Guest Post: Consumers Union: Beware of Prepaid Card Pitfalls

Consumers Union, publisher of Consumer Reports, offers this guest post on the dangers of prepaid cards:

"While prepaid cards are becoming an increasingly popular alternative to check cashers and traditional bank accounts, a new Consumers Union report finds that the cards come with high fees and don’t offer consumers the same kinds of protections as other forms of plastic payment.

Prepaid cards are reloadable cards that can be used to make payments similar to debit cards and are becoming the foundation of a second tier banking system used by a growing number of low income consumers.

Here's a link to the full report about prepaid cards.

“Consumers using prepaid cards end up paying a mountain of costly fees that can add up quickly and undermine their finances,” said Michelle Jun, staff attorney for Consumers Union. “Prepaid cards are being marketed aggressively, so it’s important for consumers to understand the hidden costs and how these cards might leave them vulnerable if lost or stolen.”
Prepaid cards are a growing business and usually bear a network logo such as Visa or MasterCard and often have the word “debit” printed prominently on the front of the cards. The Federal Reserve estimated that 312 million transactions were made with pre-paid cards in 2006 for a total value of $13.3 billion.

Consumers Union reviewed the terms and conditions of 18 different prepaid cards and found that consumers face multiple fees and other costly “gotchas’:

Activation Fees: 17 of the 18 pre-paid card issuers reviewed charged consumers a fee for activating their cards. These activation fees ranged from a low of $3 for the Walmart Money Card to a whopping $99.95 to apply for and initiate the Millenium Advantage card.

Monthly Fee: 15 of the 18 pre-paid card issuers charged monthly fees ranging from $2.95 per month for the FinanSe card to $10 per month for the Rush Card. Most pre-paid card issuers will waive the monthly fee if a direct deposit is set up. Some card issuers will waive the monthly fee if the consumer chooses the “pay as you go” option.

Fees to Get Cash: All 18 card issuers reviewed charged fees for withdrawing cash from ATMs in the U.S. On the low end, the FinanSe, SVC Revel, and Espree cards charge $1.50 per withdrawal. The NetSpend Visa card charged the highest fee – up to $2.50 for each withdrawal. Charges are usually even higher for international withdrawals.

Balance Inquiry and Statement Fees: 17 of the 18 card issuers charged fees for checking balances at ATMs, ranging from 50 cents to $1. This does not include any additional fee charged by the ATM owner.

Customer Service: Most pre-paid card issuers provide free customer service, but consumers using the Millenium Advantage card will be charged $1 per minute when they call customer service, while users of the Espree card will pay $3 for each customer service call. Some pre-paid card issuers charge customer service fees after a limited number of free calls.

Fees for Inactivity: Eight of the 18 card issuers charged fees when cards are not used after a certain period of time. These dormancy fees range from $1.95 per month for the Rush Card (after 90 days of inactivity) to $9.95 per month for the Exact card.

Overdraft Fees: A number of prepaid card issuers claim that they do not charge fees when users spend more than the available amount on their cards. However, Consumers Union found that 10 of the 18 cards it reviewed included overdraft or “shortage” fees. These range from $24.90 charged by Espree for overdrafts to $29 charged by Eufora and AccountNow.

Routine use of prepaid cards can result in significant costs for consumers as all these fees add up. For example, Consumers Union found that a consumer using the Rush Card’s pay as you go program who made three ATM withdrawals, three bill payments, eight point of sale purchases and two deposits would be charged $43.75 for the first month in fees.

Less Protection
When prepaid cards are lost or stolen and used by others to make fraudulent transactions, consumers are not protected by the same regulatory and statutory safeguards that enable other debit card users to recover their money. If a consumer contacts a card issuer about a lost or stolen debit card within two business days, the consumer’s liability is limited to up to $50 (or up to $500 if the consumer reports the debit card lost or stolen after two business days). By contrast, prepaid cards may only have voluntary protections that could be revised or rescinded at any time for any reason.

Credit Building
Some prepaid cards claim to provide consumers a way to build a credit record or include a credit line feature. However, Consumers Union found that the prepaid card issuers may report “credit building” activity to an alternative, less used credit reporting agency or may report only the payment of the card’s high monthly fees. The credit line feature may provide credit which is as expensive as costly overdraft loans and payday loans.

Security
Finally, consumers with traditional bank accounts have peace of mind that their money will not be lost as long as their bank is FDIC insured. But consumers who use prepaid cards have no guarantee that they will be able to recover all their money in the event of a bank failure because the funds may not be insured by the FDIC. "
--Source: Consumers Union

Consumer Reports: Best & Worst Credit Cards: How to Avoid Credit Pits

This item from Consumer Reports caught my eye.

Here's the report:

"Consumer Reports analyzed hundreds of credit cards and named a dozen that are worthy of consumers’ consideration—and three to stay away from.

Among the best credit cards for low-rate/low-fee are:

Capital One Platinum Prestige,
Clear from American Express,
Iberiabank Visa Classic.

The best cash-back cards:
Capital One No Hassle Cash Rewards,
Chase Freedom Visa
Discover More.

Among the best gas cards:
Chase PerfectCard MasterCard
Discover Open Road
Hess Platinum Visa.

Three cards to avoid:
First Premier Bank
HSBC American DreamCard
New Millennium Visa or MasterCard.

Although some consumers have avoided any direct effect from the storm clouds in the economy, the credit-card industry is changing in ways that could affect cardholders. Consumer Reports’ experts advise consumers to do a credit card checkup to make sure their accounts haven’t changed for the worse.

“Whether you have good credit or bad, you should check your account terms with your credit cards,” said Greg Daugherty, executive editor, Consumer Reports. "Several card issuers have doubled or tripled interest rates for some customers in recent months, even though many were current on their bills and have good credit.”

The full report is available in the redesigned October issue of Consumer Reports, on sale September 2 on newsstands and online at http://www.consumerreports.org/.

Getting the most from a card

Good credit or bad credit, consumers must keep tabs on their accounts. CR offers the following tips on how to get the most out of a credit card:

• Use credit wisely. If a consumer has a lot of high-interest debt, they should find a card that has a zero-percent-interest transfer offer and no transfer fee.
• Open the mail. Card issuer letters could look like advertising, but they also could be a notice of an increase in rates or a reduction in credit limit. Issuers often provide an opt-out clause, allowing customers to stop using the card and pay off the existing balance under old terms.
• Contact the lender. Cardholders who are dissatisfied with account changes or errors should call the card issuer and ask to speak to a manager or customer-retention person.
• Steer clear of traps. Federal banking regulators are pushing for rule changes that could take effect as early as next year. Some current practices that could be eliminated are raising rates on existing balances and applying payments to the lowest-rate charges (such as balance transfers.)
• Pick the right card. Consumers should select the right card for the type of borrower they are. CR also found that smaller issuers including credit unions and community banks are worth checking out for various interest-free offers.

CR reports that consumers’ credit card balances are up from $825 billion at the end of 2005 to $962 billion in May. At-risk borrowers are facing tightened credit lines and higher interest rates. Periods for teaser rates are becoming shorter, and balance-transfer fees are becoming standard while fixed rates on cards are as high as ever.

All news is not bad news however, as variable interest rates have come down, which can help consumers who carry a balance. Those with excellent credit scores can earn lower rates, higher credit limits and good rewards according to the report. "

Source: www.ConsumerReports.org
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9 Ways to Teach Kids About Money

A little while ago, I wrote about a little boy who thought money came out of walls (a visual image of ATMs.) The sluggish economy provides an ideal time to teach kids how to be savvy about money, according to Eric Tyson, a financial author.


Here's a guest column on the topic of kids and money, featuring 9 financial lessons from Tyson.


"With inflation on the rise (gas prices, grocery bills, health insurance premiums, etc.) and many companies being more conservative, more American families are feeling squeezed. So if you're feeling guilty because you can't buy your child that video game system he desperately wants or send him to that trendy summer camp, Eric Tyson has one word for you. Don't. In fact, he says, now is the perfect time to teach your kids some valuable financial lessons.

"Kids are surprisingly aware of what's going on in the world," says Tyson, author of the new book Let's Get Real About Money! Profit from the Habits of the Best Personal Finance Managers (FT Press, December 2007). "And if they don't know that times are a little bit tough and Mom & Dad are having to watch their spending, it's time to tell them. Sheltering kids from financial realities does them no favors."

Indeed, the opposite is true, says Tyson. A good grasp of personal finance is one of the most valuable life skills a person can have. And while previous generations may have been raised with the constant admonishment that "money doesn't grow on trees!," too many of today's parents neglect that lesson. It's time to change that—and the economic slowdown we're in now provides a great incentive for doing so.

"In many ways, a slower economy can be a blessing in disguise," admits Tyson. "It leads families to make a budget and stick to it. It forces them to be conscious about how they handle money. That's good for kids. It shows them how the world is supposed to work."


Tyson offers the following hints:


1. Realize that kids learn what they live. It may sound like common sense, but we are our kids' most influential teachers. When you ring up a barge-load of credit card debt, take out exorbitant mortgages or car loans, and fail to save anything, that's what your kids come to see as normal. If you are modeling unhealthy financial habits, you can't realistically expect your kids to "do as I say, not as I do."

"Adults who live it up now and fail to save for the future can expect to raise children who are accomplished spenders and poor savers," notes Tyson. "Be honest with yourself about the powerful money messages you're sending your kids. If your financial habits are poor, overhaul them now. You owe it to your kids."


2. De-program them. Kids are constantly bombarded with information about what things cost, whether it's the fancy sports car they like or the wardrobe of their favorite athlete or actor, not to mention the 40,000 commercials that the American Academy of Pediatrics estimates the average American child sees each year. What they aren't bombarded with is knowledge on how to manage money effectively. And while schools are increasingly incorporating money issues into the existing curriculum, the broader concepts of personal financial management still aren't taught. Frightening though it may be, some schools rely on free "educational" materials from the likes of VISA and MasterCard!

"These credit card titans provide materials that implicitly and explicitly support carrying consumer debt as a sound way to finance significant purchases and living expenses," says Tyson. "In fact, VISA and MasterCard school-supplied resources endorse spending upward of 15 to 20 percent of one's monthly take-home income to pay credit card and other consumer debts! Explain to your kids that such spending puts a lot of money directly into the credit card companies' pockets, so of course they're going to offer that advice...but that smart people don't listen to it."


3. An allowance is a great teaching tool. You don't have to break child labor laws to find great ways to help your kids earn their allowance rather than just have it handed over to them. A well-implemented allowance program can mimic many money matters that adults face every day throughout their lives. From recognizing the need to earn the green stuff to learning how to responsibly and intelligently spend, save, and invest their allowance, children can gain a solid financial footing from a young age.

"A great time to start is when your kids reach the five-to-seven age range," says Tyson. "Start them on some household chores, and explain to them that they will be paid for their work. Of course, the size of the allowance should depend, in part, on what sorts of expenditures and savings you expect your child to engage in and, perhaps, the amount of 'work' you expect your child to perform around the house. I recommend paying $0.50 to $1.00 per year of age. So, for example, a six-year-old child would earn between $3 and $6 per week."


4. Start them saving and investing early. It's never too early to start saving, and the sooner you can instill the importance of saving money into your kids the better. After they start earning an allowance, have your kids save a significant portion (up to half) of their allowance money toward longer-term goals, such as college (just be careful about putting money in children's names as doing so can harm college financial aid awards). Tyson recommends that children reserve about one-third of their weekly take for savings. As they accumulate more significant savings over time, you can introduce the concept of investing.

"Rather than trekking down to the boring old local bank and putting the money into a sleepy, low-interest bank account, I prefer having kids invest in mutual funds," says Tyson. "Another option is for kids to buy individual stocks. Kids can learn more about how the financial markets work and understand stocks better by sometimes picking individual stocks rather than using funds. Just be careful to keep transaction fees to a minimum and teach your kids how to evaluate a stock and its valuation and not simply buy companies that they've heard of or that make products they like. The money they are able to save and invest will be a huge help to them later on in life."


5. Reduce their exposure to ads. The primary path to reduced exposure to ads is to cut down on TV time. When kids are in front of the tube, have them watch prerecorded material. You can direct the television viewing of younger children, in particular, toward videos and DVDs. And for older kids, if you use digital video recorders (DVRs), such as TIVO, you can easily zap ads. But when an ad does sneak under the radar and set the kids to begging, address it. Explain to your kids that there's never a good time for frivolous impulse spending—but it's especially harmful when money is tight.


"Invest the necessary time to teach and explain to your kids that the point of advertising is to motivate consumers to buy the product by making it sound more wonderful or necessary than it really is," says Tyson. "Also explain that advertising is costly and that the most heavily promoted and popular products include the cost of all that advertising, so they're paying for it when they buy those items."


6. Find entertaining ways to teach good money habits. You'll probably be facing an uphill battle when trying to get your kids to sit down and learn about personal finance. That's why it's so important to find entertaining ways to instill good financial habits in them. For younger kids Tyson recommends age-appropriate books like The Berenstain Bears Get the Gimmies. For late-elementary-school-aged kids, Quest for the Pillars of Wealth by J.J. Pritchard is a chapter book that teaches the major personal finance concepts through an engaging adventure story. You could also get them a subscription to Zillions, a kids' magazine from the publishers of Consumer Reports, which covers money and buying topics.


"Another great opportunity to teach your kids about personal finance and get to spend quality time with them in the process is through board games," suggests Tyson. "Monopoly and Life are two games that are very effective at getting your kids to think about the best way to manage money and plan whether they should spend or save."


7. Teach them how to shop wisely. Family shopping trips, whether for groceries or something else, are likely to be your kids' first encounter with spending. They'll see you make decisions based on what the family needs, maybe see the occasional coupon used, and will observe how you pay. These trips are a great time to teach them lessons about money.


"Explain that being a smart consumer requires doing your homework, especially when buying more costly products," says Tyson. "Teach your kids the value of product research and comparison shopping. Demonstrate how to identify overpriced and shoddy merchandise. Finally, show them how to voice a complaint when returning defective products and go to bat for better treatment in service environments, two additional tasks that are part of being a savvy consumer."


8. Introduce the right and wrong ways to use credit and debit cards. Those plastic cards in your wallet offer a convenient way to conduct purchases in stores, by phone, and over the Internet. Unfortunately, credit cards offer temptation for overspending and carrying debt from month to month. Teach your kids the difference between a credit and debit card, explaining that debit cards are connected to your checking account and thus prevent you from overspending as you can on a credit card.


"Explain to them that credit cards should be used sparingly and then practice what you preach," says Tyson. "Wean yourself off of using your credit card, and tell your kids why you've decided to do so."


9. Encourage older kids to get a job. An allowance doesn't have to be the only way for your kids to earn money. Your child's initial exposure to the work-for-pay world can start with something as simple as a lemonade stand. Depending on age, he or she might do yard work for neighbors or offer babysitting services. And the fact that we're in a recession makes it all the more appropriate for older kids to "help out" by getting a part-time job—especially to fund unnecessary purchases like DVDs or cool clothing.

"I had an extensive newspaper route for a number of years, and I cut lawns and did other yard work during high school and college summers," says Tyson. "By holding down such jobs, kids can learn about working, earning, saving, and investing money. It also provides welcome relief for parents to not continually be the source of spending money. Working outside the home does raise some safety issues, so by all means be involved in ensuring that your child has a safe work environment."

Besides the learning opportunities it presents, there's another positive to the economic downturn, says Tyson. It forces families to be more thoughtful about how they spend their time—and this often leads to the stunning realization that money really doesn't buy happiness.
"Often, the pricey toys we buy for ourselves and our kids and the lavish vacations we take are simply distractions from the people we love," he says. "They send the message that it's necessary to spend a lot of money in order to have a good time. It's not, of course. The best things in life—friends, family, quiet evenings at home just being together—really are free. Sometimes it's good to be reminded of that."



--Eric Tyson

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4 Mindful & Savvy Uses for Rebate Checks: Avoid the Mall

"Getting a Rebate? Focus not on more, but on more of what matters." Bottom line: Don't overspend. That's the word from the folks at Center for a New American Dream, a consumer organization that targets meaningful living and spending plans.

Here's a guest post from New American Dream about frugal and mindful uses of rebate checks:

"In a few weeks, Americans will receive their rebate checks—part of a $168 billion effort to bolster the economy through increased consumer spending. Author and sociologist Dalton Conley, however, notes in a New York Times op-ed piece that “Consumer overspending got us into this mess. More spending won’t get us out.”

Before Americans use their checks to prop up sagging sales of unsustainable products, New American Dream and the Conscious Consumer Marketplace would like to offer four things everyone can do that will be smarter for and kinder to our pocketbooks, the planet, and the economy:

1. Pay off your credit card. Author and personal financial journalist John Wasik writes for Bloomberg.com: There's no personal economic benefit to carrying a balance on a credit card. It's an albatross. So pay them off and shed the seabird. Then download a free New Dream Wallet Buddy credit card sleeve to remind you to consider carefully before you charge: www.newdream.org/walletbuddy.pdf.

2. Invest it. Recently, the national savings rate dipped below zero, the first time since the Great Depression we were spending more than we saved. Conley suggests citizens should invest the money, not run to the malls. Why not do some social goodwill while saving for your future? Learn more on Marketplace’s Socially Responsible Investing page: www.newdream.org/consumer/sri.php.

3. Buy wisely. If you buy something, make it count—for you and for the environment. Writing for MSNBC.com, personal finance journalist Laura Coffey (after cautioning first to get debts under control) says consumers should “consider buying an energy-efficient appliance, especially if you’re now relying on older, less-efficient appliances.” For more on energy efficient appliances and other ways to support the Green Economy, visit the Conscious Consumer Marketplace at consciousconsumer.org.

4. Give it away. No, don’t send it back to the government with a “Thanks, but no thanks” note. But if you are out of debt, investing responsibly, and satisfied with the state of your stuff, then maybe it’s time to help build a sustainable society by supporting causes you believe in.

Remember, when the check comes, you are not just a consumer. You are a citizen. Think of the rebate as an opportunity to keep afloat and support your values."

source: www.newdream.org.
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"Do I Need a Debt Management Plan?"

This guest post from Consumer Credit Counseling Service (CCCS) defines and addresses the need for Debt Management Plans.

"A Debt Management Plan is particularly helpful for consumers who are struggling to make even the minimum payment on their credit cards," said Jessica Cecere, president of CCCS. "Ultimately, the plan serves the dual purpose of helping consumers repay their debts and helping creditors receive the money owed to them."

What is a Debt Management Plan?

A Debt Management Plan, or DMP, is a repayment plan that provides a systematic method for paying down your outstanding debt.

The repayment period varies based on amount owed and the repayment terms. The average debt management plan is structured to repay debt in 36-60 months.

Signs of Trouble

• Debt can quickly become overwhelming if you ignore the warning signs. Look for these warning signs and take action to avoid compounding the problem.


• Using credit cards to cover daily living expenses.


• Making only minimum payments on credit cards; or struggling to make even minimum payments.


• Carrying multiple credit cards and rotating their use to juggle balances and due dates.


• Making payments late or missing payments for more than one month


• Charging more each month on your credit cards than you are paying toward the balance.


• Credit cards that are at or close to their limit.


• Not knowing how much you owe.


• Calls from creditors.


• Taking out loans or using equity in your home to pay off debt.


• An interruption in income would cause immediate difficulty paying bills.
  

"Ignoring the problem won’t make it go away," said Cecere. "Getting help at the first sign of trouble can make the difference between a financial setback and a financial disaster."

source: CCCS

Money From the Wall: Child's View of ATMs & Credit Cards

Money doesn't grow on trees, it comes out of a wall. That's how one child explained finance to his parents, who are friends of mine. Savvy about money, my friends were a bit alarmed about their 9-year-old son's view of money. During a recent car ride, the father told me how he's trying to give his son small doses of fiscal reality.

The Scenario: The wake-up call rang when the 9-year-old proudly announced that he wasn't going to work for a living.

Father: Why not?

Son: I'm going to get one of those plastic cards that you have. When I need something, I'm just going to use the plastic card and sign my name.

The Aftermath: The father, who works in the finance industry, reviewed his shopping and spending transactions. He realized that his son -- an elementary school student -- had closely watched his parents make purchases at restaurants, stores and other locations. From a child's view, the transactions seemed simple: Show the plastic card and receive stuff for free. Why work for money when you have a plastic card?

The Solution: When the next credit-card bill arrived, the father opened the bill with his nine-year-old. Here's their step-by-step financial lesson:

• The Account Numbers: The father pulled out the family credit card and asked his son to find the numbers on the plastic card. To make the connection between the credit-card statement and the plastic card, he asked the child to match the numbers on the plastic bill with the account numbers on the bill.


• The Balance Check: The father showed the 9-year-old the monthly credit-card balance. Well-schooled in math, the child was shocked by the large dollar figure. To drive the point home, the father explained that all of the things that had been purchased with the plastic card had to be paid for each month with real money from the family's bank account.


• The Bank Lesson: The father explained he wrote checks to pay monthly bills, including the plastic bill. That lesson took a while because the son argued that checks were just paper and he could just sign his own papers to pay for the plastic. Next: The dad tried to explain how the banking system worked.

After listening to a lesson about credit, interest and banking, my friend's child nodded and came up with another solution.

"I'll get another plastic card," he told his father: "I'll get the plastic card that makes money come out of a wall."

I'm sure that the father offered a very thoughtful and detailed explanation about automated teller machines, but our car ride ended before he finished telling the story. Meanwhile, I had a lot to think about anyway. I wondered what kind of unspoken messages about money, spending and family finance that I have delivered to my children.

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Previous Posts

Mutiny: Rebellion Against Used Party Clothes: Frugal Event Planning Guide Pt.2

Frugal Lessons from Luxury Shoppers: 3 Basic Questions Before Paying

Fourth Grader Joins Flea Market, Hires 4 Employees, Sells Crafts and Prints Money
Full-Time Teacher, Weekend Cook: Part-Time Jobs To Pay Bills

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Sharon Harvey Rosenberg is the author of The Frugal Duchess of South Beach: How to Live Well and Save Money... Anywhere!, which will be published in the Spring of 2008 by DPL Press.

Kiplinger Answers My Reader's Query: Bad Credit RX?

The folks at Kiplinger’s Personal Finance have provided an answer to a reader's recent question about credit-card repair, which followed a recent post on this site.

Here's the question:

In response to Kiplinger's formula for a healthy credit score, Anon wrote:

That's very nice, but sometimes people get sick and can't work and lose their income and their credit goes in the tank. How do you get your credit out of the tank?

Kim Lankford, Contributing Editor, Kiplinger’s Personal Finance magazine provided this response:

"You can't erase a bad credit history, but you can take steps to improve your credit record from this point on. Negative items generally affect your score for up to seven years, but as time goes by their impact lessens.

Continue using your cards, but clean up your act. Pay your bills on time, keep your account balances low, and be sparing in opening new accounts. As long you use credit conservatively, your score can rebound surprisingly quickly, says Craig Watts of Fair Isaac. We've seen cases of bankruptcy in which borrowers have qualified for a premium mortgage in three years.'"

Here's a link to an article Kim wrote for the November issue profiling individuals who took control of their credit problems:

Special Thanks to Kim Lankford for the prompt response.


Special Thanks to Laura Stevens from the The Rosen Group for making it happen so quickly and efficiently.


And, of course, kudos to Anonymous for asking the question.
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Debt Hater's Carnival of Debt Reduction

Debt Hater hosts The 78th Carnival of Debt Reduction. Financial Priorities holds center stage at this carnival, which is well-organized and features smart commentary.

Here are a few of the posts that caught my eye, with links quoting the descriptions offered by Debt Hater.

• Blogging Away Debt: "isn’t getting fanatical about debt repayment." The Priority: living the good life and developing good fiscal habits.
• The Family CEO: "switched to debit from credit to avoid overspending." The Wisdom: What a difference a debit card makes!
• Queercents offers: "paying attention to your emotions" while spending. The Bottom Line: A very insightful and helpful piece about emotional shopping.

I'm happy to included in the line-up. Thanks to the host for reading, organizing and creating the carnival. It's an excellent read.

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The Frugal Duchess Booktique
The Frugal Duchess of Beauty Store
Book Shop of Fear
The Poetry & Drama Queen
Frugal Jazz & Blues

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My Cash-Only Status Changes: New Credit Card; New Rules?

Cash has ruled my house. We've paid cash for everything, with help from our debit card, check book and generous financing from extended family.

But with the recent arrival of our new credit card that all changes. Actually, no! We plan to ignore the card, except for emergencies.

An emergency is not:


1) A too-busy, too-tired-to cook restaurant meal or take-out pizza
2) An end-of-season clothing sale
3) Last-minute birthday presents
4) Cool new CD: Let's try it.
5) Hair appointments
6) Manicure, facial or other so-called R&R treatments

Those so-called emergency expenses led to a large financial debt load when I was younger and I plan to avoid the credit money pit by:

1) paying off any charges within 30 days to avoid interest costs
2) reading the contract very carefully
3) scanning my credit card statement for unusual fees or activity
4) reading the Carnival of Debt Reduction every week.
5) staying on top of the debates and hearings about credit card fees in Congress. There's a push to force credit card companies to give consumers a better deal.


This item from USA Today outlines the new so-called "kinder & gentler" fee rules from credit card companies.

"In a break for consumers, major banks are rethinking — and in some cases
dropping — a handful of credit card policies that have been widely
criticized. " --USA Today

I also enjoyed this piece from Reuters:

Credit cards promise clear, simple language...from Reuters
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The Frugal Duchess of Beauty Store
Book Shop of Fear
The Poetry & Drama Queen
Frugal Jazz & Blues

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What I Learned About Credit Cards, Teens & eBay From Disney's Hannah Montana

It pays to watch Disney shows with your children. I learned a lot about credit card debt, big-ticket shopping sprees and desperate cash-tricks by watching a recent episode of Hannah Montana at Disney.com. Through the Internet, my youngest children and I watched the program. (We don't have cable or standard TV). The story line evolved around credit cards, kids and consumer behavior. The 22-minute viewing time was well-spent.

Quick Plot Summary: Credit-card debt is dangerous/expensive and the financial burden forces you to work overtime and to sell your soul.

Here's my rundown of the show and the financial tips:

Series Summary:

The series focuses on MileyStewart / Hannah Montana played by Miley Cyrus, who lives a double life as an average teenage girl at school during the day and a famous pop singer at night, concealing her real identity from the public other than her close friends and her family. --From Wikepedia

The Cast:
1. Miley Stewart/Hannah Montana played by Miley Cyrus (The title character)
2. Robby Ray Stewart played by Billy Ray Cyrus (The Dad)
3. Jackson Stewart played by Jason Earles ( Hannah's Brother)


The Credit Card Episode: Basically, The Dad gives the two teens credit cards to be used for "emergencies only." Big Trouble.

Financial Follies:

1. The Brother loses his credit card repeatedly during the episode. He misplaces the card inside the piano and even inside an avocado sandwich.

Lesson: Don't give cards to kids who are prone to lose things.

2. Prompted by a friend, Hannah Montana/Miley goes to a flea market just to window shop.

Lesson: The road to financial trouble begins innocently even at a flea market. The main character did not intend to spend anything, but ultimately spent well over a $1,000. She would have saved money by just staying home, reading or playing sports.

3. Her spending spree began when she split her pants and that "emergency" prompted her to buy a new skirt, which launched the spending binge.

Lesson: Parents should define terms when dealing with kids and money. For example, teens and parents have different ideas about emergency.

4. After buying the skirt, Hannah/Miley purchased shoes, belts, a hand massage machine, carpet and bags of expensive and unnecessary stuff.

Lesson: One bad purchase leads to another. What's more, she had a tortured rationalization for each item. Personally, I winced with a been there/bought that moment of self-recognition.

5. Hannah tried to take back the merchandise based on her faith in the one-day money-back promise from a flea market merchant. No luck. The Flea market was gone the next day.

Lesson: Shop carefully. Know your stores.

6. To pay the credit card bill before her father found out, Hannah/Miley sold her own celebrity merchandise on eBay. Her online yard sales is big financial hit.!

Lesson: eBay is a quick source of cash. Hold your own flea market (online or traditional) to earn money.

7. The Dad finds out after tracking the sales of online merchandise linked to Hannah Montana

Lesson: We leave lots of fingerprints and footsteps on the Internet.




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The Frugal Duchess Booktique
The Frugal Duchess of Beauty Store
Book Shop of Fear
The Poetry & Drama Queen
Frugal Jazz & Blues

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