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Fine Print Alert

Fine Print Alert: Citibank & ChexSystems, Scams to Avoid and Credit Report Disputes

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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In our weekly Fine Print Alert we call out any good news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.

FINE PRINT ALERT

Citibank Forced to Rely Less on ChexSystems…

Attorney General of New York reached an agreement with Citibank. Citibank will consult Chex for anti-fraud purposes, but the bank is altering its use of negative information going forward. Citi has promised it will no longer refuse to open a bank account because of minor errors, like isolated examples of bounced checks or overdrafts.

Learn more about ChexSystems here.

Look At The Top Scams of 2014 to Prepare for 2015…

The National Consumers League (NCL) recently released the top scams of 2014, ranking the overall top ten scans as well as the top scams by category. It should come as no surprise that Internet scams featuring general merchandise sales took the top spot with 26.32% of total scams in 2014. People fall victim to this rouse when crooks offer the sale of a good and item is paid for and never delivered or misrepresented. Prize, sweepstakes and free gifts were the second place scam with “Phantom Debt” skyrocketing up to fourth place and check scams dropping from first to third.

Fraudster phones a consumer to demand payment on an old debt (aka phantom debt), which likely never existed in the first place. The crook will threaten jail time and legal action. If you receive this call and are unsure if it could be real, hang up and look to see if you have an item in collections.

You can read the full report from the NCL here.

Credit Report Disputes Going Unresolved…

Finding an error on your credit report is relatively common. The reason can be as innocent as misreporting because someone shares your name or a clerk mistyping your Social Security Number. It can also be the result of a villainous act like identity theft. Regardless of the reason, disputing incorrect information on a credit report can lead to a consumer nightmare.

A recently released FTC report followed up with survey participants from a 2012 report that had unresolved disputed and found the following:

  • 69% of people believe there is still an error, while the other 31% agree that there was no error to begin with and thus agreed with the CRA’s finding
  • Of those who believe there is still an error, only 45% plan to continue their credit report dispute
  • 41% of people were not contacted at all by the bureau after filing their credit report dispute
  • Of those who did get notified, 48% of them received no reason provided as to why there was a modification in the credit bureau’s response
  • Of this who still believe there is an error but are giving up on their dispute, only 20% are giving up because they don’t think it’s hurting them or aren’t looking for credit. 42% are giving up because it’s too hard, or the time sink is fruitless

You can read the full report from the FTC here. You can information about credit reports and credit scores in our blog section, Building Credit.

FAVORITE READS FROM AROUND THE WEB

Want to lose weight? Get on a budgetIt’s almost the end January. How’s it going with those New Year’s resolutions? The most common goals people set at the start of the year are to lose weight and to get their finances in order — two seemingly distinct areas for improvement. Now a survey from TD Bank suggests they may go hand in hand. Jonnelle Marte of the Washington Post discusses why physical and financial health just may go hand-in-hand.

How Your Workplace Can Help You Manage MoneyFunches’ experience [taking a financial education class] is an increasingly common one, as more companies are incorporating financial education into their workplace benefits. A big driver of this movement is the realization that many employees are feeling financially stressed, and the understanding that reducing their stress levels can increase their performance. Kimberly Palmer of US News & World Report details why employers should offer financial education courses and why employees should take advantage.

4 Reasons Zero-Sum Budgets Are AwesomeOne of my clients hasn’t paid me in three weeks.  Another just asked for additional work, which was fine, but it means that my invoice will be late.  Meanwhile, my website made considerably less money this month than last month, meaning my income projections for January are going to be off. But pssshhhttt…. I don’t care, even though most people I know would be freaking out.  Why? Because I use a zero-sum budget.  That’s why. Read why Holly uses a zero-sum budget, and what exactly that means, on her blog Club Thrifty.

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at [email protected]

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News

Citibank Forced to Rely Less on ChexSystems

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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ChexSystems is a credit report for banking accounts. If you bounce a check or don’t pay an overdraft fee, you could have a derogatory mark on your ChexSystems file. Most people have never heard of the report until they end up on the negative list, which can make it impossible to open checking accounts anywhere else. Banks have almost complete discretion in how they report people’s behavior to the system. Many banks often refuse to let you open a bank account if you have just one bad mark. Chex reports are also known to have a high level of data inaccuracy.

The unbanked in America often find ChexSystems reports to be a huge barrier to lowering banking fees and escaping the fringes of the financial world, including payday lenders and money transfer services. Just one bad check could force you into the expensive world of check cashing providers for up to 7 years.

This week, the Attorney General of New York reached an agreement with Citibank. Although Citi is not being as progressive as Capital One (who no longer uses Chex for their checking accounts), it is making some big changes. Citibank will consult Chex for anti-fraud purposes, but the bank is altering its use of negative information going forward. Citi has promised that it will no longer refuse to open a bank account because of minor errors, like isolated examples of bounced checks or overdrafts.

Everyone should order their annual free copy of their Chex report, which you can learn to do here. We are pleased Citibank is eliminating its most egregious practice of banning someone from banking for years after just one mistake. We find the punishment for small overdraft infractions particularly hypocritical, given how much money banks like to make from overdraft fees.

However, we wish Citi would have gone further, and believe CapitalOne 360 still offers a better solution. Capital One is famous for its use of data, and our guess is that it understands the limited value of Chex Systems screening.

Keep up with the news and information about the best financial products by following us on Twitter @Magnify_Money and on Facebook.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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Best of

The Most Transparent Credit Cards

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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At MagnifyMoney, we want to help create a simpler, cheaper and more transparent banking system. Part of that mission means finding ways to praise products that remove complexity, while punishing those products that add layers of fine print and confusing terms. In order to make it easy for our users to sort the good from the bad, we created the MagnifyMoney Transparency Score.

We have a very simple approach: the more fees, fine print and complexity, the lower the score.

We have made a small change to the Transparency Score for our Balance Transfer Credit Cards, and we wanted to explain that change to you today.

For a balance transfer credit card, we look at 3 areas in order to determine the grade:

  • Fees: the more fees your charge (for example – late, over-limit, foreign exchange), the lower your score
  • Interest Rates: we don’t like when credit card companies say that your interest rate can be anywhere between 2% and 30%. And then you have to apply for the credit card (which means you accept the terms), only to be told your interest rate after you have been accepted. So, the wider the pricing band, the worse the score. So, someone who offers 9.99% – 15.99% would be rewarded more than someone who offers 4.99% – 22.99%, because you have a better indication of your interest rate before applying.
  • Marketing: we believe that the key terms should be clearly disclosed in the marketing message, and not hidden in the fine print. The easier it is for us to figure out the terms and conditions, the better the score.

These 3 pillars of our score have not changed. However, we have tweaked our highest score, which is an A+. We will award an A+ to a credit card if:

  • There are no “junk” fees of any kind. That means no balance transfer, late, over-limit, returned payment or foreign transaction fee can be charged. This remains the same as before.
  • The marketing message clearly identifies the terms, which also remains the same as before.
  • We have tweaked the criteria for pricing. Before, you could only receive an A+ if you had a single price point disclosed up front. However, we recognized that by limiting the price points, we will only ever give an A+ rating to a card that targets people with the highest credit score. So, we changed the criteria so that you are eligible for an A+ if the range of possible interest rates is fewer than 10 percentage points.

We still hope that banks and credit unions will provide more transparency on pricing before people apply.

At the moment, there is still only one credit card that meets this criteria: PenFed Promise Visa® Card.  We applaud the simplicity of PenFed Promise Visa® Card, and we hope that other products will join Promise over time, as the banking system becomes simpler, cheaper and more transparent.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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