers, half expect donations to drop more than 9% during the period (usatoday.com Nov. 2). With less money to go around this season, it’s even more important to make your charitable dollars go further. Follow these tips to ensure your donations--large or small--have the greatest impact:
* Avoid administrative costs. Some organizations collect a percentage of your cash donation for administrative costs. Contact your charities or research them online to find out what percentage of your donation actually will go to your intended cause. The Better Business Bureau has an excellent online resource at www.bbb.org/charity. * Pinpoint your dollars. Focus on organizations that you care about most. Concentrating your support allows you to give more to a cause instead of spreading the charitable amount to several entities. * Cash instead of food. Food banks often can purchase more with a cash donation than you can at your local grocery store. Instead of buying items to donate, consider donating the amount you would have spent.

New homebuyer tax credit boon for boomers

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NEW YORK (11/16/09)--The new and improved Extended Home Buyer Tax Credit--signed into law Nov. 6--is welcome relief to more than just first-time home buyers. It may be a windfall for boomers or retirees thinking of downsizing (Forbes.com Nov. 6). The previous $8,000 tax credit was available only to first-time home buyers and to anyone who hadn’t been a homeowner during the three years before closing on a new house. Now, longtime homeowners can get a tax credit of up to $6,500, opening the door for anyone thinking of trading down--or up--or moving to a different locale for their retirement years. Whether you’re buying your first house or downsizing, understand the rules:
* Deadlines. To claim either the $8,000 or $6,500 version of the tax credit, you’re required to close on the new house--or be locked into a contract to close--before May 1, 2010. Closing must occur before July 1, 2010 (Bankrate.com Nov. 9). * Maximum allowable credit. For first-time home buyers, it’s $8,000. For current homeowners, it’s $6,500. The allowable tax credit amounts to 10% of the sale price, so if the purchase price is just $75,000, the tax credit would be $7,500. * Threshold. If your house sells for more than $800,000, you won’t qualify for the tax credit. * Purchase dates. You must purchase the house between Nov. 7 and April 30, 2010. * Income limits. Single individuals with modified adjusted gross income (MAGI) of up to $125,000 can qualify for the full credit, up from $75,000 under the old law. For couples filing jointly, the full credit is available for MAGI of up to $225,000--previously $150,000. Above those amounts, there’s a phase-out over the next $20,000. * Eligible properties. The Extended Home Buyer Tax Credit can be applied to primary residences, including single-family houses, condominiums, townhomes, and co-ops. * Size and price requirements. There are none. Your new house doesn’t have to be bigger or more expensive than the old one. And, you don’t have to sell your old house to claim a buyer’s credit. * Paperwork. You’re required to attach a copy of the new house’s settlement statement to the federal tax return for the year of purchase. This proof of purchase is intended to cut down on fraud and questionable tax accounting associated with the previous tax credit legislation. * Flippers. If you move within 36 months after the new purchase, you may have to pay back the credit.
Military personnel who serve outside the U.S. for at least 90 days in 2009 or 2010 get an extra year to claim the credit. Any servicemember who’s forced to sell a house because of a military service assignment won’t be required to pay back the credit. Finally, be on the lookout for tax fraud. If anyone in the transaction advises you to conceal information from your lender, walk away and cease all communication with that individual.

HandFF Radio examines new credit card rules

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WASHINGTON (11/13/09)--Sunday's H&FF Radio show takes a look at how the new credit card rules affect consumers, how to reduce credit card debt, and an insider’s tips to spending and saving wisely. 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:
* "Power Through Credit Card Debt,” with Susan Tiffany, director, consumer periodicals, CUNA, Madison, Wis.; * "1,001 Things They Won’t Tell You: An Insider’s Guide to Spending, Saving, and Living Wisely,” with Jonathan Dahl, editor-in-chief, SmartMoney magazine, Wall Street Journal, New York, N.Y.; * "Provisions of the Credit Card Act of 2009,” with Pamela Banks, policy counsel, Consumers Union, Washington, D.C.; and * "Sweeping Change In Credit Card Rules: How They Affect You,” with Adam Levin, founder and chairman, Credit.com, New York, N.Y.
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; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, read "How new credit card law affects you now" and view the “Managing Credit Card Debt” video in Home & Family Finance Resource Center.

A free credit report can cost you 14.95month

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NEW YORK (11/11/09)--Although consumers can request free credit reports online at annualcreditreport.com, many are being lured to other sites, such as freecreditreport.com (an Experian company) and ultimately are paying for unnecessary monthly credit-monitoring fees (The New York Times Nov. 3). Multiple sites advertise “free” credit reports, but you’re actually enrolling in a service that will monitor any changes in your credit reports. The only way to get the report at no cost from these sites is to cancel the service during the trial period. And it appears that not many are cancelling. Some nine million consumers are spending nearly $700 million annually on these services, according to Carter Malloy, a Stephens Inc. analyst. So what does $14.95 a month in credit monitoring get you? Most offers bundle a copy of your credit report with a credit score (a three-digit number, based on the history in your credit report) with e-mail alerts of changes to your credit report through at least one credit bureau. Yes, credit monitoring will tell you what’s being reported to your credit history. No, it won’t prevent credit card fraud or identity theft. If someone else is using your credit card, you’ll see the charges on your statement, not in a credit report. Credit report monitoring could, however, spot an unauthorized loan or credit card opened in your name. Bottom line: Unless you’ve been a victim of identity theft, daily credit report monitoring is probably unnecessary. “I knew they had roped me into this thing after I started getting these e-mails,” says Philip Neustrom in an interview with The New York Times. After six months, Neustrom cancelled the Experian service—never once having used the monitoring. “There are only so many things you can do in a day,” he added. The Fair and Accurate Credit Transactions Act (FACT Act) of 2003 requires each of the three major credit bureaus to provide one free annual credit report to consumers requesting a copy. The government-authorized site, annualcreditreport.com, is a portal that sends consumers to one of three bureaus for a free report. Still, be on your guard. Once at an individual credit bureau’s site, you’ll most likely be offered additional services for a charge. You can, however, take a pass, getting just your free credit report. Since you’re entitled to a free annual report from each bureau, you can stagger them throughout the year for continuous monitoring. For more information about managing credit, view the “Build Your Best Credit Score” video in Home & Family Finance Resource Center.

Help pay for college without risking students aid

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WASHINGTON, D.C. (11/9/09)--With the gap between the average annual cost of attending a four-year public university ($14,333) and the average annual amount of financial aid ($8,896) topping $5,400 a year, help from family members is becoming increasingly important. In fact, 65% of grandparents told the College Savings Foundation that they intend to chip in for their grandchildren’s higher education (CNNMoney.com Nov. 2). But as welcome as free money from a relative may be, unless you make the gift properly, it actually can reduce a student’s financial aid. A student must report assets to the government through the Free Application for Federal Student Aid (FAFSA). If money a student receives is considered income, it has the unfortunate effect of reducing the aid award by up to 50 cents on the dollar. Here are three alternatives from the Credit Union National Association for improving the amount of financial assistance you can deliver without negating the amount of financial aid:
* Good: Give money to the parent. This increases parental assets but, because of the way the aid calculation works, such a gift has a much smaller negative effect on the student's financial aid--less than 6%. Of course, be sure not to exceed the annual gift-tax exclusion, which is $13,000 for 2009. * Better: Participate in a 529 plan. Depending on the rules in your state, these International Revenue Service-authorized plans allow you to contribute up to $13,000 a year or a lump sum of $65,000. As long as the plan is in your name, its balance doesn’t become an asset to the student until distributions start flowing. The 529 plans come in two flavors--a savings plan that operates like an individual retirement account (IRA) or 401(k) investment account or a prepaid tuition fund. Unfortunately, recent stock market declines have squeezed prepaid funds, forcing some states to reject new enrollees and others to raise fees. In either case, it’s smart to consult with your financial adviser about 529 plan setup details. * Best: Help the new graduate pay off student loans to the tune of the annual gift-tax exclusion. This won’t help the student avoid debt, but neither will it harm aid eligibility. And as an added bonus, it’s a welcome reward for successfully earning a college degree.

HandFF Radio covers financial tips for veterans

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WASHINGTON (11/6/09)--Sunday's H&FF Radio show addresses financial topics for military families: Cutting grocery costs, the Better Business Bureau (BBB) Military Line, and veterans benefits. Home & Family Finance airs Sundays at 3 p.m. ET 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, a.k.a. Karen Jowers, contributor, Military Times, Springfield, Va.; * "U.S. Better Business Bureau Military Line--What’s There for You?” with Holly Petraeus, director BBB Military Line, U.S. Better Business Bureau, Arlington, Va.; * "Veterans Benefits,” with Keith Pedigo, associate deputy undersecretary for policy and program management, Department of Veterans Affairs, Washington, D.C.; and * "Navigating the Veterans' Benefits Maze,” with Shad Meshad, founder and president, National Veterans Foundation, Los Angeles, Calif.
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; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. For more information, read "Tough Times Series: Gouged by Groceries" and "Tough Times Series: Services, Sites Help Veterans Navigate Benefits Maze” in Home & Family Finance Resource Center.

Mortgage market has opportunities for consumers

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MADISON, Wis. (11/4/09)--Nearly 6.5 million home owners are deciding whether to stay with their adjustable-rate mortgages or lock in fixed rates (Money November). In fact, September’s 9.4% sales increase was the largest monthly hike in 26 years as buyers moved to qualify for the first-time buyers incentives expiring this month. Nationwide, sales are up nearly 24% since January (MSNBC Oct. 23). Foreclosures and short sales--where the mortgage exceeds the sales price--have forced prices downward 9% from a year earlier. The median price in September was $174,900, down from $191,200 in September 2008. And prices could fall further if unemployment, expected to rise to 10.5% next year, leads to more foreclosures. Inventories of unsold homes, which fell about 7% in September, are at their lowest level since March of 2007 but could well rise with higher unemployment. In fact, what is happening in the mortgage market is regional. During the past three years, home prices in metro areas of 23 states recorded gains. The South, the Plains, and most of the non-coastal West showed some ability to weather the stormy mortgage market, according to Fiserv (CNN/Money Oct. 21). Meanwhile, 16 states--those in the Northeast plus California, Florida, Nevada, and Arizona--have posted declines. For many consumers, the issue is whether to lock in a fixed rate. Roughly 6.5 million homeowners have adjustable-rate mortgages (ARMs) and many of those notes are coming up for adjustment. For the short term, consumers with ARMs should be fine. But once the economy stabilizes and the government starts to remove policies that are keeping mortgage rates low, rates are likely to rise. Here are some thoughts about whether to stand pat with your ARM or move to a fixed rate:
* If you plan to move within the next three years, if you have less than 20% equity in your home and home prices have taken a beating in your community, or if you have a jumbo mortgage, you may be better off with your existing ARM. * If you plan to move in the next three to five years or you have a jumbo mortgage, look at a 5/1 ARM. (A 5/1 ARM locks your interest rate for the first five years and then can adjust annually for the life of the loan.) * If you plan to stay in your home for more than five years, or you plan to use the equity in your home for college expenses or some other need, you may want to look at a fixed-rate mortgage now; they are not likely to go lower after the next year or so. * If you have doubts about your future plans, it is usually safer to lock in a low rate while you can.