Tougher rules needed on credit-card policies

Federal officials are proposing tougher rules on how credit-card companies handle their relationships with customers — steps that are long overdue.

The recommended changes were drafted by the Federal Reserve, in conjunction with the Office of Thrift Supervision and the National Credit Union Administration. They are expected to become final by the end of the year.

One of the most controversial practices to be banned: Credit card companies sometimes raise rates based on a customer’s poor payment history with another credit card issuer.

Some companies have also jacked up rates because of problems noted in a customer’s credit report. Under the new rules, a company could only penalize a cardholder for his or her payment performance on that card.

Other practices that would be banned include:

• Some card issuers average the balance over two months and use that to compute a cardholder’s rate, instead of using the balance from the most recent payment period.

• Some companies have shortened the time they allow cardholders to make payments before new interest charges are assessed. The rules require companies to allow a 21-day grace period.

• Some customers may have cards with different rates applied to different balances. Some companies apply payments only to the balances with lower rates.

The new rules say payments must go to the higher-rate balance or at least be split among balances.

Industry representatives argue that these changes would make it harder for card issuers to match rates with risks.

But they overstate the problems. Many of these gouging practices didn’t exist until recently, and credit issuers survived quite nicely.

The proposed changes might help improve the industry’s dubious public image. They seem reasonable and fair.

source : http://www.kansascity.com/340/story/636568.html

Freezing credit report helps prevent fraud

By Rosemary Heins, University of Minnesota Extension

Recent federal laws and Minnesota state laws help citizens protect themselves from new account fraud by allowing “freezing.” The laws empower any consumer to freeze their credit report by contacting any of the three major credit reporting agencies and requesting a credit report freeze. This action will deny potential thieves access to the credit history and prevent them from opening new credit cards or loans in the consumer’s name.

Victims of identity theft can have their reports frozen without a charge, but they will need the theft documented by a copy of the police report or case number. People who have not been victims of identity theft can choose to freeze their report for a $5 fee to each of the credit reporting agencies. When an agency receives a freeze request, it must place the freeze within 3 days of the request. In addition, the agency must provide a unique Personal Identification Number to the consumer within ten days.

The PIN can then be used by the consumer to temporarily lift or “thaw” their report for a specific period of time or for a specific creditor. For example, you are car shopping and want to allow a dealership, credit union or bank to look at your credit history to obtain a car loan. Or you may request your information be openly available for a specific period of time, like 30 days, in order to shop at several locations. After this period is over the report will automatically refreeze.

The thawing process is free to those who have been identity theft victims. Those who have not been victims will be charged the $5 fee for thawing.

(Rosemary Heins is a family resource management educator with University of Minnesota Extension.)

source : http://www.google.com/news?

Use the Web to help you get your finances in order

House prices are falling, and the cost of gas and food is on the rise. Specialized software and sites can help you manage these financial changes. And if you use the right resources, it won't cost you a thing.

Create a budget

The first step to taking control is to understand how you spend your money. Start by determining your basic living expenses such as housing, food and transportation.

Then, list other monthly expenses. This may take some work. So pull out your bills and credit card statements. Fortunately, free software can make light work of organizing it all.


SimpleD Budget (Windows) is a small program that helps you track expenses. You enter your monthly expenses and income. After allocating your money to certain categories, you enter payments as you make them.

You'll see when you're approaching the limit for a particular category. You'll also get an idea of how fast you're spending money


Buddi (Mac/Windows) works much the same as SimpleD Budget. However, it can also help you generate various reports. For example, you can see how your net worth has changed over the months.

Another free finance manager is AceMoney Lite (Windows). It has more features than the other two. For example, it can download stock quotes from the Internet..

news source : http://www.usatoday.com/tech/

How to get a credit report?

Have you ever been denied a loan or a credit card, by a bank, on the pretext that you have a 'bad credit history'? If you have, you have a right to ask the bank for the data based on which it took that decision.

As per law, if a bank denies loan or credit card application on the basis of data provided by a credit bureau, it is supposed to give you a copy of those records.

However, before you are handed over the report, you may have to prove that you are the person whose credit report is being sought. So, carry an identity proof and address proof with you.

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Remember, nobody else, not even your kith or kin, would be handed over your report. Nor can you get it without having applied for a loan or a credit card.

The way it works, credit bureaus maintain records of your borrowing history with all the banks you have transacted with. These include details such as your permanent account number, the addresses you have notified banks about, number of credit cards you hold currently or have held in the past, loans you have taken, the period within which you have repaid or whether you have not repaid and for what period you have not repaid.

Presently, the Credit Information Bureau (India) Pvt Ltd (Cibil) maintains such records and provides it to all its 147 members, who in turn keep the database updated. As and when a person applies for a loan or credit card, the member banks would check with the Cibil database.

The system would also throw up details such as the last time any bank checked for your credit records. This indicates the last time you applied for a loan with any bank, as banks are not supposed to check the Cibil database unless they receive a loan or credit card application.

Banks are barred from checking the records for marketing purposes. Moreover, each time they check the database, it costs them money, according to a banking source.

As for the cost to the individual, a random survey by DNA Money found that some banks charge between Rs 50 and Rs 300 for furnishing credit reports.

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Cibil is currently working on a system whereby you can get your credit report against a payment of Rs 100.

If you find any discrepancy in the data maintained by Cibil on you, then inform the bank and take up your case with Cibil. However, note that you would need the credit report as a proof to even take up the case. So keep your copy safe.

news source : http://sify.com/finance/fullstory.php?id=14670641

Bank CEO gives advice on maintaining credit scores

Few people understand the impact a credit score can have on an individual's life, according to Steve Dehnert, CEO of Badger Bank.

“A high score can mean a lower rate for a bank loan while a low credit score can result in more expensive insurance premiums,” Dehnert said. “Not only is it important to understand your credit score, but it is also important to understand how to improve your credit score and reap the advantages of good credit.”

Dehnert said creditors have been using credit scoring systems for some time to determine if people are a good credit risk. Today, many businesses including insurance companies, phone companies and employers use a person's credit score to determine if a product, service or employment offer should be provided, he added.

Credit scoring systems are complex and vary among creditors and businesses, Dehnert said. Essentially, information collected from an individual's credit report is put through a statistical program that compares that specific information against consumers with similar profiles, he added. The program identifies all characteristics that relate to risk and generates a number which represents a credit score.

The higher a credit score, the less of a risk a person is considered to be, Dehnert said. The scores generally range from 300 to 850. A score of 620 or higher should mean that a person is eligible for very good rates, he added.

Anyone can obtain their credit score from any one of the three national consumer reporting companies. The companies are allowed to charge a reasonable fee, typically around $8, for the score, Dehnert said.

“Since your score is comprised of information from your credit report, you need to ensure that your credit report is accurate,” Dehnert said.

To obtain a free annual credit report, visit the or call toll-free 1-877-322-8228.

“You should consider staggering the request for your free report from each of the three agencies over a 12-month period,” Dehnert said.

To help maintain a high credit score or to increase a low one, Dehnert suggests the following tips:

news source : http://www.wdtimes.com/articles/2008/05/15/news/news3.txt