Thrifty Spending Issue 67

FEATURE ARTICLE: The data they don’t want you to see

Despite opposition from manufacturers and some members of Congress, a new database could provide crucial safety information to consumers.

For a database that some say will destroy what’s left of U.S. manufacturing, looks pretty benign.

The database, which was launched March 11, includes recall notices and reports from people who’ve had bad experiences with products: light bulbs that exploded, dishwashers that caught fire, diapers that appeared to cause rashes, a crib that trapped a baby’s leg.

Manufacturers can respond to the reports before they’re posted on the site, and some do:

  • Bosch, for example, noted that the fiery dishwasher had already been the subject of a recall.
  • Dynacraft, a bike manufacturer, said “a long history of no maintenance” on a 10-year-old bicycle is probably what caused a part to fall off, resulting in a report of a cut to the rider that required seven stitches to close.
  • Pampers thanked the parents who reported rashes for “taking time out of your busy day to contact” the U.S. Consumer Product Safety Commission, which runs the database. The diaper-maker provided links to a report by the commission and its Canadian counterpart, Health Canada, announcing that they did not find a link between Pampers’ Dry Max design and diaper rash.

Some people’s reports don’t ever see the light of day. If people complain about a quality issue, rather than something that did or could cause harm, the report won’t make it into the database, safety commission spokesman Alex Filip said. Neither will reports that target the wrong manufacturer, that don’t list a manufacturer or that are otherwise “materially inaccurate.”

All in all, the database so far looks pretty restrained, especially when compared with the free-for-all commenting and reviews you can find on many other sites, from to Yelp.

At least with, manufacturers will be notified of complaints within five days of the reports and have 10 days to respond. Businesses don’t get any prior notice of complaints or reviews on other sites, and any response they make can get lost in the din of comments.

Congressional opposition

But this Internet thingy — where people actually have a right to express themselves and have their comments seen by others — still seems to scare a lot of lawmakers.

U.S. Rep. Mike Pompeo, R-Kan., led a drive to eliminate funding for the database. During a House floor debate on his amendment to scrap, Pompeo said the Web tool would drive jobs overseas — although it’s not clear how, since consumers are just as free to complain about foreign manufacturers as domestic.

Nevertheless, the amendment passed the House in February with the approval of 224 Republicans and seven Democrats. It’s unlikely to prevail in the Democrat-controlled Senate, however, so at least for now the database will continue.

The database is making public the same kind of information that the safety commission has always collected but that has long been kept from consumers’ sight. Before now, the only way to see commission reports of defective products was to file a public-records request, which manufacturers could sue to stop. Recalls have to be negotiated with manufacturers, which takes awhile, so you could easily wind up buying a product that the commission and the manufacturer know is dangerous.

So now, at least, you can see the reports and make up your own mind.

Safety commission underfunded

One of the weirder arguments being made against the database is that the “.gov” suffix — and the fact that the database is run by a government entity — will give people the idea that all the reports being made are true and complete, despite the clear disclaimers that litter the site.

Some critics have said the commission should investigate, and validate or dismiss, every report before it’s posted. But that requires staff, which requires money, which lawmakers haven’t been willing to cough up.

Will the database become a repository for people who lie about products, businesses that try to undermine competitors and those with axes to grind? Maybe. But in the absence of adequate safety enforcement, it may also become the best way to get a heads up on products that could hurt us or our children.

Liz Weston, MSN Money

MONEY SAVING TIP: The art of couponing

Today is a time when saving every dollar helps. There are many sources that help consumers save.  Here are some couponing sites:

  • Your local Sunday paper is your best way to begin.  Coupons are usually with the magazine section inside the funnies.  You will find coupons and savings for food, electronics, clothes and furniture.  You can have your morning cup of coffee as you search for the coupons that can help you save.
  • If you are computer savvy, here are some websites that are safe to visit:
    • – Best deals and freebies from food, clothing and, technology.
    • – Coupon codes for on-line shopping and section for printable coupon by category for groceries, restaurants, clothing and many household products.
    • – Grocery coupons
    • – Daily shell shocker deals on all electronics and tech gear.

Couponing helps save; It won’t make your bank account grow overnight, but it’s a great place to start.


DID YOU KNOW….that you should make sure all your electrical devices are on a surge protector?

This is especially true of your entertainment center and your computer equipment. A power surge can damage these electronics very easily, so spend the money for a basic surge protector and keep your equipment plugged into such a device.

Overdraft Programs: Consider Your Lower-Cost Alternatives

The traditional overdraft programs, which may charge up to $25 or more to automatically cover purchases or transactions when you don’t have enough money in your bank account, are expensive and fees can add up quickly. You can avoid overdraft charges by recording all of your account transactions, knowing your current balance, and making sure you have enough money in your account to cover purchases and other withdrawals. However, if you struggle with overdrafts, you can still minimize the fees.

Start by asking your bank about the lower-cost alternatives. One option may be to pre-arrange for an automatic transfer from your savings account to your checking account when the balance falls below zero. Another may be to link your checking account to an overdraft line of credit, so a shortfall in your account would trigger an automatic loan that may cost less than incurring overdraft fees.

Due to new federal regulations, consumers also have a choice in how they want their bank to handle overdrafts caused by debit card transactions. “Consumers now have a real choice on whether or not they want overdraft services for these transactions in advance. They can later change their mind and ‘opt out’ of this coverage,” said Mark Pearce, Director of the FDIC’s Division of Depositor and Consumer Protection. “Consumers living paycheck to paycheck should be especially wary of the high total cost of frequent overdrafts.”

Many banks also offer e-mail and text message alerts for customers, so ask the bank if it can send you an alert when your account balance gets low.

The FDIC has published a new brochure called “Your Guide to Preventing and Managing Overdraft Fees.” You can read and print English and Spanish versions online at

Your Wallet: A Loser’s Manual

How to protect your money, your credit record — and your sanity — if you become a victim

Consider this: Your wallet is stolen. You immediately call your bank and credit card company to report the problem, close old accounts and open new ones. You even remember to call the Social Security Administration to notify them that you had your Social Security card in your wallet. At the end of the day, you feel fairly confident that the incident is behind you.

But weeks later you receive past-due notices on bills for merchandise you never purchased, and a few months later your application for an auto loan gets rejected because someone has used your name and Social Security number to open new accounts and run up thousands of dollars in debt. The good news: Your actual liability for these unauthorized purchases is limited by law or industry standards. The bad news: It’s likely that you’ll spend many frustrating hours trying to clear your name and straighten out your credit history.

Here are safety tips from FDIC Consumer News that can greatly reduce the chances of becoming a victim.

Limit the amount of confidential information in your wallet. Only carry the identification, checks, credit cards or debit/ATM cards you really need. The rest, including bank account numbers, personal identification numbers (PINs), passwords, and most importantly, Social Security cards, are best kept elsewhere in a safe place. Likewise, don’t pre-print your Social Security number or driver’s license number on your checks, because either one could help a thief apply for a loan, credit card or bank account in your name.

Keep good backup information about your bank and credit card accounts, just in case your wallet is lost or stolen. You’ll want account numbers and phone numbers that can be used to report your losses or request new cards. “Some people make copies of the front and back of all the cards or important notes in their wallet to help jog their memory,” said FDIC Regional Ombudsman Janet Kincaid.

Review your credit card bills and your checking account statements as soon as they arrive. Make sure that no fraudulent activity is taking place.

Periodically request your credit reports. Look for signs that someone may have obtained loans or tried to commit other fraud in your name. By federal law, you are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit bureaus — Equifax, Experian and TransUnion. Go to or call toll-free 1-877-322-8228 to order your free credit reports.

Experts often suggest that, to maximize your monitoring capability, you spread out your requests and receive a report from each of the three credit reporting agencies at separate times rather than all at once.

If you’ve already been victimized, take steps to limit your liability. Immediately call your bank (to report a lost debit/ATM card) and your credit card companies. And if you spot an unauthorized charge on your credit card, you must follow up on any phone calls to your card issuer with a letter disputing the transaction.

“Under the Fair Credit Billing Act, you must dispute unauthorized charges appearing on your credit card statement in writing within 60 days after it was sent to you,” noted Joni Creamean, Chief of the FDIC’s Consumer Response Center. “The letter also must be sent to the bank’s designated address for billing inquiries, not to where you’d mail your payments.”

Fraud Alert: Text messages, pop-ups and downloads to avoid.

Be on guard against “urgent” requests and unsolicited “deals” on the Internet.   

FDIC Consumer News has reported how criminals masquerading as legitimate businesses or government agencies have tricked consumers into divulging valuable personal information over the computer, phone or fax in order to drain bank accounts. Here are our latest tips for protecting against new schemes using electronic devices.

Think twice before responding to “urgent” text messages. One recent scam involved a text message sent to cell phones and smartphones (a hand-held device to access the Internet and make calls) warning bank customers that their debit or credit card had been blocked for security reasons. The message urged users to call a hotline to unblock their card, but instead they reached an automated response system asking for their card number, personal identification number (PIN) and other information.

“Unfortunately, this was enough information for thieves to create counterfeit cards and commit fraud,” said Michael Benardo, Chief of the FDIC’s Cyber-Fraud and Financial Crimes Section.

Why are smartphone users now being targeted by scammers? “Smartphone users almost always have their phone handy and tend to respond to calls and e-mails quickly, so the expectation is that many of them may not realize that a message is fake until it’s too late,” Benardo explained. “Not only that, but fake Web sites are also harder to spot on a small screen.”

Be on guard against unexpected pop-up windows on Web sites, including your bank’s. If after you’re logged onto your bank’s Web site — or on any Web site, for that matter — and you get an unexpected pop-up window asking for your name, account numbers and other personal information, that is likely a sign that a hacker has infected your PC with spyware and is trolling for enough information to commit identity theft and gain access to your bank account.

“It’s normal for your bank to ask for your login ID and password when you first log in and to ask you to answer a ‘challenge question’ if you want to reset your password or start using a new computer,” advised David M. Nelson, an FDIC fraud specialist. “But your bank will not ask you — through a pop-up window — to type your name and information such as your date of birth, mother’s maiden name, bank account and cell phone numbers. Banks only need that type of detailed personal information when the account is initially opened.”

Be suspicious of unsolicited offers to download games, programs and other attractive “apps” (applications) onto your smartphone. Those “deals” could contain malicious software directing you to fake Web sites or install spyware used to steal information that can lead to theft. “You should consider using anti-virus software specifically designed for smartphones and other mobile devices,” added Nelson.

What are your best defenses against a variety of high-tech scams?

  • Be aware that cyber criminals always look for ways to use new technology such as smartphones to try to commit fraud;
  • Stop and think before giving personal information in response to an unsolicited request, especially one marked as urgent, no matter who the source supposedly is;
  • Only communicate with your bank using phone numbers or e-mail addresses you are certain about — such as the customer service number on your bank statement or the back of your card — and add these important numbers to your phone’s contact list; and
  • Only install programs that you know are from legitimate Web sites, such as your Internet service provider, financial institution, wireless phone company or trusted app vendors. 

Client’s Corner

  • Are you or someone you know on active duty with the US Armed Forces?  You are entitled to relief from the Servicemembers Civil Relief Act.  Under the Act interest rate charges are
    to max out at 6%.  The benefits do stop once the active duty is completed.
  • GE Money Bank has changed their name to GE Capital Retail Bank as of October 1, 2011.
  • Springleaf is changing account numbers for their 19 digit account numbers to make them 12 digits.  If you receive such notice, contact DMCC immediately with the new account number.


My question concerns negative things on the credit history and buying a house.  I had my credit history pulled because I was thinking about buying a house.  When the financial person saw it, he said that I had some bad marks and needed to take care of them. I contacted the credit card people and they told me that these things would not be removed for 7-10 years.  Does this mean that I will no be able to buy a house until then?  I know people who have worst credit histories than I do, and yet, they have been able to buy a house.  My scores range from as low as 502 to 602.  How can I get my score up if slow payments stay on my record for 10 years?

Congratulations! The process of purchasing a home can be overwhelming, but it can also mark a very happy time in one’s life.

It is true that a bad mark remains on your credit report for 7 – 10 years.  However, what you should be concerned with is the most current activity.  This is what hinders your credit score most.  35% of your credit score comes from credit payment history.  In other words, pay your bills on time and do not be late.

If you have not ordered your credit reports, do so, it will not hurt your score.  Go to and get all three reports, free of charge. You will be charged if you would like to see your credit score.  Review these reports with a fine comb. Make sure that you not only understand what is on your report, but that the information is accurate.  Contact any creditors that are reporting erroneous information.  If you feel that you should debate an item on your report, do it.  Do not wait until a lender looks at your report and has questions that you cannot answer.  We usually recommend that you review your credit at least six months before you plan to apply for a loan so you will have the ability to fix any problems in your report first.  You should enter the lender’s office with explanations to all of the items on your credit report.  Be equipped.  Be prepared.

Rest assured that it will not take you will not have to wait 7 – 10 years before you can purchase a home but keep in mind the higher your credit score the better (lower) interest rate. This better rate could save you thousands over the life of the loan.  Although, cleaning your credit report and raising your credit score takes time, it will not take that long. It is also important that you do not make any large purchases with credit during this time because it would have a negative effect on your credit. Even though you have negative marks on your credit report, most of your score will reflect what you are doing today.  Until you get that loan, be on your best financial behavior. Below is a complete list of how your credit score is determined.

Credit payment history35%
Outstanding debt30%
Length of credit15%
Credit mix10%

Should you need further information on mortgages, review the Educational Materials section of our website.  Since you have already spoken with someone in regards to a mortgage, call them and ask what you need to work on.  It would not hurt to get some pointers straight from the horse’s mouth.   Finally, be positive.  A high credit score does not necessarily mean that you have the financial capability to make a mortgage payment.  Just as a mid range score will not impede you from getting a loan.  Good luck.


Letter from the Executive Director

Dear Client,

It is with great pleasure that I can take this opportunity to tell you about DMCC’s latest accomplishment; we have recently been designated an Approved Housing Counseling Agency by the U.S. Department of Housing and Urban Development.

This means that DMCC has met certain industry standards and federal guidelines to provide housing counseling services, including budget counseling and financial management workshops. DMCC has been offering budget counseling and workshops for over 11 years; this accreditation is yet another affirmation that we do a legitimate job of helping many consumers improve their personal financial situation. It also allows us to
expand our programs to help individuals
with their housing needs.

In this regard, we have developed a new Foreclosure Prevention Program that we are now offering for free to anyone who is suffering from a financial hardship and is finding it difficult to pay their monthly mortgage. Our housing counselors will identify solutions to avoid foreclosure that meet the individual’s personal goals and, if applicable, assist the individual with obtaining a loan modification through available government programs. If you or anyone you know could benefit from this program, or to learn more about it, please call our office and ask to speak to a housing counselor.

Aside from our new housing initiatives, DMCC continues to stress the importance of education. We are constantly adding articles and materials to our website to aide in keeping you ahead of your finances and informed on the latest fiscal news. For instance, our budgeting worksheets are a good way to keep your spending in check, especially as the holiday season approaches. And, if you haven’t signed up for our free bi-weekly ezine Thrifty Spending, I encourage you to do so; it is an informative email containing useful tips to reduce your spending and save money.

Thank you for your commitment to DMCC and your continued efforts to become debt free. If there is anything we can do to serve you better, please let us know.


Phil Heinemann
Executive Director

Spring/Summer 2011

  Your Guide To Debt Freedom
   A Quarterly Educational Publication

Your Wallet: A Loser’s Manual. How to protect your money, your credit record — and your sanity — if you become a victim. Consider this: Your wallet is stolen. You immediately call your bank and credit card company to report the problem, close old accounts and open new ones. You even remember to call the Social Security Administration to notify them that you had your Social Security card in your wallet. At the end of the day, you feel fairly confident that the incident is behind you.   READ MORE

Overdraft Programs: Consider Your Lower-Cost Alternatives  The traditional overdraft programs, which may charge up to $25 or more to automatically cover purchases or transactions when you don’t have enough money in your bank account, are expensive and fees can add up quickly.  READ MORE

Fraud Alert: Text Messages, Pop-Ups and Downloads to Avoid. Be on guard against “urgent” requests and unsolicited “deals” on the Internet FDIC Consumer News has reported how criminals masquerading as legitimate businesses or government agencies have tricked consumers into divulging valuable personal information over the computer, phone or fax in order to drain bank accounts.  READ MORE

Client’s Corner:  Click HERE to read important information regarding your account.

Ask DMCC:  In each newsletter, DMCC will answer a question from one of our clients. If you have a specific question you would like answered, you can submit it to Click  HERE to read the latest question submitted by one of our readers.

Letter from The Executive Director

Mission Statement/IRS Treatment of Client Payments to DMCC/Disclosure

Thrifty Spending Issue 66

FEATURE ARTICLE: How to spot ATM skimmers

Skimmers applied to card readers (think fake card readers on top of the real ones) are designed to capture debit card magnetic stripe data, while tiny wireless cameras or overlays to existing personal identification number pads are designed to capture PIN information. Once thieves capture such data, they can use it to make fake cards or sell the information on the Internet to others.

Besides learning what skimming devices look like, consumers can also employ other strategies to spot the devices, according to John Pearce, director of commercial marketing for banking-financial and government systems at the security company ADT, which sells antiskimming technology. He recently shared the following strategies with us.

Perform an A.T.M. Inspection
Before swiping your card, Mr. Pearce recommended that consumers examine A.T.M.’s for tell-tale signs of skimmers like visible glue marks or residue around the reader or PIN pad. Also, look for loose parts (tug on the card reader, say, to see if it comes off or if there is a loose appendage recently added to the machine). “You want to inspect the card reader slots first and foremost,” Mr. Pearce said. “If there’s any residual of glue around the PIN pad area or around the card slot, there’s a pretty good chance there was skimming activity in the recent past.”

Perform an A.T.M. Area Inspection Mr. Pearce also recommended that consumers look around the A.T.M. area to see if anything looks out of the ordinary. For instance, is there a cola can or pack of cigarettes on the top of the A.T.M. or promotional literature nearby? If so, look closely to make sure there’s no miniature camera hidden in such spots. Check the ceiling above the A.T.M. for such cameras as well. While legitimate security cameras for the banks will be clearly overt and visible, these cameras will be hidden and about three-fourths of an inch square in size, Mr. Pearce said.

Cover Your PIN When you type in your PIN, Mr. Pearce recommended using your other hand to shield the keypad to block it from video cameras hidden in the light above the keypad or elsewhere. This can also help protect your information from “shoulder surfers,” people who Mr. Pearce said stand off to the side to try to record your PIN.

Know Which A.T.M.’s to Pay Special Attention To
Mr. Pearce recommended being extra vigilant and cautious when using A.T.M.’s at heavily trafficked areas like malls, airports and gas stations. In many cases, he said, skimming can go unnoticed in such locations because there aren’t any personnel monitoring the machines. In addition, if you’re having problems using a machine, avoid any offers from help from strangers. “They know you are having a problem because they caused the problem to take place in the first place,” Mr. Pearce said, noting that they would ask for your personal identification number as they try to enter your card.

Know When to Use Your Credit Card
In situations where your card goes out of your line of sight (like at a restaurant or hotel), Mr. Pearce recommended using a credit card rather than a debit card.

MONEY SAVING TIP: Clean your car’s air filter.

A clean air filter can improve your gas mileage by up to 7%, saving you more than $100 for every 10,000 miles you drive in an average vehicle. Plus, cleaning your air filter is easy to do in just a few minutes – just follow the instructions in your automobile’s manual and you’re good to go.

DID YOU KNOW….that your credit can affect your job search?

According to a survey released by the Society for Human Resource Management in 2010, 13% of the companies surveyed check the credit reports of all candidates and 47% check some candidates.

Employment related credit checks are legal in most states and the information that is provided to employers is limited.  No credit scores are divulged only your report.  Employers look at long term trends, not necessarily if you missed a payment or were late with your credit card payments a few times.

In order for an employer to check your report, they need your signature giving them permission.  You are entitled to deny them access, but that may cost you the job. If you have serious credit issues, it is recommended that you be upfront about them and the reasons why these issues exist.

Regardless of whether you are hired or not, it is a good idea to take care of the negative information on your report.  You may not be concerned with having to get a loan, but what if you were to lose your job tomorrow?  Straightening negative marks on your credit report takes time; don’t wait until the last minute.

For assistance on how to resolve disputes on your credit report, click on

For a complete article visit


10 Things You Can do to Avoid Fraud

International scam artists use clever schemes to defraud millions of people across the globe each year, threatening financial security and generating substantial profits for criminal organizations and common crooks. They use phone, email, postal mail, and the Internet to cross geographic boundaries and trick victims into sending money or giving out personal information. While con artists can be clever, many can be foiled by knowledgeable — and equally canny — consumers. Here are 10 things you can do to stop a scam.

1 Keep in mind that wiring money is like sending cash: the sender has no protections against loss. Con artists often insist that people wire money, especially overseas, because it’s nearly impossible to reverse the transaction or trace the money. Don’t wire money to strangers, to sellers who insist on wire transfers for payment, or to someone who claims to be a relative in an emergency (and wants to keep the request a secret).

2 Don’t send money to someone you don’t know. That includes an online merchant you’ve never heard of — or an online love interest who asks for money or favors. It’s best to do business with sites you know and trust. If you buy items through an online auction, consider a payment option that provides protection, like a credit card. Don’t send cash or use a wire transfer service.

3 Don’t respond to messages that ask for your personal or financial information, whether the message comes as an email, a phone call, a text message, or an ad. Don’t click on links in the message, or call phone numbers that are left on your answering machine, either. The crooks behind these messages are trying to trick you into giving up your personal information. If you get a message and are concerned about your account status, call the number on your credit or debit card — or your statement — and check it out.

4 Don’t play a foreign lottery. First, it’s easy to be tempted by messages that boast enticing odds in a foreign lottery, or messages that claim you’ve already won. Inevitably, you’ll be asked to pay “taxes,” “fees,” or “customs duties” to collect your prize. If you send money, you won’t get it back, regardless of the promises. Second, it’s illegal to play foreign lotteries.

5 Don’t agree to deposit a check from someone you don’t know and then wire money back, no matter how convincing the story. By law, banks must make funds from deposited checks available within days, but uncovering a fake check can take weeks. You are responsible for the checks you deposit: When a check turns out to be a fake, it’s you who is responsible for paying back the bank.

6 Read your bills and monthly statements regularly—on paper and online. Scammers steal account information and then run up charges or commit crimes in your name. Dishonest merchants sometimes bill you for monthly “membership fees” and other goods or services you didn’t authorize. If you see charges you don’t recognize or didn’t okay, contact your bank, card issuer, or other creditor immediately.

7 In the wake of a natural disaster or another crisis, give to established charities rather than one that seems to have sprung up overnight. Pop-up charities probably don’t have the infrastructure to get help to the affected areas or people, and they could be collecting the money to finance illegal activity. Check out fraud to learn more.

8 Talk to your doctor before buying health products or signing up for medical treatments. Ask about research that supports a product’s claims—and possible risks or side effects. Buy prescription drugs only from licensed U.S. pharmacies. Otherwise, you could end up with products that are fake, expired or mislabeled — in short, products that could be dangerous. Visit for more information.

9 Remember there’s no such thing as a sure thing. If someone contacts you promoting low-risk, high-return investment opportunities, stay away. When you hear pitches that insist you act now, guarantees of big profits, promises of little or no financial risk, or demands that you send cash immediately, report them to the FTC. For more information about investment fraud, visit

10 Know where an offer comes from and who you’re dealing with. Try to find a seller’s physical address (not just a P.O. Box) and phone number. With VoiP and other web-based technologies, it’s tough to tell where someone is calling from. Do an internet search for the company name and website and look for negative reviews. Check them out with the Better Business Bureau at One bonus tip: Visit to learn how to avoid internet fraud, secure your computer and protect your personal information.

Law enforcement agencies around the world work together to stop scammers and provide consumers with the information they need to avoid fraud. If you believe you have been scammed, file a complaint with the Federal Trade Commission at, or call 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4621.If you are outside the U.S., file a complaint at: All complaints are entered into the Consumer Sentinel Network, a secure online database used by hundreds of law enforcement agencies in the U.S. and abroad.

Federal Trade Commission

Mission Statement/IRS Treatment of Client Payments to DMCC/Disclosure

DMCC Mission Statement

Our mission is to provide consumers education and budget counseling to improve their financial literacy and assist them in the management of their personal finances. We are committed to providing credit counseling through educational programs and materials, personal budgeting, and debt management plans to financially distressed consumers, while maintaining fiscal integrity and utilizing the highest quality standards in the industry.

IRS Treatment of Client Payments to DMCC

Client payments to DMCC are considered to be equal to the fair market value of debt repayment services provided by DMCC and therefore, do not satisfy the IRS requirements for donative intent. Please review this with your tax preparer.

The subject matter contained in our educational publications is for information purpose only. We suggest that you consult your financial or other advisors when planning for your specific need or requirements



Question: I am interested in purchasing a home and a friend of mine told me to look into bi-weekly home mortgages.  Could you please explain to me the advantage of this loan over a traditional monthly mortgage?

Answer: Recently banks have come up with creative ideas to help the consumer pay their mortgage on a bi-weekly basis instead of the traditional once a month method. Through this method of payment, you can pay off your home in less time with less money. By simply paying half your monthly payments every two weeks, you will eliminate seven to nine years of an average thirty year loan. You will earn equity in your home faster because more of your payment is being applied to the principal of the loan instead of the interest. At the same time, making bi-weekly payments of one half your monthly payment will result in paying an additional monthly payment amount each year, which will result in a greater savings over the life of the loan. Your lender, interest rate, escrow payments, etc. all remain the same. If you have the discipline to budget your money and have a desire to pay off your loan in a shorter period of time, bi-weekly payment plans on your new or existing mortgage can be a tremendous benefit.

Example: A comparison chart of a typical lenders’ Monthly Schedule to the Bi-Weekly Schedule. Terms used: 30 year loan $110,000 @ $1,000 monthly payment.

PaymentYears to PayInterest Saved

To submit your question to DMCC, please write to: and in the subject line write, Ask DMCC

Client’s Corner

  • GE Money has recently acquired certain accounts from Citibank Retail USA.   If you have received notice or have noticed your statement is now from GE Money and not Citibank, please forward the document or statement to DMCC to update your account.  You can fax the statement to DMCC at 954-545-4510 or mail it to us at 700 W. Hillsboro Blvd, Bldg 1, Ste 105, Deerfield Beach, FL 33441.  Be sure to include your client ID on the notice.
  • Are you getting your monthly creditor statements?  Your statement is your  monthly receipt that the monthly disbursement was properly credited to your account.  If you are not getting your statements, please contact the creditor to verify they have the correct address for you on file.  Any creditor address change must be communicated with DMCC.
  • Talbots does not send out statements for all accounts enrolled on the debt management plan. To request a statement, please contact their Billing Department at 781-741-7706.
  • American Express charge cards that do not accrue interest are not sent monthly statements. If you want to get monthly statements for American Express charge card, please contact them at 888-258-3741.

Understand the Risks and Costs of Borrowing With a Reverse Mortgage

Advice for Seniors:   May 2010 update

A reverse mortgage is essentially a loan against your home that you do not have to pay back for as long as you live there. It allows homeowners age 62 or older to borrow cash from the equity in their homes without having to make monthly payments. A reverse mortgage is often advertised as a great source of easy money for older homeowners to supplement their income, pay healthcare expenses or use the money as they please. But as FDIC Consumer News has reported in the past, while there are potential benefits to a reverse mortgage, it may not be the best option for everyone. With the number of potential borrowers growing with the aging population, it’s important that homeowners fully understand the risks involved. Here are our latest tips.

Remember that a reverse mortgage is a loan that must be repaid. “Not all advertisements clearly indicate that a reverse mortgage is a loan,” said Mira Marshall, an FDIC Section Chief specializing in consumer issues. “In fact, a reverse mortgage is a very complicated loan that uses home equity as collateral, just like the mortgage you probably used to purchase your home.”

Reverse mortgages allow homeowners to receive cash in a lump sum, through monthly payments, as a line of credit whenever they need money, or any combination of these options. Unlike traditional mortgage products, homeowners do not make any monthly payments to the lender. However, they eventually do have to repay the principal and interest when they move, sell the house or pass away. And, because no monthly payments are being made, the amount owed will grow over time as interest costs build up and, in some cases, as additional funds are advanced.

The borrower also is still responsible for paying the property taxes and insurance and maintaining the house. Failure to do so can cause the reverse mortgage to become immediately due and payable in full.

The rules to determine how much you can borrow through a reverse mortgage are complex. For example, the total amount of cash available is a percentage of the home’s value that will vary by the age of the borrower and the location of the property. And if there’s a co-borrower, the value is determined by the age of the youngest borrower.

Let’s say your house has a market value of $250,000, you owe nothing on a mortgage and the youngest co-owner is 70 years old. Even though your home equity is about $250,000, with a reverse mortgage and depending on the location of the property, you can borrow only up to approximately $130,000. In contrast, with a traditional home equity loan, it may be possible to borrow up to 100 percent of the value of the home.

Be aware that not all reverse mortgages carry insurance and other protections from the federal government. The most common type of reverse mortgage — the Home Equity Conversion Mortgage or HECM — is offered as part of a program from the U.S. Department of Housing and Urban Development’s Federal Housing Administration. The FHA has protections for the lender as well as the borrower. In the case of the latter, for example, if the borrower or heirs sell the home to repay the reverse mortgage (instead of keeping the house and repaying the loan otherwise), the total debt will never be greater than the value of the home.

However, there are several types of reverse mortgages that are not FHA-insured. These are mostly reverse mortgages developed and offered by private companies, nonprofit organizations, and state and local governments. They may not offer the same guarantees and protections as an FHA-insured HECM.

Understand the costs and fees, which can be significant. Most reverse mortgages have an origination fee, closing costs and periodic servicing fees. There also is an additional monthly insurance premium for an FHA-insured reverse mortgage. The total amount of fees will depend on the loan product. And while the costs and fees can be added to the reverse mortgage instead of being paid up front, doing so increases the loan balance and incurs interest charges.

Borrowers also should keep in mind that the more cash they take out and the longer they go without making loan payments, the interest charges and other costs can use up much or all of the equity, leaving fewer and fewer assets for the borrower or heirs. And if you or your heirs want to keep the house instead of selling it, the full loan amount would be due and payable from your own funds, even if it’s more than the value of the property.

“Because the costs and fees can be extremely high,” said Mike Evans, an FDIC Fair Lending Specialist, “most experts generally advise homeowners not to take out a reverse mortgage if they plan to stay in their home less than five years or if they simply need extra money for small expenses.”

Do your research and shop around before committing to a reverse mortgage. To understand the potential pros and cons of a reverse mortgage, talk to financial advisors and qualified housing counselors. Depending on your circumstances, there may be other, less expensive options available to you. Explore different kinds of loans (including a mortgage refinancing, a home equity loan and a home improvement loan) and programs from local government agencies or nonprofit organizations. In some cases, it may even make financial sense to sell your home and downsize to a less expensive home or even a rental.

If you decide that borrowing money is the way to go, contact several lenders and compare the costs and benefits of the options they offer.

“Most financial experts also agree that it is never a good idea to use the funds from a reverse mortgage to purchase other financial products or services,” added David Lafleur, an FDIC Senior Examination Specialist. “Not only will you immediately incur expensive interest charges and other fees in connection with the reverse mortgage, but having large deposits or annuities may make it tougher for you to qualify for certain entitlement programs that take assets into consideration, such as Medicaid. Also, if you tie up money in CDs or annuities, you will be giving up easy access to funds you may need to meet your expenses.”

Additional information and guidance on reverse mortgages is available from HUD at or by calling 1-800-569-4287.

Note: To receive an FHA-insured reverse mortgage, you must first speak with a HUD-approved counselor, who can provide you with information on this product and other alternatives so you can determine what is suitable for you.

This is a reprint of Spring 2010 FDIC article.


Could Free Trial Offers Be ‘Fee’ Trial Offers in Disguise?

Free trial offers can be an efficient way to sample a new product or service without paying for a membership, subscription or extended service contract. Sometimes, though, if you accept a free trial offer and don’t cancel on time or according to the stated policy, you may be unintentionally agreeing to a contract to buy additional products and services.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, says “try before you buy” offers can be effective ways to market. If you like what you try, you may want to go ahead and make the purchase. But if you don’t want to buy the product or service, you may need to cancel or take some other action on a particular timetable to avoid being charged.

When a company takes your failure to cancel before the end of the trial period as permission to continue billing you, you’ve made a “negative option” purchase. Sometimes, unscrupulous merchants make it tough for consumers to take the action that would prevent negative option billing: these merchants may hide the terms and conditions of their offers in teensy type, use pre-checked boxes as the default setting, and put conditions on returns and cancellations that are so strict it could be next to impossible to stop the deliveries and the billing.

Whiter Teeth? Flatter Stomach? Shiny Hair?

If you see a free trial offer online for a product you’re interested in, stop – and read the details.

Find the terms and conditions of the offer. If you can’t find them or can’t understand exactly what you’re agreeing to, look for another merchant. You don’t want to commit to recurring charges for products or services by mistake – or before you’ve tried them and made your decision.

Pay attention to pre-checked boxes. That check may bind you to terms and conditions you’re not comfortable with – or ready to accept.

Look for information about how you can cancel future shipments of merchandise or services if you don’t want them. Do you have to pay? Do you have a limited time to respond? If you’re not satisfied with the information in the offer, look for another one that meets your needs.

Read your credit and debit card statements very shortly after you’ve responded to a free trial offer – and often afterward – looking for charges you don’t recognize or didn’t authorize. Contact the merchant first to try to resolve the issue; notify the card issuer promptly if you see any unusual or unauthorized charges.

Reprint of FTC article 2010