A short sale is when the bank or lending institution agrees to accept less than what is owed on the property in order to prevent a foreclosure. While short sales have always been around they have not always been used as much or as effectively as they can.

Under the new program that will begin April 5, homeowners who have been unable to get assistance with modification may be able to apply for a short sale. The lenders are given incentives to accept the short sale and in a big change from ever before, the homeowners will also be given up to $1500.00 in relocation assistance.

Read all about it at “Program will pay homeowners to sell at a loss”.

While of course, the best thing that could happen is that the real estate market would turn around, people would be able to get financing and homes that have languished on the market for a long time would finally sell, the problem is that the value of the homes has plummeted to such an extent that that kind of recovery is not possible in the near future and may not even be possible in the foreseeable future. Until homes start selling again at a relatively rapid pace, home prices will increase very slowly. Nobody wants to get into the same type of real estate bubble that the U.S. has recently experienced.

Therefore the short sales solution may be an answer that can at least speed the process along.

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If you expose your credit card to a magnet will it still work?

The story goes that a magnet will destroy the information encoded on the card and it will no longer work when you swipe it. The fact is that the stripe on your credit card is actually a collection of magnetic particles that hold your valuable information and transmits it through the swiping process. So it makes sense that a magnet could hurt the stripe and it would no longer work.

In an article on Yahoo finance they tested the theory. They used a common refrigerator magnet, a larger magnet that can hold up to 72 lbs., and a mega-high-powered junkyard magnet that can actually hold up to 7000 lbs.

It turns out that a magnet can affect the credit card. Sometimes. Well, actually the truth is probably all of the time but not always just a quick brush with the magnet, but rather some sustained exposure.

But given the right circumstances a quick brush might just destroy it also.

Regardless, the best way to deactivate your old credit cards is to cut them up into tiny, little pieces using a shredder or some scissors and then discard them. It’s probably not a good idea to “retile” your pool ala’ Martha Stewart—remember that old commercial?

But do remember that if you cancel your card your credit score will take a hit. You don’t have to use it, but you shouldn’t cancel it.

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“You Can Settle Your Debt For Pennies On The Dollar”

“Stimulus Plan Knocks Out Credit Card Debt”

You’ve seen the ads plastered all over the Internet.

So can you really settle your debt for pennies? Well, yes and no.

First off it’s not that easy. You can’t just call up your local politician and get some stimulus funds to pay off your debts. You can’t just call up your lender and make an agreement that says “I’ll send you half and you call it good”.

Nope, it just doesn’t happen that way.

But it is possible to settle your debts for less. Most lenders will consider taking something as opposed to getting nothing. But typically they won’t do it unless you are at least 6 months overdue and you have already been charged off.

Most debt settlement programs will require that you put a certain amount into a bank account. Once you have saved about 50% of what you owe they will then contact the lender and see if you can offer a lump sum to settle the account.

But your credit score is still tanked. It may say that the debt has been settled but it will also still say that it was originally charged off.

Also, while you are putting money into the account, creditors can still contact you, you can still be sued and you still have to deal with your lenders.

Additionally, the debt settlement company will take their fee, which is often quite sizable, off the top so it ends up costing you more than you think.

If you are in debt over your head, a debt settlement company may work for you. Or it may not. Your best bet is to talk to a legal professional and get some sound and ethical advice on your options.

Read “Can You Settle Credit Card Debt For Pennies.”

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The only place that you can get your free credit report is at Annualcreditreport.com. This is the only site that is authorized by the government to provide the free credit report. Of course, you can still get a free credit report from the other sites but you will have to buy a credit monitoring service in order to get it. Which makes it kinda, sorta, absolutely not really “free” anymore, right?

And now there is more good news. The Credit CARD Act of 2009, yes, the same one that we have been talking about for weeks on end now, issued new rules to prevent deceptive practices from unauthorized sites. They will now have to disclose very clearly that the only “free” credit report you can get is at the authorized government site.

But even at Annualcreditreport.com, there is advertising from the credit bureaus that a consumer had to wade through before they were able to get their credit report. The CARD act now requires that all advertising on the site will be moved to the end of the process rather than the beginning, thereby simplifying the process.

This requirement will go into effect on April 1. 2010. No fooling!

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Excessive late fees have long been a common consumer complaint. But on Wednesday of this week, the Federal Reserve proposed stricter restrictions on the penalty fees that a credit card issuer can charge. One of the most significant changes would be to prohibit the companies from exacting a penalty charge that is larger than the violation.

So if you happen to stop by that fancy coffee shop and purchase a $4.00 cup of coffee (yep, something luscious and decadent…..and pricey!) and you use your credit card and it just happens to put you over the limit, you won’t be paying $40.00 for the privilege of drinking that delicious coffee but it may end up costing you twice as much–$8.00.

Of course, it is best to avoid late fees altogether, but with these proposed regulations the late fee should be “reasonable and proportional” as per the Fed’s definition.

Read “Fed proposes limits on credit card penalty fees” at the Washington Post.

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It is estimated that as many as 60% of all employers conduct credit checks on their applicants and the number has increased significantly in just the past few years.

Employers justify this by saying that credit checks give them valuable information about a potential applicant’s honesty and sense of responsibility and that an individual who maintains a good credit history makes a better employee.

The problem is that most people don’t get bad credit on purpose. Nobody tries to get bad credit but things happen. People lose their jobs, they get sick, their wages go down, there are any number of reasons why someone may get bad credit and very rarely does it really have anything to do with how responsible or honest they are. The majority of people want to pay their bills on time and maintain excellent credit but life happens and it’s not always easy.

The fact is that if you don’t have the money, you can’t pay your bills and if you don’t have a job and you can’t get a job because you can’t pay your bills, you will never be able to get out of the mess.

Fortunately, some advocates and lawmakers are looking into this serious discrepancy that keeps people down. Lawmakers in at least 16 states are looking to ban the practice. According to the National Conference of State Legislature Connecticut, Georgia, Illinois, Indiana, Maryland, Michigan, Missouri, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Vermont, Wisconsin are considering this important ban and two states already ban some credit checks, Hawaii and Washington.

While it is agreed that there may be some positions that would warrant a credit check, like perhaps driving an armored truck or a job where it would be easy to embezzle funds, for example, a bank or an accounts payable office for the majority of jobs a credit check just amounts to discrimination against people who have likely suffered enough in this time of economic uncertainty.

More States May Ban Credit Checks- The Salt Lake Tribune
State May Ban Credit Checks- The Chicago Sun-Times

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Here is a great article that answers many of the questions about the homebuyer tax credit. Many of the questions pertain to issues such as divorce and home ownership and who can qualify.

Check out Turbo Tax Answers Your Homebuyer Credit Questions.

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Right now the credit card companies are implementing some new creative measures to protect their profits. Unsuspecting consumers need to be wary of newfangled, additional fees that may be tacked onto their credit card bill.

Annual fees are being implemented on many existing credit card accounts. Previously, annual fees were reserved for high-end reward cards and the majority of consumer credit cards did not have an annual fee. Annual fees are detrimental to the consumer because they significantly add to the cost of using credit cards, regardless of how much or how often you charge. If your credit card has been hit with an annual fee, you have the option to apply for a new card without a fee and canceling the old account, however, a consumer who takes that option will suffer a short-term hit to their credit score.

Under the new regulations, the credit card issuers must notify the consumer of any changes to the credit card at least 45 days in advance. Consumers need to be aware of how important it is to read all correspondence from the credit card companies as the notifications could be bundled in with the monthly statement or mailed in an envelope that resembles a solicitation or is inconspicuous and easy to disregard. Read all information from your credit card companies very carefully.

Credit card companies are also starting to charge merchants more for the privilege of allowing their customers to use credit cards. These fees are called interchange fees and when the cost of these fees increases, merchants are often forced to raise costs in order to protect their own businesses. Higher interchange fees can lead to higher prices for consumers.

Under the new regulations college students will not be able to get a credit card unless they can prove the ability to pay or have a co-signor. However, the credit card companies are limiting their risk by reserving the option to maintain the co-signor for long after the student turns 21. Co-signors need to be completely aware of the duration and extent of their liability before they sign.

Credit card issuers can no longer raise the rates on existing balances however, many raised rates previous to the regulations taking effect and offered consumers interest rate rebates for paying on time or making a certain amount of new charges every month. These interest rate rebates are an artificial savings and smart consumers will avoid these tricks by paying off the balance every month.

The new regulations are beneficial to consumers because they are offering protection from many of the credit card pitfalls of the past, however, the credit card companies are in the business to make a profit and they will continue to come up with new strategies that will cost the consumer more because they need to protect their profits.

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Some collection agencies, however, are “debt buyers” and in that case they have purchased the debt from the creditors for a fraction of the value and in return they will try to collect the full balance.

Creditors typically refer or sell their bad debts to a collection agency so that they can remove them from their accounts receivable records. They can then write off anything that is not collected as a loss on their books.

In the past, debt collection agencies have often engaged in threatening behavior, harassment and coercion. However, there are laws that protect consumers from abusive behavior. In the United States, the Federal Trade Commission (FTC) enforces that Fair Debt Collection Practices Act or the FDCPA, which prohibits debt collectors from using unfair, abusive or deceptive practices in order to collect a debt from you. Most of the states have additional laws to protect consumers from abuse from a debt collector.

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Last Friday, Citigroup sent out statements to customers throughout the United States to inform them that they may be required to submit an advance notice of seven days if they wish to withdraw cash from their checking accounts.

““We reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change.”

Later it was reported that this change was only for the state of Texas and that it had mistakenly been sent out to customers in the entire country. It was also reported that it was required to make these changes by Federal regulations and that the Federal Reserve Reg D required that all NOW accounts reserved the right to require a 7-day notice of withdrawal. Citibank also claimed that they have never exercised this right and that they had no plans to do so in the future but that they were required to disclose the possibility.

Whatever the situation, whether it is just Texas, required by the Feds, something that they have to disclose but have no intention of implementing, whatever…..
In this current economy this type of threat just frightens consumers. You would think that many consumers would be closing out those accounts before April 1. 2010.

For more information read
Business Insider-Citigroup warns customers
Seeking Alpha –Withdrawal Gate
Future of Capitalism- Citi Warns of Withdrawal Gate

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