What late filers need to know
Did you miss the tax deadline? asked Blake Ellis in CNN.com. If you’re owed a refund, the good news is that “you won’t get hit with a penalty.” But for taxpayers who owe money, you’re out of luck. “By both failing to file and failing to pay on time, you will incur a maximum penalty of 5 percent for each month after the deadline.” And if you’re more than 60 days late, you’ll be fined $135 or 100 percent of the unpaid tax, whichever amount is smaller. The safest way to avoid a fine is, of course, to file on time. But if that just isn’t possible, ask the IRS for a six-month extension. Just “remember, even if you get an extension, you still have to pay 90 percent of the tax owed by the filing deadline.”
Beware of cards bearing gifts
If you’ve been receiving a flood of credit-card offers, you aren’t alone, said Kara McGuire in the Minneapolis Star Tribune. Credit experts say card offers “are hitting the mailbox at rates not seen in a long while.” Since fewer Americans carry a credit-card balance these days, lenders are trying to make up lost profits by netting new customers and encouraging existing ones to use their cards more often. The offers are often tempting, including 0 percent balance transfers, waived annual fees, and thousands of free frequent-flier miles. “But there’s usually a catch.” If you get an offer that seems too good to pass up, read “every last bit of fine print.” Take stock of your financial situation, too, and make sure you aren’t “missing any terms or conditions that would cost” you in the long run.
Rules for smart renters
Before signing a lease, take care “to avoid common and costly renter’s errors,” said A.J. Smith in Credit.com. The most important— and obvious—thing to do is to read the lease. “Bring up any issues you have with the document” before you sign, and make sure you fully understand any fees and requirements. That includes policies covering security deposits utilities, neighbor disputes, pets, and roommates. Next, consider renter’s insurance, which will protect your personal property and cover you from liability if anyone gets hurt in your new place. Finally, “it’s a good idea to take photos or videos documenting the apartment’s condition and note any preexisting damage” before you move in. Your security deposit will thank you.
Help choosing disability insurance
If your company has ditched long-term disability insurance, don’t despair, said Ron Lieber in The New York Times. Many employers are lowering their disability-insurance payouts or leaving workers to find their own coverage. The insurance replaces some fraction of your income in the event an illness or injury prevents you from working; premiums tend to run roughly 1 to 3 percent of your annual salary. But few people give the coverage much thought, and deciding on a policy can be tough. Luckily, you can see whether disability insurance is a smart purchase for you with the help of a site called PolicyGenius.com, which aims to eliminate consumers’ confusion with an online “insurance checkup” tool that can provide quotes and clear comparisons for different types of coverage and policies.
Avoiding hotel scams
Beware of hotel booking sites bearing deals, said Alina Tugend in The New York Times. In what travel experts label “a systemic industry problem,” a growing number of customers are being duped “by promises of great deals” on official-looking websites. But in reality, they are being pushed to affiliate sites, incurring unwanted charges, and getting lost in a maze of fine print and Byzantine booking policies. Customers looking to book online should be “careful of what you click,” avoiding third-party sites and, whenever possible, booking directly from the hotel website. And if you need another reason to “always pay online with a credit card,” here it is: Unlike debit cards or money orders, you can dispute unwanted credit card charges before paying up.
How debt collectors track their prey
There’s nowhere to hide from debt collectors, said Gerri Detweiler in Credit.com. While it’s hard for just about anyone to get off the grid these days, if you’re behind on a debt, it’s all but impossible. Debt collection agencies “have many tools at their disposal” to track you down, starting with information you provided to the original lender. When that fails, debt collectors might turn to your credit report and public databases, which can provide information about other accounts, address histories, and name variations. And forget Facebook. Collectors can comb through your social media postings to get information about your income, assets, spending patterns, location, employer, even banking habits. Some firms steer clear of this tactic, “but for the moment it’s probably safe to say that anything you post is fair game.”
Time to prioritize your bills
When it comes to paying your bills, you’re probably doing it all wrong, said Catey Hill in MarketWatch.com. While
paying your mortgage before your credit card is always smart, many Americans are still putting their car loans ahead of those debts, “a trend that’s been happening for at least a decade.” Financial planners say that’s plain backward, in part because most Americans have access to public transportation. But even when paying all your bills on time isn’t possible, savvy consumers should always put the mortgage first. When you do need a break, “call the company and ask for a payment extension.” If the first person says no dice, “ask to speak to a supervisor,” who may be able to exercise some discretion.
IRS revises overseas tax rules
The Internal Revenue Service is easing up on its overseas crackdown, said Brian Knowlton in The New York Times. The agency has been aggressively pursuing overseas tax cheats, but criticism that its methods “had disproportionately hurt small taxpayers guilty of innocent oversights” has forced the service to revise some of its rules. Among the changes is an expansion of the voluntary disclosure program, removing the existing $1,500 limit on unpaid taxes and empowering the IRS to determine whether or not the taxpayer’s “failure to file previously was ‘non-willful.’” Those deemed to have complied will be spared any penalties, but “anyone remaining out of compliance” could face penalties of up to 50 percent of the taxes due, nearly double the current rate of 27 percent.
Don’t waste a dime on old tech
If you’re looking to save money, start by ditching obsolete technology, said AnnaMaria Andriotis in MarketWatch.com. Your pay-TV subscription should be the first thing to go. More and more consumers are cutting the cable and switching to services like Hulu and Netflix, “which provide much of the same programming at a fraction of the price.” Landlines are out, too, with many users switching full time to cellphones and video-chatting services like Skype. For drivers, rather than paying $300 for a new GPS, many are relying on free map apps instead. And don’t bother with a “point and shoot” camera now that smartphones are “quickly catching up” in terms of photo quality.
The rules for rewards cards
Don’t forfeit your rewards, said Michele Lerner DailyFinance.com. According to a new study from CardHub, “while credit card companies provide about $48 billion in rewards each year, about one third of those rewards are never redeemed.” Some of that money is left behind by forgetful consumers, but the shortfall also has to do with the limits on how rewards can be redeemed. Common requirements include minimum spending thresholds nd clauses that cause points to expire after a missed payment. If you’re shopping for a new card, remember that cash-back rewards are still best, since they “have the bonus of letting you use your rewards to pay your bill.” Lastly, be wary of deals that offer big signon bonuses and low introductory rates. The savings today could cost you rewards points down the road if you ever miss a payment.
Skip the holiday gift card
If you’re shopping for stocking stuffers, steer clear of gift cards, said Anthony Giorgianni in ConsumerReports.com. Recent regulations “have made gift cards safer,” but there are still “many drawbacks.” Just think of gift cards “as cash with lots of strings attached.” Some cards carry hefty fees, including purchase fees and dormancy fees. And unlike traditional debit and credit cards, gift cards carry “no right to dispute purchases made with gift cards, even if there’s an error or fraud.” Finally, if the card’s retailer goes belly up, you could end up “holding worthless plastic.” If you can’t come up with a traditional gift, “just give a check or cash, which can be used anywhere.”
JetBlue increases fees, adds seats
JetBlue is joining the baggage fee club, said David Koenig in the Associated Press. The airline announced last week it will create three ticket classes beginning next year and charge passengers in the cheapest class to check a bag. The two highest classes will include at least one free checked bag, with fees for additional luggage. JetBlue “declined to give a price for the bag fee,” though the carrier said pricing “would fluctuate with demand.” The move leaves Southwest as the only large U.S. airline that allows all passengers to check at least one bag for free. JetBlue will also add 15 seats to its Airbus A320 planes, increasing flight capacity to 165 from 150, and reduce average legroom from more than 34 inches between rows to 33 inches.
A budget for holiday spending
Don’t get stuck “with a week or two of ramen noodle dinners” in January because you overspent your holiday budget, said Maryalene LaPonsie in DailyFinance.com. The average consumer will spend $804 during this year’s holiday season, according to the National Retail Foundation, and more than a third of shoppers will go over their budget. In order to stay within your means, write down each of your holiday expenses in advance, including food costs, “the white elephant gift for the family party, the office Secret Santa exchange, and all the service workers you tip extra.” To save some dough, think of giving presents that “cost more time than money,” like knitted scarves, baking mixes, or even chores you can offer friends and family. Finally, embrace your inner Scrooge. Once you have crossed someone off your list, “it’s time to stop shopping for them.”
Credit scores and car insurance
Bad credit could be driving up your car insurance, said Andrea Coombes in The Wall Street Journal. A new study of five large auto insurers has found that credit history can make or break a driver’s premium, leaving motorists with no credit paying 65 percent more than those with good credit. Depending on where you live, that differential can go even higher. In Washington, D.C., drivers with no credit can pay premiums 126 percent higher than those with good credit. Drivers in California, Massachusetts, and Hawaii can rest easy—those states ban the use of credit histories to set car insurance rates. But for everyone else, the findings are another reminder to keep your credit in check.
So long to salary secrecy
Are workers becoming more open about their paychecks? asked Alina Tugend in The New York Times. “Discussing money, as it is often said, is the last taboo.” But thanks to a push by federal authorities for more pay equality and the rise of salary-comparing websites like Glassdoor.com, that taboo may be “on the wane.” Finding out that a co-worker is earning more might be upsetting, but pay transparency can be a good thing. “Studies show that when pay is confidential, workers often believe the salary distributions are more unfair than they really are.” And “when pay is open,” workers “can directly ask why someone is earning more and how to equalize the salaries.” Widespread transparency may be a long way off, but employees should “know they are allowed to talk about salaries and can’t be punished for it,” because of federal laws that say employers can’t forbid workers from discussing wages.
Check your benefits
It’s never too early to look at your Social Security statement, said Michelle Singletary in The Washington Post. “It used to be that a few months before each birthday, you would get a statement from the Social Security Administration telling you your estimated benefit.” The agency pulled the plug on paper statements a few years ago, but workers who want a peek at their future can view their statements online. The portal, at SocialSecurity.gov, requires setting up an account, but retirees “can get benefit-verification letters, change their address and phone number, and input or change direct deposit information.” For those of us who are still working, the website is a good way to make sure earnings are correctly reported.
Don’t raid your 401(k)
Quit treating your retirement savings like “a piggy bank,” said John Schmoll in Daily Finance .com. More and more Americans are “pilfering from their 401(k) accounts.” In 2011, American workers withdrew $57 billion from their 401(k)s prematurely—a 37 percent increase from 2003. The trend has been fueled in part by younger workers cashing out of their company-backed savings plans when they change jobs. But early withdrawals are not good. In fact, the best thing to do when switching jobs is to either open an IRA or roll your existing 401(k) into your new employer’s plan. “Not only will this allow you to avoid losing money due to early withdrawal penalties, but it will also keep the power of compound growth on your side as you build up a retirement nest egg.”
Planning a career change
Changing careers can be “terrifying,” but there are ways to ease the transition, said AJ Smith in Credit.com. First of all, “remember that the grass isn’t always greener,” so be sure to learn as much as possible about your new career before ditching your current one. Once you decide to move, “make yourself a good fit.” If more education or training is required, you’ll need to “look carefully at how this will affect your finances.” If possible, land a parttime job or internship “to get your feet wet” while you’re still employed, and “get that added degree or certification at night or on weekends.” It’s also best to build up an emergency fund, since starting a new career may mean taking an initial pay cut or even going into debt while you hunt for a job.
What to know about secured cards
If you’re trying to rebuild your credit, consider a secured credit card, said Michael Estrin in Bankrate.com. “Unlike traditional credit cards, secured cards require the cardholder to put down a cash deposit that serves as collateral if the bill isn’t paid on time.” But don’t forget to read the fine print. Secured cards can carry higher interest rates, and often charge fees for exceeding the credit limit or making late payments. And keep an eye on your deposit. While some issuers will refund your down payment and convert the account to an unsecured card, others simply “close the secured account and offer the cardholder the opportunity to open a new unsecured account.” That’s good news if you need your cash back, but remember that closing accounts can also impact your credit score.
Letting go of landlines
Is it time to ditch your landline? asked Tara Siegel Bernard in The New York Times. The government estimates that 38.2 percent of households now do without landline phones, relying solely on wireless or Internet-based phones. But while cutting the cord might save you money, there “are some factors to consider.” When emergencies strike, traditional landlines can be more reliable than wireless phones, since it’s easier for dispatchers to pinpoint a caller’s location. Landlines also use “the old copper wire system of circuits and switches, which are generally self-powered.” Internet-powered phone services—such as Verizon’s FiOS and AT&T’s U-verse—use fiberoptic lines, which can fail when the power goes out. And contracts with the “more nimble” Internet-based phone providers are not always subject to “the same regulations and consumer protections as traditional lines.”
New rules on mortgages
If you’re in the market for a mortgage, brush up on the rules, said Les Christie in CNN .com. New guidelines from the Consumer Financial Protection Bureau went into effect last week, aiming to “lower the risk of defaults and foreclosures.” Lenders will now need to “determine that a borrower has the income and assets to afford to make payments throughout the life of the loan,” which means borrowers can expect stricter underwriting scrutiny. And since “lenders will be required to document” more information about borrowers, count on “more paperwork and longer processing times.” The new rules stipulate that “your debt-to-income ratio generally must be below 43 percent,” though banks can still give you credit if other factors, such as substantial assets, mitigate the risk of default.
When debt troubles surface
“If you’re in debt, you don’t get to set the repayment terms,” said Bev O’Shea in Credit .com. But that doesn’t mean there’s no room to negotiate. “Collectors are smart enough to know some money is better than no money, and their job is to get you to pay as much as possible as quickly as possible.” If you’re behind on a bill, try to work out a payment arrangement “you can stick with,” and whatever you do, “get it in writing before you pay. If the debt winds up in court, you’ll want documentation of your agreement.” Check your credit report regularly for errors, and “work toward getting your credit back on track by addressing any derogatory items.”
