Tips to Avoid Late Fees

March 27, 2008

With late payment fees of $39 or more, credit card companies make millions of dollars a year just because we are a little late in making a payment.  What can you do?

The most important thing is to make your payment before the due date.  You will save on the late fee and it will help your credit score, which in turn will save you more money in your future lending needs.  Here are a few tips to help keep you on track and avoid paying late fees:

1.  Be aware of the rules of your credit card.  For example, many credit cards offer low rates, but if you are late by one day not only will you pay a late fee, but your rate will jump up, meaning it will cost you more money!

2.  If you are paying by mail, make sure you send the payment and payment coupon, at least a week before the due date.

3.  If you are paying by online bill payment, schedule your payment 2 or 3 days before your due date, to ensure that your payment is credited on time.

4.  If you find that your credit card payment comes at an inconvenient time, ask your credit card issuer to change the due date to assist you in managing your money.  Most credit card companies would be able to do this for you.

These are just a few common sense tips to help you manage your money and avoid paying fees when you don’t have to!


Give Your Debts a Financial Health Check

March 21, 2008

Woman Workout

How healthy is your financial situation?  Here’s how you can determine your financial health!

A debt-to-income ratio is a measure of financial stability calculated by dividing monthly minimum debt payments by monthly gross income.  Many lenders use debt-to-income ratios to help determine whether a borrower is overextended or not. 

This calculation gives a straightforward depiction of your financial position.  Typically, the lower your ratio, the better handle you have on debt.  Here’s how you can calculate your debt-to-income ratio:

First, determine your debt

* Collect your most recent credit billing statements for current balances on all loans and credit cards
* Outline your total monthly bills using two columns: bill type (such as car loan, mortgage/rent payments, credit cards, and so on) and monthly payment.  Do not include bills such as taxes and utilities in this list.

* Add up the total for all of the monthly payments listed.

* Calculate your monthly before-tax income.  If you receive a paycheck every other week, as opposed to twice a month, your monthly gross income is your before-tax income from one paycheck times 2.17.

* Your monthly debt-to-income ratio is calculated by dividing your monthly debt payments by your monthly income.  For example, someone with a monthly income of $2,000 who is making monthly payments of $500 on loans and credit cards has a debt-to-income ratio of 25% ($500 / $2,000 = .25 or 25%).

What range your debt-to-income should be is subjective.  But, generally speaking if you keep it below 35%, you should be in good shape.  And, remember – the lower your debt-to-income ratio is – the better!

Take a look at your debt-to-income ratio, and look for ways to reduce that percentage!


When is a ‘Free’ Credit Report, Not Really Free?

March 13, 2008

On the surface, it seems logical:  You type the phrase “free credit report” in a search engine to access the Web site that offers free reports–which you’re entitled to, by law.

But here’s the catch:  Your search results might not drive you to the one legitimate Web site operated by the Federal Trade Commission.

Q:  What’s the danger in going to the wrong Web site to get your free credit report?
A:  These sites hook you with offers of so-called free credit reports while aggressively marketing other services.  Go to any site other than annualcreditreport.com and you may wind up paying needlessly for services you don’t want.  Or, you could pay $75 for a credit score that otherwise costs $8 to $12.  In one example, a site advertised a “free credit report” but failed to disclose adequately that, if you signed up, you automatically would be enrolled in a credit-monitoring program and charged $79.95.  Many disclosures are in the fine print and easy to overlook.

Q:  What are some sites to stay away from?
A:  The one most heavily advertised is freecreditreport.com.  Other variations include free-credit-reports.com, freecreditreportsinstantly.com, thefreecreditreportsource.com, creditreport.com, creditreporting.com, and nationalcreditreport.com.

Q:  Which site allows access to free credit reports without trying to sell unnecessary services?
A:  Go to annualcreditreport.com, which was established after the Fair and Accurate Credit Transactions Act of 2003 gave consumers the right to obtain–once a year–a free credit report from each of the big three credit reporting agencies:  Equifax, Experian, and TransUnion.  Or, you can call toll-free 877-322-8228.

Q:  Should I order the three annual free credit reports all at once?
A:  You can order them all at the same time.  A better strategy is to stagger your requests throughout the year.  Order a free report from one agency, then wait four months and order a report from a different agency, then wait another four months and order the third report.  After a year, start the process over again.  That way, you’re more likely to detect errors–or even fraudulent accounts set up in your name–than if you wait a whole year to look at all three of your reports.

Another suggestion is to visit any branch of First New York Federal Credit Union.  We can help you understand your credit report and score, and make recommendations on how to improve your score – and it’s REALLY FREE!


Common Credit Report Mistakes Could Cost You

March 7, 2008

If you haven’t requested a copy of your credit report, there are many reasons why you should.

A 2004 study–the most recent available–by the National Association of State Public Interest Research Groups revealed that almost 79% of all credit reports contain some type of error.  One-fourth of credit reports contain such serious errors that those individuals could be denied credit or be charged a higher interest rate.

What are the common errors?

1.  Misspelled names
2.  Wrong Social Security numbers
3.  Inaccurate birth dates
4.  Inaccurate information about a spouse
5.  Out-of-date address
6.  “Closed” accounts listed as “open”
7.  The same mortgage or loan listed twice
8.  Absence of major credit, loan, mortgage, or other accounts that could be used to demonstrate creditworthiness

What should you do?  Review your credit report, at least annually, for accuracy.  If you uncover an error, contact the credit reporting agency to have it corrected.  On an annual basis you can get a free credit report at www.annualcreditreport.com.  In between, First New York members can have their credit report run at no charge, to make sure your credit report is accurate.  Visit any branch office for more information.