What happens if you move to another state while on a DMP?

If you have a Debt Management Plan agreement with a national agency, your move will likely be smooth. Just be sure to keep the agency informed about your new contact information.

However, if you are with a local agency or one that is not licensed in your new state of residence, there could be some details to take care of.

Be proactive. Speak to your credit counselor and get some advice about what you need to do as you complete your move.

Here are some important questions to ask:

1. Will it be necessary to sign up with a new agency that is licensed in the new state? 
2. Will it be necessary to change the payment dates?  Remember that there are legal limits on the number of times an account can have the due dates changed so check into that issue right away. 
3. Will the new agency have different fees or requirements that you may have to consider?  

Above all, don’t ignore your Debt Management Program! A few minutes of planning before you finish packing will keep everything on track and your credit rehabilitation alive and well.

What is ahead for consumers in 2014?

While overall household debt has risen, the demand for credit counseling and debt management programs continues to fall (off by over 20 percent since January 2013).  There are several enigmas at work here: 1) the equity markets are superficially high buoyed by the Federal Reserve’s monetary policy making 401-Ks look good (for now), 2) the job market and unemployment continue to suffer (many unemployed have been living on unemployment benefit payments for close to two years) while consumers have adapted with reduced life style choices and more conservative economic behavior (savings rates have risen), 3) home prices have rebounded but many are still upside-down with their mortgages and likely will continue to be so for some time making home equity loans a distant memory, 4) recent college graduates (and many not so recent) are unable to find jobs much less make payments on their student loans (NOTE: Student Loans are the single most important economic issue of our time and should be considered a ticking time bomb for the economy), and 5) the individual  bankruptcy rates have fallen and remain well below 1.4 million annually making the prospect for a “debt bubble” next year a good bet.

Part of the rise in consumer spending is likely tied to euphoria about improved 401-K performance and overall market growth for those who can afford to invest individually.  The rest is probably the result of optimism by those who have jobs and the increasing number of affluent consumers.  However, the FED is likely to change their policies beginning next year and there may very well be a market correction when the era of free money comes to a close.  Some consumers have learned their lessons and will not slip back into the overspending mold while others have not been as affected by the hard times over the past six years.  However, banks have all been affected severely and risk managers will continue to keep credit tight and credit card interest fairly high.

The bottom line is that consumers are in a “wait and see” mode even as they continue to experience debt issues.  I expect to see FED changes beginning in January and a market correction in the first quarter (who knows how significant). 401-Ks will be affected and many stockholders will also.  There may be a major turnaround in demand for credit counseling and debt management beginning in January as consumers start to receive their holiday spending credit card bills.

Our best advice for people is to live beneath their means; perhaps well beneath their means.  That will allow them to save and savings will be paramount in the next few years, as economic uncertainty will probably increase due to the National Debt, the likelihood of increased taxes, a continued poor job market, some level of inflation, and still no relief in property appreciation.

David C. Jones, Ph.D.

President, AICCCA

What About Those On-The Spot Department Store Credit Cards Offers?

This holiday season, retailers at the mall will be waiting at the door with store credit card offers that promise 15% or more off of every purchase you make that day if you just sign up.  Be careful.  Even those seeking to establish a credit history can be in peril.

There are a lot of reasons why you should be wary.  While getting an extra savings on purchases that you might have made anyway could seem like a great deal, there could be consequences.  Many shoppers will buy more than they would have without the new card offer and the store knows that.  That is precisely why they can afford to make the offer.

Also, the last thing many consumers need is one more credit card.  There is a strong possibility that the card may be overused and the balance carried over from month to month.  If so, every consumer should know that store cards typically carry a much higher interest rate charge than other charge cards.  Any savings that could be realized on day one can be quickly erased if the card isn’t paid off each month.

There is also the danger of a possible negative impact on the consumer’s credit score.  Score reductions can come from having too many open lines of credit compared to income or the result of late payments and the attendant late charges and over-the-limit charges.  In general, it may be better to pass up the store card offer, stick to the budget, and pay cash this year.


David C. Jones, Ph.D.
President, AICCCA

Credit Counselors Can Help Save Thousands With Simple Spending Tips

Many consumers develop spending habits that can lead to financial crisis; especially if a layoff, job loss, or other stress occurs in the family. Credit counselors can spot these spending patterns and suggest simple lifestyle changes that can make the difference between surviving a financial stress issue and folding under it.

Some examples of small changes to typical spending habits that can make a big difference are:

• Buying coffee.  Stopping for a cup every morning on the way to work or getting a special drink during a break can add up.   It is easy to spend over $70 a month on this habit alone.  You could save up to $1,000 a year if you just made your coffee at home and took a thermos to work.
• Bottled Water.  Yes, it usually tastes better than tap water, but $1 a bottle versus less than one cent a bottle makes a big difference to your bottom line.  At these prices, it’s a much better deal to buy a filter pitcher for $20 and make your own.  That can save you $35 a month or more, and keep over $400 in your pocket each year.
• Checking Account Fees.  Many banks are now charging fees for having your money in a checking account.  It may be time to look into a local bank or credit union that offers free checking.  ATM fees can quickly add up as well. Look for a bank with ATM locations convenient to your home or office and for banks with low ATM fees. Websites like Bankrate.com, NerdWallet.com, or ConsumerReports.org can help you locate and compare banks and fees.
• Cell phones.  Look into low cost providers and hold a family meeting about curtailing texting and limiting phone usage until things improve.  This can save hundreds each month.
• Cable TV.  It may be time to reduce the 300 channel service to basic cable and save $40 or $50 a month without too much sacrifice.
• Brown Bag It.  Carry your lunch to work or school.  Prepare dinner at home instead of going out or even ordering in.  It’s a lot cheaper and can be healthier for you as well.  A little extra work is worth it, especially when the savings can be huge.
• Use the Library.  It’s free! Your local library offers more than just books for you to check out these days. You can check out movies on DVD, books on tape, and even download e-books. Read current issues of your favorite newspapers and magazines for free in a comfortable chair at your local library. Most public libraries also offer free computer use with internet access and low-cost printing. Your tax dollars already pay for these services and resources - why pay for them twice?

A typical family can save $200 a month or more with some simple, common sense changes to spending habits.  An credit counselor can help you make the adjustments and you will be surprised at the difference it can make.

David C. Jones, Ph.D.
President, AICCCA

Plug the Leaks in Your Financial Life

Your budget is like an old house in the winter. If you don’t keep on top of things and focus on being efficient, money starts leaking out every window and under every door.

Plugging the leaks in your financial life means taking a hard look at all your expenses and all your spending habits. Almost everything you spend money on can be a target for spending less. But some of the easiest ways to improve your household bottom line is finding the small amounts of wasted money in everyday expenditures. They can quickly add up to a big hit to your budget. The trick is to turn that around and add up the savings instead.

One example that almost everyone encounters is the price of gas. Your daily or weekly routine of stopping at the same station to fuel up may be costing you extra. Online resources such as Gasbuddy.com can help you locate the cheapest fuel on your route to work. Some offer promotions to earn prepaid gas cards if you’re willing to spot and report low gas prices in your area.

Bringing a bag lunch every day instead of eating out or getting takeout at work is a common piece of advice that can mean big savings. It’s also not always convenient or realistic for many people with a busy household in the morning. But you can still shave money from your daily lunches by tracking what you spend. If you find yourself spending $12 a day on lunch, set a maximum average budget of $10 and try to bring lunch once a week. Or skip the soda, juice drink, or bottled water a few days each week and use the water cooler or tap. That daily $2 savings is about $500 a year.

You could be leaving money on the table if you belong to a health club or gym and your employer or health plan offers reimbursement benefits. Insurers such as Blue Cross & Tufts typically offer an annual reimbursement of about $150 for qualified memberships. More and more employers, meanwhile, are enrolling in healthy living incentive plans through their insurers. Employees can qualify for hundreds in additional reimbursements by establishing a healthy living plan with their physician.

When it comes to auto insurance, make sure to review your coverage and deductible limits each year. If you have an older vehicle, a good driving history and no auto loan, you should consider saving money on premiums by increasing your deductible or even eliminating collision coverage.

Some of the biggest sources of money leakage are your monthly debt payments. Interest charges are great for the bank, but money down the drain for you. Consolidate debt where you can and establish a debt pay down plan that attacks either the smallest balances first, or the accounts with the highest interest. As you pay off one account, roll that payment amount into paying off the next debt on your list.

Think before banking. It’s the best way to avoid ATM and other fees. Be aware of your own bank’s policy on charging fees for out of network ATMs. Understand that a convenience ATM not affiliated with your bank is guaranteed to mean a fee of several dollars.

Overdraft fees are the open floodgates of money leakage. The average overdraft fee nationwide was just under $30 in 2012. Depending on how your bank orders the processing of transactions, one overdraft of just a couple of dollars can result in two, three, or more fees. Nothing is more demoralizing then incurring $100 in fees because a $5 debit transaction caused an overdraft, Understanding your bank’s policy is important. Keeping a close watch on your balance and close track of your transactions is critical.

Even your paycheck may be costing you money. Many Americans typically have employers withhold more than necessary for state and federal taxes. The big refund at tax filing time feels good and can be a useful windfall for saving or paying off debt. But the reality is by withholding too much, you are lending Uncle Sam money every pay period at zero interest. Even low-return government bonds and Treasury securities pay better than that!

So while you tighten up the seal on your household windows and doors this winter, make sure to plug the leaks that are draining money from your household budget.

Steve Trumble is President and CEO of American Consumer Credit Counseling and a member of the AICCCA Board of Trustees

Prepaid Cards

Many new prepaid cards are entering the credit market. Consumers should be aware that some of these cards come with high fees that are not consumer friendly. However, not all of them have high fees and for some consumers, prepaid cards may be a good fit for their financial needs.

Consumers considering prepaid cards should be prepared to answer the following questions:

• How will funds be placed on the card? Many cards offer free fund loading through direct deposit, but charge a fee for cash deposits.
• How will the card be used? For example, how many purchases will be made with the card, how many ATM withdrawals, how many out of network ATM withdrawals? Will the card be used for online bill payments? Some cards may charge fees for these services.

Visit the following link to help determine if a prepaid card would be beneficial for your financial situation: http://money.usnews.com/money/personal-finance/articles/2012/04/24/the-5-best-and-worst-prepaid-cards.

In addition, some prepaid cards may come with benefits that may not be offered with a checking account or credit card, such as:

1. In most cases, no credit check is required to use a debit card. The card can be used just like a credit card for purchases and to pay bills online without having to qualify for a credit card or a bank account.
2. The best cards limit spending to what is deposited on the card. This teaches budgeting skills and eliminates worries over overdraft fees or late payment fees.
3. Many cards offer online or phone access to reports that indicate where funds are being spent.

Prepaid cards are another credit vehicle that can be a useful financial tool. As with any credit product, weigh the potential benefits against the annual cost of the card to help determine if prepaid cards are a good fit for you.

Financial Services Roundtable Hosts Important Meeting in D.C.

Dave Jones and Joe Curcio represented the AICCCA at a Comprehensive Counseling-Stakeholders Meeting at the Financial Services Roundtable offices in Washington, D.C. on January 3, 2013.  The meeting was an opportunity for industry experts to review the state of the economy and the particular challenges facing today's borrowers.

Meeting participants discussed the limitation of current models for counseling and discussed new ideas that offer promise. The goal was to engage in a collaborative effort to create a vision for the future that would offer value for the consumers and the industry.

Additional groups joining the AICCCA representatives and members of the Financial Services Roundtable at the meeting included HOPE NOW, the Homeownership Preservation Foundation, CredAbility, the Housing Policy Council, and creditors.

Overall, the meeting was worthwhile and well attended.  The AICCCA will work with all participants to help establish viability of the concepts presented and to institute a pilot study if future viability is indicated.

A Holiday Wish List for American Families

American consumers have had it hard for too long.

But our economy may be finally breaking the binds to free itself from the lingering grasp of the Great Recession.

The unemployment rate decreased in almost every U.S. state last month from the previous year. Housing stats rose in October to their highest rate in more than four years. And consumer confidence increased steadily in the third quarter as U.S. employers added more jobs.

One key indicator: Credit card balances have increased. The average debt per borrower grew almost 5 percent from the same period a year ago to $4,996.00 according to the credit reporting agency TransUnion.

Consumer spending drives 70 percent of the U.S. economy. Buying is a sign of strength and confidence, and the holiday spending season will be the next big metric for how far along this long, slow recovery has come.

But we always caution consumers to set a fixed budget for holiday spending and stick to it. The holiday financial hangover can mean months of paying down debt that was incurred over just a few days of shopping. And it’s easier than ever to go overboard on holiday spending with “door buster” specials, 24-hour online shopping and extended retail hours right up until Christmas Eve.

So here’s a holiday wish list that doesn’t require adding more household debt. Rather, it takes commitment and resolve from both government and individuals to make our financial lives a little easier.

•       Rein in the cost of higher education and make the process of financing college easier: American students are starting to question the value of beginning their careers loaded down with debt. A recent survey by American Consumer Credit Counseling found nearly half of all respondents felt their college education wasn’t worth the cost. College debt is the next housing bubble – and it’s ready to burst all over American families. For the first time ever college debt now exceeds total consumer credit card debt. And traditional options that have been more affordable – like public higher education – are getting more expensive every year. Many students don’t even realize how much debt they have incurred until they get their first statement after graduation. One good step: the U.S. Department of Education’s Financial Aid Shopping Sheet has been adopted by more than 500 colleges and universities across the U.S. This valuable resource provides a standardized award letter allowing students to easily compare financial aid packages as they decide on which school to attend. It takes the mystery out of the bottom line for college costs – and leads to more informed decision-making.

•       Make the most of new tools aimed at protecting consumers from overzealous or abusive debt collectors and credit rating errors: The Consumer Financial Protection Bureau is flexing its muscles to the benefit of American households. Large collection agencies, debt buyers and collection law firms are now subject to enhanced scrutiny and examination by the CFPB. So too are credit rating agencies, which have tremendous impact on the financial profiles of all American consumers and their ability to get the best terms on financing. While the CFPB is doing its part, consumers must do theirs also. That means being attentive and vigilant in monitoring their credit reports; maintaining a budget and paying obligations on time; and reporting abusive debt collection practices to the CFPB, Federal Trade Commission or appropriate state authorities.

•       Use the power of smart consumerism to do more than just spend. Shop for savings too: American consumers should put the same time and effort into finding the best deals on savings rates, credit cards, mortgages and investments as they do into buying new appliances, furniture or a car. The long-term payoff can mean thousands of dollars a year just by making their hard-earned savings work harder for them. Bankrate.com offers some of the best comparisons for savings account, CD and mortgage rates. TreasuryDirect.com is a one-stop marketplace for everything consumers need to know about buying government securities such as savings bonds, Treasury bills, notes and bonds. Smart budgeting tools can help keep your household finances on track. A host of such resources can be accessed at the Association of Independent Consumer Credit Counseling Agencies web site (AICCCA.org), at American Consumer Credit Counseling’s ConsumerCredit.com or through any number of AICCCA’s more than 25 member agencies.

Steve Trumble is President and CEO of American Consumer Credit Counseling and a member of the AICCCA Board of Trustees.

Make A Holiday Shopping Plan to Avoid Red Tuesday(TM)

Black Friday is almost here, followed closely by Cyber Monday, both of which bring sales that are hard to resist. Consumers who are going to advantage of these sales need to be aware that they could face a Red Tuesday(TM) if they charge holiday purchases to credit cards without a plan in place to pay them off in a timely manner.

Holiday shoppers are expected to spend an average of $749.51 on holiday related expenses for 2012 according to the National Retail Federation. Charging that amount on a credit card with an interest rate of 18 percent and making only a five percent minimum payment each month would take over five years to repay. Add $275 in interest charges during that time and consumers will find that their 2012 holiday expenses will actually cost them close to $1,025.

Red Tuesday(TM) is a real possibility for consumers who do not take the time to plan.

In order to avoid a Red Tuesday(TM) in 2012, AICCCA offers the following tips for Black Friday and Cyber Monday spending:

• Write it down. Look over the ads and make a list before you shop, whether online or in person. A complete list makes it easier to walk away from impulse buys.


• Pay with cash. For Black Friday shopping, determine the amount of money you have on hand to spend and take only that amount of cash with you when you shop. Be sure to leave your credit cards at home so that when you run out of cash, you will have to stop.


• Do your homework. For Cyber Monday shopping, search for free shipping and coupons. Be sure to shop only at sites you trust. Credit cards are actually a safer option for online shopping. To avoid incurring interest charges and adding to your debt load, charge only the amount you can pay in full as soon as the bill arrives. If you go over that amount, try to charge no more than what you can pay off in 90 days or less.

If your Tuesday is Red, contact an AICCCA member at 866-703-8787 or visit www.aiccca.org.

AICCCA Offers Tips to Keep the Red Tuesday™ Monster Away this Halloween

Halloween will be here soon, followed very shortly by the winter holidays. The Association of Independent Consumer Credit Counseling Agencies cautions consumers not to let the Halloween ghosts and goblins trick you into spending more than you can afford on the holidays or you could let in the holiday monster of debt known as AICCCA’s Red Tuesday. A Red Tuesday is the result of overspending on Black Friday and Cyber Monday when consumers buy with credit cards without a plan in place to pay them off in a timely manner.

“Halloween spending – in fact all holiday spending - falls under the ‘want’ category of a spending plan,” said Dave Jones, president, AICCCA. “A spending plan helps consumers take care of the needs of their family before they commit money to the wants.”

According to the National Retail Federation, a record 170 million people are gearing up to spend more this year for Halloween. A survey conducted by NRF says that consumers are planning to spend $79.82 on decorations, costumes and candy, up from $72.31 last year. AICCCA offers these tips to make your Halloween fun, but affordable:

Satisfy trick-or-treaters with the jingle of coins. Add pennies to your candy bowl and you won’t have to buy as much candy and treats.

Reduce, reuse or recycle costumes. Use this mantra to look through your closets for ways to dress up without buying anything new. Trade with neighbors or friends or brighten up an old costume with new trim.

Go green with decorations, too. Inventory what you have on hand before you buy anything new. Design a different layout from what you have done in the past. If you really want to buy something, consider a pumpkin or two late in the month that can do double duty at Thanksgiving. 

If you need help planning your holiday spending to avoid the Red Tuesday monster of holiday debt, an AICCCA member is just a phone call away at 866-703-TRUSTAICCCA (866-703-8787).

The CFPB Turns its Attention to Credit Scores: What Will This Mean for Consumers?

by Steve Trumble

Your credit score is a critical element of your financial profile. How you manage your budget and control your debt can make all the difference in getting the best interest rates and credit terms.

But not everything is in control of the consumer when it comes to achieving and maintaining a good credit score. The heavy influence of credit reporting bureaus on the financial lives of Americans means it is critical that you closely monitor what those bureaus are telling creditors about you.

A recent survey of 152 budget-conscious consumers by American Consumer Credit Counseling found more than 87 percent said their credit reports have errors. The accuracy of information being compiled by the major credit bureaus – Trans Union, Equifax and Experian – is constantly being questioned. With such huge volumes of data to be processed for tens of millions of people, it’s inevitable that mistakes – and sometimes very costly ones – will find their way into your credit file.

That’s why the Consumer Financial Protection Bureau has stepped in to provide additional protections and resources for American consumers as they manage their credit reports and scores. In July 2012, the CFPB adopted new rules to establish the first-ever federal program to supervise all consumer reporting agencies – including the three major credit bureaus.

The program covers about 30 agencies altogether – representing more than 90 percent of all annual revenue from consumer reporting activities, including credit reporting. This new oversight establishes benchmarks for compliance with federal consumer finance laws, and a process for detecting and assessing additional risks to consumers.  Credit bureaus and other reporting agencies may be called upon to file regular reports and to comply with CFPB examinations and monitoring.

And the CFPB will not be toothless. Under the Dodd-Frank Act and Fair Credit Reporting Act, the CFPB has the authority to write rules impacting the consumer reporting industry and also to take enforcement actions. New debt collection rules are already on the way this fall.

This marks the first time consumer reporting agencies have been subject to federal oversight and supervision, with the new rules taking effect September 30, 2012.

What does this mean for you?

Above all it means the CFPB is committed to being a real watchdog for consumers when it comes to credit bureau and other consumer reporting activities. That’s important. The three major credit bureaus alone maintain files on more than 200 million Americans: information they share with banks, credit card companies, department stores, mortgage lenders, landlords, employers and others.

Last year, close to 113 million new credit card, auto loan, personal loan, mortgage and home equity credit accounts were originated. Nearly every one of them used information from consumer reporting agencies to make decisions on approval, interest rates and terms.

That’s a tremendous amount of power and influence over our financial lives.

Finally, the CFPB is an important consumer resource for education and information on credit reporting, credit scoring and the rights of consumers under the law. The Bureau has already released an initial Consumer Advisory on credit reports, and is creating an “Ask CFPB” database to answer common consumer questions.

Credit reporting is a necessary function to maintain stability in the American economy. It allows creditors to make correct decisions when underwriting mortgages, car loans, personal loans and other major financial obligations. Proper underwriting prevents credit issuers from taking on too much risk – a condition that, unfortunately, has been all too real as evidenced by the mortgage crisis of the past half dozen years.

But consumers have a right to know their financial histories, payment records and risk profiles are being represented accurately and fairly. As a newly established federal agency with a charge to protect American consumers, the CFPB has the chance to be an important ally for Americans in this very critical area of their financial lives.

Steve Trumble is President and CEO of American Consumer Credit Counseling in Newton, Mass. He is a member of the AICCCA Board of Trustees.

What happens to a consumer’s credit report when he or she enters a Debt Management Plan?

The Credit Repair Organizations Act (CROA) requires that consumers not be misled about how their credit reports might be affected by a company’s actions on their behalf.  This law was intended to apply to companies that promise to “repair” a consumer’s credit history for a fee.  Non-profit credit counseling companies are specifically exempted by the language of the law itself.  However, in a ruling by the 1st Circuit Court, credit counseling companies must prove that they are operating in an appropriate manner or be subject to the provisions of the CROA statute.

This obviously creates a dilemma for credit counselors who are asked by consumers what impact entering a Debt Management Plan (DMP) might have on their credit reports.  There is no attempt by the credit counseling organization to “repair” the consumer’s credit history yet, the 1st Circuit ruling introduces caution in responding to this question.  On the other hand, consumers should be aware of the process.

When a creditor reports to a credit bureau that one of their customers has entered a DMP, the bureau codes the consumer’s credit report accordingly.  There is no impact on the consumer’s credit score strictly from the act of joining a DMP.  However, it may well be that the consumer’s credit behavior that led to them needing DMP assistance could have impacted the score anyway.

Creditors generally do not view the fact that a consumer is on a DMP as negative.  Rather it is usually seen as an attempt to honor their obligations and is certainly seen as more positive than personal bankruptcy.  Further, the education that is received as part of a DMP, along with the counseling, is intended to rehabilitate and produce a more credit-worthy consumer in the future.  Creditors may also see this as positive.

David C. Jones, Ph.D.
AICCCA President