Credit Card Debt Management

The U.S. Senate finally passed a controversial housing bill, designed to help overextended homeowners deal with mortgage pressures. Many critics say the bill would ultimately do more harm than good in many ways. They say it would increase pressures on mortgage giants Freddie Mac and Fannie Mae, onto which the government would essentially transfer some of the financial burden accumulated by overeager lenders stuck with bad loans. Furthermore, critics say the bill would cost the federal government some serious coin.

But, as always, the government has a plan — it may arguably be a terrible one, but it’s there. To offset some of the costs associated with government assistance, there will very likely be an increase in government regulation. Sounds vaguely familiar, doesn’t it, China and Russia?

Lingo inserted last-minute by Sen. Chris Dodd (D-Conn.) would require credit card processors (including online ones like eBay and Paypal) to report businesses’ credit card sales to the IRS. According to the Wall Street Journal, this would raise $1 billion per year for the next decade and “would allow the government to identify possible cases of underreporting when determining who to audit.”

The measure is also considered a source of revenue to offset the costs of another bill currently floating through Congress revising the Alternative Minimum Tax. This whole credit card reporting thing is probably going to happen, but those crying privacy invasion and intrusive government may be knee-jerk reactionaries. This is what Kate Szostak of the Senate banking committee staff, said to the Hartford Courant’s On Background blog:

“This is not a controversial provision or a new one. Republicans and Democrats on the Senate Finance Committee have supported it for months, and it has been included in the Administration’s budget proposal for years. This provision simply requires banks–not small businesses–to report sales transactions to the IRS each year and to merchants at the end of each day. It makes the tax system fair for everyone, without burdening small businesses and without putting consumers’ privacy rights at risk.”

Summer is a time for visiting family and friends, going on missions trips, traveling to faraway destinations and dream vacations, or enjoying a wedding followed by a honeymoon. In short, there’s a lot of traveling going on during these few months.

It can be easy to get caught up in the trip planning and the awe and wonder of sight-seeing, but vigilance is a must when it comes to your credit cards. So how does a person protect their information when jet-setting around the world?

The Kansas City Star has a few good tips, and below are some of the highlights:

-Report lost or stolen cards immediately. Most misuse of your card(s) will occur within a few days, so time is of the essence.

-Memorize your PIN. It may seem like a no-brainer, but there are those unfortunate few who choose to write their PIN down and keep it in a “safe place” in their wallet. Choose an unobvious PIN (i.e. not your birthdate) and try to change it up for each different card.

-Check your card after transactions, particularly in busy locations like restaurants. This will help you ensure, first of all, that you didn’t leave it on the counter/table/floor and, second of all, that the employee helping you handed you the correct card.

-Keep track of your trash and receipts, particularly when they contain personal information and/or account numbers.

-There may be card restrictions for traveling overseas, so call your credit card issuer beforehand to be sure. This will also warn them to expect to see international charges on the card so it won’t be a red flag.

Overall, traveling with credit cards in tow are just like traveling with cash in tow. Keep it close to the vest and use common sense. Your travels will be happier, and your credit report will thank you for it.

By now, there’s been plenty of hoopla about U.S. Sen. Chris Dodd’s (R-Nev.) housing bill to provide some relief for homeowners (and their lenders) in mortgage distress. The bill would put about $300 billion in a fund to refinance overly burdensome home loans at an amount 15% less than the original loan amount. This would make the payments more feasible for homeowners, but it would mean huge losses for lenders, particularly industry giants Freddie Mac and Sallie Mae.

The bill, currently stalled on the Senate floor but expected to reach President Bush’s desk this week, has spurred some public outcry. There is a perception that we, the taxpayers, are forking over taxpayer money to “bail out” homeowners who never should have qualified for these home loans in the first place. Hartford Courant blogger Jesse A. Hamilton addresses that point fairly well:

“I have to point out that the money source for this loan guarantee of $300 billion actually comes from revenue of GSEs (loan giants Fannie Mae, Freddie Mac and the federal home-loan banks.) It’s not taxpayer funded, which was Sen. Shelby’s main contribution… And the money is actually supposed to sit in a kind of fund that will guarantee newly refinanced fixed-rate loans that replace questionable subprime loans… the amount of the financing must be less than the current market value of the home, so the chance of default is less. Those that do default will be backed up by the fund.”

However, the housing bill is now coming under fire for another reason. A provision, apparently inserted deep in the proposal mid-June, calls for more stringent reporting requirements on credit card transactions. This isn’t just Visa, MasterCard, American Express, Discover. This is Google, Amazon, eBay, Paypal — any card company or third-party payment processor.

There are obviously some serious privacy issues here. Not only with credit card data and transaction data, but also with the social security numbers that double as tax identification numbers for thousands of small business owners across the U.S. Costs associated with collecting, organizing reporting the data could be a serious threat to small business owners on a budget, especially in these tough economic times. Read a concise summary of the problem, as well as an excerpt from the Senate bill summary itself, at Fort Hard Knox blog or on FreedomWorks.org.

Why does the government need to include this monitoring provision in a bill on housing assistance? It doesn’t make sense. While I do believe there is a link between irresponsible credit card spending and inability to meet your mortgage obligations and other bills, I do not think the government should stick its nose in the pot. Either help distressed homeowners or don’t, but do not use it as an excuse for increased governmental oversight and nosing around.