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Justin Pritchard

Justin's Banking / Loans Blog


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Some Student Loans due at Co-Signer's Death

Tuesday April 22, 2014

Usually it's helpful to have a co-signer. That person allows you to qualify for a loan that you otherwise wouldn't receive by promising to repay the loan if you are unable or unwilling to do so. Unfortunately, having a co-signer might be a liability years later -- even if you've been making payments on time.

A report out from the Consumer Financial Protection Bureau (CFPB) found that some lenders demand repayment if a co-signer on a private student loan dies or declares bankruptcy. That's a nasty surprise to borrowers who can't come up with a large lump sum or refinance the loan.

How does this happen? Some lenders include language in their agreement that says the loan is due if a co-signer dies or declares bankruptcy. When borrowers fail to repay the loan in full, the loan goes into default, and the borrower's credit suffers (making it even less likely that they'll be able to refinance the loan, much less get a mortgage or auto loan).

The CFPB is looking into the issue and may issue consumer protection regulations eventually, but what can you do in the meantime? If you've got private student loans and you used a co-signer, find out if you can get the co-signer removed from the loan -- it may be possible after several years of on-time payments. That way you'll be in the clear if something happens to your co-signer.

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Ways to Protect your Credit

Friday April 18, 2014

With all of the data and security breaches lately, you may wonder what you can do to protect yourself from identity theft.

The main thing is to keep an eye on your account activity and check your credit reports regularly. If you want to step it up a notch (or more), you can also take measures to protect your credit information. Experian just published a nice infographic that explains how you can do that and compares the features of two approaches: a credit freeze and a fraud alert.

Credit freezes and fraud alerts can help protect you, but they're not perfect. For starters, you never know when an identity thief will try to use your information (even if it was just stolen recently it might not get used for years). Fraud alerts might expire before anything happens, but you can set long-term alerts if you've been a victim of identity theft. Credit freezes, on the other hand, will protect you indefinitely, but your credit will be locked down; you won't be able to borrow money, and other organizations will have a hard time conducting background checks (a potential employer, for example) while the freeze is in place.

Remember that your credit isn't the only thing that thieves are interested in. They also want to get into your bank accounts and other accounts, so keep an eye out for suspicious transactions anywhere you have assets.

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Breaches and Bugs Last a Long Time

Tuesday April 15, 2014

Heartbleed is the latest threat to your identity and online security, and it's worth paying attention to. However, as in many cases, there's little that you can do besides monitor your accounts for suspicious activity (and change passwords after websites have updated their systems).

Fortunately, as the Washington Post reports, "many of the Web's most critical sites -- those belonging to banks and governments -- were not vulnerable to Heartbleed in the first place." So your bank account is probably safe from a direct attack. Things are a lot less safe if you used the same password for your bank and other online services.

Soon, all of this will be behind us -- or it will seem to be. The headlines will move on to other topics, but the stolen information will still be out there, and thieves will be doing the best they can with it. As Money Talks News explains, this is just "the beginning of phishing season." Changing your passwords is prudent, but you really need to stay alert in the coming years and months because that's when things will start happening.

Get in the habit of suspecting that most email messages are bogus, and think twice before giving out information to any inbound callers as well.

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Bankrate Surveys Prepaid Card Fees

Thursday April 10, 2014

Want to know how your prepaid debit card stacks up? Are you paying too much in fees?

It's tough to find out without going through the fee sheets of numerous cards. But that's exactly what Bankrate did as part of the 2014 Prepaid Debit Cards Survey. They looked at 30 cards with a focus on monthly fees, ATM fees, and purchase fees (there are about a million different types of prepaid card fees out there).

Prepaid cards have a reputation for being expensive, but Bankrate provides some statistics that are encouraging: 33% of the cards studied will waive monthly fees if you load enough onto the card each month. That's a great way to keep prepaid cards from costing an arm an a leg -- assuming you don't pay fees every month to load the card (direct deposit and electronic transfers are often free).

Stop Paying Grey Charges

Tuesday April 8, 2014

"Grey charges" are charges to your credit or debit card that you probably don't notice. They're not exactly fraudulent charges, but they are questionable. They may look small at first glance, but according to Equifax and BillGuard, those fees can add up to $500 or more over the course of a year.

What exactly are grey charges? They're charges that you've unwittingly authorized, but that you don't get anything from. For example, you might sign up for a free trial with the intention of cancelling after the trial period. If you're like most people, you'll forget to cancel, and you'll pay small fees until you remember that you need to cancel your subscription.

The best way to avoid paying these charges is to understand what they are and watch your account activity. The Equifax Finance Blog describes numerous examples of grey charges, and reading through the list may help you identify a few leaks in your budget. The most important thing to do is review your accounts regularly and investigate anything that doesn't make sense; even if it seems like a small dollar amount, the costs will add up over time.

Watch your Business Accounts for Check Fraud

Friday April 4, 2014

If you run a business, you may be familiar with the risk of accepting bad checks. But do you keep an eye out for money coming out of your account fraudulently?

Thieves target businesses because they often have more money in their accounts than individuals. Small businesses are especially attractive because they don't have the resources to lock things down as well as large enterprises; if you're busy doing everything, you'll put less energy into security.

With your checking account number and bank routing number, thieves have pretty much everything they need to write checks against your account. They'll get away with it until you notice or run out of money, so keep an eye on your accounts for any unusual transactions. It happens all the time all over the country. For example, there's recently been an uptick in Tennessee.

As a business, you don't enjoy the same protection that you might be accustomed to in your personal accounts - so your bank might not reimburse you for losses, depending on the circumstances. In addition to monitoring your accounts, consider additional measures such as using Positive Pay from your bank and setting up alerts to keep you informed about account activity.

Further reading:

Buying Your First Home?

Wednesday April 2, 2014

Spring has sprung and that means (among other fun things) that home buying season is heating up.

If you're looking to buy your first home, you may wonder about first time homebuyer programs. These programs offer assistance to people who have never owned before, and in some cases they're available if you have owned a home but it's been several years since you were an owner. That's good news for anybody who lost a home during the financial crisis.

First time homebuyer programs can offer great benefits, but there are always strings attached. Learn how they work, when they make sense, and how to find them in our guide for first time homebuyers.

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Where you Bank Matters

Wednesday March 26, 2014

Who you bank with affects how much interest you'll earn. But it also matters where you are physically in some cases.

Big banks have a reputation for offering one-size-fits-all products. That's true to an extent, and it has to be that way for them to serve millions of customers. However, a recent WalletHub study shows that big banks offer higher interest rates in certain geographical areas. Assuming you're in one of those areas, you can enjoy the convenience of plentiful bank branches (assuming you want that) and interest rates that are competitive with online banks.

Of course, it's always worth shopping around. For the highest interest rates on savings accounts, online banks almost always come out ahead. But local banks and credit unions are worth a look, and they are certainly good candidates for your brick-and-mortar bank as well.

Help Shape Prepaid Card Fee Disclosures

Friday March 21, 2014

Do you care about how prepaid card fees are disclosed (or not)? The Consumer Financial Protection Bureau (CFPB) wants your opinion.

CFPB is trying to figure out the best format -- if there is one -- for prepaid card issuers to use when describing fees. If you've ever looked into these cards, you know that fee structures can be confusing: every card charges different fees for different things, and each issuer might offer fee waivers if you meet certain criteria.

Prepaid cards have gained popularity in recent years as an alternative to bank accounts. Consumers who can't or won't use a traditional bank or credit union can find some of same services from a prepaid debit card. But prepaid cards have a reputation for being expensive; they might seem less expensive than a bank at first glance, but sometimes they end up costing a lot more.

So, should there be a required format for disclosing fees, and if so, what should it look like? I'm not sure any one format will be adequate for explaining the subtleties of fees and fee waivers; the cost really depends on how you use the card, how long you keep it, and what you're willing to live without. Let the CFPB know what you think.

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What can you do to Protect Debit/Credit Cards?

Tuesday March 18, 2014

It's so easy to pay with plastic. If you've got a debit card or credit card, making a purchase is as simple as swiping your card or punching digits into a box online. Unfortunately, it's also easy for thieves to use your card as well.

Every once in a while the headlines describe a major data breach where countless card numbers have been stolen. The next step for thieves is to print fake cards and make purchases or start spending from those cards online. Money will come from your account, and if you don't notice it's missing, you'll have to eat the losses (this is especially troublesome if you've got a debit card).

In an ideal world, security would be better and it would be harder for thieves to pull this off. However, banks and card issuers have been slow to improve security. But as Ron Lieber explains, you're not powerless when it comes to protecting your cards. By taking some fairly easy steps (assuming your card offers alerts and other security features), you can take matters into your own hands.

Making things harder for thieves is a great idea. That said, there's no substitute for monitoring your accounts; the sooner you report problems, the less you have to pay.

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