SurePath Blog

Several weeks ago we did a popular article called 10 Things People Buy They Should Get Free. To continue that theme, here’s a list of things you might buy that you could get free.

As you read through this list, remember the point of saving money: to pay down debt or build up your savings!

Many people want their cars moved from place to place, but don’t want to do the driving. Sometimes these cars are delivered by truck, but often they’re driven – by people like you. If you have a clean driving record, call car delivery companies (one example: AutoDriveaway.com) and read about how it works. Call them and ask what cars they have, where they’re going and when. If nothing strikes your fancy, put your name on a list and let them know where you’d like to go. As for the return trip, you can either fly home or wait at the other end for another drive-away car.

This is a great way to see the country, especially if you’re flexible as to when you leave, when you return and perhaps even where you go.

Why stay in a hotel when the nonprofit Couchsurfing.org offers tourists a chance to stay at homes for free? Make friends with the sponsoring families throughout the United States and countries ranging from Croatia to France. You have to set up a profile on the CouchSurfing website, which provides tips on how to find families willing to open their homes to you. Obviously, the digs won’t be fancy, but they’ll be free.

Another way to get free lodging is to home-swap. Check out Best Price for a Hotel Room? $0.

Now you can find out for free the fate of Pip in Charles Dickens’ Great Expectations or Elizabeth in Pride and Prejudice as you drive or jog. Download free audio books from the nonprofit LibriVox.org, which has volunteers recording classics in the public domain – including many Shakespeare plays. You can also volunteer to help by reading. LibriVox will even provide you with free recording software.

Even strangers will shower you with birthday gifts! Frugalliving.tv has a list of hundreds of business that offer freebies on your special day. You can eat free cake, get free meals – even receive some Happy Birthday serenading. It’s an amazing list – check it out.

Don’t go to another restaurant that doesn’t feed your kids for free. The My Kids Eat Free website offers a road map of where you can save on kids’ meals – just type in a state and city. You’ll pay but your kids won’t at more than 5,000 restaurants across the country.

Before you go to Walgreen’s and shell out a buck for travel sizes of your favorite toiletries, go to Volition.com or one of many other websites that offer free samples. In addition to soap, shampoo, etc, you might find all manner of interesting things. For example, we’ve spotted circus tickets, a free diet analysis and free advance movie screenings. Other free mega-sites include TheFreeSite.com and freechannel.net.

This one was mentioned in Ten Things People Buy They Should Get Free, but since it’s our all-time most popular story, it warrants mention here as well. Check out You Don’t Have to Pay for Cable TV.

You can get free software for word processing, spreadsheets, presentations, graphics, databases and other uses by going to OpenOffice.org. Wish Bill Gates the best as you download your free software at the website that also offers free trouble-shooting. And that’s the tip of the iceberg. Check out 5 Best Free Software Programs, and Antivirus Software is a Waste of Money.

Make your voice heard around the world with your own blog – free. Many companies will help you set up your own site at no charge, such as Word Press or Google. They’ll even give you free, easy instructions and a choice of blog templates.

The BBC is on the other side of the pond, but it offers a free 12-week class to learn French, Spanish, Italian or German, gratis. You’ll even get a certificate at the completion of the course. BBC also offers other audio and video courses in the four languages – as well as help in learning more exotic languages such as Chinese, Russian and Greek.

You have something you don’t want, but it’s too valuable to throw away. You might donate it to charity, but you also might give it away at sites like craig’s list or freecycle. From used furniture to sports equipment, the nonprofit Freecycle Network is set up to help you find free stuff and keep it out of landfills. You’ll be amazed at what people give away.

That’s the end of this story, but just the beginning when it comes to spending less and saving more. Check out 205 Ways to Save, 10 Tips to Save $1,000 by Christmas, as well as the dozens of ideas in our Tips Section! And if you have things you’d add to the list above, share!

Welcome to the end of August – the second-most beautiful time of the year, at least for retailers. After Christmas, back-to-school season is when they rack up their biggest sales figures.

But just like Christmas, if you don’t shop smart, you could end up paying too much or buying stuff that’ll end up in the back of a closet or the bottom of a drawer.

As I mentioned in the video above, parents will spend more than $55 billion this month on back-to-school purchases, according to the National Retail Federation. But the NRF also reports that parents will be spending more this year than last – an average of $606 on clothes, shoes, supplies, and electronics compared to $549 last year.

The biggest chunk will be spent on clothes ($225), followed by electronics like laptops ($182) or other electronic school needs, shoes ($103), and school supplies ($96).

Here are five tips for stretching your back-to-school dollars…

Take stock of the closet. Just because it’s a new school year doesn’t mean every stitch of clothing must be new, too. Don’t assume your kids have outgrown their old clothes, and when you shop, look for items that can mix and match with what they already have. Also remember that the best deals on clothing often happen during Labor Day Weekend. Have a hand-me-down party with friends and do some swapping. And before you hit the malls, check used clothing stores like consignment shops and charity stores. For more on clothes savings, see our story 18 Tips to Dress for Less.

You can score great deals on computer-related items right now. Tech retailers like Best Buy are running all kinds of specials, which they compile on this back-to-school page of their website. This page of Apple’s website offers college students a free iPod Touch with a laptop purchase. (If you live near an Apple retail store, simply walk in and announce what school you’re from; you’ll often get a great deal right on the spot.) But remember that you’ll always find better deals used at sites like eBay or Craig’s list. For more ideas, check out our story 7 Tips to Trim Your Tech spending.

Unlike clothes, one size fits all. That’s why many parents hook up with friends and neighbors and buy supplies like pens, notebooks, and art supplies in bulk, then split the cost – and savings. Check out your warehouse store or local art supply stores, which sometimes sell in bulk and often undercut local retailers.

A sales-tax holiday, that is. Sixteen states waive sales tax on certain back-to-school items for a limited time. Check out our state-by-state list of what states offer breaks and when.

Major retailers have gotten new-media savvy and now use Twitter and Facebook to advertise sale items, even offering deeper discounts to those who read the tweet. Follow your favorite stores and save. Example? Here’s the Twitter page for Target. Here’s Walmart’s.

Many sites – including Money Talks News – feature coupons and sales. Click here to go to our deals page. Enter what you’re looking for in the search engine and see what savings show up. And don’t stop there – on the same page we link to dozens of other deal sites.

For working Americans disappointed with the performance of their 401(k) retirement plans, the appeal of a good old-fashioned pension is alluring – even to those workers too young to remember what they are.

That’s the surprising result of a new survey of more than 1,000 workers by Ipsos Marketing. Says Ipsos Senior Vice President Peter Saracena…

But is it really that surprising? As we’ve reported just this summer, the hidden fees in 401(k) plans can cost you more than $100,000 over your working life. Also, one of the big appeals of 401(k) plans is the "employer match," which could add 50 to 100 percent extra to your plan. But during the depth of the recession, one study showed that 8 percent of employers froze their contributions and only recently announced they’d reinstate them.

Then there are the volatile investment results themselves. Even younger workers don’t have the stomach for watching their 401(k) plans fluctuate, says Saracena: "Whether they hit the job market 10 years ago or two years ago, younger Americans have experienced market bubbles bursting first-hand, which has seriously eroded their confidence in the equity markets. So, it’s a smart and rational response to want something safe and secure now."

But are pensions really any safer? Recent research by the Kellogg School of Management at Northwestern University suggests that state-sponsored pension programs in as many as 31 states are headed for financial disaster by 2030. Associate Professor of Finance Joshua Rauh predicts those plans will rack up $3 trillion in unfunded liabilities – and taxpayers will be forced to make up the difference.

"Even if states uniformly eliminated generous early retirement deals and raised the retirement age to 74, the unfunded liability for promises already made would still be more than $1 trillion," Rauh says.

The problem, Rauh says, is that "more than half of the liability is owed to people who have already retired, and the idea of large outright cuts to current retirees is not under serious consideration."

So is it any wonder that the Ipsos study also found that young workers aren’t confident they’ll have any retirement money when their time comes? Of those 1,000 adults surveyed, "48 percent believe they will not have enough money to maintain their current lifestyle in retirement."

Concludes Saracena: "The ramifications of this market dynamic on the investment choices Americans will make over the next 30 to 40 years is only now coming into focus. And, make no mistake, even the younger generation is very realistic about their prospects for retirement, especially when you find that only 4 percent of them believe that Social Security will provide enough income to live in retirement."

The retirement savings problem – from under-performing 401k plans, to pension plans promising more than they can deliver, to the uncertainty of social security – is one that affects every American. Whether you’re Republic or Democrat, already retired or just starting out, what we all have to do is closely follow the problem as well as the proposed solutions. Just as important, we need to take a lesson on self-reliance from the Greatest Generation – they learned that life wasn’t fair, and as a result lived beneath their means, featured their own retirement nests…and emerged the wealthiest generation to every live.

Bottom line? If you’re not concerned about where your retirement income will come from, you should be. And if you are, you should be living below your means, eschewing debt, setting aside at least 10 percent of your income and investing well so those savings work as hard for you as you do for them. And, of course, being a regular at sites like this one, because helping you with these things is the entire reason we’re here.

Not so long ago, when you got a present you didn’t like, you drove to the store it came from and quietly returned it. These days, if you get a gift card you don’t want, you can sell it online.

You won’t get back all the money on the card, of course. But you can get a hefty share. One way is post your unused cards on Craigslist – or buy one by searching "gift card." eBay also offers an active market in gift cards. And there are specialty sites you can try. A few of the biggies:

Cardpool and Plastic Jungle only handle cards with at least $25 on them, while Gift Card Rescue requires $15 and Monster Gift Card a mere $10. Here’s how they work…

All these sites work the same way. Just type in the name of the retailer and the money left on the card, and you’ll find out how much you can get back. For instance, a $50 Walmart card will fetch you $45 at Card Pool and Plastic Jungle – but $42.50 at Monster Gift Card and $1.50 at Gift Card Rescue.

That’s why you need to check each site if you want to get the most cash for your card. Each site seems to have its own hidden rules, and no single site is always better.

If you’re a fan of Amazon.com, three of the sites will give you a bonus. Card Pool, Plastic Jungle, and Gift Card Rescue offer 5% more if you forgo the cash and convert your existing card into an Amazon gift card.

Once you settle on a specific site, you have to open an account and mail in the gift card. Insure the package and get a tracking number – you get your payment once the site gets the card.

Prices fluctuate like the stock market, so if you find a good deal, seize the moment. And Card Pool and Plastic Jungle only touch cards with no fees or expiration dates and GiftCardRescue insists the expiration date be at least six months away. Monster Gift Card has no rules about that.

New federal regulations regarding gift cards recently went into effect that make things like expiration dates and fees more consumer friendly – see our story about that here. And some states offer even greater consumer protections: For a state-by-state list of gift card consumer protection laws from Consumer’s Union, click here.

Now if you could only sell those ugly Father’s Day ties the same way…

What’s common in Europe and Asia may finally be coming to America: Waving your cell phone instead of swiping a credit card when you buy something.

The technology is already in the phone, so it’s "expected to take off in a big way," claimed an Internet News story – from early 2007.

So what happened?

Unlike overseas, the United States has many more cell phone makers, mobile carriers, and credit-card companies. So it was with great fanfare last week that AT&T, Verizon, and T-Mobile announced they’d join forces to test just such a payment option in four U.S. cities.

The only city named so far is Atlanta, according to a Bloomberg report that calls the partnership a "game-changer."

It works like this: Instead of taking out a credit card and swiping it through a reader, you’ll pull out your cell phone and wave it across a similar-looking device. An RFID chip embedded inside your phone will identify your account, and the charge will show up on your phone or credit card bill at the end of the month.

The technology isn’t the problem – the profits are. The hang-up is deciding on who gets what portion of the processing fees. The New York Times described it this way back in January 2009:

In fact, Nokia did a similar trial in 2006, starting in Irvine, Texas, and expanding to Atlanta, New York, and the San Francisco. While customers loved it, Nokia couldn’t negotiate the back-end deals. Apparently, AT&T, Verizon, and T-Mobile have hashed out those details, working with Discover Financial Services, maker of the Discover Card, to help with the process. No word on when those other three test cities will be announced. Stay tuned – or should we say, wait by the phone.

You open your credit card statement and give the charges a glance. There’s one charge that you don’t remember making, but the amount is only $5.95, and the company name looks vaguely familiar. Since your bill doesn’t include the merchant’s phone number or website address, further investigation would take more time than it’s worth. So you pay the bill and get on with your day.

That’s exactly what the scam artists were counting on.

The Federal Trade Commission (FTC) recently halted an elaborate, international scam that over a four year period ripped off $10 million from American credit and debit card holders. While sophisticated techniques were used to set up fake merchant accounts and obtain millions of credit and debit card numbers, in the end the scam relied on something simple – the knowledge that many people will pay a small charge rather than investigating it.

Press Release from the FTC Website:

FTC Obtains Court Order Halting International Scheme Responsible For More Than $10 Million In Unauthorized Charges On Consumers’ Credit and Debit Cards

At the request of the Federal Trade Commission, a federal court has halted an elaborate international scheme that used identity theft to place more than $10 million in bogus charges on consumers’ credit and debit cards, pending a trial. More than a million consumers were hit with one-time charges of $10 or less, and their payments were routed through dummy corporations in the United States to bank accounts in Eastern Europe and Central Asia.

The defendants, using phony company names resembling real companies, and information taken from identity theft victims in the United States, opened more than 100 merchant accounts with companies that process charges to consumers’ credit and debit card accounts, according to the FTC complaint. The FTC believes the defendants may have run credit checks on the identity theft victims first, to be sure they were creditworthy. The defendants also cloaked each fake merchant with a virtual office address near a real merchant’s location, a phone number, a home phone number for the “owner,” a Web site pretending to sell products, a toll-free number consumers could call, and a real company’s tax number found on the Internet.

The FTC alleged that with spam e-mail, the defendants recruited at least 14 “money mules” – people in the United States they paid to form 16 dummy corporations, open associated bank accounts to receive the card payments, and transfer the money overseas. The defendants used debit cards linked to these bank accounts to set up telephone service, virtual addresses, and Web sites that helped deceive the card processors, according to the complaint.

The “money mules” responded to spam e-mail pretending to seek a U.S. finance manager for an international financial services company. The FTC has not determined how the defendants obtained the stolen identities or consumers’ credit and debit account numbers. Consumers’ payments were sent to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus, and Kyrgyzstan.

None of the consumers affected by the scam had contact with any of the defendants. Most consumers either didn’t notice the charges on their bills or didn’t seek chargebacks because of the small amounts – charges ranged from 20 cents to $10. Consumers who called the toll-free numbers that appeared on their bills either found them disconnected or heard recorded messages instructing them to leave a message, but no calls were returned.

The defendants are the 16 sham companies – API Trade LLC, ARA Auto Parts Trading LLC, Bend Transfer Services LLC, B-Texas European LLC, CBTC LLC, CMG Global LLC, Confident Incorporation, HDPL Trade LLC, Hometown Homebuyers LLC, IAS Group LLC, IHC Trade LLC, MZ Services LLC, New World Enterprizes LLC, Parts Imports LLC, SMI Imports LLC, SVT Services LLC – and one or more persons who are unknown to the agency at this time. The FTC charged them with making unauthorized charges to consumers’ credit cards in violation of Section 5 of the FTC Act. The court froze the defendants’ assets and ordered them to stop operating, pending final resolution of the case.

Scam protection = attention to detail

Scam artists like those nabbed in the action above count on the fact that you’re too busy to chase down a small charge to an unknown merchant. So when bill-paying time rolls around, set aside enough time to adequately review the charges appearing on your statement. This is especially important if you live in a household where one person pays the bills and more than one person use the cards.

Follow these steps to avoid becoming a victim of a similar scam:

• Thoroughly review your monthly statements. Verify every purchase and if you don’t remember it, check it against the receipt that you hopefully kept. If you don’t have a receipt, contact the merchant. If the merchant’s information isn’t available on the statement, contact the card company. If they don’t have the information necessary to contact the merchant and verify the charge, dispute it.
• If you have trouble remembering charges from month to month, make it a habit to check your accounts more often – perhaps weekly – by going online and looking over recent purchases.
• Set up a simple system to keep track of receipts. For example, put all receipts in a central envelope, basket or drawer. Then when the monthly statement comes it will be easy to verify each transaction. This is especially important if more than one family member uses the same card.

To file a complaint with the FTC, visit their FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

Another good source for information on identity theft prevention is the Identity Theft Resource Center.

The following email came in over the weekend. It shows that there are a lot of Americans who are getting serious about destroying their debts! (The book mentioned below is Life or Debt 2010, available at bookstores and libraries everywhere.)

Stacy,
I wrote you briefly a couple weeks back regarding the success I have had with my debt since reading your book (Life or Debt). Ever since reading the book I have found myself taking control over my debt situation working diligently to overcome high interest charges and unneeded monthly bills. I am even now finding paying my debts fun as I enjoy the challenge of working every angle possible to squash my debt every single month.

While following your debt destroyer program [Editor's note: This refers to a program to set aside money monthly to target debts] I have been monitoring the growth of my destroyer and always looking for additional ways to add to it. Obviously with every paid off debt my destroyer continues to grow but I’ve been looking for some fast action growth! After some further thought put into our situation I found if I were to make a change to one of our leased vehicles it would be the quickest, easiest and most dramatic change I could see to our debt. After reading the section in your book about vehicles and vehicle purchasing it reminded me of the amount of money we lost just buying new and made me need to make a change!

Long story short I sold my 2008 truck eliminating that amount and bought an older yet nicer vehicle that was over $5,000 less then than amount I owed on my 2008. Doing so combined with a better interest rate also dramatically lowered my minimum payments by $200 which has just raised my debt destroyer that amount!

Thanks again for sharing the knowledge via your book!
Best Regards,
Brad

While posting this email may seem self-serving, I thought it was important to offset some of the negative notes I get saying “I’ve done everything I can – there’s nothing left that we can do to find the money in our budget to pay off debt.”

For most people – at least those with income – there’s nearly always something you can do to find extra money to destroy debt.

Paying interest means handing money to a lender that you should be keeping for yourself. Pay off your debts as quickly as you can. And stick around for more ideas on how to find the extra money to do it!

The IRS just announced that, starting in 2011, it’s going to make it more difficult for tax preparation companies to provide refund anticipation loans: expensive, short-term loans for consumers who want their refund “instantly” rather than waiting a couple of weeks. These loans, often aimed at the working poor, typically come with fees that translate into annual percentage rates of 50 – 500%.

Many consumer advocates, including us, have long criticized these loans: after all, why would you pay major fees to borrow what’s essentially your own money – your tax refund? (To learn more about why we hate these loans, see this post:
Difference Between a Loan Shark and a Tax Refund Loan? Not Much.)

Historically the IRS provided tax preparation services with something called a “debt indicator” for each taxpayer – letting the preparation company know if a taxpayer’s refund was going to be seized by Uncle Sam for things like back taxes, child support or delinquent student loans. If the taxpayer’s “debt indicator” indicated the taxpayer wasn’t getting their refund, the preparer wouldn’t lend them money in the form of a refund anticipation loan.

Although the “debt indicator” was never intended to be used for this purpose – the IRS was simply trying to inform the taxpayer – by providing it the IRS was essentially pre-screening potential loan customers for tax preparation services.

Here’s the way it used to work

• The taxpayer goes to a tax preparer and gets their taxes done.
• The IRS receives the electronic tax return and essentially tells the preparer whether or not the customer is actually going to receive their refund, or if it’s going to be held to satisfy outstanding government debt.
• If a refund is forthcoming, the tax preparer offers the taxpayer a refund loan. If it’s not, they don’t, since the taxpayer won’t have the money to repay it.

Here’s how it will work now, and why these loans may be dead – or at least harder to get

• The taxpayer goes to a tax preparer and gets their taxes done.
• The IRS receives the electronic tax return but tells the preparer nothing.
• The tax preparer has no idea whether the taxpayer is actually getting their refund, so they’re not about to offer them a refund anticipation loan – at least, not without a lot more information.

“The federal government should not be sharing taxpayers’ personal information for the profit of banks and tax preparers by operating what is essentially a free credit reporting service for them,” said Jean Ann Fox, director of financial services for Consumer Federation of America in this press release. “We are glad the IRS finally stopped letting tax preparers and banks pry into taxpayers’ records about what they owe the government.”

The Consumer Federation of America claims that in 2008, RALs skimmed $738 million from the refunds of 8.4 million American taxpayers.

The IRS agrees that the information it was providing was used to hurt poorer Americans.

“Refund anticipation loans are often targeted at lower-income taxpayers,” IRS Commissioner Doug Shulman said in its press release. “With e-file and direct deposit, these taxpayers now have other ways to quickly access their cash.”

As one might expect, the tax preparation industry isn’t so happy. Here’s what Harry W. Buckley, president and chief executive officer of Jackson Hewitt, had to say in this press release:

“This form of credit, especially important to middle and low income, often unbanked, taxpayers, may well continue to be available in our industry. However, from the taxpayers’ perspective, it will likely become harder to receive credit approval, will cost more and the amount of credit available may be limited – all negative impacts on taxpayers during this difficult economic environment, and all a direct result of the unilateral action taken by the IRS today.”

Refund anticipation loans aren’t the only type of short-term, high interest loans that are teetering on the brink of the extinction. Check out our recent story Payday Lenders Dropping Like Flies.

And when debt does become a problem, there will most likely be fewer debt settlement companies around to “help”. See our recent story New Rules Could Erase Debt Settlement Industry.

There’s no question that the lending landscape is changing in America. Some say “it’s about time.” Others say government regulators have no place disrupting free enterprise, no matter the form.

What do you say?

Like many consumer advocates, I’m certainly no fan of credit cards. It’s hard to like plastic when I’ve done so many stories about people who end up in a financial death spiral due to revolving debt. And I can’t begin to count the stories I’ve done over the last 20 years about banks abusing their card customers with usurious rates, unfair fees and all manner of sneaky tactics specifically designed to transfer wealth from Main Street to Wall Street.

With all the negative press and recent legislation exposing the seamy underbelly of the credit card industry, it’s easy to believe that credit cards are the downfall of western civilization. But maybe this pendulum has swung too far. While it’s true that gorging on credit can lead to an untimely debt, it’s also true that credit cards are an important part of a healthy financial diet.

Here are eight reasons why it can be wise to stash the cash and pull out the plastic.

1. Credit cards give you an out.

If you buy something that turns out to less than you bargained for, using a credit card can be your last line of defense. Because by disputing a charge, you’re enlisting the considerable clout of your card company to help settle merchant disputes in your favor.

The ability to dispute a charge isn’t the best consumer protection – your car company isn’t going to side with you unless the defect is glaring – but it’s a lot better protection than you’d have if you paid with cash, which is none.

2. Some credit cards offer an extended warranty.

When you go to a big-box electronics store, the salesperson falls all over themselves extolling the virtues of their high-priced extended warranty. Yet most major credit card issuers provide free extended warranty benefits on some of their cards. It costs you nothing, and commonly tacks on an additional year of protection when you use that card to purchase qualifying stuff. What’s not to like?

3. Use a credit card and you don’t have to pay for a month.

Swipe a debt card, and before you can load your purchases in the car, the money’s gone from your account. But use a credit card, and it could be weeks before you part with your money. Allowing your savings to hang out and earn interest for an extra month is no big deal in these days of near-zero returns, but when interest rates start rising again, this simplest of credit card features is nothing to sneeze at.

4. A lost credit card won’t ruin you.

By Federal law, providing you notify the bank within 30 days, your maximum liability for a lost or stolen credit card is $50 – and most major issuers reduce that to zero. Debit cards, on the other hand, have a much larger potential liability.

• Up to $50 if you notify the bank within two business days after you realize your debit card is missing.
• Up to $500 if you fail to notify the bank after two business days, but before 60 days after your bank statement is mailed to you.
• Unlimited 60 days after your bank statement is mailed to you listing the unauthorized withdrawals.

Visa and MasterCard currently cap the liability on debit cards at $50, but that’s voluntary – there’s no federal law that protects you as there is with credit cards. So if you’re planning to be either careless or mugged, a credit card is safer than a debit card or cash.

5. Credit cards are the only way to shop online.

Because credit cards offer both protection against fraud and a line of defense should a good purchase go bad, they’re the only way you should ever shop online. In fact, if it weren’t for credit cards, online shopping probably wouldn’t even exist.

6. Credit cards can help you budget by allowing you to analyze your expenses.

Some credit cards offer itemized statements – monthly, annually or both – with expenses broken down and grouped into pre-determined categories, like gas, groceries, eating out, etc. This can be an effective way to track your expenses.

While not a perfect budgeting worksheet, it’s better than nothing, especially since nothing is what it costs.

7. Credit cards help you build a healthy credit history and credit score

Having a good credit history and credit score aren’t essential for survival, but they are useful. Some employers look at your credit report before offering you employment. Some auto insurance companies offer their best rates for those with the best credit histories. And if you ever do need or want to borrow money, a solid history and score will allow you to do so with a minimum or both hassle and expense.

Single best way to create a new credit history or polish up a bad one? Effectively using credit cards.

8. Credit cards allow you to instantly meet an emergency.

Since a credit card is essentially a pre-approved loan, it’s instant money should the need arise. Obviously, easy access to money is a double-edged sword. But it’s not hard to imagine a situation where being able to lay your hands on some money could be critical – even life-saving. Sure, the rates you pay are stupidly high. But in a true emergency when your back is against the wall and you can’t turn to friends, don’t have family and a few grand could get you home, keep you out of jail, or in the case of the uninsured, even save your life? Nothing wrong with some plastic peace of mind in your wallet.

Bottom line? With all the negative press surrounding credit cards these days, it’s easy to throw out the baby with the bathwater. Properly used, credit cards are one of the greatest wonders of the modern financial world. And proper use, while it may not be easy to execute, is simple to define: just pay them off every month.

Credit card companies are patting themselves on the back after a new report shows they’ve gotten rid of many “unfair” or “deceptive” practices consumers complained about. But that same report also says credit card companies have found new ways to stab you in the back.

First, the good news: Since Congress passed the Credit CARD Act last year, credit card companies are behaving much better…

• Gone are steep interest-rate hikes on existing balances. The new law bans credit card issuers from unilaterally raising those rates, which was widespread before the law’s consumer protections kicked in.
• Less than a quarter of credit cards now have over-limit fees without prior consent, which is down from more than 80 percent in July 2009.
• Despite the new law cutting into credit card issuers’ fees, they haven’t really added any new fees not covered by the law. In fact, the number of cards that include an annual fee actually went down – by 1 percent from July 2009 to March 2010.

Those enticing facts were revealed in a new report called “Two Steps Forward, One Step Back” by the Pew Health Group, a part of the Pew Charitable Trusts.

“While it’s been less than a year since passage of the Credit CARD Act, the new law appears to be working for millions of Americans who have credit cards,” says Shelley A. Hearne, managing director of the Pew Health Group.

But there’s bad news, too.

“Most of the news is good, but we are seeing the rise of new harmful behavior,” Hearne says. Namely…

• Steeper fees for cash advances and balance transfers – up to a median 4 percent as of March, from 3 percent in July 2009. And credit union cash advance fees rose a half-percent, to 2.5 percent.
• Continued widespread use of various, other penalty interest rates.
• A disturbing trend of credit card companies failing to disclose penalty interest rates in their online terms and conditions.

“Although we applaud changes by the card industry to create a fairer and more transparent marketplace, our research shows that some challenges remain,” said Nick Bourke, director of Pew’s Safe Credit Cards Project and the report’s co-author.

“For the first time, we have seen credit card disclosures warning consumers that interest rates could go up as a penalty for certain actions, but not stating how high those rates could go,” Bourke said.

“When issuers withhold vital pricing information, it leaves cardholders in the dark and puts their financial security at risk.”

So what can you do?

• When you sign up for credit card, don’t read just the online terms and conditions. Make sure you get the paper version, and if you have any questions, call the toll-free number and ask.
• Unless the mafia or a payday lender are your only other loan choices, never use your credit card for cash advances.
• As always, don’t assume the government will do your job for you. As you can tell from the above, just because the Credit CARD Act passed doesn’t mean credit card issuers won’t look for loopholes to extract fee from you. Be ever vigilant.