September 17, 2010

The Art of Acquiring Affordable Art

L_Imperial_Extracts_4 With two swift searches, you can set yourself on the path to affordable art acquisitions. None of this multimillion dollar, Sotheby’s auction stuff. We’re talking $25, $75, $100. Of course, if tens of thousands of dollars constitutes “affordable” in your world, you’ll have ample opportunities to make artists happy, as well.

This information comes to me from Denver artist Brenda Stumpf, a hellaciously talented artist who distills immense mythical themes onto canvas or into an assemblage, imbuing her work with the ancient like nobody’s business.

Anyway, Brenda advises typing in the following searches: “[your city] art walks,” and “[your city] open studios.” The first will lead you to days when the art district(s) in your town holds a coordinated event during which all of the galleries and sometimes artist studios are open.

The second will lead to similar, though probably less frequent events during which artists open their studios to the public. The advantages are numerous, Brenda informs, starting with familiarizing yourself with the “artocracy” of your city. In addition to the fun of chatting up artists and meeting a lot of interesting fellow patrons, you can also peruse a diverse array of objets d’art in all sizes, shapes and price ranges.

Additionally, while strolling on an open studio walk, you can purchase art that is unframed and thus priced lower. If you want framing, artists will often pass along the discounts they receive from their framers.

Brenda names another perk of these walks: “There are usually all kinds of people, so you’re not going to be stuck in a big, white box all by yourself with some stoic-looking person behind the desk glaring at you.”

You don’t have to buy big, either. Say you have a large, open wall that you want to enliven with art. No problem. Instead of one or two huge canvases, go with several smaller, less expensive pieces. Brenda has appointed one of her walls, she tells me, with a collection of 4” treasures she’s discovered on her own art-walk expeditions.

“The smaller the piece, the more intimate that little space becomes,” she says.

Looking for a “green” component? Many artists today specialize in recycling found objects, attic accumulations or thrift store and flea sale items into artwork. Attending these walks also helps sustain your community, since you’re highly likely to patronize a restaurant, bar or coffee shop. Thus, sustaining your local artists represents an artful and affordable way to expand your private collection.

Image: Imperial Extracts 4, Brenda Stumpf

Christopher Johnston has written for American Theatre, Cleveland, Continental, Crain’s Cleveland Business, Editor & Publisher, The Plain Dealer, Progressive Architecture and Urban Design, and Scientific American, among other publications. He is currently writing a biography of Frederick C. Crawford, founding chairman of TRW Inc. As an avocation, he is a playwright and director, and this December, his play APORKALYPSE! will premier at convergence-continuum theatre in Cleveland.

September 16, 2010

Prepaid Cards: Hot or Not So Hot?

Prepaid-cards-poster Prepaid cards are a hot item these days. 

  • A recent Javelin study subtitled “The Rise of the Cautious Consumer” notes a decrease in credit card use, and an increase in prepaid card use.
  • A survey by Cardbeat  – a market research report published by Auriemma Consulting Group – found a big jump in the number of gift cards carrying a network brand, such as MasterCard or Visa.
  • A MarketsandMarkets study predicts the prepaid card market will grow from $290 billion in 2009 to $791 billion by 2014.

So what’s the deal with prepaid cards? Why so popular?

1.  They are available to anyone regardless of one's credit rating. Lost your credit cards due to bad credit? If you have money to load on one of these cards, you can get one. And like other debit cards, they can be used anywhere Visa, MasterCard or Discover cards are accepted, which also makes them useful for online shopping, for example.

 2. They don’t have to be tied to a bank account. That makes them helpful for someone who either doesn’t have a bank account, or doesn’t want to use a debit card tied to their account.

3. Apparently they can also be useful for money laundering, if you’re so inclined.

4. Parents may want to use a prepaid card to dole out money to kids. It may be a lot safer than giving your kids a debit card tied to your bank account.

5. They are safer than cash. Prepaid cards carry the same fraud liability protections as debit cards under Visa and MasterCard’s Zero Liability programs, though you will need to register the card.

But wait. There are drawbacks. A new study released by Consumer's Union says that "prepaid cards can be inferior to debit cards linked to traditional bank accounts in several ways" and details problems with these cards in a 32-page report. 

Here are some of the problems with prepaid cards: 

1. Fees, and possibly more fees. These cards typically carry a laundry list of fees, though I did notice when I reviewed Credit.com’s prepaid card directory recently that some cards seem to carry far fewer fees than in the past. But on average, fees are more than you would pay at most banks or credit unions for a standard debit card tied to free checking.

2. No credit. They don’t help build your credit rating. These are debit cards, not credit cards, and they aren’t reported to the major credit reporting agencies. If you want to build credit, a secured card is a better bet.

3. Safety. I pointed out that these cards carry fraud protections, but they are voluntary. CU points out that these cards are not covered by the same consumer protection laws that cover debit or credit cards, and that money loaded onto these cards may not be protected by FDIC insurance.

4. Overdrafts. According to CU's report, some cards will approve purchases even when funds are not available on the account. The consumer may then be charged a "shortage" fee of as much as $29. This is a concern, since Fed rules now prohibit debit card overdraft fees on standard debit cards unless consumers opt in.

So what do you think? Are prepaid cards hot, or not so hot?

 


Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Your Credit Crisis.

September 15, 2010

Get What You Want from Your Bank

Negotiate-with-your-bank-blog Negotiating is an art, and a great way to save money. And as a nation, we’re getting good at it. Earlier this year, Consumer Reports surveyed more than 2,000 adults and found that more than 60% have bargained or asked for a discount at least once during the past three years.

We know negotiating works at stores and flea markets, but what about banks? Despite the credit squeeze, you can still make a good argument for getting what you want these days – and be successful. The survey found that those who negotiated with their banks over fees were successful at least once 87% of the time. And the majority of those negotiators saved anywhere from $50 to $100 as a result.

I, too, have had success getting a lower interest rate or eliminating some overdraft fees. Most recently I hit the jackpot and managed to get a costly bank “requirement” waived.

Here’s the story: I am almost done refinancing a second home. At the last minute, my broker told me I needed to get “six months of gross rent loss insurance” to compensate for potential loss of rental income in the event that property damage made the apartment uninhabitable. It’s currently a Fannie Mae prerequisite for all second home refinancing applicants. (Note: Despite my clean bill of credit and savings, it’s taken more than three months to get this deal sealed.) So I called my insurance company, Allstate, for a quote.

My Allstate agent had never heard of it. My mortgage broker quickly assured me he could “find me another insurer who could help me.”

Days later – and one week from closing – I learned that rental loss insurance is only available as a rider to your existing homeowner’s insurance policy. I’d have to ditch Allstate altogether and work with some other company and lose the ability to shop around for the best deal since I’d probably be choosing between Joe Shmo and WhatsHisName Insurance Agencies, the only places on earth that offer this unknown insurance contract. Can you tell I was getting angry?

Here’s the exact e-mail response I sent my broker:

“What an inconvenience...I just renewed my insurance policy (paid in full) and don't know if I can easily make this switch...If there is ANY way around this, please let me know. I have no financial need to rent out the home. I am fine making the payments based on my income and savings.

The fact that Allstate insurance, one of the largest insurance agencies in the country, does not provide this speaks volumes about the obscurity of this insurance.”

Minutes later, my broker replied, agreeing to follow up with underwriting. Two days later, success. The insurance was waived.

Active time to negotiate: 45 seconds. Potential savings: at least hundreds of dollars.

While I think my stern e-mail helped, I probably couldn’t have done it without a few other supporting factors. Here are a few takeaways to help anyone looking to cut a deal with a bank.

To be a successful negotiator…

  • Have Great Credit. Not just OK credit, but great credit. A score well in the 700s and a spotless credit report are facts that can give you, well, credibility. My broker knew about my credit score and I reminded him that I have enough savings and income, as well, to cover the mortgage on the property. I had no need to rent the unit, therefore 6 months of rent loss insurance was unnecessary. 
  • Stand Firm and Take Advantage of Timing. I was frustrated and my broker knew that well. While I never made threats to ditch the application process, I did express that I was not going to bend over backwards to fulfill this “requirement.” I also knew the bank and broker were knee-deep in the deal, just as I was. It was in everybody’s interest to make it work at that point, which is why negotiating then was a perfect time.
  • Get a Second Opinion. Throughout this refi process I was also speaking with another mortgage broker, a friend of a friend, who was making sure my existing broker (who came highly recommended) was playing by the rules. When I had concerns about the good faith estimate and other details, I’d run them by him for a second opinion. Then I would mention this to my existing broker, so he knew I was on top of things. It wasn’t a threat, just a friendly and occasional, “That’s what my friend, a mortgage broker, told me, as well. I asked him for his opinion.” Meantime, in my broker’s mind this likely translated as, “I'd better keep her happy.”

In the end, he did.

 

Farnoosh Torabi – Credit.com Personal Finance Contributor, nationally recognized author, expert and television host. Her first book, You're So Money, is an acclaimed tell-all for young adults searching for financial independence. Her new book Psych Yourself Rich, gives readers the mindset and discipline to build their financial life.

September 14, 2010

CARD Act Loophole Number 73 - Student Loans are Income, Apparently

Student-loans-are-income The CARD Act requires that lenders now take steps to ensure that their applicants have some sort of ability to pay their debt obligations. The fact that it took a Federal law to accomplish this is a head-scratcher for sure. The question is, how are lenders doing this and how are they navigating around and through the requirement?

First off, your credit reports don’t contain your salary, so that’s a dead end. Second, your credit risk scores are not designed to predict capacity to pay, but are rather designed to predict the likelihood of you paying so that’s a dead end too. And lastly, trusting what you put on your credit application as “income” has proven to be unreliable, so that’s not really an option either.

This is certainly a capacity conundrum. And, since the world of credit is not without humor, I gladly bring you CARD Act loophole number 73: Student loans and the “no cards for those under 21” rule. A student loan is a real loan with strange terms. It’s issued by a bank and is sometimes federally guaranteed. The monies are generally disbursed quarterly or each semester to coincide with the school’s preferred method of slicing up the school year. The loans are meant to go toward funding tuition and college related costs.

What allows student loans to become a loophole to the CARD Act capacity to pay provision is the fact that most student loans are paid to the student rather than to the school directly. Then the student uses it to pay for tuition and books and other school expenses, or at least that’s the plan. I know people who used their student loans for expenses that would never be confused with scholastic expenses.

And if what we’re hearing is true, credit card issuers are considering student loans to be income rather than a liability. It seems to make sense to do so considering there is no immediate obligation to pay back a student loan, and by the time the loan enters the payback period the student will likely be employed. But still, if 100% of the loan is meant to be paid to the school, how can it be income?

 

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.

September 13, 2010

Americans Succumb to "Bottlemania"

51zWthNaJ8L._SS500_ Is it me or is it impossible to go one day without seeing a bottle of water? Makes sense, since Americans now buy more than 500 million bottles each week.

Half a billion bottles are purchased at a time when nearly 1 billion Earthlings can’t find safe drinking water. Only 15 percent of those bottles ever make it into the recycling system, and each bottle that is tossed by the side of the road or into a landfill takes 1,000 years to dissolve.

Being the nice guy that I am, I’ll spare you most of the factoids, processes and protestations about bottled aqua are exquisitely articulated in Elizabeth Royte’s book, Bottlemania: How Water Went on Sale and Why We Bought It. She conceived the book while writing Garbage Land, when she learned that packaging comprises one-third of the solid waste in landfills.

Let’s face it, in searching for the latest, hottest new drink, the beverage companies leveraged the marketing of fear, told us tap water was dangerous, then repackaged water and sold it to us in pretty plastic bottles. The annual market now exceeds $15 billion in the US and $60 billion worldwide.

I won’t even drag you into Barrelmania; that it takes 17 million barrels of oil to produce one year’s worth of bottled water, all of the oil required to keep it refrigerated, then transport the empty bottles to waste or recycling centers … Oops.

“If I had to buy water, I would probably try to buy water that was not coming long distance,” she says. “I certainly wouldn’t buy Fiji Water or something from France. I’d try to support a local company.”

Elizabeth is a realist. She knows that the genie, so to speak, is already out of the bottle. There’s no turning back from the liquid gold mine it’s become. But $4 for a bottle of water you can get from your tap?

Here’s the most salient information Elizabeth conveyed: “Most tap water in this country is perfectly safe to drink, especially water in big cities.” she says. “The bigger the system, the more frequently it’s tested, and the more money they have to protect their watershed and keep their treatment plants running properly.”

It’s okay to buy bottled water for emergencies such as power outages or boiling alerts. Otherwise, you can rid tap water of its chemical taste by leaving it out overnight so that the chlorine evaporates. You can also buy a permanent, refillable bottle and refill it at your nearest sink.

Christopher Johnston has written for American Theatre, Cleveland, Continental, Crain’s Cleveland Business, Editor & Publisher, The Plain Dealer, Progressive Architecture and Urban Design, and Scientific American, among other publications. He is currently writing a biography of Frederick C. Crawford, founding chairman of TRW Inc. As an avocation, he is a playwright and director, and this December, his play APORKALYPSE! will premier at convergence-continuum theatre in Cleveland.

September 10, 2010

Stop Waiting on Hold With LucyPhone

 

LucyPhone from Decogram Corporation on Vimeo.

 

I'm not much of a phone person; I much prefer communicating either face-to-face or via email. So, any kind of service that reduces the amount of time I'm on the phone is a godsend. I am an occasional user of Slydial.com, which lets me place calls straight to a person's voicemail, so I can leave a message without wasting my time having an unnecessary conversation. And I'm a constant user of Google Voice, which allows me to screen incoming calls so I don't have to chat with chatty people during office hours.

And now there's a third tool in my phone-time-reduction-arsenal: LucyPhone, a free service that makes being put on hold a little less intolerable.

The best way to describe how LucyPhone works is to describe a recent example of how I used it. I needed to call Sirius Satellite Radio to complain about a billing issue (they stuck me with an autorenew plan without my knowledge, and kept billing me for months after I had returned my leased car). So I went to LucyPhone.com and entered "Sirius" in the search field (If you have an iPhone, the free LucyPhone app is handy, because it eliminates the need to have a computer to set up the call). Lucy found Sirius' phone number. Next, it asked me for my phone number, which I entered. Then Lucy called me and set up the call between me and Sirius. Once I was connected to Sirius's voice mail system, I pressed the keys to reach the customer service department. Of course, I was put on hold. At that point, I pressed ** and hung up the phone. Then I went back to work, pretty much forgetting the fact that Lucy was waiting on hold on my behalf.

Twenty minutes later, my phone rang. I picked it up, and was connected to a customer service representative at Sirius. I explained the situation to her, and she told me she'd need to put me on hold again while she did some research. So I pressed ** again and hung up the phone. This time, Lucy called me back in 10 minutes and I resumed the call with the customer service rep. That means Lucy saved me a half hour of waiting on just a single call. I imagine the service will save me many hours of waiting over the course of a year. That's time I can spend with my family, or working, or doing almost anything other than waiting with a phone pressed against my ear. Lucy is a winner.

Mark Frauenfelder – Editor-in-chief of MAKE magazine and the founder of the popular Boing Boing weblog, Mark was an editor at Wired from 1993-1998 and is the founding editor of Wired Online.

September 09, 2010

Schemes Net Millions, Results In Small Fine

Officers of a firm that allegedly helped facilitate $200 million in fraudulent charges have settled with the FTC, after paying a fine of $15,000 and promising not to do it again. The CEO and the president were individually fined for a grand total of $22.65 million, but the judgments were stayed based on their inability to pay.

Anything wrong with this picture?

At least that’s what I was thinking when I read the latest enforcement action by the FTC against the former president of a company that, according to the FTC and seven state attorneys general, “processed unauthorized debits on behalf of deceptive telemarketers and Internet-based schemes that were violating the FTC’s Telemarketing Sales Rule and state and federal consumer protection laws.”

The firm, Your Money Access, LLC, helped clients process more than $200 million in debits and attempted debits from consumer’s accounts. Nearly $70 million of those debits were rejected or returned (presumably because they were unauthorized or consumers disputed them) and, in cases where the scheme was successful, merchants often allegedly sent “relatively worthless items” – or nothing at all. 

In a recent post, I described how small credit and debit card charges you don't recognize can be the sign of a bigger problem. This case again illustrates why it’s important to monitor your credit card accounts (and if you use a debit card, your bank account) frequently, and dispute suspicious charges quickly.

(This case was settled with the FTC without admitting any wrongdoing.) 


Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Your Credit Crisis.

FICO Mythbusters, Episode 64

IStock_000012314675XSmall I can still remember my first day in front of a crowded room of angry, liquored up mortgage brokers. Fannie and Freddie had just jammed FICO scores down their throat and they were looking for someone to pay the price, and that someone happened to be me. It's a good thing I'm incredibly charismatic or I might have lost a limb trying to get out of the room.

What seemed to make them most angry wasn't the fact that their way of underwriting loans was over, forever, but more so about the lack of common sense in scoring models. Of course credit scoring isn't a common sense exercise, and it can't be. It must be empirical and empirical isn't always synonymous with logical. Here's a great example: What is the impact of closing credit cards on your FICO scores? The answer is simple, or so I thought. When you close a credit card, you lose that card's credit limit as long as the balance is $0. And by losing the credit limit you could lower your score because of the suddenly higher rate of utilization (aggregate balances divided by aggregate limits).

Somehow along the way the presumed answer has become that you lose the card's limit and you also lose the value of the account's age in your scores. I'm not sure how that assumption got tacked on but it was wrong back then and it's still wrong today. As long as an account is on your credit reports, the age of that account is likely to be included in any age-based calculations, which is good. The myth is that once you close a card its age ceases to benefit you, which is wrong.

Who knows where these FICO myths come from? At one time I thought they all came from Detroit (remind me to tell you why some day) but that's not right. No, these current myths seem to be born from partial truths. Follow me...if you close an account and it sits there on a credit report eventually, someday, one of these years, the credit bureaus will likely remove it. And then, yes, you would lose the benefit of the account's age. But that's very different from "you lose it immediately." Stay tuned for more FICO myth busting.

Visit our learning center for more information on credit scores, and check out Credit.com's Credit Report Card for a free grade on your own score.

 

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.

September 08, 2010

Beware of Fake Payday Loan Debt Collection Scam

  Snapshot 2010-09-08 13-06-51 For a year now, we've been getting complaints in the Credit.com forums about fake payday loan debt collectors. So I wasn't surprised when I read the announcement this week by Illinois Attorney General Lisa Madigan warning Illinois residents to “be on the alert for scam artists posing as collectors of payday loan debt. The scammers call consumers and threaten them with legal action unless the victims authorize payments from their bank accounts.” Her office has received numerous complaints.

These are not your normal debt collection calls. In many cases, these collectors are very aggressive. Here are some of the threats reported on our forums:

“…we would have to appear in court at 11:00am tomorrow morning, we would be charged with internet fraud, would be put in jail, could be sentenced to 4 months in prison, etc.”

“…said that if I didn't pay $1,095.87, the police was going to come to my house and arrest me and take me to jail.”

“…wont give me company name and he tried to cuss me out…”

 Just to be clear, these are not collectors trying to collect legitimate debts. Most of the complaints on our forums, and to the IL AG involve consumers who either never took out a payday loan, or who may have initiated one but never actually secured the loan. In some cases, the "collector" has detailed information about the victim – such as name, address and Social Security number – which makes the debt appear to be real.

Here's what to do if you get a call like this:

  • Ask the collector for  the name and address of the collection agency for which he or she works. Then ask him to send you written information about the debt.  Any legitimate debt collection agency will do this because it's required under the federal Fair Debt Collection Practices Act.
  • If the caller won't give you this information, hang up. If a phone number is available through caller ID, report the call on our forums and to your state attorney general and the FTC.
  • Don't let one of these companies scare you into making payments if you're not sure you owe the debt. In most cases, collectors must first take you to court and get a judgment before they can go after your wages or property. (If you live in Minnesota, though, read this warning.)

By the way, you can't be arrested simply because you can't afford to pay a debt. (Warning, though, there are cases where consumers are jailed in connection with debts because they failed to appear in court after a summons was issued.)

The Illinois Attorney General’s office says the bogus debt collectors they’ve heard about use a variety of names, including: Morgan & Associates, Federal Bureau of Investigators, DNR Recovery, DNI Recovery, Legal Accounts Association, Department of Law and Enforcement, CashNet USA, America Legal Services, Quick Cash, and ACS. If you hear from any of those companies, be sure to report them immediately to your state Attorney General’s office and the Federal Trade Commission.

And share your experience with us on the Credit.com forums

Image: Abu Badali

 

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of a new ebook, Business Credit Success: Get on the Financing Fast Track.

September 07, 2010

8 Ways to Save With Your Student ID

If you're the proud owner of your very own (valid) student ID, you stand to save some serious cash – from travel to entertainment to household goods.  Check with any place where you're a regular shopper to see if they offer student discounts – they just might.  Here's a list to get you started:

1. Clothing From Banana Republic to J.Crew, Top Shop and Club Monaco, your student ID can help you score discounts at major clothing retailers.

2. Technology At Apple stores students can save up to $200 on a new Mac. Dell also has a discount program for students.

3. Shipping Students get free membership to Amazon Prime for one year (a $79 value), which gets you free unlimited 2-day shipping on textbooks and all other Amazon items.

4. Dining You can easily nab discounts at local restaurants and cafes around campus with your student card. Find discount listings in roughly 20 states at StudentSavingsClub.com.

5. Travel For $25 you can register for the International Student Identity Card (ISIC) and in return you’ll be able to save hundreds of dollars on international travel. Domestically, students can also earn 15% off Amtrak tickets when they purchase the Student Advantage Discount Card ($20). The card also gets you discounts on Greyhound, American Airlines and Alamo Rent A Car, among other savings at major retailers and restaurants.

6. Museums Museums welcome students with discounts of as much as 25% off. For example, the Museum of Natural History in New York City and the Philadelphia Museum of Arts entrance fees are just $12 with valid student ID compared to $16 for the general public.

7. Bulk Buys – Students can get a collegiate membership at Sam’s Club, which earns them discounts on groceries and laundry detergent, as well as 25 free photo prints, $10 off a year’s supply of contact lenses and an instant $15 gift card just for signing up for the program.

8. Theatres Local theatres usually have specials days or show times reserved to offer students discounts. For example select AMC Theatres offer students a lower ticket price when they show a current high school or college ID on Thursdays.

 

Farnoosh Torabi – Credit.com Personal Finance Contributor, nationally recognized author, expert and television host. Her first book, You're So Money, is an acclaimed tell-all for young adults searching for financial independence. Her new book Psych Yourself Rich, gives readers the mindset and discipline to build their financial life.

© 2005-2009 Creditbloggers.com. All rights reserved

Disclaimer: This information has been compiled and provided by Creditbloggers.com as a service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.

Suscribe to our Feed Follow us on Twitter Like us on Facebook! Watch us on YouTube! Find us on LinkedIn




Become a Fan on Facebook


Follow Creditbloggers on Twitter
Subscribe to CreditBloggers


About CreditBloggers

Bringing together leading experts to discuss credit, loan, debt and identity theft topics, CreditBloggers provides readers with unique insight and straight answers about the financial world.

Click here to read more about the team of financial gurus who contribute to CreditBloggers.com