Jul 30

It’s hard to keep track of all the recent legislation that has been passed within the last couple of months.  Without sifting through the thousands of pages it is difficult to make sense of it all.  Below is a brief summary of a few of these changes and how they can affect you.  For more in depth information on these reforms please click on the link provided.

The Credit Card Accountability, Responsibility and Disclosure Act (CARD Act)

The CARD Act went into effect February 2010.  Designed to protect consumers from unfair credit card and billing practices, this law has many new provisions around fees, interest rates, and marketing. Highlights include:

  • Notifications and Billing Requirements-Credit card companies must now give 45 days notice to any changes to the terms of their cards.  This includes interest rate increases and fees (annual or late payments).
  • Monthly bills must be sent out at least 21 days before it is due and must have a consistent due date .
  • Credit card companies can no longer increase your interest rate within the first 12 months of opening an account.
  • Student Cards-People under the age of 21 will now need a co-signer or significant proof of income as evidence that they will be ably to make monthly payments.  In addition, credit card companies can no longer market on or near college campuses.

The Good: We love rules designed to help protect us!

The Not-So-Good: Carefully review your credit card statements.  Credit card companies are likely to increase other fees (balance transfers, annual, cash advance, and inactivity) in order to make up for lost revenue.  It may also become increasingly difficult for young adults to build their credit history.

Reg E Opt-In (Overdraft Protection)

Going into effect August 2010, this Regulation includes provisions to eliminate consumer debit card overdraft fees. The rule applies to ATM debit card transactions as well as debit card store purchases. Financial institutions are now required to obtain permission from customers to opt into their overdraft protection programs. For customers who decline to do so, their purchase/withdrawal will simply be denied.

The Good: No more $35 fees for the $3 cup of coffee that led to an overdraft!

The Not-So-Good: Financial institutions will look for ways to increase revenues due to the $37 billion of fees related to overdraft payments last year they stand to lose.  Some of the “rumors” I have been hearing include doing away with free checking accounts as well as a reduction in rewards programs.

Dodd-Frank Wall Street Reform and Consumer Protection Act (The Reform Bill)

Signed into law by President Obama on July 21, 2010, this law takes aim at the behavior of Wall Street and the Big Banks and it’s contribution to the financial crisis.  The Bill establishes an independent consumer bureau within the Federal Reserve to protect borrowers against abuses in mortgage, credit card and other types of lending.  In addition, it provides the Government with new powers to identify risky banking institutions and have the ability to seize big, failing companies.  Furthermore, banks will now be forced to keep more capital on hand.  The law has also permanently raised the standard maximum deposit insured amount to $250,000 from $100,000.  Depositors now have the comfort of knowing that their money is completely safe as long as they are within the insured limits.

The Good: No more taxpayer bailouts!

The Not-So-Good: The Reform significantly limits the ability of banks to extend credit.  Others argue that this will stifle the economy.

Hopefully this has shed some light on the new rules and how they can impact you.  It is going to be interesting to see how all of this plays out.

If you have any thought or comments we would love to hear from you.

Meredith


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Jul 24

Below is the White House video summarizing the Dodd-Frank Wall Street Reform and Consumer Protection Act. It will take to some time to see how it will translate into reality, but the video is a simplified view of how we got to where we are now. Hey, hindsight is 20-20. . .

The focus is intended to protect consumers so let’s see how it all plays out.

Lisa, Founder & CEO

www.kiboo.com

www.facebook.com/kiboo

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Jul 16

Staying in a new place is always fun and exciting. My summer in New York City has been amazing! I can’t even imagine myself sitting in my room and twiddling my thumbs out of boredom. There is always something exciting to explore– Broadway shows, plays, museums, restaurants, clubs, cafes, concerts, tourist attractions…. The list is endless.

I want to make the most of the summer and see everything that I possibly can. But there is only one problem: Money.

Yesterday’s expenses made me realize this. They were as follows:

-          Morning cup of coffee: $2

-          Lunch: $10 (this is supposed to be “cheap” in New York, while in Charlottesville it classifies as “expensive”)

-          Starbucks mocha latte – my guilty pleasure: $4

-          Umbrella because there was a thunderstorm outside: $10

-          Cab ride home from dinner because of the thunderstorm: $10

-          Dinner: A whopping $50.

So what were my total expenses for one day?

$86.

Outrageous.

Of course, I don’t usually go to such expensive places for dinner. But according to my friend, it was all right for just the one time, in order to get a flavor of New York.

However, how many such “one time” expenses am I making? Didn’t the Backstreet Boys concert from last week, or the haircut from the weekend before, or the shopping expenses from a few days ago count as part of those “one time” expenses?  How much am I really spending  on the coffee that I classify as “necessary”? And, how much am I spending overall, on the mocha lattes that I excuse  as my only “guilty pleasure”?

Although I am only here for the summer, I am concerned about the transition I will go through when I enter the work environment after leaving college.

I can justify my holiday and my daily expenses all I want, not keep a serious track of them, and ask my parents for more money when my balance is low. Or, I could start to set aside a certain amount of money each month for entertainment, necessities, and transportation.  Then I could keep track of my expenses, identify patterns and see where I need to cut back.

As obvious as that may seem, not everyone is doing it, perhaps due to the lack of the formal tools available.  A Kiboo account will provide these tools, and I can’t wait to have one. I especially look forward to the application that will let me compare my expenses over different weeks.

Becoming more frugal does not mean that I will now have to sit in my room and twiddle my thumbs out of boredom. I can enjoy the dinners, drinks and Broadway shows while simultaneously explore the less expensive, but equally flavorful aspects of the city, such as parks,  street shows, and the many different neighborhoods. It’s all about figuring out the right balance.

Prerna, UVA Class of 2011

Kiboo Amabassador

www.kiboo.com

www.facebook.com/kiboo

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Jul 10

As hard as I try to stay out of trouble, I sometimes find myself in it.   Hey, I’m human.  To stay out of debt, I pay my bills on time and don’t carry credit card balances.  So I was surprised to find a credit card statement with a July 4th due date sitting on my desk when I got back from vacation on July 5th.  I thought, with the holiday weekend and all, I might catch a break by going into a branch first thing in the morning.  Well, was I wrong. . .

Before I tell my account of events, I want to set the stage: (i) I have been a customer of this bank for over 20 years; (ii) have never asked for anything from “my” bank; (iii) do not carry balances; (iv) always pay on time (except this time); and (v) hold several types of accounts (both personal and business).

At the branch, the clerk informed that a fee hit my account and recommended I call the customer service number on the back of the card because they do not deal with credit card fees at the branch.  10 minutes later: The customer service agent sternly informed me that this is my fault, not a bank error, and therefore the fee will not be reversed.  She continued to explain even though it was a national holiday and the branch was closed, I could have called customer service 24/7 to pay the bill.  Honestly, I truly didn’t think of it at the time.  Ok, I get it, it is my fault, but have a little compassion.  To think “my” bank would have a human emotion like compassion, is asking too much.

It’s funny how people go around saying “my” bank.  Right about now, I am not feeling like it’s “my” anything.  Once I realized, I was not winning this battle, I asked the representative to explain the fee.  She said that the fee is $39 dollars and that interest will be compounded for 30 days starting as the next billing cycle (what?). First, I tried to just pay the fee to stop the interest (there is no balance), but this was not an option.  Second, I asked the representative to explain how much interest will be charged and how it is calculated.  She could not tell me the amount or how it is calculated.  If it’s so complicated that even the bank can’t explain it, we have a problem.

I wouldn’t care that much if it was just the fee that I could pay and move on, but the fact that they are not letting me pay the fee just so they can charge interest on it is totally ridiculous.  Here are a few tips to not fall into the same trap:

  1. Set up an automatic payment from your checking or savings account.
  2. Set up a calendar alert the week before the due date so that you have time to transfer money into the linked account if you need to.
  3. Make sure to review the interest rates and terms and conditions on your credit cards.  Many credit cards will raise your interest rates if you are late on one payment.

Just in case you are wondering, I called customer service to cancel card.  This was the end of the line and the nice Mr. Brown of “loyalty services” (different from “customer service”) looked at my history and acknowledged that I am a good customer and July4th and 5th was a holiday and branches were closed.  He did me a solid by waiving the fees.  I learned my lesson on this one. . .

Lisa, Founder & CEO

www.kiboo.com

www.facebook.com/kiboo

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Jul 01

Paper or plastic? Or, maybe you bring you own…whatever your “bag” is there is no denying that social consciousness, green efforts, and environmental responsibility are here to stay.  While we all take certain measures…whether you drive a hybrid, conserve energy, recycle, or simply pick up litter there is little doubt that we all need to do our part to take care of Mother Earth.

Just as we as individuals feel our accountability, corporations (thankfully) are moving in this direction as well.  (Check out http://greenrankings.newsweek.com/top500 for more information).  Banks are no exception.  Online and mobile banking offer less paperwork and less mail.  In addition, direct deposit, online billpay, and remote deposit capture (ability to take a picture of your check and deposit it into your account without having to physically deliver the check to the bank) all promote a reduction in the use of paper as well as fuel consumption.  They are not only are more efficient, but have a positive impact on the environment.

While these are just baby-steps in what has to be a global effort, they are noteworthy nonetheless.

If you have any thoughts, ideas, or comments we would love to hear from you.

Meredith

www.kiboo.com

www.facebook.com/kiboo

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