October 27th, 2011
Pros and Cons of Using Layaway This Holiday Season
It’s not even Halloween yet and the mania around holiday shopping has already begun. The latest ploy to send holiday shoppers into a spending frenzy? The reemergence of the layaway plan. In response to customer demand and the current state of the economy, Walmart has decided to join other major retailers like Sears, Best Buy and Toys “R” Us in bringing back the old-fashioned layaway program.
Using a layaway system seems like a good alternative to a credit card at first glance, but like any financial decision, it’s always best to weigh the pros and cons before jumping in. A layaway plan can be a good choice for some consumers, but there are other things to consider before you decide to leave your credit cards out in the cold this winter.
October 13th, 2011
Will Bank Transfer Day Take Down Big Banks?
Occupy Wall Street has received a lot of media attention due in large part to the protests and arrests occurring in New York and other major cities. Many consider the conversation around the dissatisfaction of banks to be a constructive idea, yet despite their growing following, Occupy Wall Street has yet to put any plans into motion to change the system.
That all changed this past week when an event called “Bank Transfer Day” emerged on Facebook encouraging people to switch from their current bank to a credit union by Nov. 5. While the event’s creator is not directly tied to Occupy Wall Street, many of its followers have shown support for the event, and it could mark the turning point for the movement.October 5th, 2011
Wednesday Roundup: Channel Your Inner Science Nerd to Make Extra Money
"Here are a few of my favorite ways to make money with science… Become a NASA Test Dummy - NASA is currently looking for willing participants to come down to their University of Texas facility and be a part of a bed rest study. The study pays participants $5,000 a month to stay in bed for 90 days and let NASA study the impacts to your body." Frugal Dad
March 8th, 2011
Who Do You Love? Banks Battle It Out With Flashy New Ad Campaigns
Banks these days just aren’t what they used to be. The numbers prove it.
A new study shows that the banking industry experienced minimal growth in 2010 as compared to 2009.
So, banks are combating the negative buzz with some new, out-of-the-box marketing strategies.
January 29th, 2010
New FHA rules affects consumers, housing market, and economy
The Federal Housing Administration is undergoing major changes in 2010 to tighten lending standards, raise credit score requirements, and increase mortgage premium costs in an effort to strengthen the agency’s weakened financial state and reform the lax lending practices that contributed to the housing crisis.
The FHA does not provide mortgage loans itself, but offers government-backed insurance against defaults for mortgages issued by approved lenders. FHA loans appeal to new and first-time homebuyers because they require down payments of 3.5% of the home’s purchase price, in comparison to the industry standard of 20% or more. However, the agency has been criticized for backing mortgages with little or no down payments, which was the type of lending that contributed to the current wave of foreclosures. The agency is also financially strapped as more than 18% of FHA borrowers are at least one payment behind or in foreclosure compared with 14% default rate for all loans, reports USA Today.
January 6th, 2010
Wednesday Trends in Credit Cards & Debt
Every penny counts today as the value of the dollar continues to decline in the new year. The blog, “Dual Income No Kids Finances,” posted this picture of what a dollar buys to see just how much American money has depreciated in comparison to world currencies.
If you’re keen on paring down debt, consider the value of each and every dollar you save. Skipping a morning latte or a trip to the movies adds a little more fuel to your debt reduction plan . Read ahead for more debt help and credit card news updates.
Credit Card News
- Did you know you can build credit without credit cards? Blog site Eliminate the Muda explains.
- “Tip 4: Improve your credit score,” — sound familiar on this blog? Bankrate.com suggests 10 best credit card moves in 2010 to put you on the right track to great credit.
- If you are already carry a balance on your credit card, Rich Credit Debt Loan suggests the smart way to handle credit card debt.
- More consumer information about the Credit Card Act of 2009 reported by ABC News. Extra information you need to know about what moves your credit card issuer might make in the coming weeks.
- Here’s another article to prepare you for the Credit Card Act, 5 steps to dominate the new financial legislation in 2010, from blog site Foreigner’s Finances.
Debt News
Fresh from holiday spending season, the following articles and blogs focus on getting rid of holiday debt and planning debt reduction strategies for the new year:
- 5 ways to dig yourself out in 2010 reported by MSN MOney. “1) Save $500.”
- Erase holiday debt from The Wall Street Journal. “Stretching debt payments for holiday spending over a long time will negate any savings you might have gained from any seasonal sales or discounts.”
- 9 rules to get out of debt blogs DebtKid. “You must cut expenses like a butcher. Slash away. Everything non-critical must go.”
- How to waste money in 9 easy steps by 20something Finance. “#3: Pay whatever fees the bank charges you because they’re the boss.”
- Why tracking expenses is important when paying off debt writes Being Frugal. “Without tracking your expenses, it’s hard to know where you’re overspending.”
January 1st, 2010
Friday Scoop on Credit Karma & Housing Market News
To kick off a prosperous 2010, here are some highlights from Kiplinger’s 11 Things to Celebrate as 2009 Comes to A Close: credit card debt is declining, the personal savings rate is up again, and it’s the best time in decades to buy a new home! Cheers to continued financial success and good news in the new year, for our economy and for each of us.
Credit Karma in the News
- The Baltimore Sun presents Credit Karma data to support why getting rid of that debt burden takes focus and planning.
- USA Today test drives Credit Karma as one of the uniquely free sites where you can and should check your credit profile.
- Another mention of Credit Karma as a good resource to check your credit profile for free can be found on Asbury Park Press.
- Credit Karma’s November Climate Report makes an appearance on The Motley Fool’s amusing blog post, “5 signs your spouse is a financial Tiger Woods.”
Housing Market & Mortgage News
- If you are wondering what a reverse mortgage is and if its right for you, Get Rich Slowly has your answers.
- MSN Money offers 10 great tips for mortgages for 2010 on everything from credit scores to down payments.
- Home costs keep going up reports The Wall Street Journal in this short and helpful article.
- Cash Money Life explains the pros and cons of mortgage escrow accounts.
- Follow this CBS News financial journalist’s predictions for what 2010 has in store for housing market.
December 31st, 2009
79.9% interest rate hike?!
First Premier Bank’s, a subprime credit card issuer, latest 79.9% interest rate hike has likely set a record as the most exorbitant interest rate ever in the credit card industry.
It isn’t out of the norm for issuers to be enforcing rate hikes and new fees; it has become a normalized practice in the industry since the CARD Act was passed last May. In order to recoup projected losses anticipated in the upcoming credit card reforms, most major issuers, from Bank of America to Citibank, have used the last few months to change cardholders’ terms and conditions; interest rates have doubled to 29.95% up from the average 13-15%, credit limits have been cut without warning, as well as older accounts being closed without reason.
Why the steep hike from First Premier Bank? In an effort to comply with the CARD Act’s stipulation that card fees cannot exceed 25% of a card’s credit line, First Premier lowered its card from the usual $256 minimum in fees for the first year for a credit line of $250, to a $75 fee for a credit line of $300. As a result, the interest rate shot up from 9.9% to 79.9%. First Premier said the 79.9% APR offer is a test for new customers and may or may not affect existing customers.
This latest rate increase by First Premier Bank is not only excessive, but it may actually prove effective. First Premier Bank, as a subprime issuer, targets people with poor credit who aren’t typically approved by other credit card companies and aren’t left with many other options. In a statement to the press, First Premier noted that it needed to “price our product based on the risk associated with this market”.
Additionally, the revamped terms might also come with new credit standards. First Premier might be moving away from its historical base of consumers with less-than-perfect credit. Synovate, a research firm that tracks credit card mailings, reports that typically 91% of First Premier’s mail offers are sent to subprime households with credit scores below 700; in the third quarter, the bank sent 84% of its offers to subprime households. This decrease indicates that First Premier may be cleaning up its credit card portfolio and tightening its credit standards to target people with healthier credit; subprime borrowers have a propensity to default and pose a risk to overall profitability.
Keep up with more credit card news and updates on our Wednesday roundup!
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!
December 30th, 2009
Wednesday Trends in Credit Cards & Debt
Do you think you could live happily on 75% less money? MSN Money poses this question as the Great Recession spills over into 2010 and challenges consumers to do more with less money. Is living a happier, more financially-fit lifestyle on your list of resolutions this year? Read ahead for debt reduction tips and credit card strategies to help you maximize your New Year’s money management habits.
Credit Card News
- Charge cards make a comeback in our credit crunched economy in the Wall Street Journal’s Tamer cards for toughter times.
- Another alternative to credit cards is gift cards, and MSNBC wants to make sure you know how to get full value for your gift card.
- Building an army of cashback credit cards is the best way to optimize your earning power as a savvy credit card user, advises Money Under 30.
- New credit card rules add accountability reports the Los Angeles Times, and explains how your credit card company will change once major industry reforms take effect in February.
- What is the 10 second credit limit increase? Bargaineering blogs on the quick credit line increase you might be eligible for, and also the benefits and drawbacks of upping your limit.
Debt News
- Wise Bread helps consumers get a grip on their debt with advice on how to obtain a clear, concise snapshot of your personal finances.
- If you are intimidated by the heights of your mountain of debt, The Chicago Tribune maps out the first steps on how to scale it.
- Looking into debt consolidation? Doughroller suggests one method of consolidating debt with P2P websites Lending Club or Prosper; it might be just the kind of debt help you need.
- Pay off debt in 2010 by increasing your debt snowball blogs Enemy Of Debt. Some motivating words to get you on your way: “Being broke is no fun. Living paycheck to paycheck is stressful, so now it is time to make the changes necessary.”
- Another post to help with your New Year’s resolution to ditch debt: Kiplinger puts you on a financial diet for 2010 with 4 ways to trim your spending. Start simple with #1: Track your spending.
December 28th, 2009
Dear Credit Karma – Negative Marks On Credit Report
Dear Credit Karma,
How do I get hard credit inquires off my account?
There is no sure method to get hard credit inquiries “off your account” other than waiting out the two year term hard inquiries remain on a credit report. A hard inquiry is a credit report check by a lender as part of a loan or credit application that negatively impacts your credit score. Some online sources report that you can “bump” hard inquiries off your report by doing many soft credit inquiries, which are credit checks that do not affect your credit score, to replace previous hard inquiries on the list of inquiries on your credit report. However, this strategy may not work because the credit bureau issuing your credit report may list the hard and soft inquiries separately. Also, beware of online companies offering to remove your hard inquiries for a price; if it sounds like a scam, it probably is one.
You are better off just waiting for the hard inquiry to fall off after two years on your credit report. Credit inquiries are one of the key components that go into calculating your credit score, and hard inquiries will drop your credit score by a few points for 6-12 months, but the older the inquiry gets, the less damage it will take on your score. Just take care to avoid future excessive hard inquiries within a short period of time, like multiple loan applications or many new credit cards, because the damage will add up. Check out Credit Karma’s Credit Simulator to see how credit inquiries will affect your score.
Dear Credit Karma,
When items “fall off” of your credit report, how long does it take to reflect on your score? How many points will each account falling off raise your score?
Determining how long it will take between an item “falling off” your credit report and its impact on your credit score is difficult to say because your credit score won’t necessarily improve due to one item “falling off”. There is no guarantee it will reflect immediately, if at all, on your credit score. First of all, your credit score is calculated according to a complex algorithm involving all components of your credit report. Your credit score will improve relative to your entire credit report, and not just one item “falling off”. Secondly, the impact of one item “falling off” may only have a slight point improvement on your score. Different credit actions vary in their damage points to credit scores, so an old bankruptcy would be a bigger weight off your credit report than a debt settlement. But the longer an item remains on a credit report, the less damage it has on your credit score over time; thus, it is hard to say just how much your credit score will benefit once an item is wiped off your report. The best thing to do is to monitor your credit report and credit score to keep a tab on any changes that happen.
Dear Credit Karma,
I’ve recently been told by two separate banks that they are closing my credit card accounts due to inactivity. Both of these have had zero balances for quite some time but the accounts themselves are at least 10 years old each. How can I apply for new credit cards without it affecting my score? This doesn’t seem fair to me.
Banks have been trimming their accounts and tightening credit access in the past few months much to the chagrin of cardholders like yourself, and now you find yourself in need of fresh credit. Unfortunately, you can’t avoid a hit to your credit score while applying for a new credit card. Issuers do a hard credit pull whenever you apply for a credit card, which will have a small negative impact on your credit score. While you can’t avoid the impact on your credit score, excessive hard inquiries due to applying to many credit cards over a period of time will hurt your credit score even more and reflects badly to potential lenders. Protect yourself as much as possible by shopping around and applying selectively to just a few, choice credit cards that are right for you. Start off with one credit card and regulate your credit use and build up your credit with monthly purchases you can pay off in full, like a trip to the movies or a grocery run; if you still want a second line of credit, you can always apply for another credit card later. But if you have other credit cards, you might consider using those older cards more actively rather than getting a new credit card, which risks letting your older cards fall to the wayside and potentially be closed for inactivity too.
Submit a question now, and maybe Credit Karma will answer your question on our next Q & A blog post!
