Businesses are hoping to get more bargaining power when it comes to how much they are charged to accept credit and debit card purchases.
The Credit Card Fair Fee Act (read the whole bill), was reintroduced this year and is now being discussed in Congressional committees. I first heard about it when I was buying an emergency breakfast at one of the various 7-Elevens that are sprinkled on my way to work.
They had a binder of papers on the counter and were asking for people to sign their petition. It seems that groups like the National Restaurant Association feel the credit card companies are treating them unfairly with a lack of transparency in the way they do business and arbitrarily raising fees.
Convenience store owner Bruce Mitchell said his operation paid out more than $3 million in credit card fees last year.
“I am paying 25 percent more for credit card fees than I pay in wages,” he said.
Business owners say that these fees, and their frequent increases, are being passed along to consumers in the form of higher prices.
What do you think? Should the “free market” sort it out, or do credit card companies have too much power?
Small business pushes credit card reform, Susan R. Miller, South Florida Business Journal, June 8 2009
On July 20, TIAA-Cref will be holding its annual participant meeting. There is an effort underway to encourage the company to be more socially responsible and accountable to its customers, and representatives will be attending the meeting to bring any common problems directly to the board’s attention.
Are you having customer service problems with TIAA-Cref? Please see the instructions below. Here are my past notable experiences with the company.
In March 2006, I scheduled a transfer from ING Direct to create my first SEP IRA on April 7, leaving enough time for the account to be created before the tax deadline. I noticed the problem the day after the account should have been created. The company did not create the account nor did they deduct funds from my ING account. There was still a week before the tax deadline, so I was not yet up in arms.
By April 18, 2006, the TIAA-Cref account had been created but they still did not deduct my funds. This was after the tax deadline, so I was very concerned that the funds would not be attributed to my 2005 SEP IRA. I had difficulties getting the correct department on the phone.
My 2005 SEP IRA was not funded until April 28, 2006, and my level of concern was much higher. I spoke to an account representative who assured me that even though they were late, my money would be applied to 2005’s tax year and I would get April 7’s price for the investment. My account information online confirmed this.
Fast forward to January 2007. I received my received my tax forms from TIAA-Cref which indicated my SEP applied to the 2006 tax year. I did eventually have this issue resolved, but it surfaced only one week after I reported that thousands of people were having problems with TIAA-Cref. Customers could not access their money, didn’t receive their payments, and couldn’t get in touch with any customer service representative who could fix the problems.
The company acknowledged the problems and attributed the mishaps to implementation of a new computer system. This excuse carried on as the problems did for at least a year, with updated in March and June 2007. Even today, visitors are still voicing their concerns with TIAA-Cref in these comments this year.
Most people’s problems were a lot more frustrating than mine, involving restricted access to money and missing payments from the company. Although I think it may be too late, Neil Wollman, an author who has been following TIAA-Cref’s activities as a socially responsible company over the past twenty-five years, is looking to speak up for consumers at the company’s annual meeting later this month.
If you are currently having issues with TIAA-Cref that you have not been able to resolve by going through the normal channels, please let me know by commenting here using an email address where you can be reached or email me directly at flexo at this domain name. I will pass your information along to Mr. Wollman who will speak to the board of directors on your behalf.
I plan to open up an account with EverBank within the next week to take this bank for a test drive. I like what I see of EverBank’s interest rates, but I have to admit the structure is not as simple as I like to see.
As of today (July 2) the savings product, “Yield Pledge Money Market Account,” sports a 1.85% APY, but thanks to a 3.01% APR bonus rate for three months, the effective rate over the first year of having money in this account can be as high as 2.15% APY. If you’re confused, review the difference between APR and APY.
The checking product, “FreeNet Checking Account,” offers tiered rates from 1.02% to 1.85% APY. Again, money from new customers earns a 3.01% APR bonus rate for the first three months. With this bonus, if the regular rate does not change, you would theoretically earn an APY between 1.52% and 2.15%.
EverBank also offers certificates of deposits (CDs) with maturities varying from 3 months to 5 years. Like most CDs, you will be penalized if you withdraw your funds before maturity. A minimum deposit of $1,500 is required for any EverBank CD. The rates range from 1.25% to 3.10% APY as of today.
Also notable are the foreign currency CDs available at EverBank. With foreign currency a change in exchange rates can either work for you or against you by increasing or decreasing your effective interest in terms of US dollars. If you believe the Mexican peso is due for growth, you may wish to invest in a CD denominated in pesos to take advantage of the 4.04% APY and the increase of the worth of a peso against the dollar.
I’ll post a full review of the account opening process shortly.
Whether due to the economy or the impending regulation enacted within the Credit CARD Act of 2009, credit card companies are taking the opportunity to raise interest rates and minimum payments. This is perhaps an unintended consequence of increasing regulation. These changes affect consumers with manageable debt, but others who are trying to get out of debt or living paycheck-to-paycheck are harder hit by these changes.
Issuers’ actions come as a growing number of consumers lose their jobs and default in record numbers on their credit card debt. The industry is also preparing for restrictions to take effect in February 2010… The banking industry says Congress has no one to blame but itself for higher rates and fees because banks had predicted that restrictions on pricing would lead to higher costs for everyone…
Yet some critics say that issuers are taking advantage of a loophole in the law to bolster their financial conditions… In a statement Monday, [Senator Charles] Schumer slammed issuers for trying to “wring more dollars out of their customers.” Some of the changes in card terms, Schumer says, are “against the spirit of the law and … just plain wrong.”
Is credit card reform — the Credit CARD Act of 2009 (Credit Cardholders’ Bill of Rights) — a mistake or are issuers just using the fear of losing future profits as an excuse for bilking customers now?
Consumers hit again as some banks raise credit rates, fees, Kathy Chu, USA Today, June 30, 2009
My wife and I went way over our budget in a couple of categories during June. Part of it was to be expected because I’m commuting to a new internship, and part of it was planned, but unfortunately, most of the over-spending can be chalked up to a simple fact: we made some spending mistakes.
Any time you make a mistake it hurts, but financial mistakes have the possibility to cause quite a bit of damage. Mistakes are especially costly when you’ve been making progress with your efforts to get out of debt and put your finances in order. They stifle your desire to keep trying and give you one more problem to fix. When you’re dealing with multiple banks and bills and paychecks, however, mishaps are bound to happen, whether small or large. While mistakes may be unavoidable, disaster is not.
Here are some simple steps you can take to mop up after a mess.
Minimize the damage
Because accounts and bills are all linked together by transfers, there is a good chance the mistake might become a bigger one if you don’t take action. If your overdraw your checking account, make sure that you have enough money in there to make up for the overdraft and any associated fees your bank might charge you. Nothing is more frustrating that withdrawing too much money from your checking account, depositing money to cover it, and then overdrawing again because of a fee.
If your financial misstep is something more long-term, like spending more than you planned, you have a bit more time. Slide the money in your budget around, and if you do have to add more money, make sure you only add as much as you need, and unless it is a real emergency; don’t pull from your emergency fund.
Take steps to ensure it doesn’t happen again
Double check any automatic transfers or bill payments you have and record them all on a calendar so you know how much is going to who and when. It’s easy to forget about the electric bill that’s due while you’re on vacation or the check you gave the kid who mowed your lawn that finally got cashed. Getting into a rhythm takes a couple of months, but once you get the swing of it you can be sure to always have your money where it needs to be.
With mistakes in budgeting or spending, go back over your purchases and find out exactly where all that money went. Make sure you can account for all of your purchases, and try to find a couple that you can leave out next month. If your situation is dire, you might want to see if you can return something or cancel a service.
You can keep more money in your checking account or come up with a bill reminder calendar to help you get an overall picture of what you need to be doing.
Learn from the experience
Do some research to find out exactly what happened. Did you forget about a bill payment or checking account fee? If you see a charge you don’t recognize, don’t just pay it and brush it off. Learn why you were charged and if there was anything you could do about it. If you understand what happened, you are more than likely able to prevent it from happening again. The worst thing you could do is ignore it.
Catch your second wind
Don’t let the setback discourage you! Everyone runs into trouble of one kind or another as they get their finances in order. It’s important to pay attention and do all you can to know what’s going on with your money, but when you miss something or something bad happens, don’t get stressed out, just fix it and do what you can to improve future.
Learning to handle mistakes in a way that suits you takes a little bit of practice, but you will cut down on the majority of mistakes and recover quickly from the others.
Photo credit: neilspicys
Bankrate.com recently completed a study of 20 different credit cards from 10 different issuers and concluded that if one of your priorities is a card which will forgive your human errors, Discover is probably the card to apply for (or not cancel).
Looking at the fine print for one platinum card and one rewards car for each bank, they found the following significant differences:
- Most banks will raise your rates if you pay late once, or end up over the credit limit once. Discover will wait for you to make that mistake twice
- Discover, along with Capital One, have a range of overlimit fees instead of just one flat fee
- Discover’s grace period is 25 days, instead of 20-25
It’s not all hugs and puppies with a Discover card. For example, if you violate the terms of the credit agreement, your rate goes up to 29.99%, the highest in the industry.
Of course, no credit card is a wise choice to carry a balance on. Check the BankRate survey if you’re in the market for a new card; they’ve done most of the hard work for you.
If you want forgiving, Discover card is the one to pick, Becky Yerak, Chicago Tribune, June 30, 2009
Although I do not have children, I am considering starting to save for college. With the cost of tuition rising well above levels of inflation, the sooner I get started, even before any children exist, the higher the chance my child or children will be able to go to school without an insurmountable pile of debt. Unfortunately, most college savings plans are complicated. They are tax efficient, but only if some conditions are met. If you need to withdraw money from the funds for purposes other than education, you can face penalties. There are a number of variables to consider, least of all is the idea that I may not have children at all.
Kiplinger’s Personal Finance has named its top five 529 college-savings plans to help parents or possible future parents like me decide which options to pursue. None of these options sound perfect, however. I do not like the sound of any of these top five, either due to flexibility or fees. In addition to fees by the dollar, all plans charge a management expense, fees as a percentage of assets, in addition to the underlying funds’ management expense.
Illinois Bright Start College Savings Program. Pros: Low fees. Cons: Low fees only apply to actively-managed funds (poor performers). If you choose Vanguard funds you must pay $10 per fund.
Alaska’s T. Rowe Price College Savings Plan. Pros: Good investment options. Cons: $25 yearly fee for some accounts.
Michigan Education Savings Program. Pros: Plan includes a guaranteed return option. Cons: The plan is run by TIAA-Cref.
College Savings Plan of Nebraska. Pros: Investors can choose from a wide variety of mutual funds. Cons: Every account has a $20 annual maintenance fee.
Virginia CollegeAmerica. Pros: Kiplinger’s counts the fact that this plan is sold by financial advisers as a pro. Cons: The plan includes only funds from American Funds, which are expensive and underperform.
Kiplinger’s also includes a state-by-state guide to 529 plans. Use this guide to determine whether your state offers its own plan with tax benefits. The benefits may compensate for the other drawbacks of the plan. I live in New Jersey, which does not offer any 529 plans with tax benefits, but I could invest with another state’s plan. While I live in New Jersey, I would not be able to benefit in the other state’s tax advantages.
Best 529 College-Savings Plans, Thomas M. Anderson, Kiplinger’s Personal Finance, June 26, 2009
Best of Consumerism Commentary, June 2009
by Flexo on July 3, 2009
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Best of Consumerism Commentary, June 2009
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