SC Credit Monitoring Update

If you were affected by last year’s South Carolina Department of Revenue security breach (SCDOR), be sure to enroll in the free credit monitoring service that opened enrollment on October 24^th. The State of South Carolina has signed a year contract with CSID, a leading provider of comprehensive identity protection. 

All eligible SC Taxpayers may enroll at www.scidprotection.com or by calling 855-880-2743.

Once you enroll yourself, be sure to add your minor child or children. As a courtesy the state is offering Child Monitoring coverage through CSID for children under age 18, for up to 12 months. This coverage allows you to monitor any addresses and aliases associated with your child’s Social Security Number, and see if your child’s personal information is being bought or sold online.

 

Be sure to watch out though; last year’s provider of ID protection, Experian, is still sending offers to extend their identity protection services to SC Taxpayers for 99 cents a month, despite the free protection offered by the state through CSID. Experian would make about $18 million if all of the 1.5 million affected taxpayers who signed up last year with them took the offer.

Check with SCDOR at http://www.sctax.org/security.html for updates. The state is anticipating that it may have to pay for taxpayer protection for years.

Further Security Tips

As a preventative and an effective layer of security, our experts here at FSI advise not to pay out for protection, but rather freeze your own credit report and self-monitor. Credit freezes are one of the most effective tools against ID theft available to consumers.  And it is completely free!

Make sure any online websites where you input sensitive information is secure. A good indicator of a secure website is an https versus http web address. If you're just browsing the web and not entering any sensitive information, http is fine. However, on pages where you enter your password, credit card number, or other financial information, you should always look for the https prefix. Additionally, never store your information, specifically passwords or Social Security Numbers, on Internet browsers.

Identity manipulation and theft victimizes more than 15 million United States residents each year. That is SEVEN percent of all adults, with financial losses totaling near $50 billion. ID and credit protection is important. By taking the time to secure your credit, you will save yourself from the havoc, time, stress, and expense it takes to resolve ID theft.

Find more tips here: http://www.fsisc.org/topic.asp?pid=142. 

Written by: Sarah Cornwall, Marketing Resources, at Family Services, Inc.

Making Ends Meet: Budgeting made easy!

Forget penny-pinching, unless you enjoy that. We like to make budgeting fun. Making minor adjustments to your financial behavior can make a world of difference.

• Start with a WARM-UP. No one ever begins an exercise routine with a marathon. Pledge a few minutes a day for a week to get organized. Gather those bills and sort them into piles. Maybe even create a calendar with bill due dates. If you are “techy,” try a Google calendar with reminder emails.

• Time to ASSESS. The next week, use that same few minutes a day to check in on your financial health. Look up your credit score on annualcreditreport.com (nowhere else, please!), check your bank account balances, and review your retirement plan.

• Now... PLAN with a purpose! Choose a goal that would change your life in the short-term. Maybe you want to switch careers, go back to school, maybe BUY A HOUSE?!

• STRATEGIZE. Break that goal into smaller pieces. Once you accomplish it,
move on to the next goal!

And, if you decide that buying a home may be one of your upcoming life goals, be sure to contact us!We can assist you in credit improvement, budgeting, debt management, and homebuyer education.


Call to learn more or to schedule an appointment at 843.735.7862 or email info@fsisc.org.


Written by: Jenna Johnson, Marketing and Development Director at Family Services, Inc.

April's Credit Club!

Click here to register!!!

Consumers Remain Committed to Using Credit Cards

National Foundation for Credit Counseling Poll Reveals Top Financial Resolutions

Washington, DC – According to the National Foundation for Credit Counseling (NFCC) December online poll, consumers remain very connected to their credit cards. When asked to rank their 2012 financial resolutions, only six percent of more than 2,300 respondents indicated that decreasing dependence on credit cards was their number one goal.

“At first glance, that statistic could appear to be a warning sign of future trouble. However, credit is not the problem. Instead, it is the misuse of credit that leads people into financial distress,” said Gail Cunningham, spokesperson for the NFCC.

Balancing the continuing reliance upon credit, an encouraging statistic from the poll is that the overwhelming majority, 62 percent, selected decreasing debt as their focus for 2012. “If consumers are able to decrease their debt load, continuing to use credit responsibly will help them meet the goal selected by 24 percent of respondents, that of increasing their credit score,” continued Cunningham.

While decreasing debt is always a positive, consumers should not neglect savings, yet that is exactly what respondents appear to be doing. Only eight percent of those weighing in ranked saving as their most important resolution. Without the security of a well-funded emergency savings account, consumers are living without a financial safety net, as unplanned expenses will occur, usually at the worst possible time.

The poll also revealed some interesting trending from 2010 when the identical question was posed. Showing the largest percentage difference between the years, the 2010 poll noted 69 percent of respondents were most interested in decreasing debt, compared to 62 percent in 2011.

The second largest year-over-year difference involved improving the credit score, with that category posting a six percent increase. In 2010, 18 percent of consumers chose increasing their credit score as their main goal, while in 2011, 24 percent selected that category as most important in the New Year. This increase indicates that consumers understand the relationship between the credit score and obtaining credit, confirming their interest in continuing to have access to credit.

“The poll suggests that consumers have recognized the importance of achieving financial stability, and intend to action. Nonetheless, even though paying down debt and improving the credit score are positive steps, the low priority placed on savings is disturbing,” said Cunningham.

The actual poll question and answers are as follows:

My #1 financial New Year’s resolution for 2012 is to:

A. Decrease debt 62% (December 2010 poll = 69%)

B. Increase savings 8% (December 2010 poll = 7%)

C. Improve my credit score 24% (December 2010 poll = 18%)

D. Decrease my dependence on credit cards 6% (December 2010 poll = 7%)

Note: The NFCC’s December Financial Literacy Opinion Index was conducted via the homepage of the NFCC Web site (www.DebtAdvice.org) from December 1 - 31, 2011 and was answered by 2,319 individuals.

If You Want to Improve Your FICO Scores…Paying Off Credit Debt Reigns Supreme

When it comes to boosting your FICO credit scores there are a variety of strategies that will yield varying amounts of improvement. Many people believe that getting negative information removed from your credit reports is the number one way to increase your scores. This is correct but only if the consumer is successful at getting most, if not all, of the negative information removed. Getting one of your twelve collections removed isn’t going to do anything for your scores.

A much more actionable (and realistic) way to increase your scores is to pay off debt. Not only is this a proven way to earn better scores but also it’s practically immediate. Paying down debt can result in a better score in less than 30 days, which is lightening fast in the slow moving credit-reporting environment.

But before you crack open your checkbook you’ll want to consider WHICH debt you’re going to eliminate. Why? Because when it comes to improving your credit scores not all “debt elimination” is created equal. In fact, paying some huge debts will yield little to no score improvement while paying smaller debts can result in meaningful score boost.

Using a scoring tool built by FICO, I recently simulated the following “pay off” scenarios and measured their impact to a FICO score of 630, which is clearly one that you’d like to improve. Nothing other than the following actions changed on the credit report.

1) Paying off a $250,000 mortgage

2) Paying off a $35,000 auto loan

3) Paying off a $5,000 credit card

The results are as follows…

Paying off a mortgage loan of $250,000 improved FICO 630 to FICO 635

I’ve been telling people for many years that installment debt, even in large amounts, doesn’t have much of an impact to your scores. This is the quantification of that advice. And while this is just a simulation, in 2010 I sold a house and eliminated a $249,000 mortgage and my FICO scores went up four points.

Paying off an auto loan of $35,000 improved FICO 630 to FICO 635

An auto loan is an installment loan (like a mortgage) and the effect of paying it off is equally unimpressive from a scoring perspective. Don’t get me wrong; it’s nice not having a monthly car payment. And, it’ll save you big bucks not paying interest on a $35,000 loan any longer.

Paying off a credit card balance of $5,000 improved FICO 630 to FICO 665

Eliminating the credit card debt resulted in the largest improvement to the credit score, and really it wasn’t even a close race. Credit card debt is scientifically proven to be a riskier type of credit for lenders to extend, which means even smaller amounts like what was used in the simulation can have a significant impact to your FICO scores. It also means if you can pay it off your scores will improve a lot, and very quickly. And even if you can’t pay off your credit cards 100%, your scores will still improve by paying it down as much as possible.

Now, where’s my checkbook?

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.

Consumer Credit Soars On Largest Card Debt Jump In Three Years

Consumer credit rose by $5.08 billion in May, marking the eighth straight monthly increase, as credit card debt had its largest gain in three years, according to the Federal Reserve's monthly G.19 report.

Revolving credit, 98% of which is credit card debt, soared by $3.36 billion after declining by $876.7 million in April. It marks the biggest increase in credit card debt for any month since mid-2008.

The figures suggest a willingness to keep borrowing despite a tight job market and unstable economy. It's possible the rise is occurring as consumers facing limited job prospects turn to credit cards more often to pay bills. (emphasis mine)

Non-revolving credit, which includes categories such as student loans and auto loans, expanded by $1.7 billion in May after shooting up by $6.54 billion in April.

The total of all consumer credit outstanding in May reached $2.432 trillion, up from a total of $2.427 trillion in April.

Start when you are young… Credit Cents

Those first few years completely free from parental supervision and financial support bring some very exciting firsts. First apartment, first job, first budget . . . It can all be very overwhelming. With everything happening all at once, it can be hard to know what is best for your finances. Here are a few basics to keep in mind.

• Make a budget. If you've heard it once, you've heard it a thousand times, constructing a budget can be your greatest ally when it comes to managing your finances. Those first paychecks may inspire you to make rash spending decisions. Impulse purchases can throw you into debt, which is never a good starting point.
• Prioritize. While you're putting together your budget, it's important to prioritize your monthly expenses, and your debt. Bills–rent, utilities, etc–need to go first; those are costs that you cannot avoid. Next come any loans (student, car, etc.) or other debt repayment. For the sake of your credit score, it is crucial that you make your payments on time. And if you have credit card debt, make sure to pay more than the required minimum whenever possible, and always put any extra funds toward paying off the one with the highest interest rate. Consider paying yourself each month one of your necessary financial obligations each month; saving just $20 a month can make a huge difference.
• Ensure you're insured. Health, disability and life insurance are often offered through employers, so make sure you're covered for life's "in case" events. Recent health-reform legislation allows you to stay on your parents' health insurance until age 26. After that you're on your own. Make sure you fully understand and are signed up for the insurance policies most beneficial for you.
• Look down the road. It may sound ridiculous to be planning your life ten years from now, but having an idea of where you want to be can help you form a plan for your spending and saving today. Do you want to own a home? Get married? Have kids? Your credit score and savings have a tremendous impact on all of these milestones, and you don't want to be looking back thinking, "If I'd only had a financial plan . . ."

Need budgeting help? Already have more credit card debt than you can manage?

Contact our non-profit Consumer Credit Counseling or Homeownership Resource Center for FREE budgeting, credit card counseling, home ownership opportunities and foreclosure counseling. info@fsisc.org phone 800-232-6489

Family Services, Inc. is a non-profit organization with HUD certified and South Carolina licensed consumer credit counselors.

10 Expenses to Cut to Help Pay Off Credit Debt

Even small cuts make a difference, so examine your costs in these 10 areas first.

If you find yourself falling deeper into credit card trouble, it's time to take a hard look at what's coming in, what's going out and see where you can free up some cash quickly to start hacking away at your debt.

Some trims may seem small, but if you package several of them together, you can soon get started on a respectable payment plan.

Here are some ideas for places to turn first.

1. Cell Phones

"For $9.88, you can buy a TracFone (prepaid cell phone) with pretty decent coverage and pay by the minute," says Mike Sullivan, director of education at Take Charge America in Phoenix. "And if you're careful, you can end up saving $40 to $50 a month off a typical $80 cell phone bill." He also recommends canceling your land line unless you have medical issues that may require emergency calls.

2. Cable/Satellite

Most people can save money just by getting rid of the extra pay packages they have -- such as premium movie channels and extra services. "If you're really in trouble, cancel the whole package," Sullivan says. Check out the library for free movies, DVDs and CDs to bridge the entertainment gap.

3. Homeowners Insurance and Car Insurance

By increasing the deductible of your policy from $500 to $1,000, you can see big decreases on your premium, says Michael Barry, vice president of media relations for Insurance Information Institute in New York. "People pay about $880 a year, so if I can knock $88 off, it's a start." Regarding auto insurance, take a look at your collision insurance if you have an older car. If you have even a fender-bender, sometimes the cost to repair the car would be more than it's worth, so perhaps you could cancel the collision insurance altogether. First, look up the value of the car at Kelley Blue Book, Edmunds.com or the National Automobile Dealers Association, then check the collision line on your auto insurance bill and see what it's worth to you to keep that insurance. Also, if you don't drive that car much, look for a discount. "If you drive from 7,000 to 7,500 miles a year, you can often qualify for low-mileage discounts," Barry says.

4. Transportation

Americans are increasingly finding alternatives here. In fact, consumers spent 11 percent less last year in this category, according to the Bureau of Labor Statistics' 2009 Consumer Expenditures Survey released in October. If you have more than one car, this may be the time to look at downsizing to just one car and getting around with better planning, carpooling, bike riding, public transportation or car sharing. Car-sharing companies such as Zipcar operate in a growing number of cities and on many university campuses. You can rent a car by the hour when you have to have one without the expense of insuring and maintaining your own car.

5. Utilities

"People often overlook programmable thermostats," says Edward Tonini, director of education of Alliance Credit Counseling in Charlotte, N.C. "You can spend $20 to get a programmable thermostat and if you set it right, it can save you $100 over the course of a year easily."

6. Food

Households spent an average of just more than $300 a month on food eaten at home and about $215 per month on food outside the home in 2009, the BLS survey reported. "Maybe eating out isn't necessary for you," Tonini says. "Packing lunches and eating at home will lower your discretionary spending."

7. Gym Membership

Are you really using it multiple times a week? Divide your monthly dues by the number of times you go in a month and get a realistic picture of what you're spending on a one-hour workout. Park districts or community centers often have low-cost or free programs. Also check into exercise videos or a piece of home exercise equipment that you would use regularly. If you decide to keep the membership, check to see whether the facility offers discounts for coming at off-peak times.

8. Movies

A family of four can quickly rack up nearly $100 on one movie with popcorn, drinks and maybe even parking fees. "Instead of going to the movies, have a game night at home. It sounds kind of corny, but it will be more meaningful than sitting in the dark when you can't talk to each other," says Dave Gilbreath, a regional director with Apprisen Financial Advocates in Yakima, Wash.

9. Tax Relief

Wendy Burkholder, executive director of Consumer Credit Counseling Service of Hawaii in Honolulu, says, "Many of the families we work with are struggling with credit card debt because of loss of income. One of the first things to do is re-evaluate your tax withholding on your paycheck (if your spouse or partner has lost a job). If you don't make the change, you end up with a whopping refund. You don't need the money a year from now, you need it now." If you're overpaying taxes, you're also giving the government a free loan and are likely putting off paying for your own bills, which can lead to fees and penalties, she says.

10. Health Insurance for Dependents

"If you're struggling with loss of income, you may no longer be able to afford $600 being deducted from a paycheck to cover your dependents," Burkholder says. She suggests checking to see whether you now qualify for a state or federal coverage plan for dependents, such as the Children's Health Insurance Plan, or coverage by health care providers that may offer reduced prices for basic health care for children.

Deciding what to cut first will be different for every consumer, but whatever the choice, it should be sustainable, rather than a one-time quick fix, Tonini says. Sometimes it's cutting out the daily $4 coffee, but "they need to figure out what their 'latte factor' is."

Happy Holidays from Family Services everyone!

What You Should Know About the New Credit Card Reform Law

From the Counselor’s Corner…
What You Should Know About the New Credit Card Reform Law
By Toby Smith

When it comes to consumers and their credit cards, it’s definitely a thin line between love and hate. While valued for providing convenience and satisfying the need for instant gratification, credit cards are also equally loathed for the destruction left in the wake of excessive usage.
Does this sound familiar?

Let me tell you about Bob (not his real name)….

Encouraged by his father to establish credit early, Bob took that advice. For the past few decades, he has gently carried about $58,000 in credit card debt as gently as he cradles his new grandson. Bills were always paid on time and with more than the minimum. Bob knew that keeping his balances below 30% would help maintain his high credit score and any extra usage was always paid off in full. He had such a great rapport with his credit card companies--or so he thought--that his credit limits were often increased with one quick call. Life was sweet for Bob…until last year.

Due to the continued downturn in the economy, and for the first time in years, Bob missed one payment to his creditor. He called to explain, but the damage was done. That creditor jacked his 7% interest rate up to 18% and soon after, several other creditors followed suit. Bob had heard about the universal default clause, which allows creditors to take this type of action, but surely that didn’t apply to him because he was a good customer. Bob was furious about the damage to his credit, but another grave realization caught his attention--the monthly payments for his credit cards just about eclipsed his monthly income. The increase in interest rates had nearly doubled the amount due and he couldn’t keep up. But his misery wasn’t over yet. The next thing the credit card company did was reduce the amount of available credit. Credit cards with a $1,200 limit were cut to $600; and another was cut from $1,000 to $500. The lack of available credit made it impossible for him to keep the credit train moving. Bob, who always prided himself for swimming like a champion, was now drowning in credit card debt-- and it all happened so quickly! He is now consulting with bankruptcy attorneys.

Enter the Credit Card Accountability and Responsibility Act of 2009

Introduced in the House of Representatives and Senate in January and February 2009, respectively, the Act represents “the most sweeping changes in how credit cards are marketed, advertised and managed in decades.” (Obama signs credit card reforms into law; Prater, Connie,February 22, 2010: Creditcard.com) The Act is exhaustive. Public Law 111-24, 33 pages long, spells out a laundry list of consumer protections, requirements for creditors and regulators, and offers protection and provisions for dealing with those under 21.

The law takes effect in phases—the first took place last August when consumers had to be notified of imminent changes. Phase two began February 22, with the bulk of the popular provisions coming into play, including limited interest rate increases; getting rid of the dreaded universal default clause with a few exceptions; ending the double-cycle billing (practice of applying interest to two full cycles of credit card balances rather than just the current one); implementing the consumer right to opt out of over the limit transactions and many other provisions. Of special note is that consumers will have more time to pay, at least 21 days; clear dates and times of payment posting will be outlined; limits will be set for over-the-limit fees; those with poor credit will get some relief in dealing with subprime credit cards—upfront fees can’t exceed 25% of available credit; and clear disclosures must provided concerning the consequences of making minimum payments. A few additional provisions relating to reducing annual percentage rates for cardholders who have paid on time for the previous six months and setting time limits on gift cards will take effect in August 2010.

It’s important to note that the new law does not apply to businesses; there is no cap on interest rates; interest rates, if based on a variable annual percentage rate, can increase if the prime rate increases; credit card companies can still close accounts and reduce available credit lines without prior notification, and the interest rates can be raised on future purchases.

What About Bob?

Can these changes help improve his immediate situation? In August, the third phase of the reforms kicks in and Bob will have the opportunity to request that his annual percentage rate be returned to where it was. This can only happen if he is able to make on-time payments for the six months prior to the request. If he can get a reduction in interest rates, the amount of money going out of the house each month will decrease, which should give him and his family a bit of breathing room for him. Will it be enough to prevent a bankruptcy? It’s too soon to know, but he is working on increasing his income, and reducing his reliance on credit cards.

For consumers new to the world of credit, the Act will provide a stronger framework for doing business, but the basic tenets of credit card usage still rule: credit should not be used as an extension of income; balances should be kept to 30% or less; and consistent pay off with designated funds—not the mortgage money or the car payment—will get the desired results.
Next time, we will review the impact of the new law for those under 21….

If you have any questions about your credit, the new laws or would like some advice feel free to give us a call or check out our website for resources. We also have a variety of helpful classes and programs available that address credit issues:

Credit Cents

Debt Management Program

Bankruptcy Counseling

**Not his real name

A summary of the Act, written by the Congressional Research Service, a nonpartisan arm of the Library of Congress, follows:

Title I - Consumer Protection

Section 101 -

Amends the Truth in Lending Act (TILA), with respect to credit card accounts under an open end consumer credit plan, to require a creditor to provide written notice not later than 45 days prior to the effective date of: (1) any increase in an annual percentage rate (APR); and (2) any significant change, as determined by rule of the Federal Reserve Board, in the terms of the cardholder agreement (including an increase in fees or finance charges). Prohibits a creditor from increasing any annual percentage rate (APR) of interest, fee, or finance charge applicable to the existing balance on an open end consumer credit card account unless specified conditions are met. Allows a creditor to increase an APR, fee, or finance charge only if the increase is due solely to: (1) expiration of a specified time period (e.g., promotional period) disclosed clearly and conspicuously to the consumer before commencement of the time period; (2) a change in index not under the creditor's control; (3) payment not received during the 30-day grace period after the due date; or (4) completion of a workout or temporary hardship arrangement, or the consumer's failure to comply with such an arrangement. Prohibits any APR increase relating to such an arrangement from exceeding the APR applicable to the particular category of transactions on the day before the effective date of the arrangement. Prohibits a creditor from changing the terms governing repayment of an outstanding balance; but permits the creditor to provide the obligor with specified repayment methods. Requires a creditor that increases the APR based upon factors including the obligor's credit risk, market conditions, or other factors to: (1) consider changes in such factors in subsequently determining whether to reduce the APR for such obligor; and (2) reduce the APR when a review indicates a reduction. Declares that no increase in any APR, fee, or finance charge, with certain exceptions, shall be effective before the end of the one-year period beginning on the date on which the account is opened. States that, in the case of a promotional rate, no written notice of an increase in the APR shall be effective before the end of a six-month period beginning from the date the promotional rate takes effect.

Section 102 -
Prohibits imposition of a finance charge, with certain exceptions, upon a credit card account balance that is based on balances for days in billing cycles preceding the most recent billing cycle (double billing cycle) as a result of the loss of any grace period. Prohibits penalties for on-time payments. Prohibits the charge of an over-the-limit fee unless the consumer expressly permits the creditor to complete the relevant transaction (opt-in). Allows imposition of an over-the-limit fee only once during a billing cycle. Prohibits its imposition more than once in two subsequent billing cycles with respect to such excess credit, unless the consumer: (1) has obtained an additional extension of credit in excess of the credit limit during any such subsequent cycle; or (2) reduces the outstanding balance below the credit limit as of the end of such billing cycle. Prohibits a creditor from imposing a separate fee related to the method of payment (by mail, electronic transfer, telephone authorization, or other means), unless the payment involves an expedited service by the creditor's service representative. Requires any penalty fee or charge to be reasonable and proportional to the omission or violation involved. Directs the Federal Reserve Board to establish standards for assessing whether the amount of any penalty fee or charge is reasonable and proportional to the omission or violation to which the fee or charge relates.

Section 103 -
Limits the use of the term "fixed," in conjunction with an APR or applicable interest rate, to a rate that will not change or vary for any reason over the period specified clearly and conspicuously in the terms of the account.

Section 104 -
Revises requirements governing crediting of payments. Requires a card issuer, upon receipt of payment, to apply amounts in excess of the minimum payment amount first to the balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted. Requires a creditor to allocate the entire amount paid in excess of the minimum payment to a balance on which interest is deferred during the last two billing cycles immediately preceding the expiration of the period during which interest is deferred. Prohibits a card issuer from imposing any late fee or finance charge for a late payment if: (1) the issuer makes a material change in the mailing address, office, or procedures for handling cardholder payments; and (2) such change causes a material delay in the crediting of payment made during the 60-day period following the date on which such change took effect.

Section 105 -
Prescribes a standard for the initial issuance of subprime or "fee harvester" cards (accounts requiring first-year fee payments in excess of 25% of the total amount of credit authorized). Prohibits payment of any fee from the credit made available by the card (other than any late fee, over-the-limit fee, or any fee for a payment returned for insufficient funds).

Section 106 -
Requires the payment due date to be the same day each month, or the next business day if such date falls on a weekend or holiday. Revises requirements for the timing of payments and the grace period. Requires each periodic statement of payment due to be mailed no later than 21 days before the payment due date.

Section 107 -
Revises civil penalties for creditor noncompliance with TILA. Includes in such penalties twice the amount of any finance charge in connection with a transaction, between $500 and $5,000 (or a higher amount in the case of an established pattern or practice of noncompliance), in the case of an individual action relating to an open end consumer credit plan that is not secured by real property or a dwelling.

Section 109 -
Requires a card issuer to consider the ability of the consumer to make required payments as a prerequisite to opening any consumer credit card account, or increasing any credit limit.
Title II - Enhanced Consumer Disclosures

Section 201 -
Revises and expands requirements for mandatory minimum payment disclosures a creditor must furnish. Directs the Federal Reserve Board to issue guidelines, by rule, for the establishment and maintenance by creditors of a toll-free telephone number for purposes of providing information about accessing credit counseling and debt management services.

Section 202 -
Revises requirements relating to late payment deadlines. Requires specified disclosures relating to increases in interest rates for late payments. States that the date on which the obligor makes a payment at the local branch of a creditor financial institution shall be considered to be the date on which the payment is made for purposes of determining whether a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment.

Section 203 -
Requires a card issuer that has changed or amended any term of the account since the last renewal that has not been previously disclosed to make such a disclosure to the consumer by a certain deadline.

Section 204 -
Requires creditors to post on an Internet site the written agreement between the creditor and the consumer for each open-end consumer credit plan.

Section 205 -
Amends the Fair Credit Reporting Act to require any advertisement for a free credit report to disclose prominently that free credit reports are available under federal law at AnnualCreditReport.com (or other authorized source).

Title III - Protection of Young Consumers

Section 301 -
Amends TILA to prohibit extensions of credit to consumers under age 21, unless the consumer has submitted a written application that meets specified requirements. Requires any such application to be signed by a cosigner, including the parent, legal guardian, spouse, or any other individual who has attained the age of 21 having a means to repay debts incurred by the consumer in connection with the account.

Section 302 -
Amends the Fair Credit Reporting Act to permit a consumer reporting agency to furnish a consumer report regarding credit or insurance transactions that are not initiated by the consumer only if the report does not contain a date of birth that shows that the consumer has not attained the age of 21, or, if the date of birth on the consumer report shows that the consumer has not attained the age of 21, the consumer consents to the furnishing of such report.

Section 303 -
Amends TILA to require approval by the jointly liable party to increase credit lines for accounts for which a parent, legal guardian, spouse of the consumer, or any other individual is jointly liable.

Section 304 -
Requires an institution of higher education to disclose publicly any agreement made with a card issuer or creditor for the purpose of marketing a credit card. Prohibits a card issuer or creditor from offering to a student at an institution of higher education any tangible item as inducement to participate in an open end consumer credit plan if such offer is made: (1) on or near the campus of the institution; or (2) at an event sponsored by or related to such institution. Expresses the sense of Congress that each institution of higher education should consider adopting the following policies relating to credit cards: (1) that any card issuer that markets a credit card on the campus notify the institution of the location at which such marketing will take place; (2) that the number of locations on the campus at which the marketing of credit cards takes place be limited; and (3) that credit card and debt education and counseling sessions be offered as a regular part of any orientation program for new students.

Section 305 -
Requires each creditor to submit an annual report to the Federal Reserve Board containing the terms and conditions of all business, marketing, and promotional agreements and college affinity card agreements with an institution of higher education, or with an affiliated or related alumni organization or foundation, with respect to any college student credit card issued to a college student at such institution. Directs to the Federal Reserve Board to report to Congress, and make available to the public, on the information concerning credit card agreements submitted to it by each institution of higher education, alumni organization, or foundation. Directs the Comptroller General to review and report to Congress about the mandatory reports submitted by creditors as well as their marketing practices to determine the impact that college affinity card agreements and college student card agreements have upon credit card debt.

Title IV - Gift Cards

Section 401 -

Amends the Electronic Fund Transfer Act to declare unlawful: (1) the imposition of a dormancy fee, an inactivity charge or fee, or a service fee with respect to a gift certificate, store gift card, or general-use prepaid card; and (2) the sale or issuance of a gift certificate, store gift card, or general-use prepaid card that is subject to an expiration date.

Title V - Miscellaneous Provisions

Section 501 -
Instructs the Comptroller General to study and report to Congress on use of credit by consumers, interchange fees, and their effects on consumers and merchants.

Section 502 -
Directs the Federal Reserve Board to review biennially and report to Congress on specified aspects of the consumer credit card market. Directs the federal banking agencies and the Federal Trade Commission (FTC) to report annually to the Federal Reserve Board, for inclusion in its annual report to Congress, on their regulatory activities regarding credit card issuer compliance with federal consumer protection statutes and regulations.

Section 503 -
Directs the Secretary of the Treasury to issue regulations implementing the Bank Secrecy Act regarding the sale, issuance, redemption, or international transport of stored value, including stored value cards.

Section 504 -
Amends TILA to direct the Federal Reserve Board to prescribe regulations to require creditors to establish procedures to ensure that any administrator of the estate of any deceased obligor can resolve outstanding credit balances of the estate in a timely manner.

Section 505 -
Directs the Federal Reserve Board to report to certain congressional committees on the extent to which creditors have reduced credit limits or raised interest rates applicable to credit card accounts based on specified factors, including the geographical location of a credit transaction, the identity of the merchant involved, the consumer's credit transactions, and the identity of a consumer's mortgage creditor.

Section 506 -
Directs the Federal Reserve Board to review and report to Congress on: (1) the use of credit cards by small businesses with not more than 50 employees; and (2) the credit card market for such businesses.

Section 507 -
Directs the Administrator of the Small Business Administration (SBA), in conjunction with the Secretary of Homeland Security, to establish the Small Business Information Security Task Force to: (1) address the information technology security needs of small business concerns; and (2) help them prevent the loss of credit card data. Requires the task force to make recommendations to the SBA Administrator about establishment of an Internet website to receive and dispense information and resources with respect to: (1) the information technology security needs of small business concerns; and (2) the programs and services provided by the federal government, state governments, and nongovernment organizations (NGOs) that serve those needs. Requires the task force to make recommendations also relating to developing additional education materials and programs with respect to information technology security needs. Authorizes appropriations for FY2020-FY2013.

Section 508 -
Directs the FTC to study and report to Congress on the cost-effectiveness of making technology available at an automated teller machines (ATM) that enables a consumer under duress to alert a local law enforcement agency electronically that an incident is taking place at the ATM.

Section 509 -
Directs the Comptroller General to study and report to Congress on the terms, conditions, marketing, and value to consumers of products marketed in conjunction with credit card offers.

Section 510 -
Directs the Secretary of Education and the Director of the Office of Financial Education of the Department of the Treasury to coordinate with the President's Advisory Council on Financial Literacy to report to Congress on: (1) their evaluation and compilation of a comprehensive summary of existing federal financial and economic literacy education programs; and (2) development of a strategic plan to improve and expand financial and economic literacy education.

Section 511 -
Amends the Omnibus Appropriations Act, 2009 to direct the FTC to initiate a rulemaking on unfair or deceptive acts or practices with respect to mortgage loans, loan modification, and foreclosure rescue services. Denies the FTC authority to promulgate a rule regarding an entity that is not subject to its enforcement powers. Authorizes a state, as parens patriae, to bring a civil action on behalf of its residents if the state attorney general believes that an interest of state residents is threatened or adversely affected by action of any person subject to an FTC-prescribed rule in a practice that violates such rule. .

Section 512 -
Prohibits the Secretary of the Interior from promulgating or enforcing any regulation that prohibits an individual from possessing a firearm, including an assembled or functional firearm, in any unit of the National Park System (NPS) or the National Wildlife Refuge System (NWRS) if: (1) the individual is not otherwise prohibited by law from possessing the firearm; and (2) the possession of the firearm complies with the law of the state in which the NPS or NWRS unit is located.

Section 513 -
Requires the Comptroller General to study and report to Congress on: (1) the relationship between fluency in the English language and financial literacy; and (2) any extent to which individuals whose native language is a language other than English are impeded in their conduct of their financial affairs.

Consumers Should Use Caution When Considering Some Forms of Borrowing or Purchasing

Interest and Fees Can Easily Outweigh the Benefits
The National Foundation for Credit Counseling

Desperate times often call for desperate measures, but sometimes those tactics can leave you worse off than where you began. This can be the case with people struggling to find money for holiday purchases.

Three areas to avoid when looking for extra money this holiday season:

Payday Loans - On the surface, getting the cash you need may seem worth it at any cost. But it’s that cost that can become financially back-breaking. To obtain a payday loan, you write a post-dated check for the amount of the loan plus any fees the lender tacks on. You then receive the amount of money you initially needed to borrow, promising to pay back that amount plus the fees. The term of the typical payday loan is one to two weeks, at which point the lender cashes your post-dated check. Most payday lenders will charge a certain dollar amount per $100 borrowed. For example, they may charge $15 for every $100 you borrow. Thus, if you needed $300 for two weeks until your next paycheck came in; your post-dated check would be for $345. What’s $45 when you desperately need $300? Here’s the catch…that $45 represents an Annual Percentage Rate of 390 percent. You wouldn’t dream of taking out any other type of loan with triple-digit interest. And, if this isn’t bad enough, many consumers cannot repay the loan at term, and end up rolling it over, thus adding on more fees and interest.

Pawn Shops – People can do several things at pawn shops. They can borrow money by putting up something of value as collateral, they can sell their merchandise outright, or they can buy the merchandise that is for sale at the shop. There are bargains at pawn shops, but only for those buying the merchandise, not for the sellers. Typically, the person pawning the merchandise receives a sum of money (usually nowhere near the true value of the item) which he or she agrees to repay with interest. If the loan is repaid by the end of the term, the merchandise is returned to the owner. If the loan is not repaid, the consumer can renew the loan, or the merchandise is forfeited. What’s the problem? Again, it’s the interest and fees, with APRs typically in the triple-digit range once everything is added in. Further, some studies show that only 60 percent of pawners end up reclaiming their merchandise, thus they have essentially sold an item for cents on the dollar, something they wouldn’t otherwise do.

Rent-to-Own – Everyone wants nice things, and if the family is coming over for the holidays, you may be tempted to spruce up your home. A quick trip to the furniture or electronics store could confirm that a new living room set or flat panel TV is out of your price range. Then you notice an ad for similar items with affordable monthly payments. It seems too good to be true, and it is. The problem once again lies in the interest and fees. For instance, if you bought a $200 item and agreed to make weekly payments of $15 for 78 weeks (basically one and one-half years), you’d end up paying $1,170 for that $200 item at an APR of 388 percent. Adding insult to injury, it is likely that you could have purchased the same item at a traditional store for a fraction of the overall cost.

For help managing household debt and/or living within your budget, contact Family Services, Inc.’s Consumer Credit Counseling division, 843.735.7802.

SHOULD YOU BE SHOPPING THIS HOLIDAY SEASON?

Holiday Spending Quiz Helps Consumers Evaluate Their Financial Situation

One in every 10 Americans is currently unemployed. Foreclosure filings were reported on close to one million properties in the third quarter of 2009. Personal savings, if it exists at all, is a fraction of what it should be. Terms on credit cards are rapidly changing, putting some consumers over the financial edge. And the biggest shopping day of the year, Black Friday, has just passed.

“Considering the volatility of the economy, consumers would be well-served to take a hard look at their personal financial situation and evaluate how to best approach the holiday season,” said Michaele Pena, Director of Consumer Credit Counseling Services (CCCS), a division of Family Services, Inc. “Self-inflicted financial pain that could have negative consequences for years to come is a gift to no one.”

Family Services, Inc. suggests that consumers take the following Holiday Spending Quiz to assess their current financial stability before they begin shopping: (answer true or false)

• There are arguments in my home about money.
• I sometimes hide my purchases.
• I have thought about filing for bankruptcy.
• I struggle to make my mortgage payment.
• I sometimes pay my bills late.
• I have used more than 30 percent of my available credit lines.
• My debt interferes with my sleep, job or home life.
• I have little or no savings.
• I am receiving collection calls or notices.
• If I lost my job, it would mean an immediate financial crisis in my life.

The harsh reality is that consumers who answer “True” to two or more of the above are not candidates for a holiday shopping spree. Ignoring the reality of your financial situation will almost certainly lead to further financial distress down the road. It will come in the form of an unmanageable debt load, resulting in a damaged credit report and lower credit score, likely limiting your access to future credit. If there were ever a year to approach holiday spending with your head instead of your heart, this is it.

“Family Services, Inc. supports financial responsibility, regardless of the season,” Pena continued. “With the ghosts of Christmas past still lingering on many credit cards, piling new debt on top of old cannot be considered responsible by any measure. With any sacrifice comes reward, and the benefits of not having a mailbox full of bills in January will likely outweigh any lifestyle spending adjustments consumers make during the holidays.”

If you’re wondering how to deal with holiday spending on a limited budget, reach out for help by contacting the Consumer Credit Counseling Services division of Family Services, Inc. Call 843-735-7802, or go online to www.fsisc.org.

IS A CREDIT CARD A MUST FOR COLLEGE STUDENTS?

Family Services, Inc. Offers Alternatives for Building a Credit History

Parents across the country are having the talk with their young adult as he or she heads out the door to college. This year, however, the talk isn’t about sex, drugs and rock and roll. Instead, it’s about whether or not the student should apply for a credit card before the new regulations go into effect in February 2010. The recently passed CARD Act will require a person less than 21 years of age to either document their ability to repay the debt, or have a co-signer before being granted credit.

The new law will also regulate aggressive credit card marketing to college students. In years past, issuers enticed students to apply for cards by making offers of free t-shirts, beach balls, or even chances for an iPod. Some states have already passed laws restricting or regulating credit card marketing on college campuses, and with good reason.

A recent Sallie Mae study revealed that college seniors carried an average credit card debt of $4,100 compared with $2,900 five years ago. College freshmen tripled the amount of debt on their credit cards, going from $373 to $939 over the same date range. Keep in mind that this segment of the population typically has no income and no credit history, but has nonetheless been extended credit.

“We live in a credit-dominated society, with most of us dependent upon credit for major purchases,” said Michaele Pena, Director of Consumer Credit Counseling Services, a division of Family Services, Inc. “Ideally, while in school the student will build a thick credit file, and graduate with a positive credit report and high credit score, allowing them to then realize some of the financial dreams they’d put on hold until graduation. But providing an 18-year-old with little financial training access to a credit card is not only risky, it could be downright disastrous.”

When it comes to building a positive credit record, the student has some options. Family Services, Inc. suggests that parents and young adults consider the following when deciding what would be best for their situation:

• Become an authorized user on the parent’s card. This is a practice known as piggybacking, and is exactly what it sounds like. The student is attached to the parent’s card and has charging privileges, but no legal responsibility for payment since the card is not in his or her name. The activity on the account is reported to the credit bureau in both the parent’s name and the student’s name, thus the young adult builds a credit file of their own. This option allows the parents to monitor the student’s spending, and remove them from the card if things get out of hand.

• Get a secured credit card. This type of credit card requires a cash collateral deposit which then becomes your line of credit, thus limiting any abuse. Consumers need to be very careful when applying for this type of card, as some charge high fees which can greatly diminish your spending power. You can also expect a secured card to have an annual fee and a higher interest rate than an unsecured card. Make sure that the issuer reports to the credit bureau. If they do, and if you pay responsibly, a secured card can not only be a safe way to build a credit file, but after a year or so will likely qualify you for an unsecured card.

• Obtain a card in the student’s name. Since the clock is ticking on the availability of this option, it definitely merits a conversation between the student and the parent. If the young adult has some financial training and experience with credit, and has demonstrated that he or she can handle it responsibly, then having a card in their own name could be a good way to launch their own credit file. Student credit cards typically have low credit lines, thus somewhat limiting the amount of financial damage that can be done. However, an irregular payment history on even a small debt can damage a credit file, which defeats the purpose of having a card.

In addition to lenders, employers and landlords also review credit reports. Therefore, it is important to graduate from college, not only with a sheepskin in hand, but a positive credit file. If you need help evaluating the risks and responsibilities associated with credit, reach out to a trained and certified credit counselor at Family Services, Inc. by calling toll-free to 800-232-6489 or go online to www.fsisc.org.

How To Negotiate With Your Creditors

Consumers Need a Back-up Card

Face it, we live in a credit-dominated society. Most of us can pay cash for our daily living expenses, but when it comes time to make a major purchase such as a house or a car, we need a thick credit file with a long history of responsible payments. Credit is a convenience that keeps us from having to carry large amounts of cash, and also allows us to buy now and pay later. Admittedly, many people have taken that perk to an extreme, but used appropriately, credit can be our friend.

Many consumers are now faced with having their existing lines of credit impacted by changes to the terms of their account. Higher interest rates, lower spending limits, increased minimum monthly payments, or even closed accounts have put many on the financial ropes. For this reason, Family Services, Inc. makes the following recommendations if the terms of your account are altered:

• Ask for an explanation. Everyone deserves to know why the terms of their account were changed, so definitely inquire. Among other things, the creditor may close an account due to inactivity, because you no longer fit their business model, because you’ve become too much of a risk, or you’re no longer profitable.
• Fight to get your previous terms reinstated. If you’ve had a sporadic pay history, are at or near your credit limit, or rarely use the card, you may not have a leg to stand on. However, if you’ve been a good customer, it’s worth it to call the issuer and plead your case, but you must have your financial ducks in a row before picking up the phone.
• Build your case before you call. Know how long you’ve been a customer, the amount you usually charge each month, and underscore your good payment history.
• Prove that you’re worth having. Get your credit report for free from www.annualcreditreport.com. Review it for accuracy. After all, you want to make sure that you and the creditor are seeing the same information. Next, pay the few dollars it costs to get your credit score. If you have a solid credit report and high credit score, you should be just the kind of customer any issuer wants.
• Make them feel secure. Point out that you’re in a field that is not susceptible to layoffs, and that you have a steady income.
• Be prepared to negotiate. Know what you want before you call, and be willing to negotiate if you have to. In other words, if your interest rate has been raised and your credit limit has been lowered, start off asking that both be returned to the previous levels. However, figure out in advance which is more important to you. Do you need a low rate because you carry a balance over from month-to-month, or does a high line of credit matter more to you? If you end up in a stand-off with the creditor, you’ll know where to give.
• Ask for a supervisor. If you’re not getting the answers you want, move up the ladder until you either get what you’re after, or are convinced they are going to stand firm with their decision.
• Inquire about the opt-out clause. If it makes more financial sense to do so, ask to have your account closed, with you continuing to pay the balance under the former terms. This option is often the right one for consumers who have had their interest rate or minimum payment raised to an unmanageable level. If it’s going to be a true financial hardship to meet the new terms, then it’s better to close the account.

“Even though having more plastic can equal more temptation, it might be smart to have a back-up card in case you lose charging privileges on your primary card,” says Michaele Pena of Consumer Credit Counseling Services, a division of Family Services, Inc. “Another card can be a safety net that will keep your access to credit open. Credit can be difficult to obtain, so testing the waters by applying for one more card – not a wallet full - before you actually need it will provide a degree of comfort during these uncertain times.”

For help making sound financial decisions, building a budget you can live with, or assistance digging out of debt, reach out to a trained and certified counselor at Family Services, Inc. To find the location closest to you, call Family Services, Inc. at 843-735-7802, or go online to www.fsisc.org. For counseling in Spanish, dial (800) 682-9832.

New Law Puts Credit Card Companies in Crosshairs

From Military.com By Kelly Johnson

A new piece of legislation was recently signed into law that has credit card companies in its crosshairs. The Credit Cardholders’ Bill of Rights Act of 2009 aims to protect credit card holders from unnecessary interest rate hikes, finance charge increases and other unfair practices that ran rampant in the past.

The act — signed into law by President Barack Obama on May 22 — amends the Truth in Lending Act to prohibit creditors from increasing the annual percentage rate of interest (APR) to an existing credit card balance unless specified conditions are met. Additionally, creditors are prohibited from extending a line of credit to consumers under age 18, unless they’re emancipated under state law, or the consumer's parent or legal guardian is designated as the primary account holder.

According to bill sponsor Rep. Carolyn Maloney’s (D-NY) website other notable provisions include:

• Prevents cardholders who pay on time from being unfairly penalized.
• Protects cardholders from due date gimmicks.
• Shields cardholders from misleading terms.
• Empowers cardholders to set limits on their credit.
• Requires card companies to fairly credit and allocate payments.
• Prohibits card companies from imposing excessive fees on cardholders.
• Prevents card companies from giving subprime credit cards to people who can’t afford them.
• Requires Congress to provide better oversight of the credit card industry.

Consumer advocate organizations and lawmakers applaud the signing of the bill of rights. The Center for Responsible Lending released a statement the day President Obama signed the act stating:

“The Credit Cardholders Bill of Rights arrives just in time. If deceptive credit card activities continued unchecked — as with subprime mortgages — the results would be even more devastating for borrowers and an economy already struggling to avoid financial ruin.”

Democratic National Committee Chairman Tim Kaine also commended the move to protect credit card holders, calling the bill “comprehensive reform” that will “make it easier for Americans to pay down their debt and empower consumers to understand the terms of the credit card agreements.”

The new regulations won’t go into effect until the summer of 2010, which according to some financial experts, gives creditors time to hike up interest rates before they have to abide by the new regulations. However, Maloney has a way for consumers to register complaints if credit card issuers continue unfair practices.

Maloney proposed The Banking Hotline bill (HR 1455), which will establish a single toll-free number and website to help consumers register complaints about their banks.