Monday, July 30, 2012

Did You Know?

Did You Know? 

As in previous years, in 2012, just over two in five US adults (43%) report that they have a budget and keep close track of their expenditures. More than half (56%) admit they do not have a budget, including more than 1 in 5
(22%) who say they don’t have a good idea of how much they spend on housing, food, and entertainment.

Though the likelihood of having a budget has not changed over the past 5 years, the proportion of adults who do not pay all of their bills on time has increased from 28% in 2011 to 33% in 2012 – that is, fully one-third of
US adults, or more than 77 million Americans, do not pay all of their bills on time.
Source: 2012 NFCC Financial Literacy Survey)

Monday, July 23, 2012

NFCC Helps Consumers Understand Importance of Credit Report

NFCC Helps Consumers Understand Importance of Credit Report
Consumers Need to Take Responsibility for Reviewing Credit Reports
Washington, DC – The Consumer Financial Protection Bureau (CFPB) recently announced that it would soon begin examining credit reporting agencies to confirm, among other things, that they are producing accurate credit reports and that consumers have ample ability to dispute errors on their reports.
 “An accurate credit report is critical to a person’s financial future, and consumers need to be aware that the responsibility for reviewing their report lies with them,” said Gail Cunningham, spokesperson for the National Foundation for Credit Counseling (NFCC).  “Even though consumers can obtain their credit report free of charge, the recent NFCC Financial Literacy Survey revealed that 62 percent of respondents had not ordered their report in the past 12 months.”
It is important to understand what a credit report is and what it isn’t.  At its core, the purpose of a credit report is to provide those with a valid need a track record of a person’s credit history.  Having a way to evaluate the risk of extending new credit is just as important to the consumer as it is to the business.
Among other things, the report contains information such as where a person lives, how many lines of credit have been applied for or opened, and how he or she manages credit.  Credit reporting bureaus are a repository of information that has been provided to them.  They sell the information to lenders, insurers, employers, and other businesses that use it as a tool when evaluating a person’s application for credit, insurance or employment.
There is often misunderstanding regarding credit reports.  Many erroneously think that the credit report includes a credit score, a person’s race, income or medical history.  One of the most common misconceptions is that the credit bureaus are involved in the approval or denial of credit, which is not true.
The reasons for obtaining a credit report are many, but include confirming accuracy before applying for credit, checking for identity theft, or verifying that outdated information has rotated off.  Perhaps the most important reason is that the all-important credit scores are based on the information contained in the credit report. 
If, upon review, consumers question the accuracy of the information contained in the report, the Fair Credit Reporting Act provides them with the opportunity to dispute the entry.  Consumers should dispute the information directly with the credit reporting bureau through which the report was obtained.  The bureau must then investigate the concern and correct or delete inaccurate or unverifiable information, usually within 30 days. 
Anxious to find a quick-fix for a blemished credit file, consumers often fall prey to unscrupulous businesses which charge high fees but offer no legitimate help beyond what consumers can do for themselves at little or no cost.  Warning signs are if a company offers to create a new identity and credit file, or guarantees to remove late payments or other negative information from a report.  The smart consumer will check with the Better Business Bureau before becoming involved with a credit repair firm.
“Since the credit report is meant to be an accurate snapshot of a person’s credit history, consumers need to remember that if the report contains negative information that is true, it needs to remain a part of the report,” continued Cunningham.  “Filing a frivolous dispute benefits no one.”
The CFPB’s announcement serves as a reminder of the importance of credit reports, and hopefully will inspire consumers to take the first step by ordering their report, examining it for accuracy, and disputing any errors.  Consumers can obtain their credit report free of charge once every 12 months from each of the three credit reporting bureaus by going to 

For help understanding the contents of your credit report, reach out to an NFCC Member Agency, like Consumer Credit Counseling Service of Buffalo, at 712-2060. 

The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation’s largest and longest serving national nonprofit credit counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. NFCC Members annually help more than three million consumers through close to 750 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC Member, call (800) 388-2227, (en Español (800) 682-9832) or visit  Visit us on Facebook:, on Twitter:, on YouTube: and our blog:

Monday, July 16, 2012

How Is Your Scam IQ? Take the Email Headline Test

How Is Your Scam IQ? Take the Email Headline Test: There wouldn't be so many email scams unless some poor saps were clicking ��" and getting ripped off. Don't be one of them.

Monday, July 9, 2012

NFCC Poll Reveals Consumers’ Top Financial Regrets

The recent National Foundation for Credit Counseling (NFCC) online poll allowed consumers to select their greatest financial regret.  Of more than 2,200 respondents, 53 percent indicated that habitually overspending was what they regretted most.

Overspending far outweighed other financial concerns such as inadequately saving (18 percent), insufficiently preparing for retirement (14 percent), not having bought a house (10 percent), or having bought a house (five percent).

“Although most people have financial regrets, it is important to not dwell on past mistakes,” said Gail Cunningham, spokesperson for the NFCC.  “Instead, look forward and take action by constructing a plan that recognizes the realities of the situation, repairs financial damage, and moves in a positive direction toward financial security.” 

 The NFCC offers the following 10 tips for turning financial regrets into financial wins:

·         Set financial goals – Both short and long-term goals provide a financial framework and create a vision that keeps spending on track.  Put the goals in writing and display in a prominent place.  Have sound reasons for establishing each goal, and when necessary, sound reasons for abandoning them.

·         Create a budget – A budget is the cornerstone that a sound financial future is built upon.  Without it, danger signals are missed and spending can easily spiral out of control.  Get started by utilizing the financial worksheet on the NFCC website at

·         Become a track star – At least once every six months, track your spending by writing down every cent spent for 30 days.  This exercise will reveal any leaks and provide an opportunity to adjust spending to best meet objectives.

·         Be financially organized - Create a cash-flow calendar, writing down all sources of income on the anticipated pay date.  Next, record which bills are to be paid out of each check.  If there is not enough money to satisfy all obligations during one period, call the creditor and request a due date change. 

·         Don’t wait to automate – Setting up automatic bill-paying provides protection against skipping a payment or paying late, both of which can result in a dinged credit report, a potentially lower credit score, and a late fee. 

·         Review your credit report – A credit report is a reflection of a person’s financial track record, and is the basis of the credit score, making it a must-read, particularly for those rebuilding credit.  Consumers are allowed one free credit report every 12 months from each of the three bureaus.  To access this free report, go to 

·         Build a high credit score – A high credit score equals a lower interest rate on loans and credit cards.  For a higher score, put an emphasis on paying bills on time, not utilizing more than 30 percent of available credit, creating a mix of credit lines, not applying for more credit than is necessary, and responsibly managing credit over time.

·         Realize that life happens – Life is filled with the unexpected, with the unplanned expense always occurring at the worst time, wrecking the best of budgets.  Guard against this by creating a financial safety net.  Even small amounts of money consistently deposited into a rainy day savings account can create enough of a cushion to make it through most short-term emergencies.

·         Know that tomorrow will come - Even if retirement is a long way off, that’s no reason to ignore planning for it.  Knowing that time is money’s best friend, provides the smart young investor a very long window of opportunity to turn a small sum of money into a fortune.

·         Become a financial adult – This may involve making hard choices, changing attitudes, behaviors, and lifestyle, but it is unlikely that financial decisions made on auto-pilot will result in a smooth landing.  Be financially mature by understanding the nuts and bolts of personal finance, and acting on that knowledge.

The actual May poll question and responses are as follows:

My biggest financial regret is that I…

A.    Habitually overspent = 53%

B.     Inadequately saved = 18%

C.     Haven’t bought a house = 10%

D.    Bought a house = 5%

E.     Haven’t sufficiently prepared for retirement = 14%

Note: The NFCC’s June Financial Literacy Opinion Index was conducted via the homepage of the NFCC Web site ( from June1 - 30, 2012 and was answered by 2,205 individuals.

The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation’s largest and longest serving national nonprofit credit counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. NFCC Members annually help more than three million consumers through close to 750 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC Member, call (800) 388-2227, (en Español (800) 682-9832) or visit  Visit us on Facebook:, on Twitter:, on YouTube: and our blog:

U.S. Credit Cards Could Brighten Bank Results

NEW YORK (Reuters) - U.S. credit card delinquencies have fallen to their lowest levels in at least two decades, baffling banks that expected consumer credit quality to stop improving this year because of persistently high unemployment.  During the financial crisis, banks turned conservative and slashed credit card lines, closed accounts and wrote off bad loans. Delinquencies promptly fell. Then they kept falling and falling and falling.
Credit cards could be one of the few bright spots in an otherwise rough second quarter for big banks. This Friday JPMorgan Chase & Co and Wells Fargo & Co's will post their earnings reports, beginning earnings season for banks.
With lower credit card delinquencies, banks can dip into money previously set aside to cover bad loans, helping second quarter profit. In a quarter where banks suffered from low rates and still-tepid loan demand, banks need all the help they can get.
For the six biggest U.S. credit card lenders, including JPMorgan Chase, Bank of America Corp, and Citigroup Inc the average delinquency rate is down to 2.35 percent from more than 6 percent in early 2009, according to Barclays Capital.
For a long time, credit card delinquencies correlated roughly with unemployment, which was 8.2 percent in June according to a report on Friday. That relationship has broken down in recent years.
In normal credit cycles, lenders would respond to improving credit performance by courting new customers and making more loans. But banks are reluctant to pursue consumers with weaker credit now. The economy is barely growing, and new rules make it harder to levy fees on delinquent borrowers to make up for the higher risk of losses.
With credit relatively tight, delinquencies keep dropping. Discover Financial Services, which posted results in June because its fiscal quarter ends in May, said its delinquency rate for credit card accounts dropped to 1.91 percent in the most recent quarter, from 2.22 percent three months earlier and from a high of 5.6 percent in November 2009.
"Credit performance continues to be exceptional, but we continue to expect that we must be at, or near, the bottom," CEO David Nelms told analysts.
Nine months ago Nelms said much the same thing as he told Reuters he did not expect delinquency rates to go lower after reaching what was then a 25-year low of 2.43 percent.
He marveled then that the company's rate of writing-off loans as uncollectible had fallen just below 4 percent for the first time since 2007. In May the charge-off rate was down further, to 2.97 percent.
While credit cards are performing well, and mortgage lending has increased with homeowners refinancing at lower rates, other lines of business were grim for many big banks in the second quarter.
Trading volumes were low and merger and underwriting volume were also weak, weighing on investment banking results. Loan demand remained lukewarm, and rock-bottom interest rates pressuring lending margins.
In addition to JPMorgan Chase and Wells Fargo reporting next week, Citigroup Inc will report Monday, the 16th, and Bank of America Corp will report on the 18th.
JPMorgan is expected to post earnings of $3.25 billion, or 78 cents a share, down from $5.07 billion, or $1.27 a share in the same quarter last year. The bank's results are likely to be hurt by a loss from a trader known as "the London Whale," who made big bets in credit derivatives markets.
As banks have cut their credit exposure, card balances have fallen by 22.7 percent, or $170.4 billion, since October 2008, according to Equifax Inc.
"With the credit card industry, you had a quick cleansing of the at-risk borrowers," said Mark DeVries, an analyst at Barclays Capital.
The unemployed have lost their cards, and the steadily high jobless rate is not adding to delinquencies and losses for the banks, DeVries said.
Issuers tightened their standards severely in the bust, said Curt Beaudouin, a credit analyst at Moody's Investors Service. "The new accounts that were being added were pristine, super-prime."
Now many banks are looking to make more loans, but they are loosening credit slowly, aiming their marketing programs at people with money to spend and those with only slightly worse-than-prime credit.
"It is very subtle," said analyst Matt Howlett of Macquarie Securities. "It is beginning to reach down ever so slightly into the gray area where you are not prime, but you are not subprime. It is not going to be as dramatic as in other cycles."
It looks like the industry actually went too far in cutting off credit, which is typical in credit cycles, Howlett said. "They probably over-tightened their guidelines and cut-off a lot of borrowers that are good payers," he said.
Now nearly 60 percent of new cards are being issued to prime borrowers, down about 10 percentage points from the strictest periods three years ago, but up from about 42 percent in the lenient periods of 2007, according to Equifax.
Credit standards are being loosened a bit, but instead of pursuing subprime borrowers, banks are focusing more of their efforts on signing up big spenders. Card issuers and processors collect fees from merchants based on how much people spend.