Friday, July 30, 2010

Has the New Credit Card Law Benefited You?

Has credit cards become safer with new legislation in place? Do you know what are the safeguards that have been implemented to prevent predatory policies of the credit card companies?

1. Retroactive rate increased

Credit card issuers should not increase rates until the promotional rate expires. According to the universal default clauses, you are not accountable to any penalty charges for late payment on unrelated account.

If you are late by 60days in the repayment plan, then you may be exposed to the costly default rate. But if you provide evidence of 6 months of consecutive timely payment, the bank can lower your rates.

2. Advance notice on rate hikes

According to Lending Act, only 15 days notice is given to the card holder before the implementation of any plan. If there is any change in the terms of the contract which includes the hike in the rate that needs to be notified before 45days. However, the bank does not need to give advance notice for adjustment of credit card limit.

3. Restriction on charges

An over-limit fee would be charged on the approval by your creditor. Banks cannot levy any charges to settle credit card debt but they can contact you for repayment through telephone or internet. A penalty can be charged on your outstanding balance just to quicken the repayment process.

If the bank fails to accept the payment by mail, then they might not levy additional charges for it. If the payment is made in the local branch office then it would be advisable to pay off the amount before the due date. Any delay in the payment in this process is charged with a late fee.

4. Restrain Youngsters From Credit Cards

For those below 21 years old, you need to show that you are financially stable before applying for a credit card. Else, a co signer above the age of 21 years is required.

Since most youngsters are not savvy enough to use credit cards responsibly, the law will prevent them from getting into debt too early.

5. End of double cycle billing

The new law banned the double cycle billing. In the past, the credit card issuer can charge interest rate on the amount that had been paid off the previous month which is very unfair.

Overall, I think the changes will definitely benefit consumers. But even with some evil practices curbed, you can rest assured that bankers/credit card companies will still be able to fleece, erm, make money from consumers through other means.

Tuesday, July 13, 2010

Manage Your Own Money For Retirement

Most companies will match a percentage of their employee’s contribution to their retirement accounts. This is a nice benefit as it encourages the employee to save money because they are being given an additional sum on top of their base salary.

This additional sum in your retirement account can be quite substantial as it cannot be withdrawn until you hit retirement.

Brokerage firms will also allow you to set up a direct retirement fund, called a Roth IRA. If you have the time and enjoy doing financial research, giving yourself control over your retirement savings might be a good idea.

You don't have to pay sales commissions and management fees to incompetent money managers who make money regardless of your portfolio performance. You also have destiny in your own hands by investing in your desired asset classes and executing the buy and sell orders.

However, managing your own retirement account is not without risks. The market is very volatile and you are not guaranteed to make profits from stocks. This approach is recommended if you buy risk free assets like Certificates of Deposit or Money Market short term paper. In such cases, engaging a financial planner is a waste of money.

It is only when you don't have the time or expertise in exotic investments, that you seek professional money managers. They can help you to diversify your portfolio into stocks, bonds or complex assets like options, forex, commodities.

You have speak to a real person about your financial goals, and work on a strategy that fits your needs. But remember that money managers do not always make money, so entrusting your money to them might not give you the best return.

To ensure a secure retirement, it is important to find a money management professional who has been in business for years. Check their track record and expertise in negotiating the volatility of the market.

Also check out red flags like your money being tied up for a significant period of time. Make sure that you can always gain access to your funds at any time as most fraudulent companies require you to lock up your money for years.