Many consumers have never heard of the law that brought about recent changes in credit card disclosures, offers and industry practices. In fact, just half of credit card holders report awareness of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, according to a 2011 survey from Synovate, a global market research firm.
Though the law rolled out in three main phases, the biggest round of provisions took effect on Feb. 22, 2010.
Here are five rights or protections consumers:
1)In the past, if you missed one payment to another creditor, your credit card issuer could jack the interest rate on your balance. The CARD Act banned this practice of "universal default" on existing balances. That is, issuers cannot increase the interest rate on existing credit card debt. There are four exceptions to this rule, however.
The law permits a rate increase on a balance if your payment is 60 days or more past due; if your account has a variable interest rate and the rate hike is due to index movement; if the increase is due to the expiration of a promotional interest rate; or if a workout agreement has ended. Rate hikes on existing debt for other reasons aren't allowed.
However, the issuer can raise the annual percentage rate on new charges after the first year following account opening, but must provide 45 days' advance notice of the change.
2)Before the law took effect, issuers could impose $39 late fees for past due payments regardless of the minimum payment amount. The Credit CARD Act changed this practice by requiring that penalty fees be "reasonable and proportional to the violation of the account terms." The Federal Reserve set safe harbor caps of $25 for the first violation and $35 for a repeat offense within six billing cycles. To go higher than those amounts, the issuer would have to prove that the costs it incurs as a result of the violation justifies a higher fee.
In addition, the penalty fee cannot exceed the dollar amount associated with the violation. For example, if the minimum required payment of $20 isn't paid on time, the issuer cannot charge a late fee of more than $20. Issuers can only charge a consumer one penalty fee for a single violation in a billing cycle.
3) If you had balances with different interest rates, it used to be the case that your issuer could apply your payment to your balances in whatever order it wished. So, if you had a balance transfer debt at a low introductory rate and a purchase debt at a higher rate, the issuer could apply your payment to the balance transfer debt first to maximize interest charges.
The new payment allocation rule in the CARD Act requires issuers to apply any payment above the minimum to the balance with the highest interest rate first, then to the balance with the next highest rate and so on until the payment is exhausted. To take advantage of this provision, you have to pay more than the minimum amount due.
4) The CARD Act permits card issuers to raise your interest rate if your account becomes 60 days delinquent. Yet the law includes a reward for good behavior. Pay your bill on time for the next six billing cycles and the rate increase must be terminated.
5) No longer can card issuers change the due date for payments from one month to the next or set an arbitrary cutoff time on the due date. The CARD Act requires that the due date be the same date each month, and the cutoff time be no earlier than 5 p.m the day the payment is due. In addition, issuers cannot treat a late payment as such unless it delivered the billing statement to the customer 21 days in advance of the due date.
вторник, 29 марта 2011 г.
понедельник, 28 марта 2011 г.
Fix your credit before seeking the car loan
Experts say the credit crunch is loosening. But to get the best interest rate on your car loan, your credit score needs to be as high as possible. These days only about 10 percent of applicants qualify for the zero- or low-interest promotions offered by manufacturers.
Here are three questions to ask before you fill out your first credit application for a new car.
What's your ratio of debt to the credit you've been extended? About a third of your credit score is based on the ratio of what you owe to the credit limits you've been extended on your credit cards. To get the best credit score, you want your ratio to be no higher than 20 percent, and ideally, closer to 10 percent. In other words, if you have $20,000 in credit extended to you, you want to owe no more than $4,000. Your overall ratio and the ratios per card are assessed, so you can improve this ratio by spreading your debt out over more credit cards and applying for an additional card (which will cause your score to drop initially, but will rebound shortly).
Have you made a payment more than 30 days late? Another third of your credit score is based on how timely you are with making payments. Lenders won't report late payments to the credit bureaus unless they are at least 30 days late. If it is reported, it could lower a high credit score by as much as 100 points. If you must complete a car loan application with a missed payment on record and you don't have a history of late payments, you can call the company and ask if they'll make an adjustment to their report, but don't count on them to say yes.
How long is your credit history? Credit history makes up about 15 percent of the overall credit score. The more years you can show that you have been responsible in managing your credit, the better your credit score. As a result, it's best to keep your oldest credit accounts active, even if you use them only minimally, since closing them will affect your credit score negatively. If you are someone who has a short credit history, then you may get a better car loan rate in a few years, though remember that the credit ratio and timeliness of payments make up about two-thirds of your overall credit score.
Once you know the answers to the above questions, order your credit report from each of the three reporting bureaus. Everyone is entitled to a free credit report from each bureau annually from AnnualCreditReport.com, but these don't contain credit scores.
Go over the reports carefully, making sure it's 100 percent accurate. Follow the instructions that accompany the credit report to correct any errors, especially ones that relate to late payments, credit limits and balances carried and length of time each account has been open, as these are the items that have the greatest impact on your credit score and your car loan. After checking your free credit report for errors, buying one report with a credit score is a good idea.
Here are three questions to ask before you fill out your first credit application for a new car.
What's your ratio of debt to the credit you've been extended? About a third of your credit score is based on the ratio of what you owe to the credit limits you've been extended on your credit cards. To get the best credit score, you want your ratio to be no higher than 20 percent, and ideally, closer to 10 percent. In other words, if you have $20,000 in credit extended to you, you want to owe no more than $4,000. Your overall ratio and the ratios per card are assessed, so you can improve this ratio by spreading your debt out over more credit cards and applying for an additional card (which will cause your score to drop initially, but will rebound shortly).
Have you made a payment more than 30 days late? Another third of your credit score is based on how timely you are with making payments. Lenders won't report late payments to the credit bureaus unless they are at least 30 days late. If it is reported, it could lower a high credit score by as much as 100 points. If you must complete a car loan application with a missed payment on record and you don't have a history of late payments, you can call the company and ask if they'll make an adjustment to their report, but don't count on them to say yes.
How long is your credit history? Credit history makes up about 15 percent of the overall credit score. The more years you can show that you have been responsible in managing your credit, the better your credit score. As a result, it's best to keep your oldest credit accounts active, even if you use them only minimally, since closing them will affect your credit score negatively. If you are someone who has a short credit history, then you may get a better car loan rate in a few years, though remember that the credit ratio and timeliness of payments make up about two-thirds of your overall credit score.
Once you know the answers to the above questions, order your credit report from each of the three reporting bureaus. Everyone is entitled to a free credit report from each bureau annually from AnnualCreditReport.com, but these don't contain credit scores.
Go over the reports carefully, making sure it's 100 percent accurate. Follow the instructions that accompany the credit report to correct any errors, especially ones that relate to late payments, credit limits and balances carried and length of time each account has been open, as these are the items that have the greatest impact on your credit score and your car loan. After checking your free credit report for errors, buying one report with a credit score is a good idea.
понедельник, 21 марта 2011 г.
Incentives cut on Japanese cars
That didn't take long.
The aftershocks of the disaster in Japan are beginning to reverberate in the U.S. auto market. American auto dealers selling Japanese brands like Honda and Toyota are cutting incentives on models affected by factory shutdowns in Japan. From the Associated Press:
Buyers will typically have to pay sticker prices, instead of enjoying discounts that had been the norm for small cars and hybrids imported from Japan. Besides the Prius, models that suddenly cost more include Honda's Insight, Fit and CR-V; Toyota's Yaris; and several Acuras and Infinitis.
The aftershocks of the disaster in Japan are beginning to reverberate in the U.S. auto market.
Small cars such as the Yaris, with a $12,955 sticker price for a base model, and the Honda Insight, priced at $18,200, are losing their typical discounts of 5 percent to 10 percent.
The price increases "will last weeks, if not months," says Jesse Toprak, vice president of industry trends and insights for TrueCar.com, a website that tracks what cars sell for at dealerships.
I've got mixed feelings on this. On one hand, you never like to see retailers raising prices in the wake of a horrible, deadly natural disaster. As political consultants are wont to say, the optics are terrible.
On the other hand, I kind of sympathize with the dealers. They're losing some of their most fuel-efficient models just as gas prices are rising and demand is ramping up. Sure, it's possible that the nuclear crisis will be resolved in short order; Japanese automakers' factories will come back online quickly, and shipping infrastructure will be ready to go sooner than we think. But I doubt it.
More likely, I think the supply of all Japanese cars will be constrained to varying degrees for the rest of the year, and dealers will have to live with reduced volume that will likely end up doing a lot of damage to their businesses. That's especially true when you consider that the fewer cars a dealership is able to sell, the fewer cars they'll be able to make money servicing in the long term, and the more market share they're giving up to rivals unaffected by the disaster. What this move probably reflects is dealers trying to make the most out of the inventory they still have on hand while it lasts.
What do you think? Should dealers of Japanese brands be raising prices? Is it gouging or just prudent business?
The aftershocks of the disaster in Japan are beginning to reverberate in the U.S. auto market. American auto dealers selling Japanese brands like Honda and Toyota are cutting incentives on models affected by factory shutdowns in Japan. From the Associated Press:
Buyers will typically have to pay sticker prices, instead of enjoying discounts that had been the norm for small cars and hybrids imported from Japan. Besides the Prius, models that suddenly cost more include Honda's Insight, Fit and CR-V; Toyota's Yaris; and several Acuras and Infinitis.
The aftershocks of the disaster in Japan are beginning to reverberate in the U.S. auto market.
Small cars such as the Yaris, with a $12,955 sticker price for a base model, and the Honda Insight, priced at $18,200, are losing their typical discounts of 5 percent to 10 percent.
The price increases "will last weeks, if not months," says Jesse Toprak, vice president of industry trends and insights for TrueCar.com, a website that tracks what cars sell for at dealerships.
I've got mixed feelings on this. On one hand, you never like to see retailers raising prices in the wake of a horrible, deadly natural disaster. As political consultants are wont to say, the optics are terrible.
On the other hand, I kind of sympathize with the dealers. They're losing some of their most fuel-efficient models just as gas prices are rising and demand is ramping up. Sure, it's possible that the nuclear crisis will be resolved in short order; Japanese automakers' factories will come back online quickly, and shipping infrastructure will be ready to go sooner than we think. But I doubt it.
More likely, I think the supply of all Japanese cars will be constrained to varying degrees for the rest of the year, and dealers will have to live with reduced volume that will likely end up doing a lot of damage to their businesses. That's especially true when you consider that the fewer cars a dealership is able to sell, the fewer cars they'll be able to make money servicing in the long term, and the more market share they're giving up to rivals unaffected by the disaster. What this move probably reflects is dealers trying to make the most out of the inventory they still have on hand while it lasts.
What do you think? Should dealers of Japanese brands be raising prices? Is it gouging or just prudent business?
суббота, 19 марта 2011 г.
Higher rates make HELOCs less appealing
Q: Dear Dr. Don,
I will pay off my mortgage in February 2010. Should I open a home equity line of credit now, in case I need extra funds for home improvements in the future? I am 39. My home is assessed at $310,000.
Jennifer Juncture
A: Dear Jennifer,
The good part about getting the line approved while your first mortgage is still in place is that you should have lower closing costs on the HELOC than if you wait until after you pay off the first mortgage. That's because with no first mortgage in place, the HELOC is, in effect, a first mortgage and may have higher closing costs because of it.
The bad part is if you're required to take money out at closing, you'll be paying interest on money you don't have any immediate plans on using.
A HELOC can be a sound financial backstop. However, some lenders are now reducing or pulling these lines out from under homeowners whose properties have declined in appraised value. With plenty of equity in your home, you shouldn't have that issue. But of course, you're not looking to use the HELOC for this reason -- instead, you want the line in case you need to make unscheduled future home improvements.
In general, it makes more sense to use a home equity loan instead of a HELOC to fund home improvements, unless you plan on taking out the HELOC in a refinancing after the improvements are completed. Bankrate's "Home equity loan vs. line of credit?" interactive worksheet can help you decide.
Assessed value determines how the home is taxed. This figure may have little to do with the home's appraised value. I'm going to assume the home's appraised value is at least as much as its assessed value. If it's not, you should take that up with your local tax collector.
A HELOC is an adjustable-rate loan with the interest rate generally tied to the prime rate, which is currently at 3.25 percent. As I write this reply, Bankrate's national average for a HELOC is 5.58 percent. That compares to 8.57 percent for a home equity loan, which is a fixed-rate loan.
While a home equity loan often is a great option for funding home improvements, it isn't likely to be right for you because you're uncertain as to when you'll want to spend money on the home improvements.
While 5.58 percent doesn't seem like a bad rate, historically HELOCs have been priced right on top of the prime rate. Paying roughly prime plus 2.25 percent is a horrible deal if interest rates start to go higher. The 2.25 percent is known as the "pricing spread" to the index. When the prime rate changes, the HELOC's rate also changes at the next reset date. The rate changes to the new prime rate, plus the pricing spread.
Use Bankrate's Compare interest rates feature to find rates in your market and look for lenders offering a rate with a narrow pricing spread.
Congratulations for being on track to pay off your mortgage in your late 30s, early 40s. I often suggest that it's a sound financial goal to pay off your mortgage before you retire. You've done well.
I will pay off my mortgage in February 2010. Should I open a home equity line of credit now, in case I need extra funds for home improvements in the future? I am 39. My home is assessed at $310,000.
Jennifer Juncture
A: Dear Jennifer,
The good part about getting the line approved while your first mortgage is still in place is that you should have lower closing costs on the HELOC than if you wait until after you pay off the first mortgage. That's because with no first mortgage in place, the HELOC is, in effect, a first mortgage and may have higher closing costs because of it.
The bad part is if you're required to take money out at closing, you'll be paying interest on money you don't have any immediate plans on using.
A HELOC can be a sound financial backstop. However, some lenders are now reducing or pulling these lines out from under homeowners whose properties have declined in appraised value. With plenty of equity in your home, you shouldn't have that issue. But of course, you're not looking to use the HELOC for this reason -- instead, you want the line in case you need to make unscheduled future home improvements.
In general, it makes more sense to use a home equity loan instead of a HELOC to fund home improvements, unless you plan on taking out the HELOC in a refinancing after the improvements are completed. Bankrate's "Home equity loan vs. line of credit?" interactive worksheet can help you decide.
Assessed value determines how the home is taxed. This figure may have little to do with the home's appraised value. I'm going to assume the home's appraised value is at least as much as its assessed value. If it's not, you should take that up with your local tax collector.
A HELOC is an adjustable-rate loan with the interest rate generally tied to the prime rate, which is currently at 3.25 percent. As I write this reply, Bankrate's national average for a HELOC is 5.58 percent. That compares to 8.57 percent for a home equity loan, which is a fixed-rate loan.
While a home equity loan often is a great option for funding home improvements, it isn't likely to be right for you because you're uncertain as to when you'll want to spend money on the home improvements.
While 5.58 percent doesn't seem like a bad rate, historically HELOCs have been priced right on top of the prime rate. Paying roughly prime plus 2.25 percent is a horrible deal if interest rates start to go higher. The 2.25 percent is known as the "pricing spread" to the index. When the prime rate changes, the HELOC's rate also changes at the next reset date. The rate changes to the new prime rate, plus the pricing spread.
Use Bankrate's Compare interest rates feature to find rates in your market and look for lenders offering a rate with a narrow pricing spread.
Congratulations for being on track to pay off your mortgage in your late 30s, early 40s. I often suggest that it's a sound financial goal to pay off your mortgage before you retire. You've done well.
четверг, 3 марта 2011 г.
Rules for refinancing after bankruptcy
Question:
Dear Dr. Don,
We currently have a 30-year conventional mortgage at 7 percent, with a loan balance of $192,000. We have never, ever, missed or been late on a mortgage payment.
What are the rules regarding refinancing after a Chapter 7 bankruptcy when it has been two full years since the bankruptcy was discharged? What kind of interest rate could we get for a traditional conventional loan vs. FHA for a 15-year fixed rate loan with credit scores of 720 and 665? We would not require any cash out and other than our mortgage, we are debt free.
Answer:
Dear Meg,
Fannie Mae and Freddie Mac require four years from either the dismissal date or the discharge date for a Chapter 7 bankruptcy, so getting approved for a conventional loan just two years out isn't in the cards. The Federal Housing Administration discusses its underwriting standard in a FAQ on its website:
Question:
How does a bankruptcy affect a borrower's eligibility for an FHA mortgage?
Answer:
A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. Additionally, the borrower must have re-established good credit or chosen not to incur new credit obligations. The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs. An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner.
Additionally, the lender must document that the borrower's current situation indicates that the events that led to the bankruptcy are not likely to recur.
Your credit scores meet the standards for FHA refinancing. These standards were recently updated in "Mortgagee Letter 10-29," which states: "Borrowers with a minimum decision credit score at or above 580 are eligible for maximum financing."
Since you're not looking for cash-out at closing, you should qualify for FHA streamlined refinancing. The Department of Housing and Urban Development Web page "Streamline Your FHA Mortgage" discusses this loan program.
Bankrate doesn't report FHA loan rates, but you can use Bankrate's weekly averages for national mortgage rates to evaluate the rate you're offered on your FHA mortgage.
Dear Dr. Don,
We currently have a 30-year conventional mortgage at 7 percent, with a loan balance of $192,000. We have never, ever, missed or been late on a mortgage payment.
What are the rules regarding refinancing after a Chapter 7 bankruptcy when it has been two full years since the bankruptcy was discharged? What kind of interest rate could we get for a traditional conventional loan vs. FHA for a 15-year fixed rate loan with credit scores of 720 and 665? We would not require any cash out and other than our mortgage, we are debt free.
Answer:
Dear Meg,
Fannie Mae and Freddie Mac require four years from either the dismissal date or the discharge date for a Chapter 7 bankruptcy, so getting approved for a conventional loan just two years out isn't in the cards. The Federal Housing Administration discusses its underwriting standard in a FAQ on its website:
Question:
How does a bankruptcy affect a borrower's eligibility for an FHA mortgage?
Answer:
A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. Additionally, the borrower must have re-established good credit or chosen not to incur new credit obligations. The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs. An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner.
Additionally, the lender must document that the borrower's current situation indicates that the events that led to the bankruptcy are not likely to recur.
Your credit scores meet the standards for FHA refinancing. These standards were recently updated in "Mortgagee Letter 10-29," which states: "Borrowers with a minimum decision credit score at or above 580 are eligible for maximum financing."
Since you're not looking for cash-out at closing, you should qualify for FHA streamlined refinancing. The Department of Housing and Urban Development Web page "Streamline Your FHA Mortgage" discusses this loan program.
Bankrate doesn't report FHA loan rates, but you can use Bankrate's weekly averages for national mortgage rates to evaluate the rate you're offered on your FHA mortgage.
Nationwide consolidating loans 'reward current account customers
A representative from Nationwide has claimed the personal loan it is currently offering beats what is available at other banks and supermarkets.
Graham Pilkington, divisional director for banking, described how Nationwide current account customers are being rewarded with this product, which allows people to borrow between £7,500 and £14,999.
He explained that the rate is only available to those individuals who use the provider for their main current account and claimed it is the leading deal on the market in its category at 7.5 per cent interest.
"Nationwide continues to be competitive in the personal loan market with the introduction of this market leading headline rate," said Mr Pilkington.
People who do not bank with the institution can secure a deal at 7.6 per cent interest by applying through moneysupermarket.com.
Last month, Nationwide cut its personal loan rate to 7.6 per cent for FlexxAccount holders, making this week's reduction the second favourable change for its customers in less than 30 days.
Click here for more loans news
Graham Pilkington, divisional director for banking, described how Nationwide current account customers are being rewarded with this product, which allows people to borrow between £7,500 and £14,999.
He explained that the rate is only available to those individuals who use the provider for their main current account and claimed it is the leading deal on the market in its category at 7.5 per cent interest.
"Nationwide continues to be competitive in the personal loan market with the introduction of this market leading headline rate," said Mr Pilkington.
People who do not bank with the institution can secure a deal at 7.6 per cent interest by applying through moneysupermarket.com.
Last month, Nationwide cut its personal loan rate to 7.6 per cent for FlexxAccount holders, making this week's reduction the second favourable change for its customers in less than 30 days.
Click here for more loans news
CFPB reviews Credit CARD Act
One year ago, many provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 took effect. In conjunction with a conference marking its anniversary today, the Consumer Financial Protection Bureau, the new consumer watchdog agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, released a report on the impact of the law. The CFPB will take over responsibility for administering the Credit CARD Act later this summer.
According to the report, the CARD Act did a lot of good for consumers. Overlimit fees all but disappeared from the industry, monthly statements more clearly broke down costs to the consumer, the average late fee dropped and the incidence of rate hikes on existing accounts fell sharply.
For its analysis, the bureau conducted a voluntary survey of the nine largest credit card issuers, commissioned a survey of cardholders and used data from several other studies developed for the conference, including a report from the Office of the Comptroller of the Currency.
The good news
"A number of issuers have eliminated some of the practices that can confuse customers and cost them money they reasonably did not expect to pay," Elizabeth Warren, an assistant to the president and special advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau, said at the conference.
* Drop in overlimit fees. The CARD Act banned issuers from charging an overlimit fee unless the consumer had opted-in to permit the card issuer to approve overlimit transactions. Without such action by the consumer, the issuer could not charge a fee for exceeding the limit.
The CFPB's industry survey found that six of the nine issuers no longer charge overlimit fees. The share of accounts that charged an overlimit fee has fallen from about 12 percent per year to 1 percent.
* Drop in average late fee. The CARD Act set limits on credit card penalty fees, including late fees. The safe harbor amount is $25 for the first violation, and $35 for a repeat offense within the next six billing cycles, with the fee not to exceed the minimum payment due.
The average late fee has since dropped from $35 to $23, according to the OCC study.
* Drop in rate hikes applied to existing accounts. The CARD Act prevented credit card issuers from raising the rate on an existing balance unless one of four exceptions was applicable. Issuers could raise the interest rate on new transactions, but could only do so with 45 days advance notice.
The OCC study found that prior to the Credit CARD Act about 15 percent of accounts were repriced during a one-year period; post-CARD Act the number dropped to 2 percent.
* Credit card costs clarified. Monthly statements must now state how much you must pay each month to clear the balance in three years, the total cost if you only make the minimum payments and the total amount of interest charged year-to-date.
According to the CFPB's consumer survey, 31 percent of cardholders who noticed the changes on their monthly statement said it prompted them to either increase their payments or reduce their use of credit. About 60 percent of those that noticed the new information said their statements were easier to read and understand, compared to a year ago.
A look ahead
In her remarks at the conference, Warren indicated there was room for improvement.
"Our next challenges will be about further clarifying price and risk and making it easier for consumers to make direct product comparisons," she said.
Do you think the CARD Act personally helped or hurt you?
According to the report, the CARD Act did a lot of good for consumers. Overlimit fees all but disappeared from the industry, monthly statements more clearly broke down costs to the consumer, the average late fee dropped and the incidence of rate hikes on existing accounts fell sharply.
For its analysis, the bureau conducted a voluntary survey of the nine largest credit card issuers, commissioned a survey of cardholders and used data from several other studies developed for the conference, including a report from the Office of the Comptroller of the Currency.
The good news
"A number of issuers have eliminated some of the practices that can confuse customers and cost them money they reasonably did not expect to pay," Elizabeth Warren, an assistant to the president and special advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau, said at the conference.
* Drop in overlimit fees. The CARD Act banned issuers from charging an overlimit fee unless the consumer had opted-in to permit the card issuer to approve overlimit transactions. Without such action by the consumer, the issuer could not charge a fee for exceeding the limit.
The CFPB's industry survey found that six of the nine issuers no longer charge overlimit fees. The share of accounts that charged an overlimit fee has fallen from about 12 percent per year to 1 percent.
* Drop in average late fee. The CARD Act set limits on credit card penalty fees, including late fees. The safe harbor amount is $25 for the first violation, and $35 for a repeat offense within the next six billing cycles, with the fee not to exceed the minimum payment due.
The average late fee has since dropped from $35 to $23, according to the OCC study.
* Drop in rate hikes applied to existing accounts. The CARD Act prevented credit card issuers from raising the rate on an existing balance unless one of four exceptions was applicable. Issuers could raise the interest rate on new transactions, but could only do so with 45 days advance notice.
The OCC study found that prior to the Credit CARD Act about 15 percent of accounts were repriced during a one-year period; post-CARD Act the number dropped to 2 percent.
* Credit card costs clarified. Monthly statements must now state how much you must pay each month to clear the balance in three years, the total cost if you only make the minimum payments and the total amount of interest charged year-to-date.
According to the CFPB's consumer survey, 31 percent of cardholders who noticed the changes on their monthly statement said it prompted them to either increase their payments or reduce their use of credit. About 60 percent of those that noticed the new information said their statements were easier to read and understand, compared to a year ago.
A look ahead
In her remarks at the conference, Warren indicated there was room for improvement.
"Our next challenges will be about further clarifying price and risk and making it easier for consumers to make direct product comparisons," she said.
Do you think the CARD Act personally helped or hurt you?
Home prices: up or down?
Hey, does anyone want to buy a house?
Anyone? Anyone?
No? Perhaps not.
Home sales haven't exactly fallen off a cliff at an annualized pace of 5.36 million so far this year, according to the National Association of Realtors. But nor are houses flying off the shelves, or rather, out of the multiple-listing services.
The reasons for not buying a house vary from nonbuyer to nonbuyer, but some intriguing trends can be found in the fourth-quarter Fannie Mae National Housing Survey, which asked 3,004 people a series of questions about housing, homeownership, the economy and their personal finances.
Here are some of the highlights:
* 65 percent of respondents agreed that now is a good time to buy a house.
* 26 percent believe home prices will go up in the next 12 months.
* 52 percent believe home prices will stay the same.
* 19 percent believe prices will go down.
* 39 percent expect rents to go up, on average by 2.8 percent, or $28 per $1,000 of monthly rent.
* 64 percent believe buying a home is a safe investment. (In 2003, that figure was 83 percent.)
* 84 percent believe owning a home makes more sense than renting.
* 28 percent of renters say renting is more sensible.
* 79 percent cite schools and safety as reasons to buy a home.
* 73 percent of delinquent borrowers and 42 percent of renters say their income isn't enough to pay their expenses.
A few comments, courtesy of Fannie Mae Chief Economist Doug Duncan:
More Americans believe that housing prices will remain stable over the next year. We also are seeing encouraging signs in the positive attitudes toward homeownership among younger Americans, despite the severe impact of the housing crisis on Generation Y. But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future.
So, what's your opinion?
Anyone? Anyone?
No? Perhaps not.
Home sales haven't exactly fallen off a cliff at an annualized pace of 5.36 million so far this year, according to the National Association of Realtors. But nor are houses flying off the shelves, or rather, out of the multiple-listing services.
The reasons for not buying a house vary from nonbuyer to nonbuyer, but some intriguing trends can be found in the fourth-quarter Fannie Mae National Housing Survey, which asked 3,004 people a series of questions about housing, homeownership, the economy and their personal finances.
Here are some of the highlights:
* 65 percent of respondents agreed that now is a good time to buy a house.
* 26 percent believe home prices will go up in the next 12 months.
* 52 percent believe home prices will stay the same.
* 19 percent believe prices will go down.
* 39 percent expect rents to go up, on average by 2.8 percent, or $28 per $1,000 of monthly rent.
* 64 percent believe buying a home is a safe investment. (In 2003, that figure was 83 percent.)
* 84 percent believe owning a home makes more sense than renting.
* 28 percent of renters say renting is more sensible.
* 79 percent cite schools and safety as reasons to buy a home.
* 73 percent of delinquent borrowers and 42 percent of renters say their income isn't enough to pay their expenses.
A few comments, courtesy of Fannie Mae Chief Economist Doug Duncan:
More Americans believe that housing prices will remain stable over the next year. We also are seeing encouraging signs in the positive attitudes toward homeownership among younger Americans, despite the severe impact of the housing crisis on Generation Y. But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future.
So, what's your opinion?
Experian ranks cities by card debt
Did you rack up a lot of holiday debt on your credit cards? If so, you're not alone. The average person owed more than $4,200 in bankcard debt at the end of 2010, according to research released Wednesday from Experian, one of the three major credit-reporting agencies. On the bright side, December credit card debt was down more than 4 percent compared to 2009 data.
Residents of some cities were deeper in credit card debt than others.
In a press release, Experian listed the 25 American cities with the highest amount of bankcard debt in December 2010. San Antonio lead the pack with an average bankcard balance of $5,177; followed by Jacksonville, Fla., with an average balance of $5,115; and Atlanta with an average debt of $4,960. Another Florida city, Orlando, ranked the lowest on the list with $4,525 in credit card debt.
Though Americans had less credit card debt than in the previous year, they were using more of their available credit. Average utilization on credit cards was more than 30 percent, up nearly 10 percent since 2007. The surge was due in part to the fact that Americans don't carry as many credit cards. The average number of cards held has dropped 23 percent since 2007, to 1.97 cards.
When utilization climbs, your credit score can suffer. That's true anytime of the year, not just around the holidays. A big component of FICO credit scores is how much debt you have, part of which comes from how much available credit on revolving accounts such as credit cards is in use. According to FICO, people with the highest FICO scores have credit utilization rates of 7 percent or less.
If you have credit card debt, tackle your balance using a pay-down strategy.
How much of your holiday expenses did you charge to your credit cards?
Residents of some cities were deeper in credit card debt than others.
In a press release, Experian listed the 25 American cities with the highest amount of bankcard debt in December 2010. San Antonio lead the pack with an average bankcard balance of $5,177; followed by Jacksonville, Fla., with an average balance of $5,115; and Atlanta with an average debt of $4,960. Another Florida city, Orlando, ranked the lowest on the list with $4,525 in credit card debt.
Though Americans had less credit card debt than in the previous year, they were using more of their available credit. Average utilization on credit cards was more than 30 percent, up nearly 10 percent since 2007. The surge was due in part to the fact that Americans don't carry as many credit cards. The average number of cards held has dropped 23 percent since 2007, to 1.97 cards.
When utilization climbs, your credit score can suffer. That's true anytime of the year, not just around the holidays. A big component of FICO credit scores is how much debt you have, part of which comes from how much available credit on revolving accounts such as credit cards is in use. According to FICO, people with the highest FICO scores have credit utilization rates of 7 percent or less.
If you have credit card debt, tackle your balance using a pay-down strategy.
How much of your holiday expenses did you charge to your credit cards?
вторник, 1 марта 2011 г.
Home-selling tactics to beat the deadbeats
The cloud over foreclosures comes with a silver lining for homeowners looking for an edge when they sell real estate in a strong buyer's market.
The good news for sellers is that foreclosures look risky again. Savvy sellers -- at least, those who have equity and are current on their house payments -- might be able to turn the tables and use the robosigning follies to their advantage, experts say.
"I am not seeing buyers afraid (yet) to buy a foreclosure," says Elizabeth Weintraub, a real estate broker in Sacramento, Calif. "They should be."
The robosigning controversy has led to a slowdown in foreclosures. The lull is likely to be temporary and sellers' advantage from a drop in foreclosures potentially fleeting, with many markets still flooded with distressed properties, according to Katie Curnutte, a spokeswoman for Zillow.com. There might even be a boomerang effect later in the year after banks get back up to full speed again with auctions, she says.
For home sellers, here are some tips on how to seize the initiative during a rare (relative) lull in the foreclosure crisis.
The good news for sellers is that foreclosures look risky again. Savvy sellers -- at least, those who have equity and are current on their house payments -- might be able to turn the tables and use the robosigning follies to their advantage, experts say.
"I am not seeing buyers afraid (yet) to buy a foreclosure," says Elizabeth Weintraub, a real estate broker in Sacramento, Calif. "They should be."
The robosigning controversy has led to a slowdown in foreclosures. The lull is likely to be temporary and sellers' advantage from a drop in foreclosures potentially fleeting, with many markets still flooded with distressed properties, according to Katie Curnutte, a spokeswoman for Zillow.com. There might even be a boomerang effect later in the year after banks get back up to full speed again with auctions, she says.
For home sellers, here are some tips on how to seize the initiative during a rare (relative) lull in the foreclosure crisis.
Refinancing without home equity
Q: Dear Dr. Don,
I bought my house in 2005 for $375,000 and the interest rate on the mortgage is 5.25 percent. I put 10 percent down and pay PMI (private mortgage insurance). The principal that I owe on my house is approximately $308,000. I am thinking about refinancing to a 15-year fixed-rate mortgage. My wife and I earn approximately $180,000 combined a year and have excellent credit. The problems I have are that due to the economy, I don't have 20 percent equity, and I am not sure how long I am going to stay in this house. I need advice.
-- Joe Jericho
A: Dear Joe,
Not having 20 percent equity puts you in the position to need PMI on the refinance as well, assuming you have enough equity to qualify for a mortgage. If you don't, you can consider a cash-in refinancing, where you put additional money down at closing to qualify for the loan. The Bankrate feature, "'Cash-in' refinance activity skyrockets," provides more detail about this approach.
You're paying PMI now, so continuing to pay PMI on the refinancing, while not optimal, shouldn't add much, if anything, to your monthly mortgage payment. Capturing a lower interest rate is the real attraction in moving to a 15-year fixed rate mortgage.
By incorporating the cost of the PMI into the refinancing decision, you can still use a refinance calculator to estimate whether it makes sense to refinance, given the amount of time you plan to be in the house. Bankrate's refinance mortgage calculators will help you with that calculation.
You could also look into a Federal Housing Administration, or FHA, mortgage. You can qualify for this mortgage with a lower down payment. You still have a monthly mortgage insurance premium, or MIP, and will pay an insurance premium at closing for this type of mortgage. The FHA Frequently Asked Questions page on the Department of Housing and Urban Development, or HUD, website will give you an overview on this type of mortgage loan.
I bought my house in 2005 for $375,000 and the interest rate on the mortgage is 5.25 percent. I put 10 percent down and pay PMI (private mortgage insurance). The principal that I owe on my house is approximately $308,000. I am thinking about refinancing to a 15-year fixed-rate mortgage. My wife and I earn approximately $180,000 combined a year and have excellent credit. The problems I have are that due to the economy, I don't have 20 percent equity, and I am not sure how long I am going to stay in this house. I need advice.
-- Joe Jericho
A: Dear Joe,
Not having 20 percent equity puts you in the position to need PMI on the refinance as well, assuming you have enough equity to qualify for a mortgage. If you don't, you can consider a cash-in refinancing, where you put additional money down at closing to qualify for the loan. The Bankrate feature, "'Cash-in' refinance activity skyrockets," provides more detail about this approach.
You're paying PMI now, so continuing to pay PMI on the refinancing, while not optimal, shouldn't add much, if anything, to your monthly mortgage payment. Capturing a lower interest rate is the real attraction in moving to a 15-year fixed rate mortgage.
By incorporating the cost of the PMI into the refinancing decision, you can still use a refinance calculator to estimate whether it makes sense to refinance, given the amount of time you plan to be in the house. Bankrate's refinance mortgage calculators will help you with that calculation.
You could also look into a Federal Housing Administration, or FHA, mortgage. You can qualify for this mortgage with a lower down payment. You still have a monthly mortgage insurance premium, or MIP, and will pay an insurance premium at closing for this type of mortgage. The FHA Frequently Asked Questions page on the Department of Housing and Urban Development, or HUD, website will give you an overview on this type of mortgage loan.
Famous, fabulous and homeless?
How does Nicolas Cage get behind on his mortgage payments? The same way other rich and famous people do.
"They've stretched themselves higher than they probably should have," says John Anderson, owner of Twin Oaks Realty in Minneapolis and a National Association of Realtors expert in foreclosures. Some couldn't keep up when the rates on their adjustable rate mortgages shot up, Anderson says. Price drops at the high end of the market were so steep that a sale wouldn't cover the debt. In other words, high-end homeowners face the same problems that plague the not-so-rich-and-famous.
Here are five of the biggest names on the of list homeowners falling to foreclosure. We've included a bit of info about the current markets where these stars once lived. You know, in case you'd like to hunt for a foreclosure deal in one of those tony neighborhoods.
"They've stretched themselves higher than they probably should have," says John Anderson, owner of Twin Oaks Realty in Minneapolis and a National Association of Realtors expert in foreclosures. Some couldn't keep up when the rates on their adjustable rate mortgages shot up, Anderson says. Price drops at the high end of the market were so steep that a sale wouldn't cover the debt. In other words, high-end homeowners face the same problems that plague the not-so-rich-and-famous.
Here are five of the biggest names on the of list homeowners falling to foreclosure. We've included a bit of info about the current markets where these stars once lived. You know, in case you'd like to hunt for a foreclosure deal in one of those tony neighborhoods.
Подписаться на:
Сообщения (Atom)