Sure, we’re all looking forward to our tax returns this year but would you be willing to pay a triple-digit interest rate to get your own money about 10 days earlier? Well any credit counselor will tell you, that’s exactly what you will be doing if you take out a Refund Anticipation Loan or RAL.

Many of the advertisements that you see that claim to be “Instant Refunds” or “Rapid Refunds” are really RALs and are mainly targeted to those with lower incomes. If you are struggling financially but are still thinking you might need to take out a Refund Anticipation Loan, ask yourself this first: “Why would I pay someone to loan me my own money?”

Don’t give a large chunk of your hard-earned cash to someone else to get your tax refund a few days earlier than you would if you file with the IRS directly. Most credit counselors advise it pays to be patient and wait for just a few more days. You can try speeding up the process by filing your tax return electronically with E-file or have your tax return sent directly to your bank account with direct deposit.

You may also want to consider reducing the amount of taxes withheld from your paycheck but it is highly recommended that you see a tax professional before doing so. This may enable you to put more money in your pocket each pay period, rather than receiving a large refund at the end of the year. This may prevent you from relying so heavily on your tax return in the first place.

If that isn’t enough to sway you from taking out a Refund Anticipation Loan, credit counselors warn: this is a loan that must be repaid. If your refund is denied, delayed or if your return is smaller than expected, you will still be expected to pay the loan back. If you are unable to pay, the lender might send you to collections, hurting your credit as a result.

Bottom line: Refund Anticipation Loans just aren’t worth it!

It’s a new year once again! Every January you get a fresh start. This is the time of year to put yourself to the test. So what is your New Year’s resolution this year? Whether you want to lose 15 pounds or to stop smoking, have you considered it might be so hard to stick to your resolution because of holiday debt? Are those holiday credit card bills pouring in on a daily basis tempting you to maybe light up a cigarette or eat a half gallon of ice cream resulting in another failed New Year’s resolution? Maybe your New Year’s resolution should be to avoid accumulating holiday credit card debt again this year.

Don’t let those holiday bills get out of control!

All of that holiday debt will not go away if you avoid opening your credit card statements. If anything, you should get ahead of the game by checking your bank and credit card accounts online before your bills even come. Don’t ignore your bills! You could incur late fees, which may cost you up to $40.00 and your interest rates could increase up to 30% annually. Avoid this by making sure you at least pay the minimum amount on each card and mail it out the same day it arrives if possible. Furthermore, be aware that your credit card companies watch how you pay your other credit cards. If your card company sees you are late paying on another credit card, they could increase your interest rate, so paying at least the minimum on all your accounts is paramount.

Stop using your credit cards!

By using cash, debit and checks (provided your checkbook is balanced), you won’t be adding to the problem of accumulating additional debt. If you can’t resist using plastic, try putting your cards in a lockbox. If that doesn’t work, a more creative approach is to freeze those cards in a block of ice so you can’t get to them, the thaw time may help control impulse buying.

Set a goal.

You need to set a realistic timeframe to eliminate your holiday debt. By paying off your cards with the highest interest rates first, you will pay less towards interest and eliminate that holiday debt faster.

Don’t let this happen again next year!

Start saving now for the next holiday season. Free up some money by cutting out expenses like Starbucks coffee; try watching TV instead of going out to the movies and bring your own lunch to work. You can use this money saved to start a Christmas club account by setting aside $25.00 to $100.00 each month so you don’t burden yourself with holiday debt next year.

If you have joined the over 40 million Americans (according to Forrester Research) who have joined the 21st Century and ventured into the world of online banking, congratulations! For those of you who haven’t – let’s talk…

Traditional “brick and mortars” with high overhead costs can’t compete with a virtual bank when it comes to interest rates. If you’re shopping, you’ll be lucky to find an interest rate for a savings account at a traditional financial institution collecting even 1% annually. Compare this to the 4% - 5% interest from virtual savings accounts and you’ll see the significant difference. A balance of just $5000 could mean an extra $250 per year in interest.

You’re thinking, “There must be lots of restrictions and high minimum balances requirements,” right? Wrong. In many cases you have the same access to your funds as with traditional accounts with the same minimum balances.

Bottom Line: As with any opportunity, it won’t be for everyone. If you’re not internet savvy, if you haven’t dug your way out of debt to even begin your emergency fund savings, or if you’re lack of close relationships encourages you to know your bank teller by name, then internet savings might not be for you. Review your options with your current financial institution and make an informed decision based on what’s right for your individual financial goals.

Most people would say that you should only consider bankruptcy as a last resort. While its important to consider all of your options first, there are instances where bankruptcy is appropriate and can provide you with the fresh start that you need. My concern with bankruptcy is when people file.

On average, one third of bankruptcy filers made the decision to file after being pushed over the proverbial edge by a credit collector; they couldn’t take the constant harassment and threw their hands up in the air. The problem with this – if you file bankruptcy today and, God forbid, you should find yourself with tens of thousands of dollars in medical debt next month, what will you do then? You can’t file again.

Bottom Line: If you have come through a financial crisis and are not still in the middle of it and could say, “If I could just get rid of this financial burden, I would be fine with my current employment, housing and transportation situation” then you might be a candidate for bankruptcy. Take the time to seek legal advice and explore your options. BEWARE: Most bankruptcy attorneys don’t get paid unless you file bankruptcy. Therefore, there may be special incentive to encourage you to file even if there are alternative options that are more beneficial.

There’s no doubt – America is at war and in the midst of a national debate as to why. Most people don’t question the universal support and appreciation of our troops who fight for our freedom. Did you know that while our soldiers are fighting for our freedom, many of them are drowning in financial debt?

Cash advance and payday lending stores have risen to epidemic proportions in heavily populated military areas. Many military personnel cannot be deployed due to the financial stress they face here which could distract their focus during critical combat situations.

There is help! Congress passed a law capping the amount of interest military personnel can be charged for a payday loan. Also the Servicemembers Civil Relief Act of 2003 provides a cap of 6% on all debts (credit cards, mortgages, car loans, etc.), provides eviction protection for dependents, and delays civil litigation.

Bottom Line: Tying a yellow ribbon around a tree or attaching a magnetic one to the back of your car is great. If you really want to help, ask the military man or woman you know if their family is aware of the provisions that have been made to give them the best possible opportunity to defend our freedoms without having to risk their financial freedom.

Want to know why most household budgets fail? Because most Americans approach budgeting the same way the approach dieting: Cut out everything I enjoy to accomplish my goal (losing weight or financial freedom.)

What’s the problem with going on a diet in which I say I’m never going to eat chocolate again? That will probably last about three days (provided those are three REALLY good days!) and then I will “fall off the wagon” and probably eat more chocolate afterwards than I would have eaten on all the days of my diet combined. This is why more people gain weight when dieting and also why people get further into debt when budgeting.

Financial goals and spending habits require a commitment to lifestyle change just the same way as proper eating and exercise deal with issues of weight loss. Don’t expect to create a budget and cut out every thing you enjoy. No one can survive life without a little bit of enjoyment! Try to find creative ways to either reduce the frequency of spending or what you’re purchasing without cutting out your motivations for getting out of debt and setting healthy financial goals.

Bottom Line: Don’t sabotage your budget by starting out unrealistically. Take the time to create an initial budget, then spend some additional time (usually 30 days) monitoring some fluctuating budget categories like fuel, groceries and entertainment expenses to get a realistic idea of your spending habits. Then be creative in finding ways you can reduce expenses to meet some of your long term financial goals like retirement, purchasing a home or taking a vacation!

Family Credit Counseling Service receives hundreds of calls per week
from consumers looking for credit counseling and debt management
assistance. Often one of the first questions asked by a consumer is,
“Are you a non-profit organization?” My answer to this question is,
“Yes, but if you’re trying to find a trustworthy credit counseling
organization to assist you in becoming debt free, this is generally
not an adequate question to measure the legitimacy of a credit
counseling organization.”

Bottom Line: It’s good to know that an organization is a non-profit
organization. It’s even better if they are members of the Better
Business Bureau. If you’re really interested in ensuring you are
dealing with a legitimate organization, determine if that
organization is a licensed debt management provider in your state.
There are many states that don’t require licensing, but there are
many that do. Find out if your state requires licensing and if so,
choose a credit counseling organization from this short list. The
chances you will have the opportunity to speak to a credit counselor
that has your best interests in mind will increase greatly.

Ever find yourself in the intimidating position of dealing with a collector? Collectors can be very intimidating and persuasive, especially if you don’t know your rights as a consumer.

The Fair Debt Collection Practices Act protects you from the abusive practices of some collection agencies; the problem - most of us don’t know what rights this legislation provides. Did you know a collector is required to stop contacting you at your place of employment as soon as you request they stop calling you there? And did you know you can write a Cease and Desist letter to a third party collector which requires they cease collection efforts unless they decide to pursue further legal action?

Bottom Line: Know your rights as a consumer, especially if you find yourself faced with this situation. Avoiding creditors and making broken promises to pay are not the best ways to deal with a collector. Find out what your rights are and get help from a reputable source if necessary.

I’m sure everyone has heard some kind of advertising to receive a free credit report. But how do they justify that the report is free when you have to sign up for a monthly credit monitoring service for $15-$20 per month in order to receive that credit report? Granted, this is a free trial membership, but most of us give our credit card information and forget to cancel the free membership before we start to get charged.

Legislation was passed that provides consumers with one free credit report from each of the three major credit bureaus per year at no cost. The catch comes in where you obtain these copies.

Www.annualcreditreport.com is the website created by the three major credit reporting agencies to allow consumers to obtain their free annual copies. You can also obtain copies by writing in or calling (877-322-8228.) BUT the law does not allow you to obtain free credit scores. If you want your credit score you’ll have to pay $6-$8 per score. This is still less expensive than paying for someone to monitor your credit.

Bottom Line: Don’t pay someone for something you can obtain for free. Also, you can monitor your own credit report for identity theft by staggering your requests to one copy every four months. And as far as credit scores are concerned… if you look at a copy of your credit report, you’re going to have a pretty good idea of what your credit score is going to be. Don’t be so concerned with your score until you’re getting ready for a major purchase like a house or car.

Payday loans, paycheck advances, or whatever you choose to call them are a growing industry, doubling in size over the past six years to nearly $28 billion in loan volume. Family Credit Counseling Service receives many calls daily from people struggling to break the cycle of Payday lending. But are they really the best option for consumers in need of a little help until the next pay day? Let’s investigate.

While legislators try to put caps on interest rates and the maximum number of payday loans one person can have, most loan providers have found the loopholes - mostly through providing online loans. The average loan carries interest rates between 300-900% annualized. Only 1% of loans written are to consumers who can temporarily use the funds, pay the loan off and walk away; the rest fall into a deeper cycle of debt.

"OK, but what is a person to do that has bad credit and an emergency need," you say? Great question! Many reputable financial institutions are beginning to provide payday alternative loans with much more reasonable interest rates and officials are looking at stricter legislation for these loans as they tend to prey on the low and lower-middle class.

Bottom Line: If you find yourself in a financial crisis, look around for alternatives before being lured by the bright neon lights of the corner 24 hour payday advance store. Look for a reputable lender that might offer an alternative product or talk to a credit counselor to discuss what your options might be.