Despite the claims made by financial advisors and planners, in reality there is no real possibility of having the perfect portfolio that performs to your expectations. Most portfolio planning today uses some variation of the mean-variance optimization process invented by Harry Markowitz, and though this system does make sense, in reality it leaves a lot to be desired. This is because mean-variance based systems are based on one very specific circumstance that is based on the exact volatility, correlation, and returns you stipulate when setting up the calculation.

Since no one can effectively guess at future volatility and performance, these calculations are invariably wrong. The subsequent performance can be well below expectations, or even worse than just taking random guesses at the proper asset allocation.

Stocks versus bonds

Historically speaking, stocks always out perform bonds over a long period of time, but stocks are also more volatile, meaning that there is a greater risk involved. Young investors, people with more fifteen years to go before they intend to retire, need active capital growth in their 401(k) plans and also have enough time that they have the time to recoup any losses from dramatic downturns or crashes.

Although it looked very bad at the time, the stock market crash of September 2008 did not amount to a permanent blow to most young investors because they still have a long time to go before they access their 401(k) funds and much of the value lost has already been regained as of November 2009. Older investors who are planning on retiring within the next fifteen years have much less time to compensate for major losses, so they should probably invest more in bonds than stocks.

What stocks should you invest in?

There are many different types of stocks to choose from, though many 401(k) plans limit their participants to investing in mutual funds holding a basket of stocks. More often than not, these mutual funds are a better idea for people lacking an intimate knowledge of the market because they are managed and operated by professionals who have an intimate understanding of the markets.

Not only do most 401(k) plans limit your stock options to mutual funds, they also tend to limit the number of mutual funds available as well. Assuming this is the case, the best idea is to research those funds that are available and trace their performance over set period of time. Do not just look at individual performance, but look at compared performance. If two or more funds tend to balance each other out – one going up when the other goes down – consider invested in both in equal amounts. Examine your options closely and look for slow, even growth as opposed to the returns made by individual funds by themselves.

What bonds should you purchase?

As is the case with stocks, most 401(k) plans also limit bond holding to funds as opposed to separate issues. Further, many 401(k) plans are tilted in favor of stocks and provide fewer bond options to choose from. By its very nature, the bond market is trickier for non-professionals to understand, so going through a bond fund is probably a better option for most 401(k) holders anyway. That being said, the core of your bond holdings should probably be a total bond market index fund as opposed to many of the more specific bond funds that might be available. One thing that should be taken into consideration in the current climate is the continuing decline of the dollar, which will likely result in increased inflation. Using a mix of foreign and high-yield bonds as well as Treasury Inflation Protected Securities (TIPS), can offset inflation related losses, but should only account for ten to twenty percent of your bond allocation.

How many funds should you hold?

Many people, especially those with a lot of funds to choose from in their 401(k) plans tend to equate holding more funds with better diversification. However, this is not really the case at all; the issue is not how many funds you hold but what those funds invest in and whether or not your funds balance each other. As a general rule of thumb it is better for most people to hold as few funds as possible because the more you hold the more complicated your planning and tracking becomes. While savvy investors with a good understanding of the markets may make more money by using many different funds, for most people using their 401(k) to save for their retirement, holding more funds just complicates the process.

Stop playing tug-of-war with your credit card company.

You are overwhelmed with debt. You have eight credit cards that are all maxed out. Making the minimum payments is causing much financial stress, and you are not making any headway on getting out of debt. What can you do? Get help, get debt counseling, find someone who can help you with the necessary information to manage your debt.

Today, many people feel that securing a debt consolidation loan is the best option. A debt consolidation loan is a single loan, which pays off other loans and specific lines of credit. It’s likely that you have seen advertisements, and the claims that are made by these firms seem to have a measure of validity. Are debt consolidation loans a good idea for you? Let’s take a look and see if a debt consolidation loan is right for you.

Debt consolidation can decrease stress

A major benefit of a debt consolidation loan is that you are obligated to make one payment instead of many. For people who mismanage their bills, this can be a great stress reliever. Obviously, managing your bills with one payment makes managing your finances much easier.

Save money with lower interest

Secondly, most debt consolidation loans will provide the borrower with reduced interest rates. The most common type of debt consolidation loan is generally a home equity loan or second mortgage. Because a mortgage or home equity loan is a secured debt, the interest rates will be significantly lower.

With a secured loan comes the added benefit of a lower monthly payment. This perhaps is the best benefit to securing a consolidation loan. If you are like most families, you have a certain amount of money every month. That money is distributed to various creditors and expenses. If the total sum of that money is lower, obviously you will realize the benefit.

Simplify your financial situation

The benefit of having one creditor means that if you do suffer financial difficulties you will deal with one creditor instead of numerous phone calls from a number of different creditors. If you have ever experienced creditor phone calls you most certainly will count this as a benefit.

If your debt consolidation loan is a home-equity loan, you will also get a tax break each year. While credit card interest rates are not typically deductible, the full interest amount is deductible on home-equity loans. Subsequently this is an added benefit for you.

Don’t be too hasty

The negatives to consolidation loans are that it is easier for you to get back into debt. With more money left over at the end of the month the your credit cards all freed up, you may end up in the same spot you were when you took out your debt consolidation loan.

The most obvious negative to a consolidation loan that is secured with a home is you run the risk of losing that home. Because your consolidation loan is backed by your house, failure to make payments in a timely fashion could result in foreclosure.

Times should be a-changin’

Consolidation loans serve as a remedy for many people to relieve financial difficulty. For others, it may lead them to more financial difficulty. Consolidation loans are not for everyone, and everyone should evaluate their situation and know their level of fiscal responsibility.

The bottom line is, if you have mismanaged your finances in the past, you are at risk to do so again unless you make some significant changes. Weigh your options carefully, and plan accordingly.

Simpler, golden times for Michael Jackson. Will he and Shmuley Boteach find debt relief soon? (Photo: flickr.com)

Over the years, we witnessed the eccentricity of Michael Jackson. From his constant changing appearance and repeated debt relief missions to his legal issues, we ask ourselves the question: Why did he do it? What lead MJ to go that far? For instance, we remember him dangling his son over a balcony, the constant wearing of surgical masks, his Caucasian/Hispanic children, and him wearing pajamas to his court date. Now that Jackson is dead, it’s morbidly fascinating to see how many of his secrets float to the surface, and which person provides the fishing pole and bait, so to speak.

Shmuley Boteach Documents Time with Jackson

In light of celebrity Rabbi Shmuley Boteach’s “The Michael Jackson Tapes” and new book on the market, Jackson isn’t made to appear realistic, or even human. He’s made to seem even stranger. During 2000 and 2001, Jackson kept in contact with Boteach on a daily basis while he explored Judaism. The two hit it off, considering Boteach complimented Jackson by calling him very handsome and even compared him to another great pop star, Britney Spears (if you can call that a compliment). Jackson then assisted the rabbi by speaking at his forum at Oxford University and revealing the clandestine information that would later form Boteach’s book.

At first read, you’d assume the book should shed light on lots of Michael Jackson’s awkward moments, but it never delivers on that hopeful expectation. In fact, the tapes raise certain questions that could never be answered. Here are four items things left me baffled after reading this book:

MJ’s Shrine to Shirley Temple (True or False?)

In the book, it is said that Michael Jackson had an unusual obsession with Shirley Temple. Jackson said an unidentified guy would travel with him, and the man’s sole responsibility was to set up a room-sized shrine to Shirley Temple before Jackson arrived. This leads a person to ask, “What was up with Michael Jackson’s fixation with children in general?” Remember the days of Jackson hanging out with Emmanuel Lewis and Macaulay Culkin? What made their relationship so cryptic and mysterious was that neither one divulged personal details of their friendship.

Michael and Janet

Boteach’s book never really discusses the true relationship between Michael and his sister, Janet. Some people have been questioning if they really did or didn’t get along. Numerous rumors, as well as Michael Jackson’s confessions, state that he did unfortunately pester Janet. Perhaps this is understandable in light of the treatment Michael received from his father and brothers.

One subject that wasn’t addressed was Janet’s vocals being turned down in the mix on their duet, “Scream.” As usual, rumors were spreading about Michael seeking debt relief right before the recording of the song. People began questioning if Michael tried to sabotage his sister’s solo for him to shine brighter for more album sales. It’s evident that Janet looked up to big brother Michael and wanted to follow in his footsteps. However, Michael Jackson didn’t seem interested in helping her. We could chock this up to his talent simply being greater than hers, or we could leave the subject unanswered as “The Michael Jackson Tapes” does.

MJ: Straight or Asexual?

There have always been questions centered on whether Michael Jackson was actually attracted to women or not. Some people assume that he was merely pretending, but with so little facts to back up his claim of heterosexuality, what is true and what is false? Boteach, however, doesn’t believe that Michael was gay at all, and provides multiple instances where Jackson showed interest in the opposite sex. Katie Couric, Princess Diana, Brooke Shields and Tatum O’Neal have all spent quality time with Michael, though he tells Boteach that he was never intimate with these women because of his bashfulness. Jackson admitted that he’s never had to ask a woman out, because they’ve all asked him first. Alas, the question of Michael Jackson’s true sexual nature will go unanswered in this lifetime.

Michael vs. Madonna. Why the “Beef?”

No one knows or has yet admitted what events transpired between Michael and Madonna to make the King of Pop say that she is “just not a nice person.” He left his comments at that, but the unanswered question is why. What happened between the two to make Jackson, someone who claimed to not dislike anyone in the world, find something objectionable about Madonna? And what made Michael vehemently claim that she was in love with him? The world may never know.

Boteach Provides Interesting Entertainment

There might be some individuals who are bent on glorifying the material Boteach has put together, simply because it has the names Michael Jackson and King of Pop attached. But information that is worth sharing and paying attention gives something to the reader or audience. I’m not 100 percent sure what “The Michael Jackson Tapes” uncover, but maybe all they’re meant for is what Michael Jackson himself gave to us: pure entertainment. And with the entertainment being distributed through Michael Jackson’s branded name, debt relief might forever be a thing of Jackson and Boteach’s financial past.

Since the stock market crash of September 2008, most investors with significant portfolios have repeatedly reshuffled and redistributed their holdings in an effort to minimize losses. The chaos that has followed has resulted in many portfolios being significantly imbalanced and weighted in ways meant to deemphasize the stock markets. However, since March 2009 the market is up some 60% and it looks like this trend is likely to continue despite the lingering effects of recession on the nation as a whole.

The international nature of the recovery

The current market recovery is being driven primarily by international factors: the increase in U.S. exports as well as the successful stabilization of many foreign markets, which present better investment opportunities for domestic institutional investors. Even if the general economy remains sluggish or lapses back into recession in 2010, the markets seem poised to perform reasonably well since many leading companies are taking advantage of international opportunities to maintain their profitability.

Slower rates of return

Although the stock and bond markets both seem likely to continue gaining ground, most analysts agree that the growth will be much slower than it was before the crisis. For stocks, few are predicting a return to double-digit returns, with most estimates being placed in the five to six percent range throughout 2010. Similarly, it is predicted that the return rates for bonds will be in the range of three to five percent. U.S. Treasuries will probably do worse, along the lines of two to three percent.

Don’t forget the bonds

With stock markets doing so well in recent months, your portfolio may be somewhat tilted in favor of stocks. However, the slower growth projected for 2010 as well as the likelihood of more stock market volatility means that you should probably be giving bonds more weight in your portfolio. The emphasis should be on highly rated short- to mid-term bonds, ones that will mature within five years or sooner. Also, you should seriously consider Treasury Inflation-Protected Securities (TIPS) to minimize the potential effects of inflation on your holdings.

International alternatives to TIPS

For American investors, Treasury Inflation-Protected Securities are most accessible through TIPS bonds, but for some investors another method is to buy securities that are denominated in other currencies. All indicators suggest that the dollar will continue to decline in 2010. Losses resulting from the decline can be offset by investing in assets denominated in other major world currencies, especially the Euro. The European Central Bank appears to be committed to keeping the Euro strong and stable, so the Euro is a good hedge.

Keeping your portfolio properly balanced

A number of factors, including a decrease in U.S. exports and declining foreign investment, could lead to market losses in 2010. The savvy investor must be willing to reshuffle his or her portfolio as needed to maintain a profitable asset allocation structure. However, for the time being, it seems that the U.S. markets are likely to continue their overall positive performance, albeit at a slower pace than many would prefer. Therefore, it is prudent to ensure that your portfolio is arranged to take advantage of this.

Payday loans mean that surprise expenses will never leave your budget in a bind. (Photo: Wikipedia.org)

Payday loans are quick short term loans that can be used for urgent situations such as paying off medical bills, car repair and more. The loan amount has to be returned on the day you receive your pay, and the interest rate is fixed by the lender. Payday loans may sound advantageous for meeting unexpected or urgent financial needs, but there are also some disadvantages that cannot be ignored.

Payday Loans Help with Unplanned or Unpredicted Money Requirements

Payday loans are instant loans, as you do not have to wait long to get this loan approved. Thus, the convenience of this loan system is that you can instantly use the loan money to meet your unexpected emergencies. The process of applying for this loan is fast and simple. You just need to fill out a short form and provide documents that include your general information such as your name, address and banking details.

A Few Preventive Steps to Make the Most of Payday Loans

1. Since you are required to provide your bank details and credit details to the lender, it is important to always check the credibility and the reputation of the lender you are going to deal with.
2. It is better to research a bit to find out the interest rates and compare the rates with what your lender is charging. Try to search for around three or four lenders (or even more) and compare their services to get the best deal.
3. Make sure that there are no hidden charges or terms included while applying for a payday loan. Always read the terms and conditions of the lenders providing you the payday loan in order to avoid these charges.
4. It is advisable to plan your loan repayment while applying for payday loans. Since the entire loan amount is to be returned on your next payday, you will need to plan this before so that you will avoid any extension on repayment as this can further burden the upcoming month’s expenditure and also can add to your increasing interest rate.
5. Payday Loans can be an easy solution against unexpected expenditures or monthly needs but we cannot ignore the fact that these loans come with quite a high interest rate.

Avoiding the Pitfalls: Using Payday Loans Well

1. Payday loans are not the best solution for every problem. These loans should not be taken for just any reason, such as fulfilling your luxuries, shopping for fun and so on.
2. You must search properly and go through a list of lenders in order to get the best deal in interest rates. The more you search, the better your chances of finding a good lender providing you with suitable interest rate.
3. You can deal with money shortage due to unplanned monthly budget or unexpected financial burdens with a payday loan easily. However, to avoid any more financial burden from your payday loan, you must have complete knowledge of payday loans. You must know the pros and cons in order to utilize them properly and safely.

Apply for Payday Loans HERE

In what universe does a one percent check cashing fee exceed a $35 overdraft fee for overdrawing a checking account by $.01? (Photo: flickr.com)

In the 1960s and 1970s, many of America’s largest banks decided to go “where the money is” by pulling their branches out of the inner cities and focusing more on affluent areas. It may be sheer coincidence that infamous bank robber John Dillinger once gave that response to the question of why he robbed banks, but I’ll leave that for you to decide. Only in recent years has that trend begun to reverse.

What this exodus created was a growing population of “unbanked” individuals and families, people who depended upon everything from shoe boxes and coffee cans to store their money to check cashers for paycheck services and payday lenders for emergency cash. The traditional view society took of such people who depended upon check cashing and payday lending was that they were the “unsophisticated poor.” However, re-examination of this idea is advisable, as the truth may be that the unbanked are more knowledge about what the banking establishment is foisting upon consumers that we’re willing to admit.

Avoiding the World of High Fees

A recent New York Times article explores the phenomenon of why so many people are resorting to alternative measures rather than depending upon traditional checking accounts. While the journalist fails to produce any conclusive reasons, it doesn’t take much to read between the lines – the cracks in society’s pavement, if you will: overdraft fees of $35 per infraction for a checking account mistake are exorbitantly more expensive than a check casher’s fee of a few percentage points to cash a paycheck.

Jose Abreau Says “No”

A 37-year-old native of the Dominican Republic, Abreau denies the bank representatives who come to his New York coffee shop to recruit him into the world of traditional banking. He doesn’t see the point, as what money he earns beyond his immediate needs is sent to his family back home. He does this in spite of the fact that banks are credit unions are within easy reach. However, so are check cashing businesses.

A recent Pew poll indicates that 86 percent of licensed check cashers in Manhattan are located closer than four blocks from a bank or credit union. People like Jose Abreau actually walk past the banks and credit unions to get to the check cashing businesses and payday loan stores. Perhaps this is because many immigrants come from countries where friends or relatives lost money due to bank collapses or corruption (where there was no FDIC to step in and insure the deposits), but in reality there are a wide variety of reasons. Language barriers can exist, but community outreach groups are available to assist. Financial education is available for those who may not understand how traditional banking works. However, the way many banks treat consumers stands at the top of the list as to why someone would not want to rely upon the banking monolith.

Not So Unsophisticated, Are They?

Millions of Americans live from paycheck to paycheck. That’s a fact that the current recession has made painfully clear. Yet this does not mean that these consumers who are just making it are unsophisticated. On the contrary, they’re educated enough to see that if a surprise expense or miscalculation dips their checking balance into the red, the resulting overdraft fees are unconscionable. Rather than having such an organization hold their money hostage, many people feel more comfortable with check cashing, where all the money they have is right there in their hands. Check cashing fees are much lower than any overdraft fee or minimum balance penalty.

How Much Lower?

Consider this. Many banks extend customers the “courtesy” to use ATM machines to withdraw more than they actually have in their accounts. This comes with a heavy – and damningly silent – penalty. We’re talking 200 percent on overdraft fees or more. How is this no legal fraud? How can this be advertised as a courtesy? Is it any wonder that check cashing customers don’t want anything to do with such institutional treachery? If banks would charge no overdraft fees and simply not allow purchases that would create overdraft to go through, they’d probably draw more of a customer base. But banks depend upon overdraft fees for much of their operating profit, so it’s clear that they have little incentive to stop.

Imagine this scenario if you don’t already understand just how disillusioned some are with banks. If a working poor family bounces a single check – let’s say it’s for a mere $3 – there’s an overdraft fee of $35 or more. That could be a weekend’s worth of food for hungry children, plus diapers and subway fare. If the family doesn’t keep their balance above a certain figure, they could be paying even more. Yes, if overdraft fee policies were different, I’d be telling a different tale. And some banks and credit unions do offer free checking. But not everyone meets the credit or documentation requirements, or their local bank many not offer the service. For the transportationally challenged, that means taking what’s closest to home.

What Carrot Could Banks Possibly Offer?

Banks are crying out for customers in this recession, aren’t they? What kinds of incentives could they offer to make people want to use their services? Aside from being able to receive direct deposit or develop a credit history, it seems that people would like to earn a decent amount on their money. But savings accounts that offer .0125 percent interest don’t cut the mustard, let alone the artificial buttery spread. It’s better than nothing, but not by much. Factor in the fees and penalties and traditional banking can feel as good as a sock in the eye.

Hiding from “The Man”

Those who avoid traditional bank accounts for the services of check cashers may be hiding, too. I mention this not to justify the practice, but it’s something of which we should be aware. Without a checking account, bill collections and courts have one less option for skimming cash in the event that the consumer owes money. Of course wage garnishment is still a possibility. And what about those people who avoid traditional banking because their income is under the table? Being able to cash in on certain welfare benefits is a powerful lure, which could explain why some consumers don’t feel the compulsion to put their money in the bank where it can be detected so easily.

Not Such a Rosy Picture for Most

One reader commented on the New York Times article in a manner both poetic and bitingly real:

O, these great unwashed masses, unwilling to strap themselves to our glorious consumer banking system where they can know the joys of ATM fees, NSF fees, account maintenance fees, account research fees, etc. , all while enriching themselves on the 1.8 percent interest rate! What is wrong with these people? Don’t they want to be part of the American Dream?

Avoiding traditional banking is second nature for many, but steering clear of it entirely can have its disadvantages. Check cashing is an attractive option for those who can ill-afford the predatory practice of overdraft fees. Unfortunately, that would include most people. Many who have money do not understand just how much the deck is stacked against those with so little. Bank presidents think in terms of profits; bank customers hope not to run afoul of bank policy, as they have become increasingly unprofitable for consumers with each passing year.

Consumers are using payday loans and their tax refunds to pay necessary bills. In the past, taxpayers saw their tax refunds as additional money to do something fun with. Whether it was a vacation, a new TV or a down payment on a vehicle, people used the money for unnecessary items. This year a new poll is showing that most Americans are looking forward to paying off bills and expenses with their tax money. In fact more than 54 percent of those receiving refund money intend to either pay credit card bills, utility bills or other housing-related expenses. This is up from the 35 percent who were in the same position just one year ago.

This news is no surprise to analysts who have spent months studying the economy and the recession. They predicted long ago that people’s attitudes toward spending would be conservative at best. Michael Fortman, economist for Smartmoney.com, stated, “Even with big sales and discounts, many Americans are going to be very cautious going into the future. … They have seen the recession and what it did to many families and they don’t want to get caught up in the issue later on down the road.”

Taxpayers are trying to stretch their budgets

The Obama administration wants this year’s refund money to be fueled back into the economy. Their hope is that the added money will spur the economy out of a recession quicker. However, with the loss of more than 5 million jobs since the end of 2007,this is a difficult task. Add that to research showing the people are focusing any increase in funds to necessary bills, and the result is less discretionary spending. As Fortman concluded, “It makes sense to be frugal when the economy is in such bad shape, but it hurts the economy when everyone does it.”

Taxpayers are trying to stretch their budgets, using payday loans, extreme budgeting, thrift-store shopping and bartering to meet their everyday needs. One mother from Sarasota, Florida stated, “For the past year and a half, I have been trading clothes with other mothers at my son’s school. Without that bartering, it would have been next to impossible to keep our five children clothed.” Creativity is the new way of 2009, as consumers are eager to find new ways of saving money.

Government interventions with the stimulus plan

The question remains whether the government’s intervention with the $787 billion stimulus truly served its purpose. It’s going to be difficult to say whether it did because of the unknown.

Critics maintain that the stimulus’s mixture of government spending and tax cuts benefited large businesses, but did little for immediate relief in the lives of American families. Harvey Leven, lawyer in New York, stated, “The little guy is always down. … Sure, the government extended huge packages to corporate America, but taxpayers — the ones who in the end will pay for the stimulus — are left in the cold. They have to fend for themselves suffering through unemployment, rising interest rates and lowered home values.”

Americans wonder about the future

In the end, many Americans are wondering where the post-recession life will leave them. They are being resourceful when paying bills, using payday loans and tax refund money to cover the costs. Everyone hopes, though, that their return to normalcy will be quick. Hopefully the economy will level itself out and allow people to return to normal spending.

Apply for Payday Loans HERE!

This should be considered a deadly weapon, in light of banks' runaway abuse of overdraft fee policies. (Photo: flickr.com)

Overdraft fees across the board have attracted the interest of Congress lately. Many have said that the way in which overdraft fees are assessed by banks and credit unions is predatory and dishonest. Charging the same high fee for each infraction – even if is for 1 cent – and then charging an additional fee for each day a customer’s account is overdrawn makes it nearly impossible for  already cash-strapped consumers to raise their heads above water.

In a recent case before California’s Supreme Court (Paul Miller et al. v Bank of American, NT & SA No. S149178), the ruling from Kruger v. Wells Fargo Bank (1974) 11 Cal.3d 352, 356 [113 Cal.Rptr. 449, 521 P.2d 441] (Kruger) was put to the test for Paul Miller, a retiree who depends upon Supplemental Social Security for his income (since 1992). Funds are directly deposited into his Bank of America checking account (since 1994). At the time that the direct deposits began, Miller was promised by Bank of America employees that those deposits would “be safe from debits or charges” unless he authorized otherwise.

But Overdraft Fees Came Calling

First, Bank of America accidentally deposited $1,799.83 in Miller’s account. They realized the error and reversed the credit, but not until Miller had made some charges. B of A also failed to give Miller notice of the deduction. The result was that his balance dipped below zero. Overdraft fees followed, which depleted a social security payment. For reference, Bank of America’s NSF fees at that time ranged from $14 to $32 per transaction. Up to five NSF fees could be processed against a checking account per day, with a maximum of $160 in overdraft fees allowed.

Miller pointed out that depleting his social security payment made it impossible for him to pay his rent or living expenses. Yet Bank of America told their long-time customer that he’d have to repay the part of the erroneous credit that he’d spent, but that he “could open a separate checking account for his SSI deposits that would not be used for repayment.” Miller did this, but a few months later the bank twice dipped into this new account to cover the overdraft fees. Both times Miller complained and the money was credited back to him.

And the Same Thing Happened Again

Although he did so infrequently, Miller occasionally overdrew his checking account. Each time, Bank of America hit him with overdraft fees that automatically deducted from his social security income. Bank employees who’d previously assured Miller that no deductions could be made from social security deposits without authorization now claimed that such funds received no “special treatment.”

Interestingly, during trial, a Bank of America executive responsible for checking products at Miller’s branch testified that Bank of America “could develop the capability to identify accounts into which public benefit funds are directly deposited, and could bypass charging NSF fees to those accounts.”

Why Didn’t Bank of America Take the Customer-Friendly Route with Overdraft Fees?

The same executive testified that “in order to prohibit certain account holders from overdrawing their accounts (which would eliminate the Bank’s need to recoup overdrafts or charge NSF fees), the Bank would have to ‘bounce’ more checks, withhold check deposits for the maximum allowable period of four days instead of one or two days before the Bank would make the funds available for withdrawal, eliminate point-of-sale purchases (but not personal identification number (PIN) transactions), and restrict automated teller machine (ATM) withdrawals from non-Bank ATMs.” The executive also stated that larger transactions would be processed before small – regardless of when the transactions occurred – because Bank of America felt larger transactions were “more important.”

More Important for Whom?

Any consumer who has felt the barbed sting of overdraft fees knows that the reordering of transactions is a way that banks stack the deck against consumers. Bank of America claimed in the Miller case that “the Bank’s practice of processing larger transactions before smaller ones results in the same total amount being overdrawn from a particular account.” Yes, but as Mr. Miller’s team clarified, doing so “increases the number and amount of NSF fees imposed.”

Miller would have none of that. His complaints alleged such things as “fraud, negligent misrepresentation, and intentional infliction of emotional distress, as well as violations of Code of Civil Procedure section 704.080; the Consumers Legal Remedies Act (CLRA), Civil Code section 1750 et seq.; the unfair competition law (UCL), Business and Professions Code section 17200 et seq., and the false advertising act, Business and Professions Code section 17500 et seq.” That’s a lengthy list of charges. How would Bank of America fare?

Nearly $300 Million at Stake in Overdraft Fees Alone

The California trial court found that fraud, negligent misrepresentation, CLRA, UCL, and false advertising claims were all viable issues that could be tried. A class was even certified that included “[a]ll California residents who have, have had or will have, at any time after August 13, 1994, a checking or savings deposit account with Bank of America into which payments of Social Security benefits or other public benefits are or have been directly deposited by the government or its agent.”

By the numbers, Bank of America had 1,079,414 such accounts in 2003. They received more than $800 million in government benefits via direct deposit. From January 1994 to May 2003, Bank of America took “at least $284,211,273 in NSF and other overdraft fees from accounts containing Social Security direct deposits.”

What Did the Jury Find in the Miller Case?

The jury found that Bank of America violated the CLRA by “falsely represent[ing] that it ha[d] the right to use Social Security funds from direct deposit accounts that receive government benefits including Social Security funds to pay overdrafts, insufficient fund[s] fees, . . . and money claims it has against class members.” Thus, the jury awarded $75,077,836 in compensatory damages for the class action. Each member also received $1,000 in statutory damages. Finally, Miller received $275,000 for emotional distress.

However, the Court of Appeal later reversed the trial court’s judgment, holding that Kruger did not apply. This is apparently still under review at this time.

What is the Kruger Argument?

Essentially, Kruger stated that a bank “may not exercise its right of setoff against deposits which, derived from unemployment and disability benefits, are protected from the claims of creditors.” But the Appeals Court found that the 1974 Kruger ruling “only applied to cases in which government payments were redirected to pay debts outside the bank.” Overdraft fees, by that logic, are internal debts.

The Office of the Comptroller of the Currency (OCC) sided with Bank of America’s ability to honor overdraft fees in the event of insufficient funds. They claimed that banks can do this without infringing upon 12 United States Code section 24, par. Seventh, or 12 Code of Federal Regulations part 7.4002 or 7.4007 (2009). (Letter, at p. 1). Overdraft fees are considered account maintenance, rather than creating a debt that the bank later collects.

The Consumer Loses Again

Runaway overdraft fees continue to plague consumers who can ill afford them. This is not to say that consumers should not be responsible for their expenditures, but in the case of Miller, I would argue extenuating circumstances. Until this is settled in California court – and until Congress forces banks to curtail abusive overdraft fee practices – the old phrase “buyer beware” still applies. At least there’s no deception with payday loans…

Credit card interest rates are going up. Has your bank dropped the bomb on you? (Photo: wilpf.org)

If you have been relying on credit cards to get by each month, you may need to borrow money just to pay the minimum payment these days. Credit card companies are raising interest rates dramatically in an effort to stay ahead of the declining economy. But the problem is that they are not just doing this to those who have had problems paying their bills on time, but those who have always paid on time. Does this seem unfair to you? Yes, but the cold reality is that people who have had their credit cards for 10, 20 or even 30 years, with previous interest rates at about nine percent, are now getting slapped with rates over 20 percent!

Is This Legal?

Yes, because the fine print in your agreement that you signed when you first accepted your credit card states that they can raise your rates at their discretion. But it will not be for long, because the new rules affecting their behavior, known as the Card Act of 2009, will not take effect until August, 2010. Regardless of your personal situation, even if it hasn’t changed, the overall financial environment has changed, creating more risk for banks and credit card companies. If they spread out the risk, they can limit their losses on those who default on their payments.

Shouldn’t I Be Notified?

Currently, banks do not need to give you more than 15 days to let you know that your rate will be increased, and what you can do about it. Did you miss this notification? You probably did, as they put this in your monthly statement, or even in a separate envelope that you may mistake for junk mail and throw it away. You have a chance to decline the new rate and continue paying off your bill, but if you miss the deadline, you will be stuck with the new rate. After August, 2010, you will get at least 45 days notice, which should help you actually see it.

My Rates Increased – Now What?

The ideal situation is that you catch the notification before the deadline and call your bank right away to let them know that you decline this new rate. If you opt out of this new rate, they will close your account, but you will continue paying off the balance at the lower rate.

However, if you miss the deadline, another option is to pay off any balance that you owe and close your account. You can possibly borrow money at a lower rate than what your credit card is currently at to pay off the balance and save yourself thousands of dollars in interest rates.

Or, if you want to keep the account open, transfer the balance to a lower rate card. Be sure to check your credit on your other card first, as well as what the balance transfer fee is. If you are not careful, you may end up paying more in fees doing this, than if you were to accept the changes and keep your account open.

Plan Ahead

The best route to saving money in the long term is to plan ahead. Before you borrow money to pay off your high credit card debt, create a budget that shows where your money will go and when. This way, you know exactly what to count on. Of course, creating a budget is only half the story—you must stick to the budget you create, so that you will have no need for credit cards or high interest loans in the first place.

Blind faith in your money manager is not a viable option

In the wake of the Bernie Madoff scandal, debt relief has become a persistent theme. Madoff had a long running Ponzi scheme in which he bilked investors of over $13.2 billion.

Under the guise of a gifted money-manager, Madoff attracted high-profile clients like Steven Spielberg, Kevin Bacon, and Hall-of-Fame pitcher Sandy Koufax. Madoff claimed his client’s investments were earning them big returns, but in reality he was using the investment money provided by new customers to fund those returns. The remainder of the money was used to sustain his lavish lifestyle.

A new skepticism

In the wake of such a high-profile crime, a new skepticism has been introduced to the business relationship between investors and money. For example, Tony Guernsey, a wealth manager for over 40 years, said that his clients are beginning to ask him a new question: “How do I know that I own what you tell me I own?” Guernsey said that he understands the concern in the light of recent financial developments. “The bottom-line,” he added, “is that the foundation between wealth manager and client, has been called into question, if not destroyed.”

Tips for investors

In an effort to restore consumer confidence, the Securities and Exchange Commission offers the following advice to consumers.

Read statements

The law requires all money managers to provide written account statements. Studies have shown however, that most investors rarely read them. To assist their customers, some companies have created simpler ways to track wealth. HSBC Private Bank offers WealthTrack, a system that clearly shows investors what they own, where it comes from and what the projected return is. Advent software is a wealth management reporting system that is quickly gaining steam with money management firms who know they have to regain consumer trust. The reality, however, is that consumers need to be responsible for their own investments. Blindly sending money to a money manager is no longer a viable option.

Monitor money managers

Financial advisor Kelly Campbell of Fairfax, Virginia, said that investors should “call the firm that actually holds their money to check on the manager.” Most independent money managers use third-party custodial firms to hold investor funds. Bernie Madoff, on the other hand, held the funds himself, which should have triggered the immediate doubt of his investors.

According to Campbell, “every bit of information an advisor can get, a client can get too.” It takes research, but consumers can check up on their investments for added peace of mind. Knowing where the money is and what it’s invested in is integral to understanding how it will play into retirement funding, debt relief, and savings.

Ask questions

Consumers should consistently ask questions based on their monitoring and reading of documentation. Carl Loughton, financial advisor in Chicago, Illinois, stated, “Many people are too trusting…they hand money to their money managers and walk away hoping it will sustain them in the future. Good money managers will provide answers before [the questions are asked].”

Consumers rarely reach the level of understanding a money manager has, but they can gain a basic understanding of documentation provided. Loughton added, “If something looks funny, ask. The worst that can happen is your manager saying ‘I don’t know’ and then check[ing] on it for you.” In the end, money is the responsibility of the owner. Consumers need to be proactive about their finances to ensure that someday their money will sustain their retirement, help them find debt relief, or finance their children’s futures.

Money for nothing

In these difficult economic times, the average American family is forced to live paycheck to paycheck — if they are lucky enough to have jobs at all. When the U.S. government bailed out Wall Street, the major banks got huge cash infusions. Since then, major banks like Chase and Bank of America have been reporting record-breaking profits.

Is this because they are making profitable loans to consumers and businesses, earning money the way banks traditionally do? No. In fact, banks’ lending levels are the lowest they have been in more than a decade. What is the secret to their record profits? Fee revenue, or as we all call it: Overdraft Fees.

NSF fees are costing Americans billions

According to the Washington Post, consumers paid a stunning $23.7 Billion dollars in overdraft fees in 2008, and that number is expected to rise dramatically in 2009. An estimated 51 million Americans have been forced to pay at least one overdraft fee in the past year at an average of $35 each.

Ouch. These fees are making cash-strapped families hurt even more. What is worse, banks used to have more forgiving policies regarding overdrafts, but now some only allow one overdraft fee per year to be removed.

Congress is regulating overdraft fees

Congress is considering overhauling the laws that govern overdraft fees, but it could be years before those laws go into effect. Yet, many Americans have discovered a secret method for preventing overdraft fees and saving money, while being able to cover their daily expenses until their next paycheck. What is the secret? Online payday loans.

Borrow money through your computer

Most Americans loathe the idea of getting a payday loan from a cash advance store in a strip mall. People are embarrassed to admit they are having financial difficulties, and frankly being seen at a payday loan store could be a huge social stigma.

Thankfully, the internet has revolutionized the way people can borrow money when they need it. You can receive up to $1,500 in two hours or less, and have the money deposited directly into your checking account. You don’t need good credit to qualify for these loans, and you don’t even need a fax machine!

The true cost of overdraft fees

Look at the math. Say you were getting paid on Friday, but your bank account came up just $3 short on Thursday. One single overdraft fee would cost you $35, creating an effective annual interest rate of 260,245 percent! As most people know, having just one overdraft fee is rare when your account balance is low. If you just buy gas, go to the grocery store, pay for child care, and pay your electric bill the day before payday, you could owe $140 in overdraft fees and in reality be paying more than 1 million percent interest!

Payday Loans help you save

Online payday loans just make financial sense. If it cost you $15 to borrow $100, and it saved you $140 in overdraft fees, its like putting $125 in your pocket. The key to saving money on payday loans is to make sure to pay them back quickly, as the fees can get expensive over time. If you don’t have the money to pay the loan back within then next two weeks, consider an installment loan, which offers a more affordable payment plan.

Your secret to beating the banks

Your banker will tell you that payday loans are dangerous and expensive. What they don’t want you to know is that they are making a killing on overdraft fees, and wouldn’t want that money to go away. Do your own homework, and you’ll find out that banks are profiting billions while America suffers. Take matters into your own hands and get an instant cash advance today.

If you need an instant cash advance, APPLY HERE

(Photo via Bensonkua, Flickr.com)

Black Friday has been the top trend for the past several weeks. Everyone is itching to find great deals offering for Black Friday 2009. Black Friday, which lands on the day after Thanksgiving Day, unofficially kicks off the holiday shopping season. And boy, things are looking hot, hot, hot.

Dirt Cheap Target Appliances

Who needs payday loans when you can get $3 Target appliances? Apparently, according to rumors, Target’s $3 appliances will include toasters, coffee makers, sandwich makers and slow cookers to name a few. And we’re not talking low-quality products. $3 Target appliances are made by Chefmate. Target will also give away a $10 gift certificate for every Benjamin you spend between 5 a.m. and noon. My question is what the heck is Target thinking? Don’t they know this could possibly start a war?

More Black Friday Deals at Wal-Mart

Wal-Mart Black Friday ads is particularly causing excitement because of their hot Black Friday special on Blackberry phones. Wal-Mart is offering a free $100 gift card on any Blackberry purchase with a 2-year contract. Fortunately, buyers will not have to deal with just one cell phone carrier. Wal-Mart has teamed up with all four major cell phone carriers: AT&T, Sprint, T-Mobile and Verizon Wireless. Even better, you don’t have to wait till Black Friday to take advantage of Wal-Mart’s Black Friday offerings. Items from Wal-Mart Black Friday Ads 2009 will hit store shelves on Saturday November 14.

Best Buy: Making the Best of Black Friday 2009

Best Buy, one of America’s favorite retailers for consumer electronics, is also catching headlines with their extensive Black Friday ads this year. From what it looks like, you probably won’t need payday loans to make the best buys. They have cell phones, kitchen stuff, household appliances, television, computers, digital cameras, video games, movies, and more – all with incredible markdown prices!

For instance, you can get an Insignia Blu-ray Disc Player for less than 100 bucks. What about a Magellan SE4 GPS? With this GPS device you can easily locate interesting destinations in all the 48 contiguous states, Hawaii, and Puerto Rico. The Magellan SE4 GPS is going for only $119.99 at Best Buy. That’s a $60 saving on just one item! Check out Best Buy’s Black Friday ads for more offerings.

Don’t Forget To Plan and Budget!

With all these offerings available during this time of the year, more people are feeling the urge to spend. Of course, Black Friday is the best time to spend and save money along the way. Your urge to spend, however, can still leave you in need of financial help if you’re not careful. So don’t forget to plan and budget for all your holiday needs.

Debt relief is possible, even if you have to plan a Thanksgiving meal. (Photo: Wikipedia.org)

If you find yourself inhaling the last of the crouton dust after a fruitless search for the elusive meal, you are likely in need of debt relief. I’ve been there before, so I feel your fruitlessness. Now that Thanksgiving has flickered into view like flames from a toaster slot, you’re going to have to do a little bit better, particularly if you’re going to be having people over.

Plan and Save from Your Man Cave

Or feminine aerie, or whatever you call your esteemed hovel. You can plan how much food you’ll need and save some money in the process. That’s debt relief with wings that work, unlike the ex-bird that will grace your table.

Or Will You Even Give Them the Bird?

There are lots of other solutions, including ham, enchiladas or the gluten-free vegan feast of your choosing. But the main things you need to know are how long you’re going to entertain, how many people you’ll have and what time of day you’re doing this. If you’re doing an after-dinner party rather than an all day football gorge fest, you know you won’t need as much.

But Let’s Get to the Menu “Rules of Thumb”

Thanks to About.com, here are some general guidelines for you to follow. I’ve added my own comments, as I’m sure you’ll deduce. They’ll make Thanksgiving cheaper and contribute toward your debt relief journey.

1) Round Up When You Estimate

Better a little too much than too little.

2) Offer Ample Choices

Contrary to what you might think, more choices equals less of any one item. A little of this and a little of that instead of industrial-sized portions of an old stand-by make Thanksgiving parties spicy and (generally) cheaper for you.

3) Assume They’ll Try Everything

But they’ll likely go small, so that’s more leftovers for you! Trust me, it’s a psychological thing akin to nobody wanting to be “the one” who ate the last cookie.

4) Go Bulk for Sit-Down Dinners

Go with breads, nuts, olives, pretzels or anything cheap. This saves on prep time for those of you with no culinary skills. Besides, lots of bread will fill them up fast, make them feel like fat slobs and lower their resistance to your hypnotic suggestions. Tell them to stop eating and leave immediately… but wait until after dessert. The world’s all right with pie.

How Much SHOULD One Person Eat?

This varies, but you can do the math and figure out where the budgetary debris will fall.

Hors d’oeuvres and Salad?

Six bites before a meal. Remind them of Botswana if they object. If that’s the meal, think four to six bites per hour. With green salad, one ounce is right. Excess lettuce leads to emission problems (see the bean barb below).

Le Main Course?

Poultry, meat or fish are acceptable. About.com says six ounces per person if there’s one main dish, eight if there are two or more. To me, that seems counter intuitive to the myriad bulk plan offered above, but perhaps your guests are zombies and their lust for carne cannot be sated.

Rice and Grains? Yes Please! Pasta too!

One-and-one-half ounces as a side dish, two in a main dish like risotto. Can’t go wrong there, I think. And for pasta, think two ounces as a side, three for first course and four for main. Not all of those, however. Pick one. Repetition will cause your guest to plot your demise as you sleep. Change it up and you won’t have an “Ox Bow Incident” on your hands.

Get Starchy

Five ounces of potatoes should do it. The starches lull the mind into trance more readily, to which I’ve already alluded. It also weighs them down if you plan to use your guests as tackling dummies later.

Veggies and Beans within Your Means

Think four ounces of vegetables and two ounces of beans per person. I cannot stress enough that you adhere to think, particularly when it comes to the beans. You’re going to be locked in tight quarters with many people for a few hours, so think about it. If you have a gas stove, it’s a no-brainer.

You May Now Have Dessert

One thin slice of cakey substance is appropriate. In fact, it’s very cosmopolitan. If you’re going to get gushy, four ounces of pudding will do. For ice cream, think five ounces. If you mix the two, cut the portions in half. You’re out to perform debt relief surgery on yourself, so you don’t need pastry blobs giving you a hard time. Give those creampuffs the what-for if they question your stinginess.

But as always, do this in the most thankful manner possible. It is Thanksgiving, remember!

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(Photo imuttoo, Flickr.com)

Best Buy Black Friday ads can now be found online and it’s definitely causing hype. How would you like an Insignia Blu-ray Disc Player for less than a $100? What about a Dynex 19″ 720p LCD HDTV for less than a $150? Save your drools, however, because things are about to heat up ever more.

Best Buy is tackling Black Friday with their hottest Black Friday deals from Kitchen & Housewares to automotive and home theater appliances. With Best Buy’s great Black Friday offerings, you probably won’t need payday loans after all to make ends meet during the busy holiday season.

Best Buy Black Friday Ads 2009

According to BlackFriday.info, you can find great Best Buy Black Friday deals throughout the whole store. For instance, if you happen to need a new phone, check out these Black Friday cell phone deals at Best Buy.

AT&T Sony Ericsson W518a – Free w/2 Year Contract *

BoostMobile Motorola Clutch i465 – $59.99 eBay

DLO Jam Jacket For iPhone – $9.99

Jabra BT-2080 Bluetooth Headset – $19.99

LG Chocolate Touch From Verizon w/Two Year Activation – $0.00 *

MiFi 2200 By Novatel Wireless w/Two Year Activation – $0.00

What about a new television set? I know the hubby would love a bigger screen at home, right in time for the 2010 Super Bowl bash.

Dynex 19″ 720p LCD HDTV (Model # DX-L19-10A) – $149.99

Dynex 32″ 720p LCD HDTV (Model # DX-L321-10A) – $299.99 *

Dynex 40″ 1080p 60Hz LCD HDTV (Model # DX-L40-10A) – $499.99

Insignia 42″ 1080p 120Hz LCD HDTV (Model # NS-L42Q120-10A) – $699.99 *

LG 32″ 1080p LCD HDTV (Model # 32LH30-UA) – $439.99

Who needs payday loans at this rate? You can get the extended list for Best Buy Black Friday Ads 2009 here.

Go beyond Black Friday Ads and save money!

If you want to save money take advantage of all the special offerings for Black Friday 2009. But if you want to save more money, do your own research. You can find other great deals than just Best Buy Black Friday Ads. Major retailers like Wal-Mart, Sears and Target are doing their best to attract more customers during this time of the year when people are searching for the best places to spend their money for the holiday festivities.

Keep in mind, however, that just because it’s a Black Friday offering doesn’t mean it’s the best deal out there. Make a list of things to buy, search for Black Friday deals from various retailers, and compare prices. You’d be surprised with how much more money you can save just by doing a little research.

Credit cards are both a blessing and a curse for millions of people worldwide. Managed use of this form of consumer credit can help build one’s credit score and provide a convenient means through which to transact with merchants who require a credit card in order for a consumer to secure services (automobile rentals, hotel rooms, etc). The key to managing one’s credit card usage, however, is a something that many consumers do not practice: paying off the balance each month. By making only the minimum payment, credit card debt grows significantly as interest is compounded. Revolving lines of credit like credit cards can saddle a consumer with a lifetime of debt.

Then There’s Identity Theft

Use of credit cards can expose consumers to the nightmare of identity theft. Whenever you pay a restaurant bill with your card, you’re exposing yourself to risk if the server is less than honest with your sensitive information. If you’re shopping online at a site with less than industrial-strength security, great potential for an information leak is there. Giving your credit number over any form of telephone connection is highly problematic as well.

Such scenarios of financial pain and horror might cause you to wonder how you can keep yourself from becoming a victim. One answer is to use payday loans rather than credit cards in emergency situations where you need quick cash, as the process does not generally expose you to potential identity theft. However, having a small number of credit cards can be beneficial to your FICO score (indicating diversity in your credit portfolio, which creditors like to see), so perhaps a better long-term answer would be how to make credit card usage less dangerous.

Make it Anonymous, Perhaps?

Elli Androulaki and Steven Bellovin of Columbia University recently published a study entitled “An Anonymous Credit Card System” which proposes a system that could serve as a solution to this problem with credit cards. Consumers would be able to kept close track of their credit card usage while banks would be able to justify the payments it makes to merchants through an anonymous E-cash system.

An Anonymity Barrier

One of the benefits consumers enjoy when using credit cards is that logs of transactions are readily accessible. In addition to convenience, this provides a level of security in that consumers can challenge erroneous charges. However, such logs can be a double-edged sword in that banks can (and often do) sell that consumer profile information to third parties. What the study authors propose is a system that maintains the benefits while at the same time protecting consumer and bank privacy through a barrier of anonymity. For consumers, however, the anonymity system express is conditional in that the consumer must make honest attempts to keep up with payments. If an overspending transaction occurs, the consumer is blacklisted from the anonymous service.

For online retail, truly anonymous credit cards would prevent any unauthorized outsider from acquiring information about a transaction or those involved in the transaction. Androulaki and Bellovin stress that banks would not be able to create profiles that they sell without the cardholder’s permission. In order to achieve this level of privacy and security, the authors have created a theoretical system whose high points will be discussed here.

The Dawn of Credit Card Security

According to previous studies of credit cards and state-of-the-art security methods, measures have existed since at least 1994, but such schemes have involved extraneous trusted parties to maintain security. Furthermore, previous credit card protection schemes offered no expense reports or means of error correction for consumers. Using E-cash as a money substitute that cannot be copied or spent more than one time has furthered security schemes, but it requires prepayment to function and works only for online transactions. It also provides no avenue for error correction or clear listing of transactions. Prepaid debit cards are limited in their security application for similar reasons.

What the authors propose is a system that combines an E-cash system for making payments and a combination of “blind and plain digital signatures” for other operations. Consumers, merchants, card-issuing banks, acquiring banks (institutions merchants are authorized to receive payments through) and credit card associations (Visa, MasterCard and others who set transaction rules between the different bank types named here) would all be served by this system. Credit cards under the new system, write the authors, “should not be forgeable or usable by any third party. It should be possible for cardholders to track their transactions (Expense Report Service) and provide an undeniable proof of any mischarge (Error Correction Service) without endangering their privacy.”

How E-cash works

There are two types of E-cash used in this system, drawn from “wallets.” One is accessed by the consumer while the other is where merchants deposit E-cash received from the consumer. Blind signature schemes are used to ensure that merchants get paid and consumer identities are protected from third parties. If set limits are exceeded, conditional anonymity of the consumer is revoked – an added incentive to make payments, which appeases the banking establishment. For the most part, merchants and consumers are identified only by signature keys when they open their E-cash accounts with their banks. In order for consumers to access their E-cash credit cards, they create an anonymous pass code. Backups, multiple layers of encryption and loss recovery systems are present here, as are timestamps for online transactions; consult the study for a more detailed account. It is interesting to note that encryption is performed by the consumer during the anonymous credit card origination process, via secure home software. Thus, a home computer would be required.

How are Anonymous Credit Cards Paid?

Obviously a consumer honor system would be inappropriate, so the consumer is required to report the amount of money spend each month to the card-issuing bank. Regular backups and reporting are required to protect both banks and consumers. Spending is proven through receipts. The card-issuing bank then computes the consumer’s monthly payment through the same formula used today for standard credit cards.

How Does Error Correction Work?

The consumer has the right to contact their credit card association in the event of an error or fraudulent use. In the event of a error, a receipt is required in order for a correction to be made. When the merchant makes the correction and gives back funds via E-cash, the currency passes the refund to the credit card association, who in turn moves it to the merchant’s acquiring bank. It is the acquiring bank who finally moves the funds back to the consumer’s card-issuing bank. If fraudulent charges require purchase cancellation, the exchange is handled in a similar fashion.

Breaching the Veil of Anonymity

As mentioned previously, consumer anonymity is dropped if credit cards are charged over their limit. In that instance, all E-coins withdrawn by the consumer are traced. The authors mark this as necessary for loss recovery. But seeing as how a cardholder may open as many anonymous accounts as desired, being able to achieve transaction linkage is possible.

Buying into the Checks and Balances

The anonymous credit card system proposed by the study authors could eliminate identity theft altogether (until someone figures out how to introduce decryption technologies in the middle of the process). That could occur, but the system proposed could be the best current option for safe credit card use.

I find it interesting that the proposed system would require consumers to hang on to their receipts. It’s something consumer groups and banks (not to mention mom and dad) always advise us to do, but how often do we practice what they preach? If you’re a conscientious consumer who already keeps track of such things, your adjustment to such an anonymous credit card system would likely be painless. For those of us who are forced to become more accountable, the transition would be more difficult. However, it is a much safer financial road to travel. It is also a responsible road. Sure, payday loans are still be more desirable in situations where carrying a balance over from month to month becomes too expensive, but credit cards will still have their place. The layers of checks and balances that preserve security may sound inefficient to some, but remember that the financial world rarely gives us something for nothing. This isn’t trading freedom for protection, in my opinion.

Image from Flickr.

Black Friday. I understand why people head to the stores in droves when retailers advertise great in-store deals for Black Friday. What I don’t understand is why stores do this, especially in the case of Target’s $3 appliances, which are being publicized in the Target Black Friday ad.

Target $3 appliances, rumor has it, include toasters, coffee makers, sandwich makers and slow cookers to name  a few. Furthermore, I read that the $3 Target appliances are made by Chefmate, so they’re not low quality. With deals like this, taking out cheap payday loans to be able to take advantage of Black Friday sales might end up saving you money. Unfortunately it appears you must go to a Target store and deal with the craziness to take advantage of the sale; you can’t buy Target $3 appliances on the Internet.

More deals in Target Black Friday ad

Besides Target $3 appliances, the Target Black Friday ad also says it will give a $10 gift certificate for every $100 you spend between 5 a.m. (5 a.m.!?) and noon. There will be toys and board games on sale for $10. Some clothing will be marked down to 50 percent off.

There are also deals on more expensive things, such as a GPS and a couple of high-definition televisions. Though these items are in the $90 to $500 range, they are deeply discounted from their regular prices.

A Black Friday mystery

As several other members of the blogosphere have pointed out, Target $3 appliances are not going to make the store any money. As far as I can tell, the only thing  Target$3 appliances will do is create total mayhem in Target stores. So my question is, why do stores to this to themselves on Black Friday?

Target no doubt is hoping people will come in for the $3 appliances and buy stuff that the store will actually profit from. But for the life of me I can’t understand why stores create these scenarios where there will be total chaos for a few hours or a day. Why make Black Friday a circus? Why not stretch the sale out?

I’ll be home for Christmas shopping

I thought the Internet would end the Black Friday mayhem as people found online sales and took solace in the fact that they could shop from the quiet comfort of their own homes. It appears that stores like Target are making sure people have to come into the stores and deal with the madness of Black Friday.

But the store has to deal with the Black Friday madness, too. Are retailers really making so much money on Black Friday that they are inclined to keep doing this to themselves year after year? I am aware that Black Friday is a huge money-making day for stores, hence the name, but I wonder what would happen if they just let the sales go on for a little longer so every bargain hunter doesn’t converge on the store at the same time.

The Obama administration is working hard to reform laws for companies who issue credit cards. On May 22, the president signed off on the Credit Card Accountability, Responsibility and Disclosure, or Credit CARD, act of 2009.

The bill is set to improve the way companies deal with consumers and act as a watchdog agency that protects users. Here are some of the benefits of the new law.

Increases are retroactive

Card companies can no longer raise rates on an existing balance unless the customer is 60 or more days past due. There will no longer be “anytime, any reason” clauses that almost every credit company employed in former contracts.

If the cardholder does trigger the default rate, the bank has to be willing to restore the rate if the cardholder maintains six consecutive on-time payments. Rates also can’t be raised the first year after the card is issued and low introductory rates have to last at least six months.

Rate hikes

Lending companies are still able to raise credit card rates, but they have to give consumers 45 days notice before the new rate is effective. This can help consumers to budget more wisely and switch to new credit cards if needed. Currently, notification time is only 15 days.

Gail Scherwood, a consumer in Billings, Montana stated, “The notice we received was dated two weeks prior, but we didn’t get it until four days before the increase. That didn’t seem fair.” This new rule hopes to resolve this issue, and give customers time to react to pending increases.

Fees

Fees are another hot topic with credit cards. Cardholders no longer will face over-limit fees “unless they elect to allow the creditor to approve over limit transactions.” Also, in general banks won’t be able to charge fees to consumers who pay their bills over the phone or online.

The only fee they will be able to tack on is an expediting fee at the consumer’s request. In addition, if cardholders pay at a bank’s branch, the payment must be posted same-day to avoid late fees.

Student credit cards

There are restrictions on students ages 18 to 21. This consumer group has to have:

1. An adequate income or a co-signer
2. Attended a financial literacy course

If they don’t have both, they won’t be approved for a credit card. This law protects young people who, in the past, were heavy targets for the credit card industry. As a result, many young people were overwhelmed with debt because of the “free” credit cards they were being inundated with. A recent survey showed that the average college student is holding $3,173 in credit card debt. This is a record high since 1998 when the first study was done.

Double-cycle billing is over

Another result of the new credit CARD law is a ban on double-cycle billing. This is when credit card companies base their finance charge on the current and previous balances. This allowed companies to charge interest on debt already paid from the previous month.

Payment allocations

Previously, payments were applied to lower-rate balances first, thus bringing in fees and interest rates on higher balances. Credit card companies are no longer able to do this. The new law requires that any “above minimum payment is applied first to the credit card balance with the highest interest rate.” This could save thousands for consumers.

More time

Finally, consumers will have more time to pay. Card companies must send out statements to consumers 21 days prior to payment due dates. This will give people adequate time to make their payments and adjust their budgets.

Credit CARD

The new law for credit cards should be enacted shortly. It will do a lot to monitor companies’ actions and protect card users. President Obama’s goal was to set in motion a safeguard for credit users, and this law is the first step to reaching that goal.

These college students are struggling financially – so much so that they can't afford suitable hats. Perhaps cash advance loans can help? (Photo: picasaweb.google.com)

(EDITOR’S DISCLAIMER: Many payday lending companies require that applicants be employed for a certain period of time before they are eligible to receive payday loans.)

Anyone who has ever screamed, “I need cash now!” while surviving the sometimes grueling experience of college life can attest that it’s a financial pain. Everything seems to cost money. From the roof over your head to the parking you utilize, it all costs money. Let’s say you aren’t living on campus. The tuition alone can take away from anyone’s pockets. Even when people acquire financial aid, other suggestions may need to be considered.

Consider Getting a Cash Advance Loan

Online cash advance Web sites such as Personal Money Store can assist with some of the less expensive liabilities. Though they are cheaper, they can be equally as important. If you own your own car, gas expenses can skyrocket through the roof. Just keep in mind that constantly taking out cash advance loans can get you into financial trouble. If you know that some grant, financial aid, or loan money should be coming soon and you need some cash until then, cash advance loans could do the trick.

Catch the Bus Some Days

The price of gas has gone up considerably in the past 10 years, making cars large liabilities. This is particularly true when the car requires payments or is being leased. During the times when gas prices are higher than usual, consider catching the local bus to school. If your job is on the local bus-line, you’ll save even more money and even get some exercise just by letting your car sit for a day or two.

Stock Up on Canned Goods

Supermarkets like Wal-Mart and Kroger offer great deals on canned good foods. Soups, fruits, and even meats are canned, and can be purchased in some cases for less than $1.50 a can. You want to make sure, however, that you avoid fast food restaurants at all costs. Most times, students are racing from place to place, constantly in a time crunch. If a student has a job and no car, the time constraints are more prevalent. This makes quick meals more tempting. Buy more foods that can be cooked and maybe even preserved for longer. A tried and true remedy for college hunger pangs is Ramen Noodles. You see? The trick is finding creative ways to feed yourself without starving.

Shack Up with Other Students

Living alone can be extremely expensive while attending school. For some people, campus living is an option, but for others, living off campus is the best financial choice. You and any other students you know might consider chipping in for a three- or four-bedroom apartment or house. Some people find this resolution satisfactory because they know their roommates will be around for at least two years, unless they drop out. In the case that a roommate does decide to move out, other frugal students will be eager to drop anchor and help with bills.

Supplement Your Income

There are many Web sites that offer money for easy work. If you are someone who loves social networking, for instance, Personal Money Store offers opportunities for you to do what you already love doing – and they pay you! What could be better than that? If you like to write, Personal Money Store also presents writing opportunities for freelancers. Another Web site called PeopleString offers profit-sharing for their members to do the things they already do, such as surf the World Wide Web, check their E-mail, visit social networking Web sites, and even check out dating websites. You can also visit over three dozen popular Web sites offering retail items along with cash-back options.

These are but a few ideas and suggestions to help you supplement your income while taking tests, doing homework and working a part- of full-time job during college. If times become too difficult, you can still consider applying for online cash advance loans and get cash now.

Have you had it up to here with your bank's overdraft protection schemes? You aren't alone, according to the Center for Responsible Lending. (Photo: flickr.com)

If you’re able to see past the shady origins and history of the Center for Responsible Lending, you’ll see that occasionally they do good work that benefits society. While they’re certainly no friend of the payday loans industry, I find that their recent report on the overdraft fees and overdraft protection rackets is worth noting for any financially conscious consumer. Personal Money Store wants you to be informed when it comes to your money, so take the CRL’s findings as a word of caution when it comes to the twisted world of overdraft fees and protection.

Major Overdraft Findings That Should Give You Pause

Overdraft fees and overdraft protection costs have skyrocketed in recent years. According to the CRL’s findings, there are three shocking points of which we should all be aware:

1. Overdraft occurs frequently. Over a 12-month period, the CRL found (based upon Federal Reserve data) that more than 50 million Americans overdrew their checking at least one time. Of those, more than half (27 million) had five or more.
2. How much operating income did overdraft feeds produce for banks and credit unions in 2008? Try $24 billion. Broken down, it’s been noted that a credit union could derive as much as 60 percent of their operating income from overdraft fees and overdraft protection.
3. Think overdraft is under control? Think again. From 2006 to 2008, the CRL found that banks and credit unions upped the penalty by 35 percent.

Were You Even Asked to Opt Into This?

For most people, the answer is no. When you sign up for a checking account at your bank or credit union of choice, you’re automatically enrolled in an overdraft program. And buried in the fine print of your contract is the overdraft fee schedule. Generally, transactions consumers don’t have the money to cover are automatically paid by the bank or credit union. What the consumer gets for the trouble is a penalty per transaction in the neighborhood of $34. Furthermore, banks and credit unions tend to charge an additional daily fee for as long as a consumer’s account balance remains overdrawn. Regardless of whether an account is overdrawn by $100 or $.01, fees can mount – and no bank or credit union I’m aware of works on a sliding scale. It’s all about flat fees that the consumer must pay. And CRL research indicates that for every $1 in overdraft protection credit extended to consumers using their debit cards, $2 in fees are assessed.

The Banks’ Defense

It’s all about protecting a consumer’s good name, they might say. By providing this “service” to customers, banks and credit unions claim they’re keeping people from bouncing checks. NSF fees from banks, bad check fees from merchants and (potentially) other late fees could amount to a person’s picture being hung on the wall in mug shot-like splendor.

Bouncing Checks Aren’t the Story, However

Debit card and ATM transactions are the big issue. The CRL finds that if banks and credit unions wanted to, they could simply decline transactions that would put consumers in the red. However, most do not do this. They pay for the transaction but “help” the consumer by severely penalizing them. While consumers should certainly be responsible with their money, digging unnecessarily deep holes for them to try to climb out of after they’ve already made mistakes is a questionable tactic on the public relations front. In the end, it comes across as a money grab.

The Reordering Transactions Shell Game

Did you know that banks and credit unions reserve the right to reorder your banking transactions from highest to lowest, even if the lesser transactions occurred first? This catches millions of consumers who gamble that a large expense won’t clear until after their paycheck is deposited. If you’ve ever done this (I know I have), know that you’re playing a losing game.

Automatically Dragged Over the Coals

This is what John and Jane Consumer typically get when they sign up for a standard checking account. Many aren’t even aware that cheaper options are available. Some banks may offer a cheaper, more formal line of overdraft credit, or even a link to a savings account in the case of overdraft. However, even these can be expensive. Payday loans, when used properly, can cost even less. Did you expect me to say otherwise?

A Terrible Trio for Consumers

Using FDIC data from 39 member banks, the CRL digs into just what the overdraft fee jungle means for consumers. They do this by addressing the three points raised above.

1. Overdraft Occurs Frequently

Of the 6.5 million accounts held in the FDIC sample, around one in four experienced at least one overdraft over the course of a year. One in seven experienced five or more. As mentioned earlier, this translates to about 51 million Americans stuck in the overdraft fee quagmire. Those with five or more instances are sinking beneath the muck. The CRL found that repeat offenders tended to be of lower income, single, non-Caucasian renters. Considering that the FDIC points to the 18 to 25 age group as being most likely to fall into the overdraft trap, it seems that more effective financial education is in order. Learning to control excessive impulse spending, balance the checkbook and consider options like payday loans in emergencies could help anyone.

2. Excessive Overdraft Fee Profits

Banks and credit unions are conveniently not obligated to report what they make on customers’ overdraft fees, but the FDIC did manage to compile from a sample of its member banks. They found that that around 69 percent of their service charge income came from NSF fees. Extrapolating the data, the CRL finds that this amounts to $34.3 billion in fees for 2008 alone for all service fees. Sixty-nine percent of that is $23.7 billion, a staggering sum that should be much lower. As banks, credit unions and even credit card companies are jacking up fees, that figure could be even larger in 2009.

3. Fees are Out of Control

As I was saying, overdraft fees are a source of concern for any consumer who depends upon the traditional banking industry to care for their money. As the collection has increased 35 percent from 2006 to 2008, the CRL wonders if there’s a ceiling. Organizations like the proposed Consumer Financial Protection Agency and the Credit Card Bill of Rights are designed to help make right what has gone so far wrong, but will they have the healthy canine teeth to tear away the sweet meat?

As mentioned, fees for individual overdraft transactions and days a balance is in the red are commonplace. A cup of coffee, a tank of gas and a few miscellaneous convenience store purchases can quickly and silently become hundreds of dollars in overdraft fee debt. The CRL finds that the monthly average for individual debt card usage is 17. More than a quarter of those are for less than $10.17 on average. Imagine the possibilities across the banking industry. Since this use has exceeded credit card use since 2005, it’s also no wonder that the credit card industry has sought myriad ways to charge their customers with fine print clauses.

Fruits, Vegetables and Overdraft Fees

That sounds like part of a balanced diet these days. The CRL frightens us all with the details of how Americans spend “about the same amount” on overdraft as they do on fruits and vegetables. As for grains and other essentials like postal stamps and books, overdraft fees are clearly in the lead, say the CRL. Considering how difficult financial matters are during the recession, is it any wonder that the CRL found that most consumers would prefer that a transaction be denied than to have to paid exorbitant $34-per-transaction overdraft fees?

How Can This Problem Be Fixed?

This is your checking account on overdraft protection. (Photo: http://tolweb.org/)

Beyond preparing consumers to make sound financial choices, the financial abuses inherent in the traditional banking system must be exorcized. The Federal Reserve is considering that very matter, as is Congress. Large-scale change is needed.

Prohibit Overdraft Fees on Debit Card and ATM Transactions

This exception would be a welcome aid. If a fee is absolutely necessary, then a bank should have to provide a more highly visible, real-time warning so that debit and ATM infractions don’t fly under the radar and destroy overtaxed consumers’ budgets. If warning sign appears, consumers would have the choice to back out of the transaction (if the merchant didn’t simply rule out that method of payment). Some banks and credit unions block such transactions completely. The CRL suggests that all should follow the practice.

Overdraft Fees Should Be Proportional

The CRL’s finding that the amount that banks pay out to merchants for consumer overdraft is about half of what they actually charge consumers for the “convenience” is another signal beacon that change is needed. Flat fee overdraft charges are unnecessary when compared with the actual cost of covering the overdraft to banks and credit unions. It is understandable that banks and credit unions have to think of profit margins, but the current overdraft fee system is tantamount to gross customer abuse. The CRL suggests that an overdraft line with a reasonable rate of interest would be easier for consumers to swallow. Then again, rather than dealing with revolving interest, why not use payday loans?

There Should Be a Limit

If a consumer dashes their checking upon the overdraft fee rocks, banks and credit unions should be required to offer an alternative product at lower cost. A consumer shouldn’t be allowed to rack up more than six overdraft fees per year, says the CRL. This is what’s called weaning traditional financial institutions from their habits of excessive profit. Getting by with a reasonable profit margin may mean fewer executive retreats to Cabo San Lucas, but it’s the right thing to do.

No Overdraft Protection Without an Opt-In

This is self-explanatory. No service or accompanying gross fees should be thrown at a consumer without their approval. The CRL found that around 90 percent wanted to be able to choose whether they would have overdraft protection or not, so banks and credit unions should listen. If not, they run the risk of losing even more customers to payday loans when financial calamity strikes. Banks and credit unions certainly have a larger war chest to draw from, but that doesn’t mean they shouldn’t try to be competitive.

Make Banks Toe the TILA. Payday Lenders Do!

The Truth in Lending Act requires that lenders disclose certain information to the public. It seems that information regarding the amount of money banks collect in overdraft fees should be included in the purge, much the same way payday loan companies make their APR known. Since overdraft protection is an act of extending credit to a consumer, banks and credit unions should be forced to clarify just what they’re charging customers. No bank or credit union should be exempt from the law.

There’s Nothing Up My Sleeve

The Consumer Financial Protection Agency is on its way. President Obama made a great deal of show about the related Credit Card Bill of Rights. It’s time for banks and credit unions to be made to tow the line. If you’ve even gone through the hassle of dealing with overdraft, you know that there has to be something better behind the curtain. In the case of payday lenders, there’s nothing “up the sleeve.” In a short term financial emergency, payday loans are up front about fees, which typically are much less expensive than falling back on overdraft protection. The consumer should have the power to choose what fits their financial circumstances best.

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(Photo: Wikimedia.org)

I’ve said it before and I’ll say it again: Start your holiday savings now! It’s the perfect time to start your holiday shopping budget (if you have not yet already) and take advantage of hot deals offerings for Black Friday 2009. Tons of Black Friday Ads have leaked on the internet like Wal-Mart Black Friday ads 2009. Although many major retailers have not yet officially released details of their 2009 Black Friday ads it’s obviously getting a lot of people excited. I mean, what’s better than saving money during the holidays?

Before you can settle on any item, however, you must first search and compare different offerings in order to uncover the best Black Friday deals. Like I said earlier, Black Friday Ads 2009 can easily be found on the internet. So avoid the last minute need of a payday loan and start researching!

Wal-Mart Black Friday Ads 2009 – Blackberries Galore!

Get a free $100 gift card on any Blackberry purchase! (Photo via Honou, Flickr.com)

Wal-Mart is not only great for the holidays; it’s the place to go to save money all year long. Wal-Mart Black Friday Ads 2009 have also leaked online and you won’t have to wait till the day after Thanksgiving to get a Black Friday deal. Wal-Mart Black Friday Ads 2009 will fall in effect this Saturday November 14.

Among the best holiday discounts put forth by the world’s largest retail store, Wal-Mart’s Blackberry deals are getting the most attention this year. Wal-Mart is offering a free $100 gift card on any Blackberry purchase with a 2-year contract. Much like Personal Money Store, a place that works through a wide network of lenders to eliminate the traditional hassles of getting a payday loan, consumers will not be limited to one cell phone carrier. You can choose a BlackBerry phone from all four major carriers: AT&T, Sprint, T-Mobile and Verizon Wireless.

Comparing Wal-Mart Blackberry Deals

Okay, so you get a free $100 gift card on any Blackberry purchase. Sounds good. But as a smart shopper, I can’t help but wonder how much money I will actually be saving with Wal-Mart’s Blackberry deal.

Well, according to several news sources, it’s a pretty sweet deal. Here are a few examples from I4U News:

AT&T BlackBerry Bold 9000 Price: $78.88
The BlackBerry Bold 9000 sells on AT&T for $199.99 after $100 mail-in rebate. Amazon charges $39.99 for the AT&T BlackBerry Bold, which is $38.89 less than Walmart charges for it. Overall with the $100 gift card you only save $61.11 on the Bold. On LetsTalk the AT&T Bold is even free with contract reducing the potential savings to $21.12.

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T-Mobile BlackBerry Curve 8520 Price: $28.88
The Curve 8520 sells on T-Mobile for $129.99. On Amazon you only pay 1c and the activation fee of $35 is currently waived. With the $100 gift card deal you save here $71.12. If Walmart charges an activation fee you have only saved $36.12.

Who needs a payday loan at this rate?

Wal-Mart Wireless on High Demand

People go to Wal-Mart for one thing: To save money. At Wal-Mart, you can find everything from the cradle to the grave… literally. Wal-Mart is now offering cheap caskets online in case you didn’t know. It’s clear, however, that Wal-Mart wireless is what’s causing the hype this year. They’re sweet phones with sweet prices. Wal-Mart Black Friday Ads 2009, however, highlights a lot more than just Blackberries. So start researching for the hottest Black Friday 2009 deals for all your holiday needs.