protecting your self against high fees, scams and outright fraud

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Protecting your self against high fees, scams and outright fraud. Presented by The Coalition for Debtor Education Chris Muy. Your money can DRAIN away fast. or it could “leak” away…. Stop the major drains first. Avoiding Scams and Money Traps. Rent-a Centers Pay Day Loans - PowerPoint PPT Presentation

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  • Protecting your self against high fees, scams and outright fraudPresented by The Coalition for Debtor EducationChris Muy

  • Your money can DRAIN away fast

  • or it could leak away.

  • Stop the major drains first

  • The Coalition for Debtor Educationwww.debtoreducation.org

    Rent-a Centers Pay Day Loans Rapid Refunds Debt Consolidators

    Avoiding Scams and Money Traps

  • Rent to Own

  • Payday Loans

  • Payday LendingShort term loans made between paydays:1. Provide copy of pay stub to the lender2. Write a check dated after your next payday3. Give your bank account number for direct charge to your account4. Lender cashes check or debits your account

  • Payday LendingExample:Today, you write a check dated two weeks ahead for $256You get $ 200

    Interest and charges $56= $28 per week or 14% per WEEKInterest on an annual basis: 728%!

  • Payday Lending

    Not enough money in account to cover billsRenew Loan for additional fee and interestNEXT PAYDAY

  • Refund Anticipation Loans

  • Rapid Refunds

  • Rapid RefundsThe NEED to READFeesCheck FeeAccount Processing FeeFinance FeeTechnology FeeRefund Estimate FeeTax prepFeeE-file FeeBank Documents FeeTransmission FeeService Bureau FeePLUS finance charge on the loan

  • Your alternative!

  • The Coalition for Debtor Educationwww.debtoreducation.orgVITAVolunteer Income Tax Assistance)

    You may be able to get your taxes prepared for free

    From January until April 15, theres a free tax preparation service for eligible residents.

    To find nearest VITA site: Call 311, or Go to NYC.gov/tax prep, or Call 1-800-TAX-1040

  • BE CAREFULTwo words about foreclosure scams and debt consolidators

  • Check CashersCheck cashers can charge almost 2% of each check you cash.

  • Are you throwing away a weeks pay every year?

  • Check Cashers Max. charge in NY = 1.95%Do the math:$100 = $ 1.95$1000= $ 19.50$2000= $ 39.00

    If your monthly check is $2,000:$39.00 x 12 = $468.00 per year almost equal to a weeks pay!

  • Avoiding SCAMS!

  • Stop the leaks

  • The NEED to READ!!!(again!) Read your bank statement every month

    Open all your mail

    Read your credit card agreement and any additional inserts they send you

    Pay attention to the privacy statements you get in the mail

  • Protect your identity from thieves:Dont carry your Social Security or Medicare card with you

  • Dont reveal your Social Security or Bank Account numbersPhishing

  • DO NOT CALL Registry

    888-382-1222 or go to: donotcall.gov

  • Safeguard your personal information

  • SCHRED!!!

  • TMI!!!

  • ATM fees

    Add up!

  • Minimum BalanceMinimum BalanceMinimum BalanceMinimum BalanceMinimum Balance

    READ your bank statement every month

    ASK what you have to do to get FREE Checking

    ASK if there is a minimum balance required for a free account

  • The Coalition for Debtor Educationwww.debtoreducation.orgOverdraftsIts your choice! Bank cannot charge you for overdraft on a debit card unless you OPT-IN

  • Rent-to-own storesPayday loans, rapid refunds Student loansScams

    *Lets start with the leaks (Ask students to name some of the ways small amounts of money slip through their hands)

    Cabs, shopping at a convenience store instead of a market, lottery tickets.

    Credit card and bank fees:Fees that you can AVOID: Late feeOverdraft feeATM feeCash advance fee on a credit card

    Also, cable and cell phones. If you dont stay within your plan, you are charged extra amounts each month. Call and negotiate a better rate if your contract is up.

    These leaks can add up to a hundred or more dollars a month.

    If you can aoiv some of these leaks and save just $3 a day, a year form now you will have $1100!!*Dont let your hard-earned money rush down the drain. *Well start by talking about predatory lenders Rent-a Centers Pay Day Loans Rapid refunds Debt Consolidators

    These businesses are legal but they charge extremely high interest rates for their services. What they do is make it convenient for people who dont have easy access to standard financial pservices like banks and credit cards.services, like banks or credit cards

    Most of these are NOT actually fraudulent but they prey on vulnerable people who need to borrow money or have debt problems.

    We recommend avoiding debt consolidators altogether because while some may be legitimate businesses, even they have some business practices that may leave you in more debt than when you began. If you have debt problems, call 311 for recommendations of where you can see a credit counselor at no cost in your own borough

    Well take a look at each of these groups.*The largest company in this category is Rent-a-Center but there are smaller companies in the NY area. They put very low prices on furniture. The problem I that the prices are the payments PER WEEK. And often the furniture is used because its been repossessed from someone who didnt pay on time.*Heres a typical offer. And please note how it is designed to appeal to people with poor or no credit. The upper left corner shouts Everyones Pre-Approved to start buying without credit.

    *This particular online offer is designed to appeal to different people: theres an offer for a washer/dryer, a large screen TV and there was also a computer. The total prices are different but each is offered for only $19.99 per week.*So now lets look at the fine print for the TV:

    *So now lets look at the fine print:It says : Own it in 24 months or less. 90 days is the same as cash. This means if you pay the price of $1,372.11 within 90 days, that what it will cost you.

    BUT if you make 104 worry-free payments of $19.99 PER WEEK, total price : $2,078.96. which is a little more than 50% more than if you just paid for it.

    AND, if you miss 2 payments, the item is repossessed and you get no refund for what youve already paid.

    **Payday loans are illegal in New York. But Pay day lenders still target New Yorkers over the internet. A payday loan is a high-interest loan borrowed against your next paycheck. In New York State, most payday loans are handled by phone or online. In order to apply for a payday loan, a borrower generally needs to have a checking account and proof of income. NY regulates payday lending and/or limit the amount of interest that can be charged but many states do not, and enforcement can be limited especially when out-of-state banks are utilized. If you receive an offer for a payday loan, please report it to the New York State Banking Department by calling 1-877-BANK-NYS (2265-697) or visitingwww.banking.state.ny.us***Heres how the math works.: The amount sounds reasonable except that the interest is only charged for 2 weeks. Thats because the lender gets repaid when the borrowers next paycheck is deposited at the bank. The lender collects immediately.

    If you annualize the interest over one year, which is how most interest rates are quoted, that works our to 728%!*Consequently the borrowing can become a cycle

    The loan is a short term fix for serious financial need

    The borrower is willing to pat a high interest rate for that short term

    By the next payday, the borrower falls short because the lender has taken money to repay the loan from that paycheck, so the person must borrow again to cover expenses.

    The debt snowballs since the borrower will always fall short on his or her next paycheck.esult

    And payday lenders target people on fixed income becausde they know they have a steady income

    *These are LOANS against tax returns. They were supposed to end last year but if you google rapid refunds, youll find there are still plenty of offers to do your taxes and provide an quick refund. Now these tax preparers are making money on fees.

    The governement sends tax returns relatively quickly these days so its not worth the interest and fees you will have to pay to get your refund a few days early.

    Be very careful about who you choose to do your taxes.

    A rapidtax refundorrefund anticipation loan(RAL) may sound appealing, especially if you are in an urgent need of cash. It definitely comes at a cost and may not be at all what you think!

    Here are examples of somechargesthat could accumulate when you have your taxes prepared. Check FeeAccount Processing FeeFinance FeeTechnology FeeRefund Estimate FeeTax PreparationFeeE-file FeeBank Documents FeeTransmission FeeService Bureau FeeIf you arent paying close attention to charges, these fees could add up to as much as $1,000. To avoid them, do not opt for a rapid refund.

    If you needquick cash, find out what fees you are liable forbeforeagreeing to the terms of an RAL. A good reference point might be the list above.

    Insist on reading the fine print of any contracts, and comparison shop! Not all companies charge the same fees, so find out what the fees are for. The Better Busioness Bureau (BBB) offers Business Reviews on companies, so checkbbb.org and NY States Attorney Generals website for information. If you cant find the business you are looking for, call BBB. Dont get caught up in RAL fees! Put your money to better use!

    From Kristal Heffley blog

    *

    Read all the fine print before you pay someone to prepare your taxes. Ask about fees upfront. And try to read the agreement. Take the time to READ any agreements. Dont let the salesperson rush you to sign anything before reviewing what you are signeing. Here are some typical fees (on slide)

    Just as an example one online agreement stated in the last para