Capitol Hill seems to be taking up the pro-consumer fight on two fronts this week with the extension and expansion of the Home Buyer Tax Credit and the sped-up start date of the Credit Cardholder’s Bill of Rights. Today, Obama officially signed off on the Homebuyer Tax Credit extension, which will extend the original November 30, 2009 deadline to April 30, 2010 and also opens up a $6,500 tax credit to eligible repeat buyers. On the frontlines of credit card reform, the proposed measure to speed up the Credit Cardholder’s Bill of Rights, from its original February 2010 date to December 1, 2009 was signed off by the House and is now awaiting Senate approval.

The passing of the revised Homebuyer Tax Credit, coupled with mortgage rates dropping below 5% again for the first time in 4 weeks, has many politicians and analysts hoping for another boom in the housing market to last well into 2010.

As for the credit card reform, if approved, the earlier-than-expected December date would be “just in time for the holidays,” when consumers are likely to more heavily rely on credit cards and could most benefit from the restrictions the reforms will place on the price-gouging practices of the credit industry. Cardholders and lawmakers in support of the proposal complain that since the passage of the Act in May, credit card companies have been abusing the grace period as a last ditch effort to raise interest rates, change card terms, add fees, lower credit limits, and even close accounts in order to recoup losses that the coming regulations will cost them. The reform is needed to help protect consumers by “locking a ban on interest rate hikes on existing balances, and tricks that have kept far too many consumers trapped in a never-ending cycle of debt,” reports CNNMoney.

On the other hand, credit card issuers have contested that the expedited start date would ultimately hurt the entire industry. Making the reforms effective a full two months sooner than planned won’t give their systems enough time, issuers argue, to get acclimated to the new regulations, and they have even gone so far as to defend the recent interest rate hikes—some as high as 30%–as fair considering the current state of the economy. Another lawmaker defended the measure, saying, “They have retained the right unilaterally and retroactively to raise the interest rate on what you already owe them. It is the single unfairest (sic) economic transaction I can think of that doesn’t involve a pistol!”

The CARD Act’s major provisions that will affect cardholders includes prohibiting arbitrary rate increases on existing card balances, requiring customer permission to opt into the ability to overdraw on accounts, and the “reasonable and proportional” penalty fees that require issuers to review all interest rates and reduce it where warranted. The measure awaits the Senate’s vote and Obama’s signature to become law.

The consumer protections and consumer incentives of these two key pieces of legislation are under hot debate as to whether the stimulus measures will be effective enough to spark sustainable activity in the struggling economy.

At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!

The bigger and better extended Home Buyer Tax Credit cleared both the House and Senate vote this week, and now sits on President Obama’s desk expecting to be signed and approved today. As soon as pen hits paper, the law will go into effect and ensure that the original $8,000 tax credit is extended to April 30 plus qualified repeat buyers can take advantage of a new $6,500 credit. It could be a stabilizing force for the crippled housing market, or it could be a band-aid that won’t last long. Read ahead for more opinions and perspectives on what new measures Uncle Sam is taking to cool off the heat of recession.

Credit Karma News

• Money Matters: when ‘free’ isn’t free from Keloland Television.
• The Today Show mentions CK in their Wednesday morning segment!
• The New York Times puts in a good word about CK in, “A Free Credit Score Followed by a Monthly Bill.”

Home & Mortgage News

• 6 signs your home will increase in value straight from SmartMoney.
• DebtKid asks, if money = freedom, why buy a home?
• The New York Times reports on fraud watch for homeowners.
• Good news! Mortgage applications rose 8.2% last week reports MarketWatch.
• More good news! Mortgage rates fall below 5% reports The Oakland Tribune.
• WiseBread gives fun tips on how to make money from what you could find in your attic.
• Deadline for home tax credit extended writes The Money Times.
• Moolanomy throws in its two cents– Why the first time home buyer credit is terrible for the economy.
• The Baltimore Sun’s blog has a few points to make about the expanded home buyer tax credit.

Here’s a glance at current mortgage rates to keep you up-to-date. The table shows the overnight average interest rate for two of the most common mortgage loan types (keep in mind, refinance rates typically vary from purchase rates listed below). Happy house hunting!

With less than 2 months till Christmas, its prime time to be writing up your Christmas gift list, doing some window-shopping, and scouring deals for Black Friday (3 weeks away!). But are you also getting your wallet ready for the holiday spending spirit? Budgeting and practicing within-your-means spending is going to be key to surviving through to New Years with your credit score intact and your finances out of debt.

Not to put a damper on the joy of the coming months, but realistically this holiday season could be a minefield of risks that could blindside your credit report and bank account. Racking up charges up to your credit limit could lower your score, extra fees on credit cards and the risk of overdraft charges on debit cards take chunks out of your savings, and just like with holiday pounds, you could gain debt faster than you can work it off. WiseBread posted an interesting blog about “frugality fatigue,” suggesting that after the recent years of tightened spending and penny-wise habits, people are looking to spend and return to the old ways of credit cards and overspending. An American Express survey of consumer attitudes found that 80% of consumers still intend to buy gifts this holiday season, with 36% planning to spend $100-$499, 28% to spend $500-$999, and a full 30% spending $1,000 or more.

Whether you plan to spend $100 or $1,000, the next two months of gift shopping, eating out, entertaining, and traveling could deplete your savings and hit your credit score harder than you are prepared for. Besides healthy credit and stable savings, there are many good reasons to be prudent with your holiday budget this year so you can start 2010 in good financial health. The following tips can help you save money and care for your credit without skimping on the holiday extravagance:

Protect your Credit

1. Plan ahead to minimize overspending – Before you even go to the mall or shop online, make a list of who you have to buy for and stick to it. It will help you stay on budget and on track, and minimize the possibility that you might start browsing and shopping for yourself. Also, remember as you shop not to overspend just because you might be charging credit. Rule of thumb: spend only what you can afford to pay off RIGHT NOW; shop like your credit card is a debit card and go straight home after shopping and pay off your credit card so you won’t be tempted to carry a balance and rack up interest charges.
2. Opt out of traditional credit cards – Pre-paid credit cards are a good alternative to credit cards because you don’t risk overspending on what you deposit, you can still build credit, and you won’t pay interest; the trade-off is you have to pay an annual fee. Or think about paying cash or using a secured card, both of which will not hurt your credit score.
3. Steer clear of store credit cards – Read the fine print of a store credit card or retail card and you may find that the membership benefits or special discounts you’d receive for opening the card isn’t worth the high interest rate and extra charges that comes with it. Store credit cards typically have a interest rate far higher—sometimes double the APR like Macy’s 23.99% APR or JC Penney’s 24% APR card—than a normal credit card. Also, store credit cards often stipulate that you must spend a certain amount through the year in order to qualify for discounts or benefits, have high late payment fees that increase with the balance, require a minimum purchase within a period of time to keep the benefits, and more. However, store credit cards are beneficial if you are sure to pay off your balance in full every month, that way you can get your 15% discount without risking paying a 25% interest rate. For information on specific cards pros and cons, check out Store Credit Cards: A Rip Off?

Shop smart, shop early

1. Save on shipping – More and more on-line retailers are extending offers of free shipping to get more customers clicking and buying. Look out for major retailers like Target, which launched its holiday free-shipping promotion on Nov 1, Walmart, which ships free to a nearby store, and more stores mentioned here to see where you can save. More tips:
   • Some online merchants time their free-shipping deals right before the week of Thanksgiving and Christmas to move inventory faster.
   • Websites like freeshipping.org and coupon sites like slickdeals.net and fatwallet.com list specific merchants with free or discounted shipping. Also, mark your calendar for Free Shipping Day, when participating merchants offer free shipping this Dec 17 and guaranteed delivery by Christmas Eve.
   • Amazon’s “Super Saver” shipping gives free shipping for most purchase orders over $25; if you are a few dollars short of $25, www.slickfillers.net lists items as low as $0.35 so you can fill in the few dollars or cents and get free shipping.
2. Get it while it’s hot and in stock – Ever heard of deal-of-the-day sites that only sell one product at a time, at a deeply discounted price, until it runs out and moves on to the next item? They are insanely popular all over the web and addictive to watch and track to see what the next item will be. Deal of the Day Tracker monitors most of these sites, which sell everything from discount duds to army knives and electronics, and shopping here could save tons of money on high-quality gifts and also practical items. Some sites, like Red Tag Crazy, can alert you via text message, e-mail, or instant message so you can know what is selling like hotcakes at 3 am.
3. Check your mail - Going through your junk or spam mail can pay off if you find some special offers from retailers’ emails. More and more retailers are sending customers special offers by e-mail or mail instead of mass advertisements of sales. Sign up for mailing lists or loyalty clubs at stores you want to spend at (for buying gifts for others, not for yourself!), and pay attention to email (you might have to wish out of your junk mail folder) that might hold big sales or coupon codes exclusive to customers on their mailing list.

At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!

Personal finance management tools aren’t new; sites like Moneystrands and Quicken Online have been around for years. These sites specialize in helping stressed-out consumers and overwhelmed spenders keep track of their money. Now, credit card issuers are countering bad publicity by becoming more and more consumer friendly in their approach, offering personal finance management tools to help customers manage their finances by emphasizing budgeting and saving rather than just credit card-charging.

This happens to be good timing in light of the entire credit card industry under tough scrutiny by both the government and the public in the last few months due to the increased interest rates, credit limit reductions, fee hikes, and more changes issuers have been scrambling to put in place before the reforms of the CARD Act go into effect in February 2010.

These controversial actions taken by the credit card issuers hasn’t made for a very good image of big names like Chase and Wells Fargo in consumers’ eyes. Getting back on the consumers’ side means showing customers that big credit card companies aren’t just out to squeeze money out of them. These personal finance management services, plus ending some of the more controversial changes in their terms and practices, are the credit card companies’ olive branch to consumers.

Check out what kind of financial management tools your issuer offers. Even if you are not a cardholder, some of the following sites are open to all consumers:

1. American Express Money Manager Tool – As a free benefit for American Express cardholders, the newly-launched Money Manager Tool helps you stay on top of your finances by giving you a complete view of all your accounts, credit cards, and loans in detail and have a big picture view of your money management. You can link all of your personal financial accounts in one place, and customize graphs and budgets so you can monitor your spending and budgeting the way you want to. While very similar to other personal finance management websites, the Money Manager tool is different in that it is exclusive to AmEx customers and also allows users to consolidate rewards statements for frequent flyer and hotel points. If you want all the perks of a typical money management site plus extra credit-card specific features like tracking your travel rewards points, this is a benefit AmEx customers should take advantage of.
2. Wells Fargo Smarter Credit– This website is open to all consumers, and has learning tools, articles, tips, and information aimed at helping consumers establish/rebuild credit, reduce debt, get more credit, and manage and protect credit. This site is useful because you can pick out the tools and tips most relevant to you according to where you are on the credit learning curve. Aside from some helpful articles and budgeting sheets, there is an interactive money management tool called My Spending Report with Budget Watch to help you track every purchase and set monthly budget goals, exclusive to Wells Fargo customers.
3. Discover’s Spend Analyzer – Another newly-debuted personal finance tool that offers online tracking and spending of purchases for Discover customers. Using the standard model of money management websites, you get the run-of-the-mill features of categorizing spending, comparing spending patterns over time, and sorting transactions by detail so you can manage how you use your Discover Card. However, this online tool only tracks spending of your Discover card, and not all of your financial accounts. But, a unique feature is the “Paydown Planner”, which helps create a plan for reducing your Discover card’s balance and get you out of debt, which is one of the most effective tools a credit card-specific financial management service can offer.
4. Chase Blueprint – This is a personal finance tool tied straight to select Chase cards that allows customers to determine how they want to apply payments across their statement balance. Check out my review of Chase Blueprint to see how it works and see if it’s the right kind of money management helper for you.
5. Capital One MoneyWi$e – A partnership between Consumer Action, an advocacy group, and Capital One created this personal finance resource website that offers helpful tools and articles specific to your money goals, whether that is educating your teen on credit or learning how to build wealth. It has an interesting click-through format that features people’s stories as well as interactive activities. Worth checking out since its open to all consumers.
6. Citibank – Citibank’s website features a “Planning” section that encompasses many categories that the other issuers’ personal finance resources don’t cover, such as Retirement Planning and Investment Planning. Click on the type of “Planning” you want, and you’ll receive a comprehensive list of articles, strategies, as well as tools and calculators to help you plan towards your goals. While there is no interactive money management tool, the information and calculators provided are very useful because they give you specific strategies and tools unique to your goals. The site is better suited for addressing specific financial goals rather than overall money management.

At Credit Karma Blog, what goes around comes around… Are these services helpful to you as a customer, and do you want to see your credit card issuer reach out with more tools, advice, and help like this? Comment back– we’d love to hear your reactions!

Debt is the new four letter word to avoid. Everyone, from Uncle Sam to the average American, is taking action to get out of the red: Bloomberg reports that the U.S Treasury Department is selling a whopping $81 billion of long-term debt next week to steer away from the country’s legal debt limit of $12.1 trillion; and Philly.com reports that Americans have been buying less stuff on credit cards, which helped drop the total U.S credit card debt peak of $975 billion in Fall 2008 to below $900 billion this summer.

Your card balance may not be in the billions, but are you taking steps to take care of your credit and eliminate your debt? This week’s roundup is especially for you to start taking steps to get out of the red too.

Credit Card News

• Thinking about canceling your card? Before you do, read The Wall Street Journal’s article, “Credit cards: break up or make up?“.
• Is it possible to live without credit cards?, FiveCentNickel asks.
• If you are shopping for a credit card, do your homework first with The Boston Globe.
• Reduce Debt Faster shares 3 ways to lower credit card payments.
• Prepaid credit cards gaining favor reports The Salt Lake Tribune.
• Study finds prepaid cards less expensive than debit cards from banks blogs Almost Frugal.
• The BBC looks into what’s in store for the future of credit cards?
• Credit card debt elimination guide @ Clear Choice Credit Cards.
• The Digerati Life looks at how to opt out of interest rate increases.

Debt News

• Cash Money Life asks an important question: Do you know how much interest you are paying each month?
• A fun, alternative approach from Five Cent Nickel: Use weight loss strategies to get out of debt.
• Don’t wait until January to think about budgeting Being Frugal warns!
• Good debt vs bad debt: isn’t it all bad? Your Money Relationship answers the burning question.
• Gather Little By Little recommends using your emergency fund to pay off your debt.

Overdraft fees hit consumers hard last year as lenders raked in $24 billion, a 35% increase from two years ago reports the St. Louis Business Journal, which makes overdraft charges the banking industry’s single largest driver of consumer fee income. Now, Congress is siding with consumer complaints that banks and credit unions’ are taking advantage of customers with outrageous overdraft fees and less-than-full disclosure about their overdraft protection programs, and is proposing industry-wide limitations on overdraft practices.

Complaints Turn Into Changes

Debit cards—once the safe alternative to credit cards—is becoming a debt trap for consumers. Right now, banks and credit unions often automatically enroll customers in their most expensive overdraft protection program—up to $39 every time you overdraw your account. Like the above example of incurring a $39 charge for overdrawing $3, overdraft fees can often be disproportionate to the actual overdraft purchase so you are penalized an outrageous fee for a tiny infraction. Banks have also been accused of squeezing as much money out of customers as possible by rearranging the way transactions clear so you get charged overdraft on bigger ticket items, or as many as 9 times in a single day.

To reform other consumer complaints against these practices, some of Congress’ proposed changes include:

• Issuers must get customer’s permission to enroll them in an overdraft protection program, and the option to opt out of it
• Must notify customers that they are overdrawing on their account, and must warn them before any overdraft fee is imposed so they have the opportunity to cancel a charge
• Capping the number of overdraft fees consumers can be charged to once a month and six a year, after which purchases would just be denied
• Require issuers to have “reasonable and proportional” overdraft policies in which charges are proportional to the cost of processing the overdraft
• Prohibit issuers from manipulating the order in which transactions clear to create more charges

On the other side of the argument, banks and credit unions claim that it’s a courtesy to customers to provide overdraft protection to save them from embarrassment or inconvenience of a rejected charge or a bounced check. To that, one Congressman in favor of reform retorted, “Don’t do people favors without asking them.” The proposed changes are still being weighed in Congress as to how much more regulation—on top of the changes some issuers have taken upon themselves already—can be tolerably placed upon big banks. Banks and credit unions are strongly opposing the legislation, arguing that it would lead to higher fees for all customers, such as returned check charges.

Next Steps

Some banks have already reformed their overdraft policies in response to public heat. Bank of America will no longer charge fees if customers overdraw less than $10, Chase and Wells Fargo have cancelled fees for accounts overdrawn by less than $5, and Chase also promises not to charge more than 3 overdraft fees a day (down from a previous limit of 6). But you can protect yourself too. Consumers can take it upon themselves to be more responsible about not overspending, keeping track of expenses, and being aware of your own bank’s overdraft policies. If you want more information, check out How to Avoid Being Charged Overdraft Fees for extra tips.

At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!

Headlines are unanimous: when it comes to the recession, we are… confused. “Recession over? Sure doesn’t feel like it“, scoffs MSNBC, while The Wall Street Journal breathes a sigh of relief thanks to “A Recovery At Last.” Skepticism and optimism on both sides of the media circus are pulling the public back and forth.

But how does the average consumer– YOU –feel about the state of our economy? Does it feel like we’re finally steering clear of recession, or are the signs of recovery everyone has been talking about been passing you by? Throw in your two cents and comment back on what you think!

Personal Finance News

• CNN Money gives some tips on free cash for your business.
• Here’s a fun (and useful!) post from The Simple Dollar: 14 ways a notebook in your pocket can save you money.
• Find your financial style — and its pitfalls, writes The Wall Street Journal.
• Moolanomy offers advice on what to do with a financial windfall.
• Need help teaching your kids about personal finance? Check out The Chicago Tribune’s Financial games: it can pay to play.
• 11 ways to save money on groceries blogs My Dollar Plan.

Credit Reports & Credit Scores News

• The San Francisco Chronicle clears up confusion on credit scores.
• What is in a credit report? asks Business Finance.
• Let’s end confusion over free credit reports writes The Dallas News.
• Financial Money Investment helps you understand where credit scores come from.
• MSN Money finds out how your credit score will affect your auto insurance in the article, “Bad credit is worse than bad driving“.
• How to improve your credit score tips from KCCI 9 News Channel.

Prospective homebuyers may no longer need to rush to open houses or speed through paperwork—senators have hammered out a plan to extend the popular First Time Homebuyer Tax Credit past the November deadline, plus offer a reduced tax credit to repeat homebuyers who qualify. While lawmakers have figured out the bulk of the tax credit deal, it still awaits approval from the entire Senate and the House before it becomes law.

Despite recent allegations of homebuyers fraudulently claiming the $8,000 tax credit and criticisms that the extended tax credit would be unnecessary spending of stimulus funds, renewed life for the tax credit appears very popular among legislators. The expanded tax credit plan would accept contracts until the end of April 2010 and must be closed before July 1. In addition to the potential $8,000 tax credit for new home buyers, the new tax credit would also provide up to $6,500 credit for repeat homebuyers who have lived in their home for at least five consecutive years and are looking to move. Repeat homebuyers qualify if they make less than $125,000 a year for individuals and $225,000 a year for couples.

“This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide,” Treasury Secretary Timothy Geithner said in a statement to MarketWatch.

The extended credit could further prop up the housing market because many more homebuyers can benefit from the tax credit than before. Home sales rebounded to the highest level in two years with a near 10% increase in September—we could see these figures magnify in the coming months to get the housing market back on its feet.

However, more recent home sale dips have stalled signs of recovery and suggests that the market is slowing down as the current tax credit nears its November deadline. Legislators are hoping that the new extension may be enough of a jumpstart to pick-up home sales, get home values increasing, and properties hot enough to get the market booming again. Like putting in a more gas until the engine gets up and running by itself, supporters insist that it’s the bigger boost needed to keep the economy revving again. On the other hand, these temporary government stimulus measures can’t prop up the economy forever.

At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!

Will your credit score be a trick or treat for you this Halloween? Are rising mortgage rates spooking you out of the new home market and back into your apartment? Here are some good reads from the headlines and blogosphere because personal finance shouldn’t be such a scary experience.

Home & Mortgage News

• Surprise drop in new home sales CNN money reports.
• Money Under 30 sets it straight: Pre-qualification vs pre-approval: whats the difference?
• The New York Times follows homeowners walking away.
• Frugal Dad dives into Q&A on the new rules for mortgages.
• Do you know about the ‘double bubble’? MSNBC explains more on the current real estate trouble.
• How to buy a home you can afford blogs Free Money Finance.
• The Wall Street Journal asks, is an expanded home buyer tax credit a good deal?

Credit Karma News

• The Collier Citizen mentions CK in, “Tracking a Credit Score”.
• Lesson learned: Now you can get credit scores free! @ JournalStar.com.
• Thanks to San Francisco Chronicle for listing CK in Money-saving sites to check out, Part 2.

Are you unhappy with your current bank? Or maybe your bank is starting to charge you extra fees, your APY dropped, the bank closed your account, or you just want to switch banks or put your money elsewhere (say, in a CD or in the stock market). Whatever the reason, don’t be intimidated to close your bank account. First of all, closing your bank account will not affect your credit score; neither will opening a new bank account. Second of all, I’ve lined up the following pointers just for you to make sure you close your current account and moving on to a fresh start as painlessly and easily as possible:

1. A very important step to do before closing your account: make sure all checks being withdrawn and deposited have cleared before attempting to close the account. Stop using your account and clear all debit transactions and any other outstanding transactions completely.
2. Another important tip: choose your new bank and open your account before you close your old account so you can transfer your automatic transactions and current balance to it immediately.
3. Once your new account is open but before you close your old account, list all your automatic transactions and make sure they are re-linked to your new bank account. Give your employer your new banking information to do automatic paycheck deposits to the correct account. If you have automatic bill pay set up with your current account, also make sure you relink to your new account so your bills are still paid and on-time. Just be sure you stop and redirect all direct deposits, automatic transfers, and automatic withdrawals you have tied to your old account—you don’t want to miss anything crucial that will affect your credit like your car payment.
4. If your bank has a physical location, go in person to talk to a teller or customer service about closing your account so you can ask any questions and verify any information as needed. If not, send a formal letter requesting to close your account. Also, before you go in to your bank, prepare yourself: call ahead (and you should also do this if you have an online bank without a physical branch) and ask if there are any fees or charges for closing your account. If you are visiting your bank’s branch, bring with you two forms of identification and photo ID, just in case they should ask.
5. Before closing your account, request a print-out of your current balance. Whether you request to transfer the funds into your new account or you request your balance in cash or cashier’s check, make sure you or your new account has the correct amount of funds in it.
6. If you have checks or a debit card attached to your account, make sure you stop using both and cut or shred them before recycling. Also, keep an eye on your credit report and any bank statements you might still receive to make sure no other activity occurs thereafter on your account; if so, you might be a victim of identity fraud or someone else opened and is using your account—contact the bank immediately.

Other tips

• If you have a joint bank account with another person, some banks require both individuals to be present when closing it, or if you are sending your request via letter, both of your signatures.
• When visiting a physical branch, call ahead for the bank’s open hours because sometimes banks have a specific employee and time window for handling bank closures.
• Depending where you are transferring the funds too or how large your balance is, keep in mind it may take several days to process your closing request.
• It’s a good idea to keep your old account open for a month or so after opening your new account, and leave a little cushion money in there. This way, you could monitor your account and see if any automatic transactions occur that you forget to transfer to your new bank.

At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!