Chapter 2

The Credit Card Mistake That’s Costing Millenials

Posted on September 17, 2014 by Melissa Hart

“A new survey from BMO Harris Bank shows consumers are confused on how credit card balances affect credit scores. . .”

While using a credit card is one of the easiest ways to build credit, there are plenty of misconceptions about how best to do that. According to this survey

39 percent of Millennials—people between ages 18 to 34—believe carrying a balance increases their credit scores. In fact, carrying a balance does not improve credit scores and can actually hurt scores.
23 percent of those surveyed indicated that a person’s educational level affects his or her credit score. In fact, a credit score is based only on the information in your credit report, and educational level is not included in your credit report.
27 percent of those surveyed thought checking their credit scores would lower their credit score. In fact, the opposite is true: If you regularly check your credit scores, it’s likely you’ll make financial decisions that will improve your credit score.

For more information go to http://finance.yahoo.com/news/credit-card-mistake-thats-costing-103040745.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

Discuss why a credit score is important.
Stress the importance of “managing” credit card debt.

Discussion Questions

What affect will your credit score have on the finance charges you pay for credit purchases?
How can your credit score affect your ability to purchase a home or an automobile?
Assume you have a low credit score and have been turned down for a home mortgage. What steps can you take to increase your credit score?

Categories: Chapter 2, Chapter 5, Chapter_11, Credit Cards, Credit Mistakes, Credit Scores | Tags: credit capacity, Financial checkup, money management, Opportunity cost | Leave a comment

Six Bank Fees to Avoid

Posted on September 6, 2014 by Melissa Hart

Each year, it seems that banks are reporting ever higher profits. How do they make so much money? By charging customers service fees!

Here is a list of six fees that you should avoid:

ATM Fees-It’s important to know where ATM’s are located that are in your network. This will help you avoid a charge to use another bank’s ATM.
Account Fees-Check the fine print. Is there a fee if your balance falls below a certain limit? The limit fees are monthly and can really add up.
Overdraft Fees-Know how much money that you have to spend. Budget wisely and make sure that you have a cushion in your checking account, in case of unexpected expenses.
Fancy Checks-How cute! How much do those Frozen Personalized checks cost? The reality is that the checks and the shipping costs can be very expensive. There are numerous options to acquire cheaper checks (Sam’s club, BJ’s, Costco, Walmart). One more thing to consider: checks are used much less frequently today, so, that box of Frozen checks might last a really long time, make sure you like the design.
Credit Reports-You can get a copy of your credit report for free from AnnualCreditReport.com, so, don’t pay for one.
Loan Interest– As an incentive, banks offer a discount by utilizing more than one of their services. You might get a lower rate, if you agree to direct deposit, in exchange for a reduced interest rate on your loan.

Bottom Line: Do your homework when it comes to bank fees. There are many ways to avoid spending money on unnecessary fees.

For more information: http://www.wisebread.com/are-you-paying-these-6-unfair-banking-fees

Teaching points:

Discuss these six fees with your students. Survey how many have paid at least one of these fees.
Have students research at least two local banks and report back on the account fees that each bank charges.

Discussion items:

Do you believe that any one demographic pays more fees than another? Why?
What are some other ways that people can avoid these fees?

Categories: Bank Fees, Chapter 2, Chapter 4 | Tags: ATM, bank fees, checks | Leave a comment

Millions of people serve as fiduciaries, someone who manages money or property for another person who is unable to do so. This responsibility provides caring assistance while also protecting the person from potential scams and fraud. Many older Americans experience declining capacity to handle finances, which can make them vulnerable. The main responsibilities of a fiduciary are to: (1) act in the person’s best interest, (2) manage money and property carefully, (3) keep money and property separate from own, and (4) maintain good records.

The Consumer Financial Protection Bureau (CFPB) recently published four guides to help financial caregivers, particularly those who handle the finances of older Americans. These guides are designed for those who serve as agents with power of attorney, a court-appointed guardian, a trustee or as a government fiduciary, such as a Social Security payee.

The guides will assist financial caregivers as they: (1) plan and implement their duties, (2) attempt to avoid scams and financial exploitation, and what to do if the person is a victim, and (3) require additional information; the guides tell where to go for help.

For additional information on a managing someone else’s money, go to:

http://www.consumerfinance.gov/managing-someone-elses-money

Click to access 201306_cfpb_msoa-participant-guide.pdf

Teaching Suggestions

Have students talk to someone who manages money on behalf of someone else. Obtain information about the activities and concerns they have encountered.
Prepare a list of actions that might be taken to avoid scams targeted at older consumers and other vulnerable audiences.

Discussion Questions

What are situations that might require a person to manage the money of another person?
What are examples of frauds and scams aimed at older consumers?
How might a person avoid frauds and scams?