Money and Credit

The new Consumer Action Handbook - This page guide from the Federal Consumer Information Center can help with your consumer problems and questions. Find help on such topics as buying and leasing cars, shopping from home and protecting your privacy and yourself from fraud.

Need a little help? Check out the new Consumer Action Handbook. Get consumer tips and advice on everything from leasing cars to protecting yourself from fraud. The Handbook also features thousands of names, addresses, phone numbers and e-mail addresses for corporate consumer contacts, state and federal government agencies, local and national consumer organizations and more.

Loans

A number of Federal state and local agencies regulate banks and other financial institutions. Check the table of contents or the index for specific information about how to reach these offices by mail, fax, telephone, E-mail and through the Internet. For information about: mortgage loans see Home Financing; home improvement loans see Home Improvement; car loans see Buying A Car: New or Used.

Payday Loans

In a typical payday loan, a consumer would write a personal check for $115 to borrow $95 for two weeks (until payday). The annual percentage rate (APR) in this typical example is 395%. In 19 states payday loans are illegal. Avoid payday loans by:

• asking for more time to pay a bill,

• seeking a traditional small loan, or

• using a cash advance on your credit card.

For more information about payday loans, contact your state banking authority, Consumer Federation of America or U.S. Public Interest Research Group

Money and Credit

Money and Credit

Credit Access and Use Equal Rights

The Equal Credit Opportunity Act guarantees you equal rights in dealing with anyone who regularly offers credit, including banks, finance companies, stores, credit card companies and credit unions. A creditor is someone to whom you owe money. When you apply for credit, a creditor may not:

• ask about or consider your sex, race, national origin or religion;

• ask about your marital status or your spouse, unless you are applying for a joint account or relying on your spouse's income or you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington);

• ask about your plans to have or raise children;

• refuse to consider reliable public assistance income or regularly received alimony or child support; or

• discount or refuse to consider income because of your sex or marital status or because it is from part-time work or retirement benefits.

You have the right to:

• have credit in your birth name, your first name and your spouse's last name, or your first name and a combined last name;

• have a co-signer other than your spouse if one is necessary;

• keep your own accounts after you change your name or marital status or retire, unless the creditor has evidence you are unable or unwilling to pay;

• know why a credit application is rejected; the creditor must give you the specific reasons or tell you of your right to find out the reasons if you ask within 60 days;

• have accounts shared with your spouse reported in both your names; and

• know how much it will cost to borrow money. The Truth in Lending Act requires a lender to inform you of the cost to borrow, so that you can compare the cost and terms of credit offered by various lenders.

Money and Credit

Money and Credit

Credit Cards

Choosing a Credit Card

Consider and compare all terms, including the following, before you select a card:

• Annual Percentage Rate (APR) —the cost of credit as a yearly rate.

• Free or Grace Period —allows you to avoid any finance charge by paying your balance in full before the due date. If there is no free period, you will pay a finance charge from the date of the transaction, even if you pay your entire balance when you receive your bill.

• Fees and Charges —most issuers charge an annual fee; some also might charge a fee for a cash advance or if you fail to make a payment on time or go over your credit limit.

• Credit Card Insurance - is unnecessary because it duplicates protections you already have under law in case your credit card is lost or stolen.

If you pay bills in full each month, the size of the annual fee or other fees will be more important. If you carry a balance, the APR and the method used to figure your balance are key.

• Get all terms and fees in writing, including whether a deposit is required.

• Apply directly to the card issuer. Don't give money to a company that offers to get you a credit card for a fee. You may not get a card or your money back.

• Beware of "credit cards" that only allow you to buy from their own catalogs.

• Avoid companies that promise instant credit or guarantee you a credit card "even if you have bad credit history." No one can guarantee you credit in advance.

• Be cautious of offers for secured credit cards. These cards usually require you to set aside money in a separate bank account in an amount equal to the line of credit on the card to guarantee that you will pay the credit card debt. Some of these offers advertise that secured cards can be used to repair a bad credit record, but no matter how well you handle this account, your payment history on your past debts still will be taken into consideration when you apply for credit, employment or housing.

Money and Credit

Using a Credit Card

Protect your credit record.

• Pay bills promptly to keep finance charges low and to protect your credit rating.

• Keep track of your charges and don't exceed your credit limit.

• Report any change of address prior to moving, so that you receive bills promptly.

If your card is lost or stolen, you are not liable for any charges if you report the loss before the card is used. If the card is used before you report it missing, the most you will owe is $50.

Credit Billing and Disputes

The Fair Credit Billing Act applies to credit card and charge accounts and to overdraft checking. It can be used for:

• billing errors;

• unauthorized use of your account;

• goods or services charged to your account but not received or not provided as promised; and

• charges for which you request an explanation or written proof of purchase.

Money and Credit

Using a Debit or Check Card

Using an Automated Teller Machine (ATM) or debit card and a personal identification number (PIN), consumers can withdraw cash, make deposits, or transfer funds between accounts and pay for retail purchases. Although a debit card looks like a credit card, the money for the purchase is transferred immediately from your bank account to the store's account.

Some ATMs charge a fee if you are not a member of their network or are making a transaction at a remote location. ATMs must disclose the fee on the terminal screen or on a sign next to the screen.

Purchases made with a debit card are handled in one of two ways: you enter your personal identification number or you sign for the purchase. Ask for a debit card that must be used with a PIN to make it harder for thieves to use your lost or stolen cards or account numbers. Keep your PIN a secret. Don't write your PIN on the card or on a slip of paper kept with your card.

Take your ATM receipt after completing a transaction. Reconcile ATM receipts with bank statements promptly. When you use a debit card for a point-of-sale purchase, these purchases will be shown on your periodic statement from your bank account. If there is an error on your account, contact the issuer of the card (for example, the oil company) at the address or phone number the company provided. When you use an electronic funds transfer, federal law does not give you the right to stop payment. You must resolve the problem with the seller.

Stored-value cards contain cash value stored electronically on the card itself. Stored-value cards and the transactions you make using them may not be covered by the Electronic Funds Transfer Act, which means you may not be covered for loss or misuse of the card.

Money and Credit

Protect Your Credit and Debit/Check Card Rights

• Write to the creditor or card issuer within 60 days after the first bill containing the disputed charge is mailed to you. (Even if more than 60 days have passed since you were billed for the item, you still might be able to dispute the charge if you only recently found out about the problem.)

• Send your letter to the address provided on the bill; do not send the letter with your payment.

• Be specific. In your letter, give your name and account number, the date and amount of the charge disputed, and a complete explanation of why you are disputing the charge.

• To be sure your letter is received, and so you will have a record, you might wish to send it by certified mail, with a return receipt requested.

If you follow these requirements, the creditor or card issuer must acknowledge your letter in writing within 30 days after it is received and conduct an investigation within 95 days. While the bill is being disputed and investigated, you need not pay the amount in dispute. The creditor or card issuer may not take action to collect the disputed amount, including reporting the amount as delinquent, and may not close or restrict your account. If there was an error or you do not owe the amount, the creditor or card issuer must credit your account and remove any finance charges or late fees relating to the amount not owed. For any amount still owed, you have the right to an explanation and copies of documents proving you owe the money. If the bill is correct, you must be told in writing what you owe and why. You will owe the amount disputed plus any finance charges. You may ask for copies of relevant documents.

Money and Credit

Debit/Check Cards

Report a lost or stolen ATM or debit/check card to the issuer immediately.

• If you report an ATM card missing before it's used without your permission, you are not responsible for any unauthorized withdrawals.

• Federal regulations limit your liability to $50 if you report the loss within two business days after you realize your card is missing, and to $500 if you report the loss between 2 and 60 days.

• Under Federal law you could lose all the money in your bank account and the unused portion of your line of credit established for overdrafts if you fail to report an unauthorized transfer or withdrawal within 60 days after your bank statement is mailed to you.

• Self-imposed industry rules limit your liability to zero if you report the loss within two business days, and to $50 if you report it more than two business days after realizing your card is missing.

Money and Credit

Protect Your Credit Report

The Fair Credit Reporting Act controls how your credit history is kept, used and shared among lenders. It is designed to promote accuracy and ensure the privacy of the information used in credit reports. The three major national credit bureaus have credit files on millions of consumers nationwide. Their toll-free numbers are:
Equifax 1-800-685-1111
Experian 1-888-397-3742
TransUnion 1-800-916-8800

Anyone who takes action against you in response to a report supplied by a credit reporting agency (CRA) -such as denying your application for credit, insurance, or employment- must give you the name, address, and telephone number of the CRA that provided the report.

• You have a right to know what is in your credit report, including medical information and, usually, the sources of the information. Make sure your report is accurate.

• Get your report for free if a company takes adverse action against you based on the report and you request your report within 60 days of receiving the notice of the action.

• Request one free report a year if you can prove that you are unemployed and plan to look for a job within 60 days, if you are on welfare, or if your report is inaccurate because of fraud. Otherwise a CRA may charge you up to $8 for a copy of your report.

If you find inaccurate or incomplete information in your report:

• contact both the CRA and the company that provided the information to the CRA.

• tell the CRA in writing what information you believe is inaccurate. The information provider must investigate and report the results to the CRA. If the information is incorrect, it must notify all nationwide CRAs to also correct your file.

• if the reinvestigation does not solve your dispute with the company, ask that your statement of the dispute be included in your file. A notice of your dispute must be included anytime the CRA reports the item.

Who Has Access to My Report?

An employer or a prospective employer can only get your credit report if you give written consent. Creditors, employers, or insurers cannot get a report that includes medical information without your approval. Only people with a legitimate business need can get a copy of your report.

Negative Information

A CRA can report negative information for seven years, and bankruptcy information for ten years. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.

Money and Credit

When Your Debt is Out of Control - Credit Counseling

Counseling services provide assistance to individuals having difficulty budgeting their money and/or meeting necessary monthly expenses. Many organizations, including credit unions, cooperative extension services, family service centers and religious organizations, offer free or low-cost credit counseling.

The National Foundation for Consumer Credit (NFCC) has 1,400 members that provide money management techniques, debt payment plans and educational programs to help consumers learn to budget and use credit wisely. Many of its members are locally managed, nonprofit agencies operating under the name Consumer Credit Counseling Service (CCCS).

To locate the nearest NFCC member, call toll-free, 24 hours a day, 1-800-388-2227 or visit its web site at www.nfcc.org.

Myvesta.org is the nation's first, nonprofit, Internet-based debt counseling service. It assists families and individuals with debt, credit, money and financial problems through its web site at www.myvesta.org, as well as through one-on-one counseling at 1-800-680-DEBT.

Money and Credit

Debt Collection

The Fair Debt Collection Practices Act applies to those who collect debts owed to creditors for personal, family and household debts, including car loans, mortgages, charge accounts and money owed for medical bills. A debt collector is someone hired to collect money owed by you. A debt collector may not:

• contact you at unreasonable times or places, for example, before 8 a.m. or after 9 p.m., unless you agree, or at work if you tell the debt collector your employer disapproves;

• contact you after you write a letter to the collection agency telling them to stop, except to notify you if the debt collector or creditor intends to take some specific action;

• contact your friends, relatives, employer or others, except to find out where you live and work, or tell such people that you owe money;

• harass you by, for example, threats of harm to you or your reputation, use of profane language or repeated telephone calls;

• make any false statement, including that you will be arrested; or

• threaten to have money deducted from your paycheck or to sue you, unless the collection agency or creditor intends to do so and it is legal.

If you are contacted by a debt collector, you have a right to a written notice, sent within 5 days after you are first contacted, telling you the amount owed, the name of the creditor, and what action to take if you believe you don't owe the money. If you believe you do not owe the money or don't owe the amount claimed, contact the creditor in writing and send a copy to the debt collection agency with a letter telling them not to contact you. If you do owe the money or part of it, contact the creditor to arrange for payment. To file a complaint, contact your state or local consumer protection agency and the FTC.

Money and Credit

Credit Repair

Credit repair companies advertise that they can erase bad credit and create a new credit identity legally, all for a hefty fee. Don't believe it. No one can legally remove accurate and timely negative information from a credit report. No credit repair company can do anything you can't do for yourself for free. Only time, hard work, and a personal debt repayment plan will improve your credit report. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed promised services. They must:

• provide a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract;

• give you a written contract that spells out your rights and obligations; and

• give you three days to cancel without paying any fees

Some credit repair companies promise to help you establish a whole new credit identity. You can be prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit with false information. It is a federal crime to make false statements on a loan or credit application, to misrepresent your social security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretences. Your state may have a law strictly regulating credit repair companies. Contact your local consumer affairs office and state attorney general, or the Federal Trade Commission if you have lost money to credit repair scams. The National Fraud Information Center accepts consumer complaints about telemarketing and Internet credit repair offers at 1-800-876-7060. .

Money and Credit

Insurance

When buying insurance of any kind - car, homeowners, renters, life, fire, flood - shop carefully. Check with your state's insurance department to make sure the company is reputable and financially strong.

• Make sure the insurance company is licensed and covered by the state's guaranty fund, which pays claims in case of default.

• Find out how the insurer's creditworthiness is rated by agencies such as Standard & Poor's, A.M. Best Co. or Moody's Investors Services. Most public libraries have copies of these reports.

• Make sure you receive a written policy within 60 days after you paid your first premium. This ensures that the agent forwarded the premium to the insurance company.

For information, contact American Council of Life Insurers, Insurance Information Institute, Consumer Federation of America and National Association of Insurance Commissioners. Visit these web sites: www.pueblo.gsa.gov, insure.com and consumerworld.org (click on money).

To avoid fraud:

• Be wary about buying insurance from door-to-door or telephone sales people.

• Be wary if, after any kind of accident, a stranger contacts you to offer "quick cash" or to recommend a particular medical clinic, doctor or attorney. Report such contact to your police department.

• Protect your insurance identification numbers as you would your credit card numbers.

• Carry a disposable camera in your glove compartment. If you are in an accident, take as many pictures as possible of the damage and of all the people involved. Get any passengers' names and telephone numbers along with the driver's license.

If you suspect fraud, call the National Insurance Crime Bureau's hotline at (800) TEL-NICB (835-6422). For more information, check out www. insurancefraud.org.

Money and Credit

Investing Wisely - Commodity Futures

Only commodity brokers registered with the U.S. Commodity Futures Trading Commission (CFTC) can sell exchange-traded futures contracts and options on futures to the public lawfully. The National Futures Association (NFA), a CFTC-designated self-regulatory organization, has a toll-free hotline at 1-800-676-4NFA (4632) to verify registration and disciplinary history (including customer complaints) of futures/options firms and salespersons. From outside the United States, call 312-781-1410.

Securities

Before making a securities investment in stocks, bonds or mutual funds, you should get written financial information such as a prospectus or annual report. Select a broker or investment adviser who understands your financial objectives. Interview two or three to compare experience, education and professional background. Call the National Association of Securities Dealers, Inc. (NASD) toll-free on 1-800-289-9999 to find out about the disciplinary history of the broker. Call your state securities regulator to see if the investment and the salesperson are registered in your state, and to obtain any disciplinary information.

• Understand how the broker or investment adviser is paid. What fees will you pay to purchase, sell or maintain the account?

• If you have a problem with your broker or your account, talk with the firm's manager. If you can't resolve the problem, contact the U.S. Securities and Exchange Commission or your state securities regulator.

• Read magazines like Money, Kiplinger's Personal Finance and Fortune for investment advice.

• Visit the numerous web sites providing personal finance information. Good gateways to these web sites are www.pueblo.gsa.gov and www.consumerworld.org. Click on money.

Day Trading

Unlike longer term investments for college or retirement, day trading seeks profits based on short-term fluctuations in the prices of stocks. You gamble on whether the price of a stock will rise or fall. Unless you are extremely knowledgeable about stocks and how the stock market works, you should not engage in day trading. For more information, call the U.S. Securities and Exchange Commission or your state securities regulator.

Money and Credit

Avoiding Investment Fraud

Deceptive or fraudulent sales pitches for investments often misrepresent or leave out facts in order to promote fantastic profits with little risk. No financial investment is risk-free and a high rate of return means greater risk. Beware if a salesperson:

• Tells you to borrow money on a credit card, take out a mortgage on your home, or cash in your IRA to invest in commodities;

• Pressures you to invest immediately, and then sends an overnight courier service to pick up your check and give you forms to sign;

• Promises quick profits;

• Downplays the risk disclosure documents and statement, which are required by Federal law, as just a formality;

• Tells you to write false information on your account form, for example, to overstate your income;

• Sends information that is not printed on letterhead stationery or has typographical errors;

• Does not send your money promptly when you order the broker to close a trade and send you your balance;

• Offers to share inside information; or

• Uses words like "guarantee," "high return," "limited offer," or "as safe as a C.D."

This service is provided by the Federal Consumer Information Center of the U.S. General Services Administration. If you have a comment or question, e-mail

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