Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Consumer Archive

Consumer

Struggling Americans use plastic to stay afloat

 Permanent link
ATLANTA (5/19/08)--More Americans are turning to credit cards to keep them afloat as they swim in a sea of debt, spawned by high gasoline and food prices, low savings rates, and shrinking home equity (CNNMoney.com May 9). Saying “charge it” to meet basic living needs is drawing concern from credit counselors nationwide, who report seeing clients dig themselves deeper into debt. Many struggle to scrape together funds just to make minimum payments on their cards. Americans’ credit card debt load soared to $957.2 billion in the first quarter of 2008, a 6.7% increase from the previous quarter (Federal Reserve May 7). And despite reports of banks tightening guidelines and not offering credit to consumers with spotty credit records, mailboxes tell a different story: More than five billion credit card solicitations were sent to U.S. households last year alone (Los Angeles Times May 7). For most Americans, there’s no fall-back. The National Foundation for Credit Counseling and MSN Money 2008 Consumer Financial Literacy Survey, prepared by Princeton Survey Research Associates International (April 29), revealed that the majority of consumers don’t have sufficient emergency funds--defined as three to six months of after-tax income--to cope with layoffs or unexpected expenses. If you feel yourself falling victim to the credit card crunch, take steps now to start climbing back to solid ground:
* Reassess spending habits. Try to identify some budget busters--such as cigarettes, soda, the morning latte, video rentals, or casino visits--that may be draining much-needed funds for gas or food. * Find free or low-cost alternatives. Until your finances get back on track, set a goal to make painless adjustments. Instead of that $3.50 latte, make coffee at home and fill a to-go mug. Borrow free videos from the local library. Or pack a picnic lunch and take the kids to the park. * Revise your written spending plan. Unless you can increase your income, allocate more money for the categories that require more funds (transportation and food), and decrease anticipated spending in other areas. Then stick to your new budget. And if you don’t have a written spending plan, now’s the best time to start one. * Don’t be tempted by new card offers. Shred them right after they come in the door, and then visit dmachoice.org/consumerassistance.php to get your name off prescreened credit card lists. * Steer clear of cash advances. The interest rate is typically higher than for straight purchases. The same goes for payday loans, rent-to-own, and refund anticipation loans--all of which prey on consumers with less-than-stellar credit and charge excessive interest rates and fees. * Check your credit history. If you’ve been late with some payments, check to see if those “dings” made it onto your credit record. They may make it difficult for you to get credit--or get good interest rates on credit--in the near future. Go to annualcreditreport.com to order a free credit report every year from each of the three major credit-reporting agencies. Correct any errors, and vow to pay all bills on time. * Get help. Contact the credit union for help developing a spending plan, particularly during these tough economic times. For help working out a repayment plan with creditors, contact the nearest Consumer Credit Counseling Service by calling 800-388-2227 or visiting nfcc.org. * Put something—even a little—into emergency savings regularly. This cushion will give you some much-needed peace of mind in the months ahead.

Tips for avoiding foreclosure scams offered by OCC

 Permanent link
WASHINGTON (5/19/08)--Foreclosures are up nationwide, and the government is warning consumers that scams promising to "rescue" homeowners from foreclosure are increasing. An Office of the Currency (OCC) consumer advisory warns about these scams:
* Lease-Back or Repurchase Scams. Someone offers to pay your mortgage and rent your home back to you, or promises to sell your house for you. Signing over a deed gives the con artist power to evict you, raise your rent, sell the house or steal the equity in your home. * Refinance Fraud. People posing as mortgage brokers or lenders offer to refinance your loan to more affordable payments. But they may trick you into signing over ownership of your home by telling you that you're signing documents for a new loan. * Bankruptcy Schemes. Several scams attempt to abuse bankruptcy laws. One asks you to give a partial interest in your house to one or more persons. Each holder of a partial interest can then file bankruptcy, one after another. A stay order against foreclosures won't excuse you from having to repay the full amount of your loan.
OCC suggests you protect yourself by:
* Knowing what you are signing; * Getting promises in writing; * Making mortgage payments directly to your lender or mortgage servicer; * Being careful about signing over your deed; and * Reporting suspicious activity to the Federal Trade Commission and to your state and local consumer protection agencies.
For the full advisory, use the link.