Featured, Strategies to Save

Clever Ways to Reduce or Eliminate Your Housing Costs

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

We all know that aiming to live well below your means will help you save more money, get out of debt, and get ahead financially overall. To supercharge this process, you may want to consider attacking your largest expense: housing.

Just being able to save $200, $500, or more each month on housing could put a large dent in your debt repayment or help you seriously pad your savings. Reducing or eliminating your housing expenses might sound difficult, but there are so many different strategies, at least one could work for you.

What’s more is that these options don’t have to be permanent. You can always go back to a more traditional housing situation once you feel like the arrangement has run its course.

See if one of these ways of cutting your housing costs might work for you.

Be Energy Efficient

The eco-revolution is here, and as a result, there are so many ways to save on utilities. A bonus is that some energy-efficient modifications and products can help you earn federal tax credits.

The list of things you can do is long and can get expensive, but there’s some low-hanging fruit when it comes to reducing your energy consumption:

  • Stop air leaks with caulk, insulation, or weatherstripping
  • Swap out incandescent lights for LED lights
  • Turn down your water heater and get a jacket for it
  • Plug your devices into powerstrips that minimize idle current usage (or unplug devices altogether)
  • Use rainwater barrels for your outdoor water needs
  • Air-dry your clothing
  • Choose light colors on flooring and walls to minimize artificial light use during daylight hours
  • Program your thermostat
  • Get alerts for higher priced kilowatt rates during certain hours of the day

You get the point. The more you can minimize your energy use, obviously the more money you’ll save on these costs. Pick a few that work for you, then use the money saved to get ahead in your finances.

Put Your Bills on Autopay

Not only will this small gesture save your sanity, it could potentially save you fees and penalties connected with late payments. You can set up automatic payments to be deducted from your bank account or a credit card account. If you choose the latter, be sure to avoid carrying a balance from month to month and pay your credit card bill on time as well. Otherwise, the interest and late fees from missing your credit card payment could cancel out the benefits of your autopay set-up.

Appeal Your Property Taxes

If you’ve ever gotten those solicitations in the mail from companies that claim to reduce your property tax bill, don’t put it in the junk pile quite yet. According to the National Taxpayers Union, up to 60% of U.S. properties are over-assessed. This means that 60% of Americans could be paying inflated property tax bills.

Many property owners don’t even know that they can get their property tax bill reduced via an appeal process. Because of this, it’s very possible that you are paying too much for your property taxes.

The appeal process to get your taxes can seem daunting, but it’s usually a string of paperwork and deadlines. Of course, you’ll be dealing with government entities so that could add a layer of complexity to the whole ordeal, but it’s not insurmountable.

If you have the time and ambition, it’s a process you could easily undertake yourself. If not, it may be worth hiring help to file and follow up through the property-tax appeal process. If the appeal is successful and your property taxes are reduced, you’d fork over a portion of the savings to the firm or person you hire.

Shop Around for Insurance

If you’ve got home insurance, you are likely to have other policies for vehicles, and perhaps you also have coverage for health and life insurance benefits, too. If you’ve got insurance needs that require multiple policies, you can leverage your buying power to shop around for better rates.

Shopping around for insurance can seem straightforward, but be ready to use your brain to the utmost in this endeavor. Not only will you need to compare prices, but you’ll also want to compare things like coverage amounts, premiums, deductibles, and available riders at the quoted prices.

Fortunately, there are comparison sites and independent insurance agents that can make this task a little easier. Either way you do it, it’s a good idea to check around every once in a while to make sure your current insurance provider is being competitive and offering you the best rate.

Become a DIYer

One of the most costly expenses of owning a home can be maintenance, repairs, and upgrades. Save money by learning to do some things around the house yourself. There are many resources to help you with anything you don’t know much about, from books, to websites, to YouTube. Though it can take more time, you might come out ahead by cutting your own grass or installing your own kitchen backsplash.

If you’ve got complicated jobs that require special expertise and equipment, consider a partial DIY approach. For example, if you’re redoing your bathroom, you might ask the contractor about things you can do yourself to shave the bill down some. Demolition and cleanup of existing fixtures might be the type of work you can handle.

Don’t be afraid to experiment, but definitely be wise about the projects you decide to take on yourself. Finding the right balance between hiring and DIYing can save you time, money, and headaches as a homeowner.

Rethink Your Home Purchase Plan

Getting a conventional mortgage with vanilla terms that include a 10%-20% down payment and a 30-year loan period are all too familiar to the home-buying public. But if you really want to save on the single largest expense in your life, you might have to be a little more flexible than the standard terms accepted on most home loans.

Larger Down Payment

One approach to consider is putting down at least 20% on your home purchase. This will allow you to skip private mortgage insurance (PMI), which can amount to thousands of dollars over the life of your home loan. PMI can eventually go away over the life of the loan when certain criteria is met, but you can save more money by dumping it sooner than later.

Refinance Your Mortgage

Many people refinance their homes in hopes of getting a lower monthly payment or locking in a lower interest rate. Adjusting these numbers downward can definitely save money for some homeowners over the long run.

However, refinancing your home loan is not a silver-bullet solution that will work in every scenario. In some cases, it makes perfect sense to refinance, and in others, it wouldn’t be a good idea. The best thing to do is run the refinance numbers and make a decision. After doing the math, you might actually find that fees and extended loan terms could cause you to lose money rather than save it.

Make sure you fully understand the terms of your refinanced mortgage along with the potential impact on your entire financial outlook. Most definitely, confirm your assumptions about this move with math. If you need help running the numbers, check out this refinance calculator from myFICO.

Pay Cash for Your Home

While not an option for the average American, paying cash for your home is not unheard of. Paying cash for a home would eliminate tens, maybe hundreds of thousands of dollars in interest, mortgage fees, and PMI. If you think you’d like to go for the gusto and pay cash for a home, consider ways to make this feat possible:

Drastically Change Your Lifestyle

Though these options aren’t for everyone, they are still worth a mention. These suggestions are for those who might be willing to change their lifestyle in order to garner the most savings possible when it comes to housing.

Get a Roommate (or Two)

The home-sharing revolution has caught on, and everyone from young professionals to empty nesters are finding boarders on places like Craigslist and Airbnb. If it works out, it can truly be a good solution to help lower your housing costs. Plus, having a roommate can be temporary or longer term, based on your living preferences.

Again, this option is not for the faint of heart. Adding a roommate to your living equation could be utterly disastrous or surprisingly pleasant, so choose your housemates wisely.

Buy a Multifamily Unit, Rent One Unit Out

Depending on the location and property type in these situations, homeowners can often cover their entire mortgage amount with their renters’ payments. It can definitely have its benefits, but don’t buy that two-flat just yet.

Remember, with this arrangement, you’ll be swimming deep in the waters of landlordship. How it all pans out can be based on so many variables: the landlord, tenant, property, location, and a host of other factors can make this arrangement easy income or a nightmarish headache.

If things go wrong with your property, your tenant doesn’t share the burden of fixing things though they live there just the same. There can be costs associated with maintenance and repairs that go well beyond the monthly income your rented unit brings in. You’ll want to have a comfortable cash cushion for incidentals before starting your homeownership journey as a landlord.

Downsize

You don’t have to join the tiny home revolution to downsize (though it’s not a terrible idea). Downsizing can look different for different people. Downsizing for one person might be moving from the lake-view two-bedroom apartment to a studio in a less ritzy location. You’ll have to decide what downsizing looks like for you and if it will be worth the effort.

While you might not be game for all of these suggestions, you can probably adopt a few that could change your financial situation significantly. Whatever measures you choose to save or eliminate your housing costs, make sure you are ready to deal with the consequences. These consequences can be both beneficial and somewhat inconvenient for your quality of life and your financial health. In the end, you’ll have to determine if it’s worth it.

TAGS:

Credit Cards

Disputing Credit Card Charges: What You Need to Know and Instructions for Each Card Issuer

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

If you use credit cards, chances are at some point you’ll need to dispute a charge that appears on your statement for one reason or another. The good news is that this common practice has some pretty awesome guidelines and provisions protected under both state and federal laws.

Whether your dispute is straightforward or complicated, you’ll want to know the ins and outs of how the dispute process works so that it can ultimately work for you should you need it. The dispute process will help you get the best outcome in the case of billing errors, fraud, misrepresented products, or any other charge on your statement you believe you shouldn’t be responsible for.

When to Dispute a Charge on Your Account

The Fair Credit Billing Act (FCBA) protects consumers from unfair credit billing practices. This federal law also provides guidelines to both consumers and credit card issuers for dispute management and resolution. According to the FCBA, consumers can file disputes, according to the FCBA settlement procedures, for the following billing errors (list provided by the FTC website):

  • Unauthorized charges. Federal law limits your responsibility for unauthorized charges to $50.
  • Charges that list the wrong date or amount.
  • Charges for goods and services you didn’t accept or that weren’t delivered as agreed.
  • Math errors.
  • Failure to post payments and other credits, like returns.
  • Failure to send bills to your current address — assuming the creditor has your change of address, in writing, at least 20 days before the billing period ends.
  • Charges for which you ask for an explanation or written proof of purchase, along with a claimed error or request for clarification.

There are additional FCBA provisions covering problems with the actual goods or services, aside from billing errors. This is known as the right to assert “claims and defenses.” In other words, the charge is correct, but the goods or services are not delivered as promised or described. This right can be exercised up to one year after purchase.

Under claims and defenses, the purchase has to be made within 100 miles of your current billing address and be more than $50, and you’ve got to make a “good faith” effort to resolve the dispute with the merchant first. The dollar and distance rules don’t apply if there is a special relationship between the buyer and seller or the purchase was made via internet, mail, or phone.

When you are initiating a dispute on this basis, make that clear with the credit card company so they’ll process the dispute accordingly. In this case, state laws may also play a part in determining what actions you can take against the merchant and the credit card issuer if the dispute is not resolved in your favor.

How to Dispute a Charge on Your Credit Card

The first thing you’ll want to do is determine if the charge is really an error. A little research will help you figure out if a charge is an error, fraudulent, or a purchase gone wrong. Some things to consider:

  • Did you let someone use your card? Do you have an authorized user on your account? They may have made a purchase with it.
  • Is it possible that someone obtained your information illegally and made a fraudulent charge on your card?
  • Does the merchant use another company name that appears on your credit card statement? (For example, Binky Toys can appear as “TOY CORP” on your billing statement.)
  • Did you read the fine print? You may have signed a contract with a merchant authorizing charges you were not aware of.

Once you determine there is an actual problem with your statement, you’ll want to figure out if the problem is with your credit card issuer or a merchant. The process can be slightly different if a merchant is involved or not.

If the charge is an error that doesn’t involve a merchant, like fraud or identity theft, then you can contact your credit card issuer directly. Though it’s best to document your dispute in writing, many card issuers will discuss the issue with you (and sometimes even resolve it) over the phone.

Nowadays, most major card issuers will allow you to log in to your account and file the dispute or initiate an inquiry about a charge online. If you don’t feel comfortable with any of these methods, you can use this sample dispute letter provided by the Federal Trade Commission (FTC) and begin the dispute process via mail.

If the charge involves a merchant whose goods or services were either defective, misrepresented, or not delivered as agreed, then you’ll want to contact them first. You can place a call to start the process, but it’s best to have things in writing. So an email or snail mail letter can either kick things off or confirm and reiterate what was discussed over the phone regarding the issue.

Many times, merchants will work with you because they want to keep their chargeback rates (credit card refunds due to errors and disputes) low. Merchants who have higher chargeback rates are deemed high risk by credit card processors and face higher penalties and processing rates which cut deeply into their bottom line. For this reason, try to settle with them before going to your credit card company with the problem.

If you can’t get an acceptable resolution from the merchant who charged your card, then it’s time to contact your credit card issuer. Just like the process outlined above for billing errors, you can choose to initiate the dispute via phone, internet portal, or mail.

In all your disputing, remember the timelines set forth by the Fair Credit Billing Act. If your problem is with a merchant, you’ve got up to a year to make a claim under “claims and defenses.”

For errors, your dispute correspondence has to be received by the credit card issuer no later than 60 days after the first statement containing the charge you are disputing. In either case, if you decide to send your correspondence via mail, it’s a good idea to send it certified with proof of delivery.

What Happens After You Initiate a Dispute

Under the FCBA, your card issuer has to acknowledge your complaint 30 days after receiving it (unless they resolve it before then). Sometimes, the dispute process is fairly straightforward and within a matter of minutes the dispute could be resolved in your favor. You’ll receive a credit on your statement and the issue is resolved.

You should also be aware that under the FCBA, you don’t actually have to pay the amount in dispute or any interest or any related late fees while the dispute is ongoing. Sometimes, the card issuer will even remove the charge under investigation right away. The bank has 90 days to investigate the issue and resolve it either in your favor or the merchant’s favor.

Keep in mind that you could be asked for supporting documentation to back up your dispute. This could include police reports, photos of a defective product, manufacturer claims and descriptions, tracking numbers, screenshots, and email correspondence.

This evidence will be gathered and checked against any evidence supplied from the merchant. Once the bank has concluded the investigation, you’ll receive a final ruling where the charge is either removed permanently or placed back onto your statement and becomes your responsibility to pay. You should also know that you may be responsible for interest and fees that accrue for a dispute you ultimately do not win.

What If Your Dispute Isn’t Approved

If finally, despite your best efforts, you’re deemed responsible for the disputed charge, you still have a few options. You could appeal the final decision with the credit card issuer within 10 days of the decision. Sometimes, the investigation could be reopened. Inform the bank that you’ve got new information they should consider.

If they still decline to reconsider or resolve in your favor, they can report your failure to pay to credit bureaus. If they do report this information, it must also state that you do not believe you owe the amount in question.

Another option is to take the merchant, your bank, or both parties to court. This can be costly, but for an amount that’s high enough, a court case could be justified. Be sure to check terms and conditions for both the merchant and the issuer, because you may have waived your right to this course of action in doing business with them. Also, state laws will have a say in what legal recourse is available to you against both the merchant and credit card company. Check with the consumer protection division of your state’s attorney general office for guidance in this area.

Also, don’t be afraid to engage help and organizations that might have oversight of the institutions involved in your dispute. You can file a complaint against credit issuers with the FTC. The FTC complaint process, however, won’t apply to banks. Banks are regulated by the FDIC. You can find the regulator that has oversight of the bank you are dealing with here, or you can file a complaint with the Federal Reserve Consumer Help website.

If you’ve got the time, energy, and ambition, you can always take to social media to vent and tell the world about your experience. Many companies are diligent about protecting their online reputation and prefer to route these conversations offline for resolution. If possible, be just as polite and diplomatic on social media channels as you would be with a phone call or written complaint. You’ll likely get further with this approach.

Where It Can Get Sticky

As mentioned, disputes can be settled quickly and easy. Some people say that their card issuer didn’t even ask for documentation but charges were immediately reversed. Other times, it can be a longer process, especially if a merchant objects to your dispute.

When this happens, there can be a lot of back-and-forth between everyone involved in a credit dispute. The purchaser, the merchant, the acquirer (Visa, MasterCard, American Express, Discover), and the issuing bank all have to coordinate communication to make sure disputes are investigated thoroughly and resolved appropriately.

Be aware that there are circumstances that can complicate, delay, and even hinder the dispute procedures.

Bankruptcy

When a merchant doesn’t deliver goods or services due to insolvency, there may not actually be any money in their bank’s account to cover a chargeback. You might be better off filing a case in small claims court. Sadly, in many bankruptcy proceedings, outstanding payables due to customers are one of the last payment priorities.

Collections

Though the dispute can be resolved in your favor from the credit issuer, the merchant could come back and bill you anyway. They can even send your account into collections. In this case, keep your documentation and be ready for a potential battle with collection agencies that have been engaged to recoup the funds from you. You credit report could also suffer.

Prepaid services

Let’s say you make an advance payment on a fitness camp 12 months in advance, but the company goes out of business and won’t be hosting the camp after all. You’ll want to make sure that you fully understand the dispute resolution process regarding future purchases. It will vary for each card issuer, so find out how you are protected in a situation like this. Consult your bank’s card member agreement and speak with someone who can give you clarity on dispute terms before making advanced payments with your credit card.

Product returns

If the dispute is resolved in your favor, part of the resolution may be connected to returning goods in order to receive the refund amount. There are very clear rules around what merchants must do when they receive your goods — a credit must be transmitted to the card issuer within seven days. From there, the issuer must ensure it shows up on your account within three days. It’s not unheard of for a seller to “send” for an item and never retrieve it in order to delay or avoid issuing a refund. Make sure that you take responsibility for returning goods. It’s a good idea to pay for tracking and insurance to make sure your items arrive safely, with proof of delivery, to the seller.

Pre-existing contracts

Terms and conditions are no fun to read, but it’s a good practice to look at the fine print (especially for large purchases). Hidden in these terms could be strict refund policies and even waivers to the dispute process should a problem occur with a sale.

Instructions for Filing Disputes with Major Credit Card Issuers:

 

Card Issuer: Instructions for Disputes:
Chase Chase dispute instructions
Bank of America Bank of America dispute instructions
Capital One Capital One dispute instructions
Barclays Barclays dispute instructions
Discover Discover dispute instructions
Citi Citi dispute instructions
American Express American Express dispute instructions

Final Thoughts on Credit Card Instructions

There are so many variables that can influence the outcome in all of these cases that it can seem like the final decisions are arbitrary. What worked in one scenario may not work in another with a different company or cardholder.

Many times, you’ll be working with a customer service representative who is unfamiliar with your rights as a consumer and the laws that should govern the outcomes of credit card charge disputes. When all else fails, research, education, and persistence may be your most powerful weapons in the fight for your consumer rights.

TAGS:

Building Credit, Credit Cards

Guide to Adding an Authorized User to Your Credit Card

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: Though we have done our best to research information regarding this topic, be aware that issuing banks may have unique rules and agreement terms that apply to their particular credit card accounts. Contact issuing banks directly for questions on terms and policies relevant to specific credit card accounts.

What Is an Authorized User?

An authorized user on a credit card account is any person you allow to access your credit card account. Not to be confused with a joint account holder, an authorized user can only make purchases and, in some cases, have access to certain card benefits and perks. Joint account holdership is becoming extremely rare, but typically occurs when two people apply for a credit card together. In joint account ownership, both people are liable for charges and can access and make changes to a credit card account.

An authorized user can be a spouse, relative, or employee. When you designate an authorized user on your credit card account, this person usually gets a card bearing their name with the same credit card number as the primary cardholder. In this scenario, the primary cardholder is liable for all transactions made by themselves as well as by any authorized user tied to their account.

Why Would You Add an Authorized User to Your Credit Card Account?

There are many reasons you might think about designating an authorized user for your credit card account. It all comes down to convenience and extending benefits that a credit account offers: access to credit, related perks, and credit card rewards, as well as the potential to improve the credit score of the authorized user.

For example, couples that share expenses might find it easier to designate one or the other as an authorized user to avoid passing a single card back and forth to make purchases. Perhaps you have a relative who lives far away, and it would be easier to give them access to your credit account for emergency purchases. You may also have a child that you want to assist in building credit history to increase their credit score. Adding them as an authorized user could help with this, but we’ll cover that more in another section.

Additionally, if you are an employer whose employees need to make purchases on behalf of the company, it would make sense to make them an authorized user. Without this designation, it could be extremely inconvenient for them to not have a company credit card at their disposal.

In some cases, adding an authorized user can also accrue reward points connected to a credit card account. These reward points can be used to make purchases or receive discounted pricing on things like travel and retail products. Typically, points are accrued from reaching credit card spending amounts within a certain time frame. Sometimes, the act of adding an authorized user can garner additional rewards as well.

How Can I Add an Authorized User to My Credit Card Account?

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As the primary cardholder you are the only person who can designate an authorized user. The authorized user cannot contact the credit card issuer and add themselves to your account. You will have to contact the issuing bank and request to add one or more authorized users to your account.

Depending on the bank and the technology in place, you may be able to handle this process entirely online. Some banks allow you to log in to your banking portal to designate additional authorized users, create their own bank login and profile as well as determine the level of access you’d like them to have to your account. Levels of access can range from being able to view transactions only to making purchases. If your bank doesn’t have this technology in place, usually a phone call is sufficient.

Adding Authorized Users Online

How to Add an Authorized User to a Chase Credit Card Account:

  1. Log into your Chase credit card account
  2. Under “My Accounts” click “Add Authorized User”
  3. Complete the information requested (see screenshot below for reference)How to Add an Authorized User to a Chase Credit Card Account

    How to Add an Authorized User to a Bank of America Account:

  1. Log onto your Bank of America account.
  2. Select the credit card you’d like to change.
  3. Click on the tab labeled ‘Information & Services’
  4. Scroll down to the section labeled “Services”
  5. Click on “Add an authorized user”

How to Add an Authorized User to a Chase Credit Card Account

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How to Add an Authorized User to a Capital One account:

  1. Log onto your Capital One credit card account online.
  2. Under the “Services” tab, click “Manage Authorized Users”
  3. Click “Add New User”

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How to Add an Authorized User to a American Express credit card account:

  1. Log onto your Amex account online.
  2. Click on “Account services”
  3. From the lefthand menu, select “Card Management”
  4. Under “Account Managers”, click “Add and Manage Users with Account Manager”screen shot 10
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How to Add an Authorized User to a Citi credit card account:

1. Log onto your Citi credit card account online.
2. Select the “Account Management” tab.
3. Click “Services” from the lefthand menu.
4. Click “Authorized Users”
5. Click “Add an authorized user”
6. Fill in the authorized user’s personal information.

 

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How to Add an Authorized User to a Barclays credit card account:

  1. Log onto your Barclays credit card account.
  2. Select the “services” tab.
  3. Under the dropdown menu, select “Authorized users”
  4. Select “Add an authorized user”
  5. Complete the form to add an authorized user.
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Who Can Be an Authorized User on My Account?

An authorized user can be anyone you choose, whether they are related to you in some way or not. In most cases, the bank will request identifying information such as name, birthdate, Social Security number, and address. Some card issuers require that authorized users meet age requirements, and others do not have age requirements. As always, check with the bank to understand the criteria authorized users must meet for your card.

The Fees

Some credit cards will charge an additional fee for more additional authorized users, while others will offer this benefit at no charge. Make sure you read the fine print in your cardholder agreement so that you are aware of all the fees associated with having one or more authorized users on your account.

Fees can range from less than $100 to a few hundred dollars and beyond each year. Business accounts especially can carry higher fees when multiple authorized users are associated to one account.

Liability

As the primary account holder, you must understand that you are 100% solely liable for any and all charges made on your account by both yourself and your authorized user. If you have been designated as an authorized user, you do not legally share liability for purchases made on the credit card account. However, you may have a personal arrangement with the primary account holder to pay your share of charges when the bill is due.

What Can an Authorized User Do?

This can depend on the level of access you’ve chosen with your card issuer for your authorized user. If there are not varying levels of access to choose from, check with the card issuer to find out exactly what an authorized user can and cannot do.

In most cases, an authorized user cannot make changes to an account. They cannot close an account, request changes in bill due dates, change account information, or request limit increases or a lower annual percentage rate.

Again, this varies from card issuer to card issuer, but there are many other things an authorized user can do.

Here are some possible capabilities based on the terms of your credit card issuer:

  • Make purchases
  • Report any lost or stolen cards
  • Obtain account information
  • Initiate billing disputes
  • Request statement copies
  • Make payments and inquire about fees

Benefits of Adding an Authorized User

As mentioned before, adding an authorized user to a card can be for convenience, accruing rewards, or sharing card perks and benefits. An authorized user can be incredibly convenient in the case that you don’t have your personal card or for some reason don’t have immediate access to it.

Having an authorized user can help a primary user reach limits to earn reward points for some cards. One of the most effective marketing strategies of credit card companies is to offer bonuses and rewards for adding authorized users to your account. Adding another user to your account could add a few thousand extra reward points you would not have earned without adding the user. Then, there’s always the chance that the authorized user will make purchases that contribute even more to your attempt to accrue reward points.

Finally, there are a number of credit cards that offer perks or benefits that can extend to your authorized users. Depending on your credit card, benefits like car rental insurance, lost luggage reimbursement, and extended warranties could apply to all purchases made, including those by your authorized users, on your credit card account.

Benefits of Becoming an Authorized User

Though the credit-reporting landscape is changing, there’s still the potential to “piggyback” on a primary account holder’s credit history for a card in good standing. But not all credit card companies report information to credit bureaus for authorized users in all circumstances. However, to know for sure what will be reported to the credit bureaus in regard to your authorized user status, speak with your card issuer for the details of what information is reported and when to credit bureaus.

Another benefit is having access to more credit. If you are in a bind and have emergencies that come up, access to credit can be helpful. Plus, exercising diligence in managing purchases and bill payment can help you develop good credit habits.

You should also know that being an authorized user may grant you access to certain perks for account holders and their primary users. There are benefits like access to travel lounges, Global Entry or TSA PreCheck application, travel credits, and discounts an authorized user could be privy to as well.

What Could Go Wrong?

If for some reason the credit card account doesn’t remain in good standing, the credit score of both the primary account holder and the authorized user could be affected. If you are a primary account holder, make sure your authorized user understands the terms under which they can make purchases. If they make purchases that cause your payments to be delinquent, your credit score could suffer.

Even if you did not give this person permission to make purchases with your credit card account, the fact that you designated them as an authorized user is evidence that you at some point trusted them with your credit card access. A claim of criminal or fraudulent activity in this instance would be extremely difficult to prove, so choose your authorized users wisely.

Though not as common with an authorized user, your credit score could be negatively affected if an account becomes delinquent. Because tradeline reporting for authorized user accounts to credit bureaus varies from card to card and scenario to scenario, a delinquent account status could still appear on your credit report. If you will be added to someone’s account as an authorized user, find out whether or not the credit history of the account will be reported to credit bureaus under your authorized user status.

Removing an Authorized User from an Account

Either the primary cardholder or the authorized user can remove an authorized user from an account by contacting the credit card issuer. You may be asked to verify your information as well as the information of the primary account holder.

In many cases, only one card number is issued between one or more users. Your credit card company may deactivate the primary cardholder’s credit card number and reissue a new card and number once an authorized user is removed from an account.

If your status as an authorized user does show up on your credit report for the credit account after you’ve been removed from a credit card account, you may have to contact credit bureaus to have it removed.

The Best Way to Manage Shared Credit Access

Designating someone as an authorized user is not something to be taken lightly. Even a small misunderstanding of credit card issuer terms and your own interpersonal credit arrangement can cause problems. Before adding an authorized user to your account, set ground rules around card use that covers access to perks and making purchases.

Some things to consider and discuss with your authorized user include:

  • What is the goal in having the authorized user on the account?
  • Will the authorized user have a physical card?
  • When is it OK to use or not use the credit card to make purchases or access card perks?
  • The credit history of both the primary cardholder and the authorized user
  • Good credit habits that will prevent identity theft and fraud
  • Setting up monitoring alerts with the credit card company or an identity theft protection service

The ability to add an authorized user to a credit card account can be a double-edged sword. On one hand, convenient benefits of access to credit and credit card perks can make life easier in so many ways.

On the other hand, this same convenience can cause problems if both the primary cardholder and the authorized user don’t understand the rules of engagement with each other or the terms set forth by the credit card company.

Adding an authorized user to your account has the potential to be incredibly convenient and mutually beneficial if handled the right way. Make sure you follow best practices to get the most out of this financial arrangement.

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These Women Paid Off $262,000 Worth of Debt Using Accountability Groups

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Just a few short years ago, Janet Lombardi of Long Island, N.Y., was mired in debt. Her husband of 25 years was recently sent to prison, and she was left to face their $485,000 mortgage and $60,000 of credit card debt alone.

“Once I realized the astounding levels of debt he had accumulated, I resolved to get solvent, and I did,” Lombardi told MagnifyMoney.

Help came from an unexpected source: an accountability group. Lombardi joined a support group for people struggling with debt called Debtors Anonymous (DA), an offshoot of the well-known support group Alcoholics Anonymous (AA).

Using a process similar to the 12-step program made famous by AA, the DA process includes making amends to those wronged and becoming aware of compulsive habits and characteristics that can lead to overspending. People can attend meetings at no cost with the options of face-to-face, online, or phone meetings in several languages.

After joining DA, Lombardi made some big strides in her finances: She sold the home she couldn’t afford, negotiated her credit card debt down from $60,000 to $20,000, and paid it all off over the next two years. She says she now lives solely on cash and enjoys the kind of financial stability she’d never experienced before.

Lombardi

“Having a place to openly discuss feelings around money is enormous,” Lombardi says. “And having partners to help you go over your finances and help you with day-to-day management is super helpful.”

If getting out of debt has been difficult for you, joining an accountability group might be a simple way to get the support you need. Whether you are trying to lose weight, overcome addiction, or fix your finances, those who work in a group setting are more likely to reach their goals, research has shown.

Things like stating a goal and having accountability along with action steps make all the difference in reaching that goal.

In this post, we spoke to Lombardi as well as three other women who have paid off a collective $262,000 worth of debt with the help of debt accountability groups.

3 Reasons Accountability Groups Work

The Group Effect

Studies reveal that those who explicitly state a goal or an attempt to solve a problem are 10 times more likely to reach their goal than those who don’t. In a group setting, there’s no negotiating: You’ve got to be up front about your problems along with your resolve to fix them.

Positive Peer Pressure

Dr. Robert Cialdini, a social psychologist who studies the power of social influence, is noted for observing the effects of positive peer pressure: It helps us make difficult decisions and attempt to one-up our peers (in a good way). In other words, you are more likely to strive toward a goal if you see people similar to you achieving (or going toward) the same goal.

Powerful Problem Solving and Inclusion

Group therapy is common in the world of psychotherapy and can be an effective tool for dealing with the behavioral root of money problems. A group approach to problem solving involves talking, reflection, and listening to people with different backgrounds and viewpoints. Groups can also remove the stigma and loneliness of dealing with a problem like money mismanagement.

Jessica Garbarino, 39, of Wellington, Fla., completed a popular course on money management called Financial Peace University (FPU) in 2010. The class isn’t free, with a fee of $109 to $149 to enroll. FPU was created by debt-free guru, Dave Ramsey. FPU’s course is typically taught at churches, community centers, or schools, but people can also complete the course online. For Garbarino, the group approach of tackling debt helped her pay down $8,000 while in the class and gave her the tools to get rid of another $26,000 worth of debt that same year.

Jessica Garbarino

“It made you feel like you were not alone in your financial journey,” Garbarino says. “We were all able to talk openly and honestly about our current financial situation and encourage each other.”

How to Find a Debt Accountability Group

Debt accountability groups and forums exist all over the internet. Many, like Financial Peace University and Debtors Anonymous, mainly operate as in-person meetings. Some of your favorite financial gurus might have groups you can participate in as well. Look for personal finance authors, bloggers, or experts who discuss money regularly. They may have a debt accountability group or be able to direct you to one they can vouch for. These groups can be offered in a variety of formats: in person, online (Facebook groups, Google Hangouts, webinars, website forums, etc.), or even on group conference calls.

Leslie Walsh, 48, of Sparks, Nev., is a government worker who says she paid off over $28,000 with the help of her accountability group. She found support in an unconventional arena: Facebook. Walsh joined a group started by personal finance blogger Jackie Beck of The Debt Myth. Walsh says she received support and encouragement through the Facebook group, via email, and through a debt repayment app the group’s founder created.

Leslie Walsh
Leslie Walsh

When searching for an accountability group, make sure that it’s is a good fit and that you are comfortable with the way it operates. For example, some groups have rules around confidentiality and want participants to check in regularly. Some groups are more relaxed in terms of updates and accountability. Choose a group approach that works for you and will help you reach your goal of paying off debt.

How to Get the Most Out of an Accountability Group

Rachel Gause, 38, of Richlands, N.C., completed Financial Peace University twice and now teaches the class herself. She believes firmly in the power of a group to fix your finances. After paying off $180,000 in debt as a single mom, she believes coming clean and taking responsibility helps you get the most out of a group setting.

Rachel Gause
Rachel Grause

“[Group members] must acknowledge that they have an issue with managing their personal finances,” says Gause. “People with all types of incomes have issues regardless of race, age, and education level.”

There are many ways to participate and get value out of an accountability group, but the more you put in, the more you’ll get out of it.

Here are some tips that should help:

  • Remain committed to check-in times, assignments, and times to share.
  • Be as transparent as you possibly can but avoid sharing personal details like account numbers, passwords, etc. with group members.
  • Have a plan to share with your group, but be realistic (and open) about your progress.
  • Though group advice will be helpful, remember that debt problems can be financial and legal in nature, so engage professional help when necessary.

The evidence is compelling: An accountability group could help you make strides toward eliminating your debt once and for all. But although accountability groups can be good for people who need an extra nudge toward their financial goals, remember to seek professional help when necessary. Done the right way, group accountability could be just the thing you need to make a dent in your debt.

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7 Signs That Identity Protection Service Isn’t Worth It

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7 Signs That Identity Protection Service Isn’t Worth It

According to a report released by the Federal Trade Commission (FTC), identity theft complaints increased by 47% from 2013 to 2015. Needless to say, identity theft is on the rise, and many people are concerned they could become a victim. Like any crime, totally preventing identity theft is practically impossible. However, that hasn’t stopped many so-called identity theft protection and prevention companies from selling services that promise to do just that.

As a consumer, it’s important to be cautious when purchasing identity theft services simply out of fear. Sometimes, fear-based marketing tactics can cause consumers to pay or overpay for services they may not need, or worse yet, may not be even be effective.

Before we dive into the details of assessing the value of the ID theft protection service you are considering, let’s do a quick recap on the types of identity theft and common services offered to help with this issue.

A Quick Recap: Types of Identity Theft and Protection Services

Types of Identity Theft

There are two primary types of identity theft. The first is account takeover, which is more common and normally not too difficult to address. In account takeover, someone steals a credit card or gains illegal access to your bank account or credit card to make unauthorized transactions.

The second, less common and often more complicated to resolve, is identity takeover. That’s when someone assumes your identity and acts fraudulently on your behalf. Identity takeover can manifest in medical, criminal, or financial scenarios.

Common Identity Theft Protection Services

The most common offerings from identity theft protection companies are along the lines of prevention, monitoring, and resolution.

To be clear, you can reduce your risk of being an identity theft victim with good “identity hygiene” habits, but you can’t totally prevent identity fraud. An effective identity theft protection service is not prevention so much as it is early detection (monitoring) before the damage gets out of hand. Once a problem is detected, having a plan that includes resolution services (doing the legwork of fixing the fraud damage) is likely the most value you’ll get for your money.

7 Signs to Watch Out For

1. Misleading Claims and Offerings

Many consumers are reeled in with hefty promises of $1 million or $5 million in “coverage” and may not know what that coverage entails. When you see these numbers, it usually means that a company will commit up to $1 million in resources to help you through the resolution process. That might mean things like covering notarized forms or other professional services needed in the resolution process. Some companies will cover lost wages from missing work due to dealing with an ID theft incident.

In many cases, your bank or credit card company will have policies in place so that you are not liable for fraudulent transactions anyway, so the millions in “coverage” wouldn’t be applied toward recovering that property. (Some services will reimburse fraudulent transactions but with stipulations around reporting time frames, proof of criminal activity, and making sure you aren’t covered already under another benefit.) Resolution services can be extremely helpful, but they usually only run a few hundred dollars, not even close to millions!

2. Excessive Offerings

Looking at the laundry list of items that a common identity theft protection company offers can make these services look like consummate, comprehensive coverage. IDShield, a LegalShield product, promises to monitor so many things that you wonder what could fall through the cracks: 10 phone numbers, 10 email addresses, your driver’s license number, and a host of other personal data points.

With all these monitoring claims, it makes you feel good about spending that $20 or $30 per month for a service, but the fact of the matter is that it’s highly unlikely that you’ll get the medical ID number monitoring promised. A quick visit to the Better Business Bureau complaint section shows this to be true for many companies. Common complaints for identity theft protection services reveal monitoring and alerts don’t always happen as promised. In these complaints, people report moving, opening new accounts, and other activities they are sure should trigger alerts, but receive no notifications.

3. Services You Can Do Yourself or Already Have Coverage For

Eva Velasquez, president and CEO of the Identity Theft Resource Center (ITRC) says there are many things you can do yourself if you have the time. ITRC provides resources for helping people execute the DIY version of identity fraud resolution. Velasquez feels you shouldn’t be shut out of help in the midst of an identity fraud crisis because you don’t have the money to handle it.

Velasquez also encourages people to check other places they might already have identity theft protection benefits in place at low or no charge. Insurance riders, employee benefit packages, credit cards, credit unions, banks, or motor clubs are are few places where protections could already be in place for you.

4. Aggressive or Questionable Marketing Tactics

When a data breach occurs, the company whose customers’ information was compromised typically offers identity theft protection services to these customers at no charge. The provider of these services is call the data breach vendor. In the famous Target data breach of 2013, Target provided a basic service to customers through Experian’s product, ProtectMyID. There were many complaints citing Experian’s aggressive attempts to upsell vulnerable customers to monthly subscriptions because the free services offered by Target and the data breach vendor were limited in benefits.

5. Limited Offerings

In the example above, Target opted to provide data breach victims a pared-down package of the complete ProtectMyID package. This package monitored only one credit-reporting agency (CRA), while complaints surfaced of victims who would eventually face identity fraud due to the data breach and poor vigilance of their personally identifiable information post-breach.

Zander Insurance offers services that focus heavily on the resolution side. They offer monitoring of your personal information in varied capacities, but only have reminders to check your free credit report each year. Their take is that CRA monitoring provides a false sense of security and that the real value is in the resolutions services they offer.

6. Not Following Best Security Practices

Enrolling in an ID theft protection service means you’ll likely have to give your service provider a lot of your precious personal information. The idea is that they will be able to effectively monitor all the data points you provide for fraudulent activity.

If this is the case, you’ll want to make sure that your information is collected, stored, and accessed in a secure manner. A major player in the identity theft protection space, LifeLock, was fined by the FTC in 2010 and 2014 for poor information security practices, among other things.

7. Complaints, Lawsuits, and Fines

Eva Velasquez of the ITRC, who also worked for the Better Business Bureau for five years, says third-party verification agencies like the BBB can be a consumer’s best friend when vetting identity theft protection services. Search sites like Consumer Affairs and the BBB for common complaints about an ID theft protection service you are considering. The complaints section is a great resource to learn about common problems and misunderstandings with a particular ID theft protection company.

Tips on Evaluating Identity Theft Protection Services

As a reminder, these services will help you mainly with detection and resolution, not prevention. There is no perfect identity theft protection solution, only a solution that is perfect for you. To start, you’ll have to play an active role in protecting your personal information and reducing your risk for ID theft.

In the end, it’s true that there are many services you could perform on your own to resolve ID fraud, but you may not have the time. So one person’s value-add would be different for another. Read the fine print and understand exactly what you are paying for. Check third-party consumer advocacy sites with honest reviews about identity theft protection service shortfalls and gaps in coverage.

Understand your specific needs, time constraints, and risk exposure to find the solution that provides the most value, not the one that feeds off your worst fears.

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