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Vestal, NY -- Its easy to find a gas station sign offering a cash price cheaper than a credit price.
But did you know its illegal in New York to charge someone more for paying with a credit card?
Thats due to General Business Law 518, which prohibits surcharges on credit card purchases. A number of businesses, from a hair salon to a billiards saloon, lost a challenge to the law last week, the New York Law Journal reported.
On the other hand, its legal to charge less for cash than for credit. So, you can charge $12 for an item and offer a cash discount for $10. You cant sell an item for $10 and mark it up to $12 for credit cards.
That legal distinction was at the heart of a multi-year court battle that was decided Sept. 30 in the US Court of Appeals.
It stemmed from a Binghamton-area hair salon that sued the state, winning an injunction against the law in 2013. US District Judge Jed Rakoff called the law incomprehensible and noted wryly that Alice in Wonderland has nothing on section 518 of the New York General Business Law, referring to the nonsensical classic in ordering the law be unenforced.
But the three judge appeals court reversed Rakoffs decision last month, finding the law was constitutional.
Its rarely enforced, anyway: only one case had been prosecuted under the law, which calls for a $500 fine and up to a year in jail.
So businesses have to absorb those swipe fees from credit card companies without penalizing customers.
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Looking for a mortgage loan with bad credit? Believe it or not, you may be able to seal the deal even with a credit score below 620. Youll just have to be willing to jump through a few hoops.
First, youll need to know where you stand. You can get your credit report for free once a year at AnnualCreditReport.com. You can also pull a free credit report summary every month from Credit.com.
Heres what to expect when youre ready to apply.
1. You have limited options
The only program out there for applicants with credit scores below 620 is the Federal Housing Administration. Fannie Mae and Freddie Mac offer conventional loan financing with a hard credit score requirement of 620. Generally, youll need a minimum score of 600 to buy a home or a get a mortgage.
2. There are stringent income requirements
The lower the credit score, the more risk the lender takes in approving your loan. To minimize your chances of defaulting (and to protect themselves from a legal standpoint,) lenders now require consumers have a 43% debt-to-income ratio, consistent with the Consumer Financial Protection Bureaus definition of a qualified mortgage.
In other words, your existing monthly loan obligations, like an auto loan or credit card balance, in addition to your proposed mortgage payment, cant exceed 43% of your total monthly income.
For example, if your mortgage payment is $2,800 per month, consistent with 3.5% down FHA loan on a $425,000 home, and you also have other payments on tax obligations and car payments at $600 per month, you must be earning $7,906 of income to offset the liabilities.
3. You may have to complete homeownership counseling
Some mortgage companies require consumers with bad credit complete online counseling to ensure they fully understand what homeownership entails. (It doesnt matter if you are refinancing or have previously owned a home.) Typically, this counseling can be completed online. If required, get it done early on in the loan process as a sign of good measure.
4. Youll face higher rates and pricing
Your mortgage, unfortunately, will cost more in fees and interest due to your bad credit. Lenders charge in accordance with the risk they are taking. For example, a borrower with a 620 credit score will pay a rate thats approximately 0.5 percentage points higher, and approximately $2,000 more in loan fees than a borrower with a credit score of 620 or higher, based on FHAs risk-based pricing.
Raising your credit score to the tune of 620 or higher will help you qualify for better rates. Mortgage lenders may use an industry-specific version of your credit in their underwriting process, so theres a chance the score they see will differ slightly from the one you are looking at.
The bigger picture
Keep in mind, buying a home and making on-time payments to your mortgage may cause your score to rise,.This improvement in turn, could help you qualify for a refinancing offer down the road, netting you a lower interest rate and a more affordable monthly payment.
Talk to your mortgage professional about your credit and the means you currently have to buy a home while considering what options make the most financial sense for you overall.
More from Credit.com
How much house can you afford?
How to get your free annual credit reports
Can you get collections removed from your credit report?
Credit.com is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.
- Written by Super User
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EAU CLAIRE, Wis. (WEAU)- If you havent gotten one already, you can expect to see a new credit and debit card in the mail soon.
The cards have a computer chip directly on them as retailers will be using a new card swiping system.
Experts say it will reduce the $5.5 billion lost annually to fraud in the US
As of October 1st, businesses were required to have the new chip card readers installed.
Businesses without them are now responsible for consumers whose cards are compromised at their stores.
Consumer Victoria Stumm said card safety is her number one concern.
"I think thats the most important thing, I dont like to use my credit card any place thats not safe," consumer Victoria Stumm said.
New cards now contain a computer chip inserted into the card and require people to dip, not swipe.
Target is one of the forerunners for installing the new card reading system.
"It is a little different, it does have a slot at the bottom, so you no longer slide it on the side," Erin Miller said, Target Executive Guest Experience Leader. Miller has been training employees for the past few months on how to use the new card reading system.
The new process of inserting or 'dipping' your card compared to sliding is a simple process.
All you do is insert your card, wait until the card reader tells you to remove it, and then take it back out.
Unlike cards with magnetic strips that can be copied, chip cards create a unique transaction code that cannot be used again.
"It does take a little bit longer to process a transaction, but I think the guest, once they understand the benefit of removing the magnetic strip, they really understand that 'ok, this is an important process and they're willing to wait that extra couple seconds longer for that extra layer of security," Miller said.
"If I can be safe, even if it took me five minutes, I would do it," Stumm added.
If you havent received your new chip card yet, youre not alone.
According to a credit card report, 6 in 10 people do not have their cards yet, and it aligns with businesses as only an estimated 5 to 10 percent have the chip card readers so far.
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Were just 11 weeks from Christmas, have you hit the stores yet?
If so, youll want to know how safe those purchases are and with new requirements for debit and credit cards coming out weve got you covered.
If youre someone who uses their debit card most of the time, this story may have you reaching for your credit card instead.
With identity theft at an all-time high, some financial advisers say a credit card is a safer option if your identity is stolen.
Sometimes it makes you wish you had never done computers or cards, it harder to get your information then, said Rita Langhans.
When Langhans found out she wasvictim to identity theft, she changed the way she shopped.
I would just rather use cash, Ill use Visa whenever I have to, she said.
Langhans is part of the 13 million Americans whose identity was stolen in 2014.
The crime has skyrocketed over the last decade, surpassing drug trafficking in the USand the headache that comes with having your identity stolencouldbe avoided by switching out your usual method of payment.
Financial Advisor Tyler Cuba saidwhile a debit card and a credit card may look similar in the palm of your hand,if they get hacked or stolen, the wayyour account is treated is very different.
A credit card has a maximum liability of $50 no matter how large the charge might be. On a debit card, depending on when you report the fraudulentpurchase, makes a difference on the amount of liability that you actually have, said Cuba.
Tyler saidif you report a fraudulent charge on a credit card, the amount is almost immediately refunded.
But Cuba saidsome should be hesitant about embracing credit if you dont actively check your statements.
If you are not actively monitoring your accounts whether it be a credit card or checking account, savings account and you let a fraudulent purchaseexceed a certain period of time you have maximum liability of the amount of money that was taken, he said.
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Unlike many commentators, I tend to think credit scores are a good thing. In a big world, it is difficult for large financial institutions to figure out the most import "C" of the four Cs of Credit -- Character. Credit scores offer an imperfect but generally useful shortcut in what is often an anonymous world.
In my last article on the topic, I noted that in addition to lending, credit scores are used in renting, insurance, employment, and a wide number of other areas. One new place where credit scores could prove useful is analyzing a prospective spouse. An academic paper suggests the following:
- Birds of a feather flock together -- in general, people tend to enter into long-term relationships those with similar credit scores.
- Relationships with higher credit scores tend to last longer.
- Those with larger gaps in the credit scores have a higher probability of the relationship ending sooner.
Though the paper is more broad than marriage, I am going to shift over to marriage for the rest of this article. Why? Every now and then, I get called in to do marriage counseling, typically along with my pastor and fellow elders. Im not perfect, so my marriage isnt perfect, but it is very good.
Marriages tend to fail because the husband and wife disagree on goals or methods for the partnership that they have entered into. Common disagreements and problems involve:
- Children -- number, methods of raising
- Lack of companionship -- shared goals, responsibilities, etc.
- Bad communication patterns
- Sins that need to be repented of -- anger amp; abuse, adultery amp; related, laziness, substance abuse, disdain, lying, etc.
- And more -- there are more ways to get it wrong than to get it right, just as there are more wrong answers on tests than right answers.
Im only going to handle the money issue here, though laziness, lying, bad communication, and lack of clearly specifying and agreeing to goals play a large role in money problems. Going back to my earlier article on credit scores, you might recall that I said that credit scores were a moderately accurate measure of moral tendency on average. Quoting:
Honoring agreements that you have entered into is an important indicator of your personality. Those who do not repay are on average less moral than those that repay. Those that are net creditors on average made efforts that net debtors did not.
Credit scores are important. In a specific way, they measure your willingness to keep your word. Anytime you enter into a debt contract, you make a promise to repay. If you fulfill your promise to repay, you impress others as one of good moral character. If you dont repay, it is vice-versa, you appear to be of low moral character. (Note: I am excluding those that got hoodwinked by lenders that defrauded borrowers in a variety of ways. That said, if you can be hoodwinked, that says something else about you, and that may have an impact on your creditworthiness as well.)
Now, before I continue, these concepts work on average, and not always in particular. I have helped some at the edge of society with gifts and loans. In some cases there is a cascade of bad events that the most intelligent would have a hard time facing. Being wise helps, but there are some situations that would tax the soul of anyone, and be difficult to claim that they were blameworthy; its just the way things happened.