For example, here’s one myth that I was discussed in a recent article: “Anyone can get their credit card bill reduced”.  Well that’s certainly a myth.  Take a look at the following article for more credit card myths that you should know about.

8 Credit Card Myths You Need To Know

Tip 1: Shop for a loan before you visit a dealership or bid for a car over the Internet. After reviewing your credit report to correct errors (see Check your credit report for accuracy), ask your bank and several other lenders about their loans and costs so you are in a better position to get the best possible terms. If you’re a homeowner, you could also consider using a home equity loan or line of credit instead of a traditional auto loan, but remember, you could lose your home if you can’t repay the loan. Know what car dealers are offering in terms of financing by reading their advertisements, making phone calls or checking the Internet. Many dealers offer discounted loans (such as zero-percent financing) or cash rebates, but not both. "In some situations, it may be better to accept the dealer’s rebate and pass up the zero-percent financing in favor of a loan from a bank that does charge interest," said Joni Creamean, an FDIC Senior Consumer Affairs Specialist.

Tip 2: Think carefully about how much car you can afford and how much of a loan you need. The dollar amount of your loan largely will be determined by the sales price of the vehicle minus your down payment, any rebates and the value of any trade-in. Don’t forget, however, the costs of auto insurance, sales taxes, annual property taxes on the car (if any), and options you may be inclined to buy, such as an extended warranty. Also remember that every item you add to your loan instead of paying upfront will add to the total cost of the loan because you will pay interest on the amount financed.

Tip 3: Consider getting "pre-qualified" by a lender for a specific loan amount. "This doesn’t mean you have been approved for a loan," said Creamean, "but it will help you know approximately how much you can afford to spend on a car and how much it will cost you in finance charges before you get to the dealership." Consumer advocates also suggest that you not tell the dealer if you’ve been pre-approved elsewhere for a loan until after you’ve negotiated the best price on a car. They say that some dealers may be less flexible on the price of the vehicle if it’s clear that the dealership won’t be earning money on a loan.

Tip 4: Understand the costs and risks of choosing a long repayment period. "A longer loan term will be tempting because it means a lower monthly payment, but that also means a higher total cost overall because you will be paying interest longer," warned Creamean. For example, a $25,000 loan at a seven percent interest rate for three years will cost $772 a month. Stretching the term to five years will drop the monthly payment to $495 but will increase the total cost of the loan by about $2,000. Creamean offered another reason to be cautious with a repayment term of five years or more: The aging vehicle’s resale value may fall below what you owe on the loan if the terms are spread out too long. "In the later years of the loan, you’ll still be making payments on what is an older vehicle that may have a lot of repair and maintenance costs," she said. "And if you decide to sell your car, you may have to come up with extra cash out of your own pocket just to pay off the old loan."

An identity thief is someone who obtains some piece of your sensitive information, like your Social Security number, date of birth, address, and phone number, and uses it without your knowledge to commit fraud or theft.

How Identity Thieves Get Your Information

Skilled identity thieves use a variety of methods to gain access to your personal information. For example, they may:

• Get information from businesses or other institutions by:
  • Stealing records or information while they’re on the job
  • Bribing an employee who has access to these records
  • Hacking these records
  • Conning information out of employees
• Rummage through your trash, the trash of businesses, or public trash dumps in a practice known as "dumpster diving".
• Get your credit reports by abusing their employer’s authorized access to them, or by posing as a landlord, employer, or someone else who may have a legal right to access your report
• Steal your credit or debit card numbers by capturing the information in a data storage device in a practice known as "skimming." They may swipe your card for an actual purchase, or attach the device to an ATM machine where you may enter or swipe your card.
• Steal wallets and purses containing identification and credit and bank cards.
• Steal mail, including bank and credit card statements, new checks, or tax information
• Complete a "change of address form" to divert your mail to another location
• Steal personal information from your home
• Scam information from you by posing as a legitimate business person or government official

How Identity Thieves Use Your Information

Once identity thieves have your personal information, they may:

• go on spending sprees using your credit and debit card account numbers to buy "big-ticket" items like computers that they can easily sell
• open a new credit card account, using your name, date of birth, and Social Security number. When they don’t pay the bills, the delinquent account is reported on your credit report.
• change the mailing address on your credit card account. The imposter then runs up charges on the account. Because the bills are being sent to the new address, it may take some time before you realize there’s a problem.
• take out auto loans in your name
• establish phone or wireless service in your name
• counterfeit checks or debit cards, and drain your bank account
• open a bank account in your name and write bad checks on that account
• file for bankruptcy under your name to avoid paying debts they’ve incurred, or to avoid eviction
• give your name to the police during an arrest. If they are released and don’t show up for their court date, an arrest warrant could be issued in your name.

Protecting Yourself

Managing your personal information is key to minimizing your risk of becoming a victim of identity theft.

• Keep an eye on your purse or wallet, and keep them in a safe place at all times.
• Don’t carry your Social Security card.
• Don’t share your personal information with random people you don’t know. Identity thieves are really good liars, and could pretend to be from banks, Internet service providers, or even government agencies to get you to reveal identifying information.
• Read the statements from your bank and credit accounts and look for unusual charges or suspicious activity. Report any problems to your bank and creditors right away.
• Tear up or shred your charge receipts, checks and bank statements, expired charge cards, and any other documents with personal information before you put them in the trash.

How To Tell If You’re a Victim of Identity Theft

Monitor the balances of your financial accounts. Look for unexplained charges or withdrawals. Other indications of identity theft can be:

• failing to receive bills or other mail signaling an address change by the identity thief;
• receiving credit cards for which you did not apply;
• denial of credit for no apparent reason; or
• receiving calls from debt collectors or companies about merchandise or services you didn’t buy.

What To Do If Your Identity’s Been Stolen

If you suspect that your personal information has been used to commit fraud or theft, take the following four steps right away. Follow up all calls in writing; send your letter by certified mail, and request a return receipt, so you can document what the company received and when; and keep copies for your files.

1. Place a fraud alert on your credit reports and review your credit reports.
   Contact any one of the nationwide consumer reporting companies to place a fraud alert on your credit report. Fraud alerts can help prevent an identity thief from opening any more accounts in your name. The company you call is required to contact the other two, which will place an alert on their versions of your report, too.
   

   Equifax: 1-800-525-6285; www.equifax.com
   Experian: 1-888-EXPERIAN (397-3742); www.experian.com
   TransUnion: 1-800-680-7289; www.transunion.com

   In addition to placing the fraud alert on your file, the three consumer reporting companies will send you free copies of your credit reports, and, if you ask, they will display only the last four digits of your Social Security number on your credit reports.

2. Close the accounts that you know, or believe, have been tampered with or opened fraudulently.

3. Contact the security or fraud department of each company where you know, or believe, accounts have been tampered with or opened fraudulently. Follow up in writing, and include copies (NOT originals) of supporting documents. It’s important to notify credit card companies and banks in writing. Send your letters by certified mail, return receipt requested, so you can document what the company received and when. Keep a file of your correspondence and enclosures.

4. When you open new accounts, use new Personal Identification Numbers (PINs) and passwords. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your Social Security number or your phone number, or a series of consecutive numbers.

5. File a report with your local police or the police in the community where the identity theft took place.
   Get a copy of the police report or, at the very least, the number of the report. It can help you deal with creditors who need proof of the crime. If the police are reluctant to take your report, ask to file a "Miscellaneous Incidents" report, or try another jurisdiction, like your state police. You also can check with your state Attorney General’s office to find out if state law requires the police to take reports for identity theft. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.

6. File a complaint with the Federal Trade Commission.
   By sharing your identity theft complaint with the FTC, you will provide important information that can help law enforcement officials across the nation track down identity thieves and stop them. The FTC also can refer your complaint to other government agencies and companies for further action, as well as investigate companies for violations of laws that the FTC enforces.

7. You can file a complaint online at www.ftc.gov/bcp/edu/microsites/idtheft/. If you don’t have Internet access, call the FTC’s Identity Theft Hotline, toll-free: 1-877-IDTHEFT (438-4338); TTY: 1-866-653-4261; or write: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

Bonds are a security and are generally good investments for the older crowd who wants to earn higher interest rates for income. Bonds also belong in younger portfolios to enhance investment balance. But beware; the Big Bad Wolf may be knocking on the bond investing door.

In 2009 you couldn’t make 1% a year in the safest investments with easy access to your money. Examples include: money market bank accounts, short-term CDs, T-bills, savings accounts, and money market funds. But you could earn more than 6% in some bonds and over 4% in the safest ones in the world, the U.S. Treasury bond. Why not jump on these good investments?…

The answer is that bond investing carries risk… more than the average new investor thinks. First, there is credit risk. The issuer of the security could get into financial trouble and fail to make timely payments of interest as promised. Even worse they could go broke. This risk can be greatly reduced by putting your money into a bond fund vs. an individual issue.

Interest rate risk is another animal altogether, and with interest rates at all-time lows the wolf is huffing and puffing at the door of bond investing. Unfortunately, the new investor is likely unaware of his presence and does not sense the danger. In a few minutes, you’ll get the picture.

When you buy a bond you are lending the issuer (like a corporation) money for a promise that reads something like this. “Lend me $1000 and in return I’ll pay you 5% a year in interest. In the year 2035 I’ll pay you back your $1000.” After the issue is originally sold to an investor, it then trades in the secondary market. The good news is that the bond can then be bought and/or sold any time between issue and 2035.

The scary news is that the price or value of the security changes as it trades in the market. When interest rates are falling these fixed-interest-rate investments go up in value. When interest rates go up, interest rate risk can bite you in the posterior… because bond prices (values) go down.

That’s how bond investing works. Picture owning the 5% security we used as an example. As long as the issuer remains financially strong and interest rates remain stable, your investment should be worth about $1000. What would happen if rates in the economy headed toward 10% for similar bonds being issued? Remember, your 5% rate is locked in until 2035.

Only a fool would offer you $1000 for a security that pays $50 a year when any investor could get closer to $100 in yearly income in the open market. There are plenty of fools out there, but no one is that dense. Your investment is headed toward a ½-off sale.

Bonds can be very good investments when interest rates are falling. They are not good investments when rates are on the rise. It doesn’t matter if you are rich or poor, young or old, new investor or experienced. The wolf is knocking on the bond investing door, and sooner or later interest rates will go up. Don’t let interest rate risk take a big bite out of your investment portfolio. Don’t chase bonds just to earn higher interest rates.

Fortunately, there are cheaper alternatives to expensive family outings. They provide the opportunity to have just as much fun at a fraction of the cost. Some are even free.

Movies and Music

Kids are often itching to see the newest releases at the movie theater. Doing so even once a month, however, can get pricey. One alternative in some areas is the drive-in. Admission is usually much cheaper than it is at a regular theater, and some let you bring your own drinks and snacks. Drive-ins usually show fairly new releases, so the kids can say they saw something that’s not out on video yet.

Some theaters offer reduced-price matinees during the day. Some even have free kid-oriented movies on weekend days. These options offer the theater experience without the outrageous cost.

Kids often want to go to concerts, but tickets to see the most famous bands are far from cheap. Check your local paper for free concerts in the park. Many areas have them during the warm months. Young children can enjoy the music without the huge crowds and deafening sound systems, and older children might gain an appreciation for less well-known bands.

The Great Outdoors

Nature offers a wealth of possibilities for family outings. Camping is a wonderful activity for families, and it doesn’t have to be expensive. It can be as simple as pitching a tent in the back yard, or you can spring for a camper and rent space at a campground. Bring the grill and some hamburgers or hot dogs, or catch some fish to fry.

Parks are great for day trips. Those with playground equipment can keep youngsters entertained for hours on end. Hiking trails offer opportunities for exercise and exploration. Most parks have picnic facilities, so you can pack a lunch instead of eating out.

Other Ideas

Here are some more inexpensive family activities to consider:

* Play miniature golf. Admission is usually quite reasonable, and it provides the opportunity for relaxed yet engaging family competition.

* Visit a petting zoo. These small zoos do not have the exotic animals you see at larger ones, but kids can feed and pet the animals.

* Go to a museum. Some offer cheap or free admission, while others cost more. But the larger and more expensive ones often sell season passes, so if you live close by, you can visit numerous times for one low price.

* Go boating. If you’re fortunate enough to live near a body of water, boating is fun and relaxing. Canoe and paddleboat rentals are inexpensive, and when you’re done boating there are usually other cheap or free activities in the area.

* Attend events at a nearby college. These may include plays, concerts, dance recitals and movie showings. Prices are low, and student discounts usually apply to kids, too.

Having fun as a family doesn’t require a six-figure income. If you look hard enough, you can find lots of free or cheap activities that parents and kids can enjoy just about anywhere.

It’s easy to dismiss cutting back on little things. A few dollars a month won’t make a significant difference in the big picture. But a few dollars here and a few dollars there adds up to a few more dollars. When you cut back in a lot of small ways, you could end up with a lot more money at the end of the month.

Waste Not, Want Not

One thing we can do that is good for the budget is stop wasting so much. This can apply to many areas in our lives. From eating to home heating, waste equals money going down the drain unnecessarily.

Cooking for the family instead of eating takeout or dining out is a great way to save money. But if you’re throwing food out, the benefit is reduced. So if you have leftovers, don’t let them end up in the trash. Some dishes freeze well, and this makes for easy dinners when you don’t have time to cook. You could also eat dinner leftovers for lunch the following day.

If your home is not well insulated, you’re probably wasting lots of money on home heating and cooling. Insulating will cost some money up front, but it will pay for itself quickly. If you have drafts around windows and doors, weatherstripping can help maintain the temperature of your home.

Most households waste an unbelievable amount of electricity. This can be prevented in part by using energy efficient appliances and light bulbs. Turn lights, televisions, computers and other devices off when you’re not using them, and open blinds to take advantage of the sun’s light during the day.

Do Yourself a Favor: Do It Yourself

Any time you pay someone else to do something that you could do yourself, you’re spending money unnecessarily. This applies to little things like buying coffee instead of making your own, as well as to larger expenses such as home repairs.

Many of us buy coffee or a soft drink from a convenience store or coffee shop on the way to work in the morning. This can really add up over time. Instead, make your own coffee, or buy soda in 2-liter bottles and pour some into a smaller bottle or cup to take with you. The same applies to lunches. Instead of springing for fast food, take a sandwich or something microwavable to work.

While we’re not all good at all types of repairs and maintenance, most of us can do some things for ourselves. Maybe you could change your own oil instead of paying someone else to do it. If the walls need painting, consider getting friends and family to help you do it instead of hiring a painter. Things like these can save us a noticeable amount of money right away.

When you add up the savings, little things can make a big difference to the budget. So take a close look at your budget and see what small expenses are lurking there. If you can eliminate or reduce them, it could positively impact your bottom line.

Credit repair agencies claim that they can remove bad entries from your credit report. But did you know that you can often have them removed yourself at a much lower cost? There are two methods by which you may be able to get negative entries removed from your report.

Tip Number 1: File a Dispute with the Credit Bureaus

The Fair Credit Reporting Act (FCRA) requires credit bureaus to investigate any item on your credit report that you dispute. If the information is found to be false, inaccurate or unverifiable, it must be corrected or removed from your report. The bureaus have 30 days from the time they receive notice of the dispute to complete their investigation.

If there is any inaccurate information on your credit report, a dispute is certainly in order. But some people have had luck disputing items that were in fact accurate, including judgments, collections accounts and repossessions. If such items are not verified by the creditor (or the court in the case of judgments) within the time limit for investigation, they must be removed.

If you decide to dispute a legitimate entry, simply write a letter to each of the credit bureaus stating that you dispute that entry. No explanation is required. But keep in mind that if the entry is verified, it will remain on your report. And if the creditor verifies the information after the 30-day time limit, the credit bureau may reinstate the entry as long as they notify you at least 5 days before doing so.

Tip Number 2: Negotiate with Creditors

Dealing with creditors can be intimidating, especially if you’re not on good terms with them. But speaking to your creditors directly may help you get negative information removed from your credit report.

If you only have a late payment or two on your account, a creditor might be willing to remove the derogatory information once you’ve resumed a regular payment schedule. If you’ve experienced repossession or had an account turned over to collections, payment in full might persuade them to remove the negative entry. It sounds like a long shot, but you never know until you ask. Requests to remove late payment information may be made after you’ve brought you account current. But if you’re hoping for removal of a repossession or collection action, it’s best to negotiate a deal before you pay anything.

If You Can’t Get the Bad Entries Removed

There is no guarantee that disputing information on your credit report or negotiating with creditors will get negative items removed from your record. If it doesn’t, the best thing you can do is try to build up some positive information on your report.

The first thing you need to do when trying to rebuild good credit is bring past due accounts current. Try to work out a deal with your creditors to accomplish this, or talk to a credit counseling agency. But don’t miss payments on current accounts to put money toward those that are past due. If it comes down to paying one or the other, keep the current account current.

Once you’ve brought all of your accounts current, put a priority on keeping them that way. Making your payments on schedule will raise your credit score, and with the passage of time, the good entries may outweigh the bad.

Potential Benefits of Credit Cards

A Fast, Unsecured Loan: Credit cards enable you to buy goods or services now and – unlike debit cards – pay later. Your payment won’t be due for at least 21 days after your monthly credit card bill is mailed or delivered.

Options to Avoid Interest: If your card has an interest-free grace period and you pay the balance off each month, you won’t be assessed finance charges.

Building a Good Credit Record: If you’re careful about how you manage your credit card, especially by paying your bill on time, your credit score will go up and you may qualify for lower interest rates on loans and credit cards.

Potential Concerns of Credit Cards

Interest Charges: If you don’t pay your card balance in full each month or your card doesn’t have an interest-free grace period, you will pay interest. This can be costly, especially if you only pay at or near the minimum amount due each month. You also may be subject to interest rate increases. However, as of August 20, 2009, you must be told at least 45 days before any rate increases or other significant change in account terms takes effect. If you don’t agree with the new terms, you generally can cancel the card, pay off the balance over time at the original rate and terms, and avoid the new terms.

Overspending: “High credit limits and the ability to earn rewards for using a credit card can make it easy for some people to spend beyond their means,” cautioned Janet Kincaid, a Regional Ombudsman at the FDIC. “Don’t get caught in the cycle of buying things you don’t need or can’t afford just to get points for future travel or other rewards. Without even realizing it, you may end up paying more in interest than you’re earning in rewards.”

Fees: Credit card fees are likely to include those for paying late and going over the credit limit. Some cards also have annual fees.

Consumer Protections for Credit Card Users

Federal law limits your losses to a maximum of $50 if your credit card is lost or stolen, although industry practices may further limit your losses. You are also protected against billing errors. In addition, federal law may allow you, under certain circumstances, to withhold payment on defective goods until the problem has been corrected. These protections are a big reason why most experts recommend credit cards – not cash, checks or debit cards – when paying for big ticket items or services that you want to know will work as promised.

Also, the Credit Card Accountability Responsibility and Disclosure Act of 2009 is intended to help shield consumers from abusive fees, penalties and interest rate increases. Some provisions of this law took effect August 20, 2009, but most start next year. For example, starting February 22, 2010, a card issuer can’t allow you to go over your credit limit and then charge a penalty fee for having done so unless you explicitly agree to this practice in writing. In contrast, most debit card issuers will assess a fee for making a purchase or other transaction that exceeds your account balance.

Final Words of Wisdom

Credit cards may be especially useful if you want to pay for things when your bank account balance is low or to take advantage of a no-interest grace period.

There’s also a different type of credit card, a “charge card,” that must be paid in full each month. “A charge card may be a good option for people who are not planning to carry a balance and want to avoid interest charges,” said Creamean. “However, if you use your charge card and then have a financial setback, you still need to pay in full each month, whereas with a credit card, you could carry a balance forward until your situation is better.”

Consumer Protections for Debit Card users

Federal law includes protections against debit card errors and the loss or theft of your card, although consumers are required to promptly report a lost debit card or unauthorized transaction. In addition, industry practices may give you added protection.

“To be fully protected under the law, you must submit specific information about unauthorized debit and ATM card transactions within a short time period,” stressed Kirk Daniels, an FDIC Supervisory Consumer Affairs Specialist. “That’s also why it’s important to review your bank statements and report a problem as soon as possible.”

Unlike the federal protections for credit cards, which cap your liability for unauthorized charges at $50 (see the credit card section), your liability limit for a debit card depends on the situation and your promptness in reporting the lost card or unauthorized transaction. Specifically, the maximum legal liability is $50 if you notify the bank within two business days after discovering an unauthorized transaction. But if you notify your bank after those first two days, under the law you could lose up to $500, or perhaps much more. Some banks may voluntarily waive all liability for unauthorized transactions if the cardholder took reasonable care to avoid fraud or theft, but consumers must still report errors promptly.

In addition, with transaction errors, banks have up to 10 business days (and in some cases 20 business days) to promptly conduct an investigation after receiving notice from the debit cardholder. If more time is needed, typically because of special circumstances, they can take up to 45 days (and in some cases 90 days) to investigate, but they generally have to credit the consumer’s account for the amount of the alleged error on a “provisional” (temporary) basis pending the outcome of the review.

“Until the bank provides provisional credit, you could temporarily be out of pocket for the amount in dispute,” said Richard Foley, an FDIC attorney who specializes in consumer issues. “This would not typically happen with a credit card because consumers can withhold payment of the amount in dispute.”

Also, as discussed on the next page, consumers have better federal protections when they purchase faulty goods with credit cards.

Final words of wisdom about Debit cards

Debit cards may be especially useful for small and routine purchases, but they are considered less beneficial than credit cards for major purchases or buying items online because of the more limited protections in cases of unauthorized transactions or disputes.

Next time well move on to Credit cards and talk about their benefits and drawbacks.

Potential Benefits

Convenience and Speed: As with credit cards, debit cards are a way to pay for purchases quickly, without writing checks or having to make sure you are carrying enough cash.

Limiting Your Costs: As long as you don’t overdraw your account (see the fees section below), debit cards are a good way to pay for purchases without borrowing money and paying interest. You also may avoid other costs associated with credit cards, such as annual fees.

Cash Back: You can use a debit card when you make a purchase at stores or to withdraw cash from your bank’s ATM (generally at no charge). In contrast, most credit cards charge fees and interest for cash advances.

Safety: You won’t need to carry large amounts of cash that can be lost or stolen.

Potential Concerns

Fees: Be especially aware of overdraft fees, which can occur if you don’t have enough funds in the account when you swipe your debit card but the transaction is still processed.

“You can avoid overdraft fees, which can be costly, by keeping track of your debit card purchases and other transactions and being aware of your balance,” warned Joni Creamean, Chief of the FDIC’s Consumer Response Center. If overdrafts are a problem for you, consider keeping a little extra in your account, as a cushion. Or, arrange with your bank to link your checking account to a savings account or line of credit. Even though your bank may charge for those services, normally they cost considerably less than overdraft fees.

New restrictions on overdraft fees also are coming. Under Federal Reserve Board rules that will take effect July 1, 2010, you can generally only be charged a fee for ATM and one-time debit card transactions that overdraw your account if you have opted in (agreed) to an overdraft service from your financial institution. Before you can opt in, your bank must provide you a written notice explaining its overdraft services and fees.

Dealing with Problem Transactions Can Be More Difficult: You do not have the right to withhold payment on damaged or defective merchandise, as you do in some instances with credit cards.

Beware of “Holds” on Funds: At the time of purchase, merchants immediately place a temporary hold or “block” on funds for the transaction as protection against fraud, errors or other losses. If the final purchase price is unknown when the card is swiped, the hold will likely be for more than you actually spend. One common situation involves a hotel putting a hold of perhaps as much as $250 or more for each day of an anticipated stay when you use a debit card (or credit card) to check into a room. Another example is when you use your debit card at the gas pump. The hold will be removed when the final transaction is processed, nearly immediately or perhaps a day or two later, but until then, you won’t have access to that amount in your account.

Next time we’ll talk about how federal law protects certain consumer debit card transactions.