Simple Money Solutions : 10 Ways You Can Stop Feeling Overwhelmed by Money and Start Making It Work for You

by Lloyd, Nancy

• ISBN13: 9780812931754
• ISBN10: 0812931750
• Edition: 1st
• Format: Hardcover
• Copyright: 2000-01-01
• Publisher: Crown Business
• More Book Details
• Purchase Benefits

Summary

"I know I should be saving for my future, but life keeps getting in the way." As a money-media personality and former Federal Reserve Board economist, Nancy Lloyd often hears from people who want her help. Her advice to them: There are no secrets to money, just some basic rules you haven't learned yet. In Simple Money Solutions, she demonstrates logical, easy-to-follow strategies that have worked for others, and she helps you get out of your own self-defeating money habits. You can quickly and painlessly increase your financial I.Q., take stock of your financial situation, and find the path to achieving your financial goals by following the step-by-step guidelines here. There's even a Time-Is-Money calendar so you can see not only what things to do, but when to do them so they're most effective. Best of all, you don't have to wait decades to reap the financial rewards--Lloyd shows you easy things you can do to free up cash right now.

Author Biography

Nancy Lloyd is the personal-finance commentator for National Public Radio's Morning Edition, the consumer/money correspondent for ABC radio, and a Family Circle contributing editor. She has been an on-air money adviser for the CBS Evening News and Up to the Minute and editor-at-large of Kiplinger's Personal Finance Magazine, and has appeared frequently on the Today show and Good Morning America. Lloyd's articles are syndicated by The New York Times; she also has written for The Washington Post, Good Housekeeping, Reader's Digest, and Cosmopolitan, among others. As a Federal Reserve Board economist, she specialized in consumer credit and banking issues. She lives outside Washington, D.C.

Excerpts

Take Charge of Your Credit

With smaller banks being gobbled up by bigger ones, great credit card offers, as opposed to those that just appear great in the advertisements or pre-approved mailings, are getting hard to come by.  Do you know how to separate the credit card deals from the credit card duds?  In this chapter, I will show you what to look for -- and look out for -- when sizing up your current credit cards, shopping for a new card, or even weighing the pros and cons of a debit card.  

Vicki's story:

        "'2.9% interest rate!' the credit card mailer screamed, in bold letters," recalls Vicki.  "They even sent 'convenience' checks so I could transfer the balance from my 8.9% credit card to the new one.  I figured this switch would save me money.  Turns out that low interest rate only applied to new purchases.  Interest on my balance transfer was 12.9 percent, plus they added a 2 percent balance transfer fee!"

Here are six steps that can save you money and turn your so-so credit report into one that sparkles:

STEP 1: TEST YOUR CREDIT CARD KNOW-HOW
STEP 2: DECIPHER THE FINE PRINT
STEP 3: CHECK YOUR CREDIT REPORT
STEP 4: GET THE LOWDOWN ON DEBIT CARDS -- BANKS LOVE THEM, BUT SHOULD YOU?
STEP 5: BOUNCE BACK FROM BAD CREDIT
STEP 6: AVOID PRICEY PLASTIC PERKS

STEP 1: TEST YOUR CREDIT CARD KNOW-HOW
Take this quiz to see how best to choose and use a credit card.  

Question 1: If you carry a credit card balance of $1,750 on a card that charges 18 percent interest, how long will it take to pay off the bill, and how much interest will you pay if you make only the minimum monthly payment (2 percent of the outstanding balance)?  

a)        3 years + 2 months; $627 interest.
b)        7 years + 9 months; $1129 interest.
c)        21 years + 11 months; $3647 in interest.

Answer 1: c) You'd spend almost 22 years and $3,647 in interest. (That's $2 interest for each dollar of purchase!).

Tip: By paying an extra $25 per month, you could eliminate the balance nearly 19 years earlier and pay only $588 in interest -- a saving of $3,059.  

Question 2: If your payment is only one day late, your card issuer may:

a)        Assess a late payment fee of up to $30.
b)        Boost the card's interest rate.
c)        Cancel your card.
d)        Any of the above.

Answer 2: d) Any of the above.  Some credit card companies raise fees, change terms or cancel cards when consumers don't use their cards in ways issuers like.  Credit card companies can change terms (including interest rates or fees) with just 15 days' notice.  Be prepared to switch to a cheaper card if the terms on yours become unattractive.

Question 3: True or False?  If you accept a "pre-approved" credit card offer with a $5,000 credit limit and a 13 percent interest rate, you may only get a card with a limit of $250 and an 18.6 percent interest rate.

Answer 3: True.  Bait and switch happens because card issuers know that many consumers will take whatever card they get.  

Question 4: True or False?  If the card issuer raises the interest rate, it will apply only to new purchases.

Answer 4: False.  Most rate increases apply to outstanding balances.
If you make no new purchases on your card, a few states prohibit card issuers from raising rates on existing balances, but you must notify the issuer that you're canceling the card.  Switch to another card before 'teaser rates' expire, or ask your bank to continue the lower interest rate.

Question 5: True or False?  Cards that offer rebates (cash back, frequent flyer miles, etc.) are bargains for most consumers.

Answer 5: False. These cards typically charge the highest interest rates and fees allowed, so if you carry a balance, you'll probably pay more in interest than you'll collect in rebates.  Awards can change or be rescinded with little or no notice.  

Question 6: True or False?  Taking a cash advance on a credit card that charges 13 percent on purchases may cost you the equivalent of 40 percent.

Answer 6: True.  First, most cards charge a higher interest rate on cash advances than on purchases, and they don't always disclose them.  Second, cash advance fees are often a percentage of the advance.  Third, interest typically begins from the date of the cash advance, even if your account is paid in full.

Question 7: True or False?  Paying for merchandise with "convenience checks" is like paying with a credit card.

Answer 7: False.  You may be hit with a check-writing fee, a higher interest rate than on credit card purchases, and interest charges that start immediately.  Plus, you may not get other card benefits, such as extended warranties.  

Question 8: True or False?  Stores offering "deferred billing," with no finance charges for six months will charge retroactive interest if you don't pay off the balance within six months.

Answer 8: True.  They'll forgive the interest if you pay off your balance within six months.  Otherwise, you'll owe interest from the purchase date, and many store cards charge very high rates.  

Question 9: True or False.  You'll pay less in finance charges if you make payments earlier.

Answer 9: True.  Most finance charges are based on the average daily balance, so the sooner you pay, the lower your average balance.  More of your payment will go to reduce your debt, not just toward interest.

Question 10: True or False? If your credit card is tied to your home's equity and you fall behind on payments, the bank can foreclose on your house.

Answer 10: True. Only consider credit cards tied to your home's equity for important purchases (such as home improvements or tuition), not vacations, restaurant bills or anything that will be used up before you've paid it off.

Lloyd's Law: The squeaky wheel gets the best credit card deal.  

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Excerpted from Simple Money Solutions: 10 Ways You Can Stop Feeling Overwhelmed by Money and Start Making It Work for You by Nancy Lloyd
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.