Credit Cards are Even More Risky Today

Credit Cards are Even More Risky Today

Dear Bob

You have warned about credit card deals in the past.  What are some examples of what to look out for?

Consumers sign up for credit cards not knowing how bad of a contract that was just signed. They read the terms and conditions and think the details are reasonable. What most consumers don’t know is that the real details of the agreement aren’t found in the terms and conditions. They are found in the card member agreement which credit card companies send out way after the fact.

The credit card companies lure you in using free interest, plane tickets, reward programs, etc.  I think the most deceptive program is found with the Citi-Simplicity Card.

No more late fees and no more annual fees. Who wouldn’t like a no more fee benefit? Probably the person who tends to be late.

So, if you signed up for this card you saw some advantages to that benefit. Now let’s look at the card member agreement for that card.

Default. We may require immediate payment of your total Account balance, to the extent allowed by law, if any of the following occurs: (there was a list – however, just look at #1)

  1. You don’t pay at least the Minimum Payment Due by the due date.

We may close or suspend your Account if any of the events listed above occur, or for any reason, or for no reason. We may do this at any time, without notifying you, as allowed by law. 

If we close or suspend your Account, or if you close your Account, you must pay us all amounts you owe on the Account, even if they post to your Account after it’s closed or suspended.

So, you take advantage of the no late fee benefit, you don’t get a late payment. Yet, you could be considered in default, they close the account, they demand the balance get paid, and the best part…. they put you in collections and make you pay all the legal fees. Yes, that is in the agreement as well. Will it happen? They would probably allow a few late payments to slide. However, at some point you look like a risk. Just know, they have full control over you through that contract.

The politicians passed the Card Act back in May 2009 to curb credit card abuse. Apparently credit card companies have found a way around the law. I studied that law and those consumer contracts for my book Deceptive Money. I can assure you that today’s credit card agreements are no different than the agreements prior to 2009 that the politicians are trying to protect you from.

So back to the question…. What do you look for?  To my knowledge even the most credit friendly credit unions have the same language. Thus, abuse consumer contracts are just part of borrowing money from the credit card industry. There is nothing to look for. They all appear to be horrible and abusive contracts.

Photo Credit: Cafe Credit via Flickr, under the Creative Commons License

Should I Give When My Pastor Drives a Bentley?

Should I Give When My Pastor Drives a Bentley?


I have a question about tithing. I want to begin tithing even though I don’t have it to really give, but I know I must give what I can, even if it’s not the full 10% just yet. May God help me get to where I can give more fully. But my real question is: Must what I can afford to give be offered solely to the church in order to be considered a proper tithe?

Honestly, when I see the pastor pull up in a Bentley…I do not want to give to him if it will be used to finance his expensive car, house, and all-around lifestyle. I want to give directly to what I believe the money should go to, like an orphanage or St. Jude Children’s Hospital or a local soup kitchen. Can I give directly to them instead and offer my time through volunteering for it to be acceptable tithing in God’s eyes?


What an important question!

I do believe that God is always going to bless us when we give (note: a blessing does not necessarily mean material or financial).  I don’t believe that blessings should be the motivation for giving nor do I think that we have the right to dictate ahead of time the nature of that blessing, example: “I am giving back to God and I expect him to make me financially successful”.  Giving isn’t about the blessing. It is about an act of worship, relationship with Christ, and Faith.

I also believe in tithing as a part of overall giving. There is debate of Old Testament versus New Testament when it comes to the validity of the tithe. Some say that because it is old testament teaching that it is not valid. At the same time, do you really think that God wants us to disregard a good percentage of the Bible?  I believe that God set the standard for the tithe as 10% in the Old Testament.

I also believe that you give to the church as a first priority. Some believe that tithes and offerings go to other places beside the church. The church is the bride of Christ that is on a mission. God uses the people of the church to work to accomplish that mission. Through God’s church as a whole, great strides can be made towards reaching the lost and showing Christ’s love. If God has not given you a confidence that your church is on mission, it is important to explore those feelings. I feel it is important to be in a church that you feel is on mission.

Plus, there are general expenses that have to be paid in any church. This is where a person goes to learn and grow. This is where children learn about God for the first time. I think that it is important for each to do their part versus being a consumer of the church.

You do have to feel comfortable that your church is being a good steward over the money it is given. I would agree that a high-end, expensive car could send the wrong message for someone in non-profit work. Having said that, that is between your pastor and God.  I would encourage you to pray about your giving and have God ease your unrest.

Remember it is not about the action of giving-it is about where your heart lies before you give. Your heart is determined by your prayer time with God. Put these questions to prayer, read what the Bible says about money, and trust God to give you a sense of peace concerning direction.

Not Concerned About Identity Theft?

Not Concerned About Identity Theft?

A new survey by Experian reveals the reality of people’s lack of concern regarding identity theft.  The reality is that it is not a matter of if you become a victim.  It is a matter of when you become a victim.  The probabilities are extremely high.  This isn’t speculation on my end.  That opinion comes as a result of the numbers.

Among the survey findings –

  • 84 percent of respondents acknowledge being concerned about the security of personal information online, but nearly two-thirds (64 percent) agree it’s “too much of a hassle to constantly worry about securing personal information online.”

How can you acknowledge the epidemic and come to the conclusion that it is too big of a hassle to deal with?

  • A significant majority of respondents (72 percent) think thieves are only interested in “wealthy people’s identities.”

Is it a justification for a lack of concern?  “I am not a wealthy person so this doesn’t apply.”  Guess what, a thief just needs a social security number and they are set.

As a part of a financial plan, everyone should have an identity theft plan.  An identity theft plan includes the following:

1)     A Credit Monitoring Service – A credit monitoring service alerts you to changes on your credit report and it is the first line of defense against identity theft.  What about all the other services that are marketed?  Until a company such as Lifelock can prove that they can do what they say, call me skeptical.  Their initial state of the art service was putting fraud alerts on your account until a judge shut them down.  Then they magically came up with this exclusive service a few weeks later.

2)     Being intentional about guarding your personal identification information.  In other words, not being a part of the above statistics. Just be mindful that it can happen and be protective of your information.  Being aware of your surroundings makes up a good percentage of the solution.

3)     Regularly checking credit card and bank statements for unauthorized transactions.

4)     Following the Golden Rule of Identification Protection –  Never give out information to anyone that approaches you first.  That includes a random phone call, a visitor at the door, an email, etc.

Don’t be a statistic!  The correction of an identity theft case requires hours of effort at the minimum.


10 Steps for Retirement in 10 Years

10 Steps for Retirement in 10 Years

“I am 10 years away from retiring. What should I be doing at this point in my life?”

This is very common question and a timely one being 10 years away.  Incidentally, this makes sense even if you are 20 years away. Here are my 10 steps for retirement in 10 years!

(1)     Develop a spending plan

Where are you spending money? Most people don’t have an accurate idea of where their money is going. It is critical that you have an accurate idea of your spend rate or monthly spending. Starting this process 10 years out does good things for you. First, it gives you an accurate idea as to what that spending number is at retirement.  Second, it gives you 10 years to develop a habit. I can’t stress enough that at any stage pre-retirement whether you are 20 or 60 this is one of the most important processes you can go through. Email me if you want a copy of our spending plan where we track using an excel spreadsheet.

(2)     Consolidate investments into one big plan – strategy wise and account wise

Oftentimes people have investment accounts spread out over numerous places.  For the purpose of retirement, get all of those consolidated into one place where that money is being managed by a strategy of growth and protection from risk. If you can’t move a 401 K plan, just make sure it is following the same strategy for risk as your other investments.

(3)     Set up a benchmarking system to track progress

Start with the end in mind  and determine your monthly income need at retirement.  That income need will require a certain amount of investments earning a certain growth rate to fund a retirement income stream.  A benchmarking sets the benchmark for the end of the y ear telling you where your investment totals need to be at the end of each year.  This tells you whether you are on track or behind the 8 ball.

For example, if you need to be a $500,000 in retirement assets by the end of 2017 to be  on target, then $500,000 is your benchmark.  If you are over $500,000 by the end of 2017 then you are ahead of schedule.  If you are less than your  $500,000 benchmark you are behind.

(4)     Eliminate debt

Without question, you want to be out of any consumer debt. 10 years should give you plenty of time.

(5)     Eliminate Mortgage

I separated this out because sometimes people don’t consider this debt. It is very important that you have a 10-year game plan to eliminate this debt as well.

(6)     Create A Healthy Cash Account 

Cash is an invaluable asset in retirement because emergencies and unexpected expenses don’t go away just because you are retired. The difference is that you had more resources to handle the unexpected when you were working.

(7)     Create your Estate plan

It is also a good time to get a will or a will/trust and all the invaluable documents set up. You want to make sure that your family is taken care of in the event you don’t make it through those 10 years.  Consequently, once you hit retirement, you want to make sure not only that your spouse is taken care of, you also want to make sure your estate transfers to your family when you both are gone.

(8)     Long-term care planning

Ok, don’t ignore this one. Don’t pretend it won’t happen. What is your game plan if you or your spouse have to go to a nursing home or need home health care?  This is a good time to figure out how much long-term care insurance you need.

(9)     Evaluate Life insurance – you might not need it

There comes a point when you don’t need that term life insurance policy that you have been paying for all those years.  At some point, you become self-insured.  Said another way, there comes a point where you have accumulated enough assets that your spouse will be fine without the insurance.

(10)   Start working on your Life Game Plan

Getting the finances in order is essential. At the same time, knowing what retirement looks like is important. You need to be prepared for quite a dramatic shift/change.  What are you going to do with your time? Are you going to volunteer? Give back to ministry efforts? What is most important to you?  Keep in mind that you will have the ultimate freedom to serve and give back. It creates great significance. It pays to be emotionally ready for retirement.


The Details That Credit Card Companies Try to Hide (and Hope You Won’t Read)

The Details That Credit Card Companies Try to Hide (and Hope You Won’t Read)

As they say, the devil is in the details. The credit card companies are doing everything they can to acquire credit card debt. They want to do balance transfers. They want you to apply for these new cards and charge them up. They tempt you with rich rewards programs offering cash back. They give you 0% interest for a long period of time. Why are we seeing the credit boom occur once again?  After all, we have eclipsed 1 trillion dollars in credit card debt sitting at all-time highs.

It is very simple. As a consumer, you are signing up for one of the worst consumer contracts ever created. As a result, the credit card company has little risk to loan money to you. It is the credit card company that is getting the good deal. Take the new Discover cash back benefit.  Why is this card such a great deal for them and horrible for you?

Interest rate

They have the ability to evaluate your credit and assign anywhere from 11% to 23%.  The very best credit rating gets 11%.  The worst is 23% which is only 3 to 4% away from what we use to call penalty rates.

Those Interest Rates are Variable and Going Higher

As interest rates are increased, they will raise your interest rates.  Said another way that rate of 23% has no place to go but up. Interest rates are at historic lows and have no place to go but up.

The Big Bait and Switch with the No Late Fee Charge 

Sure, they won’t charge you a late fee if you are late. They can consider you in default.  The card agreement says this:

You are in default if:

  • …….including failing to make a required payment when due, exceeding your Account credit line or using your Card or Account for an illegal transaction. If you are in default, we may declare the entire balance of your Account immediately due and payable without notice.

The good news is that they won’t charge you a late fee. The bad news is that they can declare you in default. Oh, and if they put you in collection, you will flip the bill for the legal fees for the debt collection.

They Can Change Your Contract 

The card member agreement states “We may cancel, suspend or not renew your Account at any time without notice.”

Then maybe my all-time favorite contract language. “We apply payments and credits at our discretion, including in a manner most favorable or convenient for us.”  I can’t make this stuff up!

You don’t find any of this in the terms and conditions that they show you up front.  It is in the 18-page card member agreement that they send to you after you transfer the balance and start using the card.  Further, it says in the agreement that the minute you use your card you agree with the card member agreement (which you have not read yet).  Fortunately, if you do a Google search you can find the card member agreement on the internet. I will say that this particular card member agreement was not easy to find.

Now any question why they want your debt?

Father’s Day Deals

Father’s Day Deals
Trying to figure out what go get Dad for his day?  Why not do some browsing on-line and save some money in the mean time. has some great Father’s Day Coupons available to help ease the cost of celebrating Dad.  I wanted to share them with you.  ENJOY!
Stein Mart
Peets Coffee
Global Golf
Home Depot
American Express
Bass Pro Shop
CBS Store
John Hardy
Subscribe to the Prudent Money E-Letter

Subscribe to the Prudent Money E-Letter

Join our mailing list to receive the latest Prudent Money news and helpful advice.

Thank you for subscribing to the Prudent Money E-Letter.

Subscribe to the Prudent Money E-Letter

Subscribe to the Prudent Money E-Letter

Join our mailing list to receive the latest Prudent Money news and helpful advice.

Thank you for subscribing to the Prudent Money E-Letter.