Tag Archives: university students

Eight Financial Legislation Changes That Would Really Help Us

Recently NDP leader Jack Layton held a press conference here in Edmonton to put the spotlight on credit card issuer. Mr. Layton comments focused on the high merchant fees and on credit card interest rates.

He’s half right, and half off the mark. The merchant fees that retailers have to pay in order to accept credit cards average around two percent. In addition, there are also a ton of other fees which add up to another one or two percent. They’re not optional, because it’s impossible for a retailer not to accept credit cards, they keep rising, and they are certainly built into the retail price of what you and I pay.

The issue of credit card rates is another matter. I’m always hopeful that Mr. Layton will use the massive media attention he can draw in a positive and constructive way. But, once again, I was disappointed. Two years ago, Mr. Layton called for the elimination, or drastic reduction of ATM fees. Sorry, but an ATM fee is a “lazy fee,” as we discussed at the time. Nobody has to pay them, if they just go another two or three blocks to their own bank machine where there’s never a charge.

Mr. Layton wants the government to force financial institutions to have at least one credit card at prime plus 5%. Sorry, but with write offs and other costs, that can’t happen, and won’t happen. But then, for anyone carrying a balance, there are cards with 11% rates out there. If you are going to carry a balance, it’s a quick fix to change from a 20% card to the low-rate card. Forget the perks and points. Most are never claimed in the first place, the worst of which are airline miles. where Consumer Report found that over 75% are never redeemed.

There isn’t a law that says you HAVE to use your credit card. It’s your choice and it’s one of the most expensive ways to finance things.

If you carry a credit card balance – stop using it until it’s paid off! Broke people can’t keep spending! We’re at 150% debt to net income – and it’s getting worse, and we’re now more broke, and saving less, than Americans! No law Mr. Layton may want to pass will stop broke people from continuing to dig their financial hole deeper and deeper.

Needless to say, I would do anything to get one-one hundredth of the media attention Mr. Layton can garner to make a difference in financial education and to actually help families. Mr. Layton missed a great opportunity to shine the spotlight on financial issues that matter and that can, and should, be addressed.

How about some legislation that Universities and Colleges can’t sell their student lists to credit card issuers? It’s our educational institutions selling out their students for a kick-back.

How about that you actually need a job to get a credit card, and preventing them from being issued to students until age 21 and with proof of an actual income?

How about changing the giant rip off of mortgage insurance with CMHC? CMHC has $8 billion in net assets and made almost a billion dollars in 2009. Yet we have to pay the insurance on less than 20% down payments. In the U.S. it’s monthly premiums until you do reach the 20% equity. At that point, the premium charge stops.
Here in Canada, it’s entirely front loaded, and adds $14,000 to $18,000 in costs to the average mortgage.
How about re-starting Bill C27 that died, making it a criminal offence to steal someone’s identity, with up to five years prison?

How about a credit freeze law that allows individuals to totally block their credit report, making it impossible to be the victim of identity theft? Because it’s the ONLY way to accomplish that.

How about legislation that forces financial institutions to advice customers when their transaction will trigger an overdraft with huge fees? This opt-in rule would be a no-brainer in having an ATM screen display that you are about to go into overdraft with this withdrawal.

Better yet, how about matching the U.S. legislation that requires customer consent before every allowing an overdraft? That way, people can’t be trapped into huge overdrafts they never consented to.

And back on credit cards, how about restricting the $30 or $40 over-limit fees to a percentage of the balance, or requiring specific customer permission before over-limiting the account in the first place? Right now, a $2 coffee can trigger a $30 overdraft.

How about championing a consumer bill of rights, including the right or ability to speak to a human being at the credit bureau with inquiries, or concerns about their credit file. Because, right now, one-third of files have errors serious enough to prevent obtaining credit.

Those are eight reasonable and reasonably simply issues that can be passed through the House of Commons and become legislation. Unfortunately, they are certainly not as sexy as talking about ATM fees, or mandated low-interest credit cards. But then, is it about cranking people up, or wanting to help and make a difference?

Back to School Does Not Mean Suspending Financial Reality

Back to school is a $50 billion industry this time of the year. But, by all accounts, it was a bust, in spite of some really great Staples commercials. And retailers are pretty freaked out as back to school is their best indicator of the Christmas season.

For one group of students, back to school didn’t end two weeks ago, and that’s University and College students. First, I know a bunch of students are still shopping for textbooks, and will again, for the next term. Here are nine great sites for comparison shopping on line. But first, start with your professor and ask if you can purchase a prior edition, which you’ll find used, if you try:

Cheapestbookprice.com Allbookstores.com Abebooks.com A1books.com Bookfinder.com Valorebooks.com Biblio.com and Textbook411.com.

There are also a number of U.K. sites for used science textbooks priced so cheap you’ll still be ahead, even after shipping. Finally, if you’re game to rent your textbooks, there is a new site that has saved students over $41 million as of July this year. It’s at chegg.com

While this may be your first few weeks of school, or the final year, do remember that the average student graduates with a degree, but also about $4,00 in credit card debt, and more than $20,000 of student loan debt. THAT will assure being broke for a lot of years to come, even after you start to earn a paycheque. And let’s be honest, it’s not the textbooks or course fees. More often than not, it’s the pizza and beer, the need to own a car, clothes shopping, or trips to the mall. But ask yourself some of these questions. And these questions aren’t just for students, but probably the rest of us that are broke or living paycheque to paycheque:

• Are you mature enough to delay pleasure?
• Are you prepared to be a winner with money?
• How long after graduation do you want to be broke?
• Are you prepared to say the four hardest words out loud: I can’t afford it?
• Do you believe that getting that free T shirt to sign up for a credit card is a better deal for you or the credit card company who now has you trapped and helping with that going broke project they have in mind for you?
• Exactly how do your marks go up when you think you need a plasma TV, or a 23 inch flat screen monitor?
• Are you prepared to live like a student for a few years, so later in life you can live like 95% of the world can’t afford to?
• If you need a car, is this an actual need, or a desire? If it’s legit, are you prepared to drive a “stay out of debt” student car for $2,000 max?

The great news is that you’re an adult now. So choose to act like it, financially. You’re smart enough to go to University! You ought to be smart enough to know that credit and getting into debt is not your friend.

Do you even believe that student loans count as debt? If not, you’re like most students. But you’re also kidding yourself, and will be financially doomed for at least a decade after graduation. No, you won’t think about that today. But you’ll remember my words in about five years or so, I assure you. 70% of the population lives paycheque to paycheque. This year, and for a few more years, you’ll be in a temporary state of broke. That’s part of being a student! Just don’t join the 70% of the world AFTER graduation when every dollar you finally earn goes to rent, food, student loans, and the hangover of credit card debt for stuff from years ago that you can’t even remember charging.

And one more thing for parents:

If you have a son or daughter across the province, or the country, who needs access to some money in a hurry, what do you do? Paypal has just developed a student account.
One of their VPs has six kids and got stuck trying to figure out how to send one of them some money.

The cost is 2%, so when you’re sending $100, $98 shows up at the other end. It’s in Beta testing, but you can get it right now if you already have a PayPal account. If not, you may have to wait. It’s great to have competition from PayPal. Right now, the banks and Western Union have a virtual choke hold on this area, and charge a lot of fees.

Another way is to set up a bank account where you and your son or daughter has a debit card. It can be your son or daughter’s account, but with your card and secret PIN number you can make a deposit into the account and they can access it at the other end.

Just make sure the account is set up without holds on the money, or they’ll be waiting two to six days to get access to it! What’s NOT a solution is to give you kid a supplemental credit card linked to your card. It’s too risky and too tempting. Don’t do it!