Archive for October, 2010

How To Deal With An Error On Your Credit Card Statement

Wednesday, October 20th, 2010

What do you do when you notice a charge on your credit card statement that is incorrect?  With so many reports of scams and rip-offs related to credit cards, consumers are justified in their concern about bogus charges on their card statements.   Above all, don’t panic … if it is in fact a mistake, there are a few things that you can do right away to quickly make it right.

Here are 4 steps you can take to help you deal with and quickly fix any error on your credit card billing statement:

Confirming the Mistake

If you are going to dispute a charge, you need to do your homework and confirm that it’s an actual mistake before you start throwing stones at your card issuer.  Looking at the statement, identify the errors and write down the name of the merchant and the amount in question.  If the merchant name for the charge looks unfamiliar, don’t automatically assume that the charge was a mistake.  If the mistake was an incorrect amount charged to the card though, look for the receipt that will prove what the actual charge should be.

Call the Retailer/Merchant

Your credit card statement provides contact information to identify the merchants who accepted each credit card payment from you.  Contact the merchant and inquire about the specific charge in question.  If the error is an incorrect amount that was billed to you, you can work directly with the merchant to satisfy the dispute, simply by providing the merchant with a copy of the receipt.  Request the amount be corrected and ask the merchant to provide you with the change made in writing. Most merchants will be happy to clear up the mistake immediately and the matter should be resolved fairly quickly.

Contact the Credit Card Provider

If things do not work out with the merchant or you suspect foul play on the charge to your card, waste no time in contacting the credit card issuer. As a consumer you have 60 days to notify the card company of any disputed charge. Initially, you should contact the company by phone to report the incident, especially if you suspect fraud.  Be sure to put your dispute in writing though and mail it via Certified/Return Receipt Requested to ensure the correspondence of your disputed charge is on the record. Include in the letter your contact information, account information, date of the charges, and a description of the charges being disputed.  Include a copy of your billing statement with the disputed charge highlighted for easier identification.

Taking Further Action

If you are unable to resolve your dispute satisfactorily through either the merchant or the credit card company, you need to review your rights under the Fair Credit Billing Act, or FCBA. As a consumer, you have certain rights when it comes to unauthorized charges and charge disputes including the consumer’s right to not have to pay the amount being disputed during the investigation. No interest can be accrued during the investigation on the specific charge either. In the event the dispute is denied, the interest can be added back on the disputed amount retroactively.

Guest Post:

Crime Paid Well – Until He Got Caught

Tuesday, October 19th, 2010

The $67.5 million settlement by Angelo R. Mozilo in a civil fraud case brought by the Securities and Exchange Commission should send a clear signal.

If you know the company is going under, hiding risks from investors while engaging in insider stock sales will eventually catch up with you.

Angelo Mozilo, founder and former chief executive of Countrywide Financial Corporation, is the first financial executive to be personally penalized for excesses leading to the mortgage boom and bust. However, securities regulators are investigating former senior executives at Merrill Lynch for possible securities fraud.

Goldman Sachs has already paid a $550 million fine to settle similar charges against their company.

We don’t need to worry about Mr. Mozilo being forced to join the ranks of the homeless because of these fines.

Countrywide has been paying his legal fees and will pay $20 million of the $67.5 million fine. And, considering that his compensation during the period from 2000 through 2008 was $521.5 million, he should be able to continue his present lifestyle. He also profited by $140 million in gains on stock that he sold from November 2006 through October 2007.

One thing he cannot do in the future is serve as an officer or director of any public company.

It does seem a shame. Mr. Mozilo and his friend David Loeb started Countrywide in 1969. Together they built the company into the nation’s largest mortgage lender. They continued to thrive until they went into subprime lending.

Was this decision to grant “bad loans” a matter of greed – or of government dictates?

This case is also a clear example of a lesson some parents are trying to impress upon their children these days: “Don’t say anything on line or in an email that you don’t want the whole world to see.”

Part of the case against Mr. Mozilo stems from e-mails he sent starting in 2006. While Countrywide was boasting to investors about its high-quality loans, he and others in Countrywide were discussing the poor quality of those loans.

When discussing no-money-down loans to borrowers with poor credit , he said he had “Never seen a more toxic product.” He also decried the sloppy documentation practices within their organization and warned his colleagues about the adjustable rate mortgages that let buyers qualify at low, introductory “teaser” interest rates.

When the S.E.C. charged him with deliberately concealing the dangers from his investors, his e-mails were proof positive that he did know the risks they were taking, even as Countrywide assured investors that all was well.

Because of the complexity of the case and the possible consequences, both sides were willing to reach a settlement without going to trial. The S.E.C. knew that it in spite of the e-mails, it would not be a simple case to prove. A loss would have hurt their credibility going forward.

Had Mr. Mozilo lost, a criminal prosecution might have followed the civil case.

Which is the Best Rewards Card

Monday, October 18th, 2010

I get this question almost daily.  Which is the best rewards card to sign up for?  Aren’t they all the same?  Miles, points, cash back, what’s the best option?  The truth is rewards cards are not all the same and there are some that are probably better for you than others.

It’s very important to keep in mind that credit cards have a purpose.  The purpose is to make the credit card issuer money.  However that revenue is generated, it doesn’t really matter.  Whether it’s fees, interest, interchange (the merchant’s fee for accepting the card), or through the sale of enhancement products revenue is revenue.

All rewards cards also serve the same purpose.  That purpose is to generate revenue for the issuer but in this case the issuer is targeting you with a partner.  That partner might be an airline, a sports team, a charity or a school.  Regardless of which, it’s someone or some organization that is appealing to you.  And since most consumers are vain, they’d rather walk around with a card with a college logo stamped on the front than one with nothing on the front.

I believe, and I might be unique in my opinion, that cash back cards are the best type of rewards card.  Why?  It’s simple, cash has no black out dates.  And, the cash back programs are really easy to understand, which is not something you can say about the air miles programs.  If you spend a dollar you earn some percentage of that dollar as cash.  Normally the percentage ranges between 1% and 5%, depending on the issuer.

Here’s another reason I like cash better than miles, the value is better understood by the consumer.  Follow me…it takes roughly 25,000 air miles to redeem for a free round trip domestic coach ticket.  And, that’s if you’re lucky enough to choose a flight that actually has seats available for purchase with that minimum mile price tag.  To earn 25,000 miles you’ll likely have to spend $25,000 because most of the programs reward you with a mile per dollar spent.  Now, I can buy a round trip ticket in first class to anywhere on the globe for about 1/2 that price.  Point being, you better not buy stuff simply to earn the ticket.

Go to any of the airline websites and you’ll see that you can buy a round trip coach seat for well under $500 from any two destinations in the continental United States.  So using the airline points to buy a round trip ticket from Atlanta to New York just does not make sense, as an example.  In fact, there aren’t many examples that DO make sense.

So the next time you’re in the market for a rewards card keep a few things in mind please…

1.  If you’re paying the bills then it might be a better idea to get a cash back card rather than an airline points card

2.  If you don’t understand the program terms then don’t sign up for the card

3.  If you revolve a balance from one month to the next and pay interest, you’re likely to pay more for the reward than it’s worth.

John Ulzheimer is the President of Consumer Education for and owner of  He is an expert on credit reporting, credit scoring, credit score ratings, and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry.  He is a weekly guest on FOX’s The Willis Report and is the credit blogger for the New York Times and  He has served as a credit expert witness in more than 65 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Holiday Shopping Season Could Mean More Customers Buying on Credit

Friday, October 15th, 2010
Each and every year many Americans “claim” that they are not going to buy Christmas gifts with their credit card but it seems to be the case that customers find a way to resort to the plastic.  Before the holiday shopping season gets into full swing it might be a very good idea to make certain that a credit report is completely free of errors.

With a growing number of American consumers already thinking about Best Buy Black Friday sales it comes as no surprise to see these same individuals attempting to save money in any way possible.  While waiting until Black Friday to save on Christmas gifts is one way to cut back on spending this holiday season another is to create a very good budget.  Sticking to this budget might be a whole different story.

If customers plan on buying on credit then it would be smart to access the free annual credit report that is available from the government.  The link to the website that is sponsored by the FTC is  By making certain that this credit report is completely accurate many customers could save a great deal in the form of lower interest rates on those credit cards.  Before going out and grabbing those 2010 Christmas gift ideas it would be wise to budget and make sure a credit report is accurate.

Remember that the free annual credit report does not include a free credit score.  To obtain a credit score it will likely cost between $10 and $30.  There are some websites that offer a free credit score with the purchase of a membership or other financial service.  Sometimes it is best to just fork over the extra money and get the accurate credit score.

Author: Jesse

Buying a home requires more than good credit.

Thursday, October 14th, 2010

Buying a home requires upfront leg work…..

In the current market you need more than a good credit score. You must qualify with provable income. Even if you are a W2 employee, banks will request your last two years tax returns.

During previous years all you needed to qualify for a loan was 2 years W2’s and 30 days paycheck stubs. Now banks are asking for 2 years tax returns to determine your income, even if you have a guaranteed salary. After all if you are telling the IRS you make less and are taking more than the standard deduction, how can you claim you make what you do via W2’s and paycheck stubs?

What banks are looking for on the tax return that will ding your income, are write-offs such as unreimbursed employee expenses. When these types of write-offs are on your tax return, get ready to have your income reduced.

It’s kind of like that old saying, “you can’t have your cake and eat it, too…”

These are the type of issues that are taking place even with borrowers that have 800 fico scores and are putting down 20%.

So when you get ready to buy a home make sure you get pre-approved. You may not qualify for the home you thought you could afford. Or let me rephrase that. You don’t have provable income to get the home you actually want.

Provable income affects your (DTI) debt to income ratio. This will be affected by what banks are allowed to use to calculate your income. So a small detail of writing off 20,000 in expenses could mean the difference of a 30% DTI or a 40% DTI. The lower your debt to income the better chances of qualifying for a home loan.

Before jumping in a car with a Realtor, do a little leg work to make sure you actually qualify for the price range you are looking in. To get a mortgage these days takes more than a good credit score and a pulse.

Author: Mike Clover

New FTC Rules Curb Shady Debt-settlement Companies

Thursday, October 14th, 2010

Millions of Americans are deep in credit card debt – a situation that spelled opportunity for shady debt-settlement companies.

In an effort to protect consumers from their fraudulent practices, the Federal Trade Commission (FTC) created new regulations which will go into effect on October 27.

These regulations apply to for-profit companies offering debt negotiation, debt settlement, and credit counseling. The rules don’t apply to nonprofit companies, but do apply to for-profit companies that claim to be nonprofit.

The primary provisions of the new regulations are:

* Agreements must be in the form of a written contract which outlines the work to be performed and the payment to be charged

* The company must reveal how much time it will take to see results

* The company must disclose the pitfalls of using a debt relief service

* Companies may not collect an up front fee

* Companies must successfully settle or negotiate at least one of the consumer’s debts and the consumer must make at least one payment to the creditor before any fees are paid.

* Fees must be based upon results. If a consumer has 5 debts and the company settles only one, they may not collect the full fee

* The rules covering telemarketing are expanded to cover calls made from the consumer to the company.

One detail not covered by the new FTC rules is the dollar amount of the fees to be charged for services rendered.

Since scammers continually work to find ways around regulations, consumers should be cautious. Not only will some for-profit companies pose as nonprofit companies, some will undoubtedly claim to be implementing government programs.

Thus, before you consider working with any debt relief company, do your research. Contact the Better Business Bureau, the FTC, or the Office of Consumer Affairs before signing a contract with any company. The Better Business Bureau has extensive files documenting thousands of consumer complaints about debt-settlement companies across the country.

Many consumers would be better off contacting their creditors themselves and trying to work out a repayment plan. Not only will they save money, they’ll have better assurance that their creditor won’t sue.

In general, debt relief companies will try to negotiate a smaller balance with creditors. If successful, they’ll collect funds from the consumer until they have enough to settle the debt entirely. This could mean a delay of several months, or even years before the creditor is paid. Impatient creditors may well bring suit before the balance is paid.

Mike Clover

Credit Card Debt and Government Awareness

Wednesday, October 13th, 2010

Credit issues & consumer debt have become such a problem in our country the government is now involved. If you have turned on the TV lately you might see a commercial about credit education from the US Treasury Department. You may have also seen various government sites promoting credit education. Here are some government education sites below.

Example sites:

This obviously is a sign we have big credit issues out there. So the government is getting involved with public awareness. The media is somewhat misleading, because you will hear that debt is down. Then you will hear it’s up… and so on… So who is really correct and what is the current situation with consumer credit debt?

Chuck Jaffe with recently reported that the data on consumer debt is really skewed. The reports between the Federal Reserve Boards G-19 and actual charge-off numbers with banks were off by 12 billion in the second quarter of 2010. According to the banks actually charged off $21.8 billion in bad credit card debt. So this basically means that consumers accumulated $10 billion more in consumer debt than the year before.

In most media publications you will read that consumers are reducing debt and saving for a rainy day. Well it’s not hard to see that consumers are just letting their debt go and hoping for a better future.

After all, when the big companies got a bail out, where was the bailout for consumer debt?

Anyways, back on topic here.

Nether less, the truth is out. Matters are not better with consumer debt and regardless of the government awareness programs; we need job creation to get rid of debt.

Until job creation and confidence in the market place is created, matters will not improve regardless of what the government is doing.

So the next time you read stats from the Federal Reserve Board or the media, make sure you do some research.

How does that saying go…..? by Benjamin Franklin.. “Believe none of what you hear and half of what you see…..”

Author: Mike Clover

Can Closing Credit Cards Lower Your Scores?

Tuesday, October 12th, 2010

The answer to the question is yes it can, but it doesn’t always lower your scores.  The reason it can lower your scores is because you lose the available credit in the calculation of what’s referred to as “revolving utilization.”  This is the relationship, expressed as a percentage, of your aggregate credit card balances as compared to your aggregate credit card credit limits.  You want this percentage to be as low as it can be.  Closing cards will result in a lower aggregate credit card credit limit figure, thus making it possible that your utilization percentage will increase and cause your score to decrease.

John Ulzheimer is the President of Consumer Education for and owner of  He is an expert on credit reporting, credit scoring, credit score ratings, and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry.  He is a weekly guest on FOX’s The Willis Report and is the credit blogger for the New York Times and  He has served as a credit expert witness in more than 65 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Can Collection Agencies Pull Your Credit Reports?

Monday, October 11th, 2010

The story is all too common these days.  Consumer applies for a credit card, consumer makes charges on said credit card, consumer stops paying said credit card.  This is the beginning of a chronology of events destined to end badly for the cardholders.  And while we all know that credit card issuers can report the performance of your accounts to the credit reporting agencies, did you know that collection agencies also have their own ‘credit report’ strategy?

Stuck nice and deep within the Fair Credit Reporting Act, the Federal law that mandates how your credit reports can be used, is section 604 entitled Permissible Purpose.  A Permissible Purpose, in English, is a reason or condition that allows another party to pull your credit reports from the credit reporting agencies.  And clearly listed within this paragraph is what gives collection agencies permission to pull your credit reports.  Per this section the credit reporting agencies are fully allowed to provide a credit report to any company that intends to use the information in connection with the collection of an account.

So now that we know collection agencies are allowed to pull your credit reports, what exactly are they looking for?  Are they buying your credit scores?  And what kind of inquiry are they posting?

What are they looking for? – Simply put, they’re looking for you.  Step one of any successful collection effort is to find the debtor.  And what better to use to identify your current mailing address than your credit reports?  This is commonly referred to as skip-tracing.   In addition to your current address they are also trying to determine if you have the capacity to pay the collection account.  If you owe them $1,000 and you have a credit card with a $10,000 credit limit, which will be on your credit reports, then you can afford to pay them.  You might not want to, but you can.

Are They Buying Your Credit Scores? – You bet they are.  In most cases credit scores are used to determine creditworthiness.  But in the case of a collection agency they are using a different type of credit score designed to determine the likelihood of you making a payment.  Think of it this way, if you took 100 people who owe you money and calculated their collection credit score you could focus your collection efforts on the people who score the highest and are most likely to pay you.  And, maybe just as important, you could ignore the lowest scoring people, who are the least likely to pay you.

What Kind of Inquiry is a Collection Inquiry? – I have bad news for this one.  Collection inquiries are hard inquiries and are seen by other creditors and credit scoring models.  This means whenever a collection agency pulls your credit reports everyone can see it.  I am in the middle of a lawsuit right now (as the plaintiff’s expert witness) where a collection agency pulled the credit reports of an alleged debtor 4 times in a six-month period.  It’s very likely that this group of inquiries lowered the plaintiff’s credit scores.

So what’s the best way to prevent a collection agency from pulling your credit reports and possibly lowering your credit scores?  Simple, avoid collections.

John Ulzheimer is the President of Consumer Education for and the author of the book “You’re Nothing But A Number.”  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry.  He is a weekly guest on FOX’s The Willis Report and is the credit blogger for the New York Times and  He has served as a credit expert witness in more than 65 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Pay Attention to this Anti-consumer Loophole in the CARD Act

Sunday, October 10th, 2010

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 is now fully in place. The third stage of reforms went into effect on August 22, 2010.

But mainstream news doesn’t tell the whole story…

The CARD Act should be good news for consumers with credit cards, and in many ways it is, but the news around the reforms has been slightly misleading. To understand all of the provisions, you need the rest of the story.

For instance, you heard that interest rates cannot increase in the first year after opening a new account. That’s true, unless you had a 6 month promotional rate that expired, or unless you have a variable rate tied to the consumer price index, or unless you become 60 days delinquent.

After the first year, your credit card issuer can immediately increase your interest on existing balances for all of the above reasons, and they can increase your interest rate on future purchases as long as they give you 45 days’ notice.

This is probably the most deceptive of the terms so widely touted and applauded.

The truth is, the new, higher interest rate will apply to purchases made only 14 days after they send notice. How they turn 45 days into 14 days is a puzzle whose answer likely lies in some fine print somewhere, but this misconception is a dangerous one for consumers.

It sounds as if the new rate will apply, but they can’t bill you for it until the 46th day.

I’d say that’s pretty sneaky. And, call me suspicious, but I’d say they’ve promoted it falsely knowing full well that it would get consumers deeper in debt – at high interest.

Think about it…

If you believe that your rate will not go up for 45 days, you just might decide to go ahead with that major purchase you’ve been putting off. After all, if it’s something you really need and can’t put off forever – like a new refrigerator because the old one is gasping for breath – you’d naturally assume that it’s wise to get it while your rate is still low.

You’ll be “safe” if you make that purchase immediately, but if you do it on day 15 after they’ve mailed you the notice, you might as well have waited 60 days, because you will pay interest on that purchase at your new high rate.

Notice that the calendar will begin turning on the day they mailed the notice. If it didn’t arrive in your mailbox until a week later, you don’t have much time. So check the date on the correspondence, not the date you received the notice.

Author: Mike Clover

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.