Finance Solution

Archive for August, 2009

Individuals with problematic credit histories often suffer unfairly from high mortgage, insurance, and car loan rates. On top of that, they have difficulty getting approved for credit cards. The whole situation can get extremely frustrating. Frequently, I get emails from consumers wondering what they can do to rebuild their credit. The first thing I tell them is to get a credit card designed for people with bad credit. The second thing I tell them is written in bold: READ THE FINE PRINT.

There are only a limited number of credit cards for individuals with bad credit. At first glance, many look the same. They all help build and rebuild your credit by reporting to the major credit bureaus on a monthly basis. They all provide you with the Visa or Mastercard you need to make many purchases. And they are all necessary evils that can save you thousands of dollars in mortgage and car loan rates in the future. However, you must read the fine print before applying for one of these credit cards, as they often charge high yearly fees, set-up fees, and even monthly fees. Here, I will examine a few examples of charges current “bad credit” credit cards bury in the fine print. Of the three major cards I will examine, only one stands out as consumer-friendly.

“Bad Credit” Credit Card #1: This credit card charges a very low interest rate for an unsecured credit card. However, your first fine print glimpse reveals that there is a one time setup fee of $29. Not too bad. So far, since the next charge is a one time fee of $95. So far, we’re up to $124 in expenses. That’s got to be it, right? No. Add in another $48 for the annual fee and $6 per month in account maintenance fees. That’s brings the cost of your new credit card to $244 the first year, and $120 each additional year. This is no small change, and a card such as this should be considered only if you cannot be accepted for a better unsecured credit card for bad credit.

“Bad Credit” Credit Card #2: This credit card charges a very high interest rate for an unsecured credit card. This can’t be good. But the setup fee is only $29. Maybe this card isn’t so bad. There is that pesky monthly maintenance fee of $6.50 per month which brings the cost of this unsecured credit card to $107. Maybe we’ve found a bargain. Not quite. The annual fee is a whopping $150. Yes, $150 every year. That not only brings the initial cost up to $257, but you will also pay $228 a year just to maintain the credit card. There has to be a better offer.

“Bad Credit” Credit Card #3: This credit card is available as both a secured and unsecured credit card, based on the issuer’s review of your credit history. The interest rate is average, even competitive. Now, the fine print reveals that there is a one time setup fee. However, based on your credit, this fee can be as low as $0 or as high as $49. So far so good, especially if your credit is not that bad. But, there must be a huge annual fee. Not exactly. The annual fee for a secured credit card is only $35, and for an unsecured credit card, this fee can be as low as $39 or up to $79. So far, the cost of this card ranges from $35 to $128. Now its time for the monthly maintance fee. This one has to be huge. Or not. Its $0. That means the most you could possible be charged to obtain this credit card is $128, about half of what competing cards are charging.

Clearly, there are substantial difference between “bad credit” credit cards. Of the three offers we have examined, only one doesn’t take you to the cleaners. In fact, “bad credit” credit card #3 provides great value. All positive changes to your credit history and credit score will translate into lower loan rates, lower credit card interest rates, lower insurance rates, and ultimately, thousands of dollars in savings. The path to rebuilding credit has its costs, but in the long term, rebuilding your credit with a “bad credit” credit card is the fastest and most cost-efficient way to correct the often unfortunate circumstances that have damaged your credit in the first place.

Nearly 40 percent of women aged 30 to 55 are worried about spending their retirement years at or near the poverty level because they cannot adequately save for retirement, according to a recent survey.

The National Women’s 2005 Retirement Survey found that women of color are most concerned about their ability to save for retirement. While 53 percent of women of color report that they expect to live at or near the poverty level in their retirement years, just 33 percent of all men expect to face the same dilemma.

The survey was commissioned by the Heinz Family Philanthropies under the direction of Teresa Heinz, founder of the Women’s Institute for a Secure Retirement and chairman of the Heinz Family Philanthropies.

Here are some of the survey’s other key findings.

* Fifty-two percent of women expect to continue to work once they reach retirement age, including 57 percent of Hispanic women.

* Fifty-four percent of women have little to no money left to save for retirement once they pay their bills, rising to 62 percent among Hispanic and African-American women.

* When asked, “At the present time, do you feel that you are saving enough money for your retirement?” 62 percent of the women surveyed answered “no.” Among women of color, 74 percent of African-American and Hispanic women said they are not saving enough.

* When asked about barriers to saving for retirement, African-American women are more than twice as likely as white women to cite “financial responsibility for adult children or grandchildren” as a reason for not saving for retirement. Of the African-American women supporting their adult children or grandchildren, 63 percent report spending between $100 and $1,000 on them each month.

The Heinz Family Philanthropies commissioned this survey with the Christie Foundation, the Barbara Lee Foundation and others to identify the critical retirement savings issues facing women and to use the data to develop ways to help women secure their financial futures.

The survey polled 1,700 adults and has a margin of error of plus or minus 2.4 percentage points.