“How To” Videos from FINRA

The FINRA Investor Education Foundation has developed a series of short “how-to” videos on subjects ranging from budgeting to credit to learning how to spot investment scams.

How To Build a Budget shows you how to establish spending priorities so you can create and maintain a workable budget.

How to Control your Credit teaches some simple ways to control your spending and pay down your balances.

How to Spot Investment Scams in 6 Simple Steps identifies the red flags of investment fraud and instructs on how to check the legitimacy of an investment product or professional.

More videos are in the works and are coming soon.

Know your Cards

Consumer-Action.org has introduced a new website to help consumers understand the current laws that regulate all forms of plastic payment such as credit, debit, prepaid and gift cards.

KnowYourCard.org “presents key payment card changes, explains how they could affect cardholders and offers tips to help consumers make the right moves”.

The At-a-Glance Card Rulebook provides more detailed information and an overview of changes for each type of payment card.

Explore the database of Q&As. Use the search box, browse by category, or send your  question to Consumer Action via a form on the site. Feedback is appreciated, so let them know about your experience with the website and how it can be improved.

Tips on Improving your Credit Score

Want some quick advice on how to keep your credit score in the favorable zone?

Listen to this one minute podcast on Quick Credit Score Fixes from Practical Money Skills.

Suggestions include:

• Set up automatic payments for recurring bills
• Don’t close older, unused credit card accounts (15 percent of your score is based on length of credit history)
• Sign up for text or email alerts for when your bank balance drops too low

For more ideas on improving your credit score and how to recover from a financial setback, come to the Newton Free Library on Wednesday June 20th for our final Money Smart presentation on Financial Recovery.

Refreshments provided by Whole Foods Market will be served!

Graphic Teaching Tools

Visual guides and comic books are creative formats that can entice young people into learning about financial literacy.

A College Student’s Guide to Credit Cards at CreditDonkey.com is an infographic that helps students think through whether or not they can handle credit, credit card terms, and alternatives such as debit cards or prepaid cards.

Saving the Day is a Marvel Digital Comic featuring Spider-Man and the Avengers which teaches kids about financial terms, spreadsheets and more. The 21-page comic book  is free and can be read online. A Teacher’s Guide and versions in eight different languages are available.

Secured Borrowing Basics

Financial Literacy at the Library welcomed back Julie Soforenko, Community Outreach Coordinator, American Consumer Credit Counseling for a presentation on Financing Fundamentals: Car loans, Home loans and Equity Lines of Credit.

Cars and homes represent the most expensive purchases most people make.  It is important that one’s money matters be in tip-top shape before seeking financing for them.

Julie covered the pros and cons of buying vs. leasing cars.  Monthly payments are generally lower on leases than car loans, but insurance payments can be higher.  Leases often come with restrictions on mileage and on the degree of wear and tear that is acceptable. At the end of the lease term, the vehicle must be returned to the dealer unless a separate purchase option is negotiated.

When borrowing to purchase a car, it is wise to ask the financing company how your personal information such as your social security number will be protected.  Make sure you know all associated costs before signing any documents and avoid loans with a balloon payment or prepayment penalty.

When considering whether to purchase versus rent your next home, Julie advised looking at the following factors:

• Is this a short-term or long term housing need?
• Are you looking at a home as an investment or inheritance for your children?
• Are your savings substantial enough to cover a 20% down payment plus closing costs?
• Is your income enough to cover property maintenance/repairs, taxes, insurance and association fees?

Julie recommended Renter’s Insurance for those renting a home and suggested that favorable rates may be obtained by combining the policy with your car insurance.

In addition to commercial institutions, home loans are available through several government agencies such as the VA, FHA, HARP (refinancing only) USDA and First Time Home Buyers  programs.

When shopping for a mortgage, it is best to complete your research within 30 days.  Multiple inquires on your credit history for this purpose will not affect your credit report if concluded in a short time frame.  If however, several inquiries are spread out over many months, it will have a negative impact on your credit report.  Remember for a free credit report, visit annualcreditreport.com.

First Time Home Buyers should educate themselves by enrolling in a home buying fundamentals class.

Homeowners aged 62 and older experiencing cash flow problems may want to consider a Reverse Mortgage.  Rather than making monthly payments to a financial institution, under reverse mortgages the bank pays you.  Due to its unique terms and risks, it is required that borrowers consult with a HUD Certified Housing Counselor to become eligible. Read more about reverse mortgages here.

Do not miss the final installment of the FDIC Money Smart Series, Financial Recovery: How to recover financially and rebuild your credit after a financial setback, to be presented by Julie Soforenko on Wednesday, June 20.

Your Personal Cheerleader for Becoming Debt Free

Want to get rid of your credit card debt?  You can use several types of services:  debt consolidation services, debt management services, and debt settlement services.  But they may put you in a worse situation.

Instead, how about a cheerleader who can help you organize your debt and encourage you to keep to your payment schedule? That’s what the new website ReadyForZero.com claims to offer.

To use the online service, you must enter financial information, but not your credit card numbers or social security number.  You are then walked through the process of setting up a personalized pay-off plan.  Once underway, you have an easy way to check on your progress, while getting frequent tips on ways to meet your financial goals.

For more help with debt recovery, see Six New Tools to Help You Get Out of Debt  at CNNMoney.

CFPB Credit Score Report

Question:  Does each Consumer have just one generic credit score?

If you took the Credit Score Quiz from our July 5th post on this blog, you would know that the answer is No.

The newly formed Consumer Finance Protection Bureau issued this month a preliminary Report to Congress on the differences between consumer-and creditor-purchased credit scores. A larger study set to begin this month and based on information supplied by the three big credit bureaus – Experian, TransUnion and Equifax – will analyze whether consumers are actually hurt by different scores.

According to a review of the Report by Michelle Singletary in her July 23 The Color of Money column, the differences could cost you.  The “difference could give consumers a false sense of credit bravado, or it could make them think that they are a worse credit risk than they really are.”

The selling of credit scores is big business. Purchases by individual consumers  have generated an estimated $1 billion in annual revenue, representing approximately one-quarter of the total sales.  According to Elizabeth Warren, special adviser to the secretary of the Treasury on the CFPB, the bureau is “assessing whether purchasing a credit score provides a consumer with the information he or she needs.”

Although FICO (Fair Isaac Corp) is the score most known by consumers, it is not the only group that produces credit scores for sale.  Each credit bureau employs its own proprietary model and, in a joint venture, yet another model was developed.  Be aware of this when purchasing a credit score.  Know which score you are getting and what it is meant to predict.

For more information on the Report and what you should know about credit scores, read this helpful summary published by Money Management International in their July 28, 2011 online newsletter.

Credit Score Quiz

Think you know all there is to know about credit scores?  Try testing yourself.

The Consumer Federation of America and VantageScore have created a  Credit Score Quiz  for consumers to test their knowledge of credit scores.

Do Utility Companies use a credit score when establishing new residential service?  Do home insurers?

What is considered a good credit score?  Is there only one?

Are high balances on your credit card a factor in calculating credit scores?  Is marital status?

All these questions and more are asked and answered on the quiz.  Just click on the sticky  note to start.

The site also offers some useful information  to know about credit reports.

Bank Shopping Advice

The FDIC has just released the Spring issue of Consumer News, the online consumer newsletter.  This Special Edition, Shop and Save…at the Bank, is a Buyer’s Guide to Finding the Right Loan, Credit Card or Deposit Account.

Have you wondered whether your savings are deposited in an insured account?  Learn the questions to ask to find out.  Is “credit protection” or “identity theft protection” a worthwhile investment?  See what the FDIC has written about Cross-Selling offers.

Read among the dozen articles with expert tips on Home Equity Loans, Escrow Accounts, Prepaid  Cards and more.  Make sure to review the Basic To-Do list.

To subscribe to FDIC Consumer News, enter your email addresshere.

The Check is in the Mail

Have you wondered what to do with those unsolicited personalized blank checks you receive  in the mail  from credit card companies?  Are they a good deal?

According to Mitch Lipka’s May 8, 2011  Consumer Alert column, they may not be.

Barbara Anthony from the Massachusetts Office of Consumer Affairs warns  “these ‘checks’ are generally bad news for consumers, whether through very high interest rates or theft of account information”.

Not all blank checks are the same.  Many are actually lines of credit that carry a high interest rate.  Often the ones sent by credit card companies begin accruing interest from the moment they are cashed.

If you would like to stop receiving them, Lipka suggests contacting the Direct Marketing Association  to get removed from the mailing list.

Read the full article here.