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ISSUE #199

Email Newsletter  

  April 1, 2009  


Scott Bilker
Signature
Scott Bilker, founder of DebtSmart
  

Hi,

Take a look at this excellent special from CNBC on Hulu, "House of Cards." This is ABSOLUTELY one of the best shows I've seen on what has happened to our economy. I strongly urge you to watch the entire show.

Here are answers to some common questions about the Obama administration's new foreclosure-prevention plan.

And just when you thought debt collectors couldn't get anymore disgusting--check this out.

Best,
Scott


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In This Issue

Cool Quote
Dental Surgery Funding
STATISTIC: Record credit card delinquencies in January 2009
Think FICO is fair?
There is only one truly free report site
"Home Depot card raises rates for ALL customers"
Extreme cheapskates: Tightwads revel in frugality
Household Math™: Cutting the budget
Unavailable Credit
Quiz: How savvy a consumer are you?
 

Cool Quote

"Banks made mistakes in lending, which got the economy in this whole mess. Their latest ingenious decision is to get rid of their best customers and their most profitable accounts."

--Scott Bilker

More cool quotes from past issues


Dental Surgery Funding
by Scott Bilker

Hi Scott,

I need some very expensive dental surgery and work. Here's how the numbers look:

In May, I will have two dental implants installed for a total cost of about $5,130 (that's $5400 minus a 5% "discount" for paying in full at the time of surgery; alternatively you can pay for the surgery over 90 days). This will be done by a specialist. I might get a few hundred dollars from insurance for this, but let's assume not (implants are not covered, but bone grafting is).

Next January, I will have a bridge installed for about $3,500 (after insurance). It is possible that for tax reasons, I may have this work done in this tax year.

Though I can raise the cash, I am concerned that if I were to become unemployed over the next few years, my cash reserves would be dangerously low. This is also a scary percentage of my annual take-home pay (I'm on a moderate income).

I was wondering if you could suggest a strategy/strategies to fund this $8,500 expenditure over a two-year period interest free. I have an excellent credit score (800+). I know that during the process, I can shop for balance transfer offers; however, I'd prefer to find a card with 0% on purchases for 24 months or do a series of transactions to perform the equivalent.

My dental surgeon's office has an arrangement with "Care Credit" whereby (if approved), I pay no interest for 6 months (not much help). After that, it goes to market (I'm not interested in paying more than 4% interest). My primary dentist (the one doing the bridge) has no arrangements with Care Credit or similar cards.

Bob R.

Finish reading the article


STATISTIC: Record credit card delinquencies in January 2009

Charge-off rates in January 2009 were 40% higher than a year ago at 7.5% and were expected to approach 9% during the second half of 2009. As one would expect, late payments on credit card bills are closely link to unemployment levels. Non-farm employment fell 524,000 in December 2008, contributing to the biggest decline in payrolls on a three-month moving average since 1945. The unemployment rate jumped to a 15-year high of 7.2%, from 6.8% in November 2008. Many analysts are predicting financial conditions to worsen in the coming months.

More credit card and debt statistics


Think FICO is fair?

As a former banker, business owner Rob Hurst knows how credit card companies think. So he's diligent about paying off his statements each month. He keeps his balances low. He does whatever it takes to avoid the kind of painful surprises other card customers are getting these days.

"I have no intention of letting the banks take advantage of me like that. Because I know they will," said Hurst, who runs a Wild Bird Center.

For many others, that lesson is only now becoming clear.

As struggling card banks rush to...

See story here


There is only one truly free report site
by FTC

Anyone can dance a jig, but only the FTC provides you with a truly free credit report. It's the only authorized source to get your free credit report under federal law.

Anyone can write a catchy jingle, but only the FTC provides you with a truly free credit report. It's the only authorized source to get your free credit report under federal law.

Finish reading the article


"Home Depot card raises rates for ALL customers"

Hi Scott,

Here is some info that you may want to use somehow in your next newsletter, which, by the way, I love. I just received a new "change to terms" notice with my January 15th Home Depot card statement which is administered by Citibank. The normal rate (for everyone) is 21.99% APR - yes, totally ridiculous which is why I pay my balance off within a month or two whenever I have one. Now, effective the next billing cycle, the rate is going to 25.99% !!!! Can you believe that? 4% increase for ALL customers!

I called Citibank to inquire why, when I've never paid late, pay my balance in full, etc., I was being penalized - they said all customers received the hike. I asked why, when the prime rate has gone DOWN. They said "Increased defaults, the bad economy, etc has made them need to recoup their losses." So they're going to try and do it on the backs of their good customers? I'd encourage everyone to pay their balance off ASAP if they have a Home Depot card. For anyone who didn't read the new terms attachment with their recent bill, be sure to let your readers know. I'd even encourage them to switch to a Lowe's credit card instead. No fee, lower rate than Home Depot. Bye Bye Home Depot.

Keep up the good work, Scott.

Toni F.

Learn how to "Talk Your Way Out of Credit Card Debt"


Extreme cheapskates: Tightwads revel in frugality

NEW YORK--Amy VanDeventer has always been a cheapskate. The recession is taking her to new extremes.

Before the economy tanked, she was still wearing maternity clothes from her last pregnancy, clipping coupons and using hand-me-downs to dress her daughters, ages 2 and 3. Now, she's salvaging bagel scraps left on their plates for pizza toppings and cutting lotion bottles in half so she can scrape out the last drops.

"I was already cheap," said VanDeventer, a 36-year-old mortgage loan underwriter from Broomfield, Colo. "Now I am neurotic about it."

If you thought those cheapskate friends and relatives couldn't pinch pennies any tighter, think again. The recession is making tightwads...

See story here


Household Math (TM): Cutting the budget
by Scott Bilker

Susan spends 30% of her income on housing expenses, 30% repaying her credit card debts, 20% on all taxes, 10% on groceries, 5% on clothing, and saves what's left over. She decides that she wants to pay back her debt more quickly, and to do that, she needs to make a few budget cuts. Susan cuts the grocery bill by 25%, the clothing spending in half, and dedicates all the money she used to save toward the credit card debts. How much, by percentage, of her income is now being used for repaying credit card debt?

Answer this math problem


READER NOTE: Closed Credit Card Accounts

Howdy Scott:

I remember a short time ago you mentioned in one of your newsletters about getting ticked off about Citibank closing your business account. You stated you went ahead and closed ALL of your personal accounts with Citi. I was curious if it had any effect on your credit score. I know Citi pulled the same thing on me with a VISA account that they have in partnership with Associated Bank based in Wisconsin. I transferred around $10,000 about 2 1/2 years ago at 2.99% APR for the life of the balance, with no balance transfer fee. So far I have whittled it down to $4800. I made positively sure that no new purchases were added to the account, since my payments would only go towards the 2.9% balance. (until that changes in July 2010.)

Well, to make a long story short, I received one of those nice "we're increasing your APR from 10.24% to 16.99" letters from Citi. I contacted the toll-free number listed on the letter and reached one of their customer service reps. I told the rep I could not honestly accept their wonderful offer of increasing my interest rate and I was opting-out. I informed him that I would not deal with a bank that lies to their credit card customers. The rep disputed that. I told him that the head of Citicard had previously testified before Congress many months ago and promised that their company was not going to be increasing interest rates arbitrarily. Well, you & I both know what happened...they broke their promise! I also made mention it was particularly galling that Citigroup had to be bailed out to the tune of around $45 billion dollars and probably may need more. He got very quiet!

In an interesting note, not one of the credit cards that I have with credit unions have indicated that they were in the process of increasing my interest rate. I contacted one of them, Pentagon Federal Credit Union, and I asked them if they were pulling the same sort of stunts that some of the big banks were doing. The rep I spoke with said no! She said Pentagon Federal is not a bank and does not operate their lending policies like a bank. My credit line with Pentagon Federal is $50,000. So, Scott...pass along the word that if consumers want a good deal with a credit card, check out credit unions!

John


Unavailable Credit
by Gary Foreman

When I was young, one of the things that was most likely to cause a fight was when someone changed the rules in the middle of the game. Generally someone else was a victim of the new rule and wasn't too happy about it. Fortunately, it was just childish stuff. Even if there was a fight, everyone would make up the next day.

But, it does remind us of an interesting point that's relevant today. We make plans based on how we understand the rules of the game. A change in those rules could work against us. And, as adults, unlike kids, we're playing for keeps.

Finish reading this article


Quiz: How savvy a consumer are you?

ConsumerMan challenge will show if you know your rights

We live in a world that grows ever more complicated. Simple transactions are no longer simple. It's not easy to be a savvy consumer. To celebrate National Consumer Protection Week, I, ConsumerMan Herb Weisbaum, have put together a little quiz to test your consumer smarts.

See story here



The author(s), Press One Publishing, and DebtSmart.com shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly by the information contained in this email newsletter and/or at the DebtSmart.com website. The information, methods and techniques described may not work for you and no recommendation is made to follow the same course of action. Every effort has been made to verify the accuracy of all content contained herein. However, there may be mistakes; typographical, mathematical, or in content. This email newsletter and the DebtSmart.com website have been created for your entertainment only. You must always seek the proper professional advice before taking any financial or legal action. You have been warned. Copyright ©2009 Press One Publishing. All rights reserved. Please do not reprint, or host on your web site, without explicit permission. However, if you found this newsletter helpful, we grant you permission, and strongly encourage you, to e-mail it to a business associate or a friend. Thank you.

The DebtSmart Email Newsletter, ISSN 1538-6740, is written and published by Scott Bilker and edited by Larissa Bilker and Denise Troy. Please contact comments@debtsmart.com with any comments, problems, or concerns. (See the very bottom of the email to make changes to your subscription.)

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