Personal Banking E-Newsletter - April 2011

Disputing a Credit Card Charge

How to come out on top

What happens when the brand-new digital camera you brought home turns out to be a bust? Or the DVD player you got for your spouse's birthday gets stuck permanently on rewind? Or, when you've been double-charged for something you're sure you only came home with one of?

If you've made these purchases on a credit card - and these days, that's a near certainty - you're in luck. Thanks to the Fair Credit Billing Act, consumers have a good deal of protection for their credit card purchases. This law allows consumers to withhold payment on poor-quality, damaged merchandise or incorrectly billed items they bought with a credit card until the matter is resolved. Read on as we show you how to dispute a credit card charge and actually come out on the winning side.

Retrace Your Steps
Your first move is always to go back and attempt to resolve the problem with the merchant. If you give them a chance to address your complaint, they very often will; especially if you approach them with politeness and courtesy. Most large retailers have customer service policies in place that err strongly on the side of being generous, at least within a certain period of time, and under "ordinary" circumstances.

Bottom line is, if you act promptly and reasonably, you're likely to get the full benefit of the doubt. If you don't have luck with the first representative you speak with, ask to talk with the manager or supervisor on duty. Be sure to keep records of each interaction, the person you spoke with as well as the date and time, so you can refer back to them if needed.

Put it in Writing
If the merchant won't budge, it's time to put your complaint in writing. Draft a short, detailed letter outlining your particular dispute, and send it to the merchant by means of certified mail. Before you send it, make a few copies, so you can save one for your records and send another copy to your credit card company, as proof of your efforts to resolve this dispute.

Next you'll draft a letter to your credit card company, to officially alert it of the disputed purchase amount. The Fair Credit Billing Act mandates that you do this in writing, within 60 days after the bill with the disputed charge was sent to you. In your letter, you'll need to include your account number, the closing date of the bill on which the disputed charge appears, a description of the disputed item and the reason you're withholding payment. You should also enclose a copy of your complaint letter to the merchant, along with any other documentation that supports your position. This letter should also be sent by means of certified mail with a return receipt requested; be sure you send it to the 'billing inquiries' address at your credit card company, and not the regular address for payments (since these are often two separate departments).

Keep on Paying
Even though you're disputing an item on your current bill, it's important to maintain your other payments. If you've charged anything else on your card during this cycle, you'll need to send that payment and all financing charges to the regular address, otherwise you'll incur interest and late-payment charges.

At this point, you're just waiting to hear the result of your challenge. Some card companies - especially the bigger firms, such as Capital One - will often give the benefit of the doubt to their consumers, and issue a temporary credit until the dispute is resolved. This isn't required by law, however, so don't assume you will get this consideration. Meanwhile, the card issuer will get in touch with the merchant to find out their side of the story. Basically, if they end up siding with you, you will enjoy a full refund. If not, you'll have to pay for the disputed item, as well as any additional finance charges that may have accrued.

There are a few catches to the Fair Credit Billing Act. Technically, the sale must be for more than $50 and must have taken place in your home state or within 100 miles of your billing address, which means phone or internet orders may be immune.

If you find yourself in the position of having to dispute a credit card charge, you may have more rights and advantages than you realize. The key is to act quickly and responsibly. Address the matter in a prompt and courteous fashion with the merchant in question, and if necessary, follow up with your credit card issuer. In most cases the whole matter can be resolved within a matter of weeks to your satisfaction.

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Using Your Tax Refund

Save, invest, or fritter it away?

The IRS says the average tax refund for the 2011 filing season is a not-too-shabby lump sum of $2,985. So what should you do with this new-found pile of cash? Treat it as mad money and blow it in an impulse-driven shopping spree or a once-in-a-lifetime trek on an African safari? Or does it make more sense to use the refund to fix your money problems or invest for the future?

Not too surprisingly, given Americans' preference to "shop till they drop," 37% said they would spend all or part of their tax refund, a Capital One Bank survey found. A smaller number said they would save at least part of their refund (31%) or use it to pay down debt (19%). A much smaller percentage said they would stash the cash in a retirement account or fund a college account for their kid.

But spending all the money rather than investing or paying down debt is a personal finance no-no, says Tony Ogorek of Buffalo-based financial advisory firm Ogorek Wealth Management.

Receiving a tax refund is a golden opportunity for Americans, many of whom are struggling with high debt and low savings, to "shore up" their finances, he says.

"Everyone has financial weaknesses," Ogorek says. "People need to ask themselves, 'What are my weaknesses, and how can I use this money to strengthen my financial position?' "

Getting More Than Just $3,000

It is prudent to pay down credit card debt, plow more money into retirement and college-saving accounts, or enhance the value of your home. And with super-smart planning, Americans can get the most bang out of the bucks they receive back from Uncle Sam. Ogorek offers advice on how to get a double- or triple-whammy on this precious windfall of nearly $3,000.

Say you have a $3,000 balance on a credit card at the national average interest rate of 14.43%, according to By paying off the debt in full you get not one but three or more distinct benefits. You lock in an instant return of 14.43%. That is a better return than the current 0.62% average yield on money market accounts. And you boost your credit score. And no use carrying credit card debt, as its interest is not tax deductible.

Similarly, here's a clever way to use the money to bulk up your 401(k) and benefit in ways you might not have envisioned. When you get your IRS check, put the money in a money market account. Then increase your annual 401(k) payroll deduction by the same amount. (The money market savings will offset a smaller paycheck due to 401(k) payroll deductions.)

You get the benefit of putting your money into the 401(k) a little at a time, a process known as dollar-cost averaging, which allows you to buy more shares when prices are low and fewer when prices are high. It will also increase your chances of getting a full company match, if you are not already receiving that perk. You also benefit from the pretax withdrawals coming out of your paycheck, which will lower your tax bill next year. What's even better: If you invest in an index fund that invests in large-company stocks, which have posted average gains of 9.8% over the long term, according to Morningstar, you will more than double your money in 10 years and end up with $7,603.

Home, School Can Pay Off

Making key fixes to your home, such as making it more energy efficient with new windows, appliances or solar panels might also mean bigger savings than meets the eye. You not only increase the value of your home, you also will benefit from lower energy costs as well as a possible subsidy from the government.

If your career has been derailed by the financial crisis, using some of the cash to improve your education, upgrade skills or break into a new field will add up to a much bigger investment down the road."It is essential to have a plan," Ogorek says. "Financial security doesn't happen by accident. It happens by design."

You can also spread your money around. For example, put $1,000 in a retirement account, stash $1,000 in a college fund and set $1,000 aside for a rainy day or to spend on yourself, if you can't kill the urge to splurge, planners say.

If your savings are low, you are risk-averse and you fear another financial shock might hit, it makes better sense to squirrel your refund away in a safe place, such as a money-market account, despite its puny yield, says Robert Cohen, a financial adviser at Financial Strategies & Wealth Management.

Cohen fears that the political upheaval in the Middle East could cause energy prices to spike dramatically and push up gas prices sharply. "If you are paying $4 or $5 or $6 for a gallon of gas, maybe you will need your tax refund to pay for it," he says. An oil shock, he adds, could push oil near or above the prior peak of $147 a barrel. That would not only slow economic growth, it would also likely cause a stock sell-off. That's why he is reluctant to advise risk-averse investors to use their refund to invest in the stock market.

"You will feel bad if the Dow goes down 1,000 points," Cohen says.

Invest based on your age

If you are dead set on investing your refund, spread your risk based on your age — and invest mainly in your retirement account, advises Michael Farr, president of money manager Farr Miller & Washington.

For those under 30, invest two-thirds in a low-cost index fund that tracks large-company stocks, such as the Standard & Poor's 500. Put the other third in an index fund that tracks developed foreign markets.

"Thirty-year-olds want to be the most aggressive," Farr says.

Fortysomethings should invest their entire refund in an index fund that tracks the largest 100 stocks in the S&P 500. These big stocks, he says, have underperformed in the recent rally, are cheap and pay nice dividends.

Retirees should put half of the $2,985 in a short-term bond fund and the rest in a stock index fund filled with large, dividend-paying stocks.

"Take care of your retirement first," says Farr.

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Basic Strategies for Simplifying Your Financial Life

There are many reasons to organize and simplify your financial life. Eliminating clutter, saving time and reducing stress are surely among them. And here's another motivating factor: Not keeping tabs on your finances can be costly if it results in fees or interest charges you could have avoided, investment losses, additional taxes or other pitfalls. FDIC Consumer News offers a checklist of nine basic things you can do to get your money matters in order...and keep them that way.

1. Use direct deposit. Ask to have your pay, pension or Social Security benefits automatically deposited into your bank account. Direct deposit is safer, easier and more convenient than getting a paper check in the mail and then having to deposit it into your bank account. It may even help you avoid bank fees. Direct deposit also gives you access to your money sooner than with a paper check.

Also be aware that if you receive Social Security and other federal benefit payments, the U.S. Treasury will only issue them electronically beginning in March 2013.

2. Automate recurring bills. Many merchants, such as insurance companies or utilities, will allow you to pay recurring bills with an automatic withdrawal from your checking account or through a charge to your credit card. However, be sure to record these transactions in your check register to avoid overdrawing your account. And if you charge the bills to a credit card, pay the balance in full by the due date to avoid interest charges.

Many banks also offer online bill-paying services that allow you to pay bills quickly and easily. These programs generally allow you to sign up on your bank's Web site to receive bills electronically from companies you do business with. Then you can review the bill and pay it using that same Web site.

"That is an entirely paperless transaction, and it can reduce the chance of incurring a late-payment fee," said Luke W. Reynolds, Chief of the FDIC's Community Outreach Section.

3. Explore online banking. This service lets you review deposits and withdrawals, keep track of your balance, and move funds between, say, your checking and savings accounts — at your convenience.

For example, with online banking you can quickly review your account and make sure you didn't forget to record any debit or ATM card transactions in your check register. You can get an update on whether funds from recent deposits are available for withdrawal. You might even be able to receive your bank statements online instead of in the mail.

4. Put some savings on autopilot. Arrange with your bank or employer to automatically transfer a certain amount into savings accounts or investments on a regular schedule. "Automatic savings programs can make it easy to build an emergency fund or save for the future," said Joyce Thomas, an FDIC financial educator in the Community Outreach Section.

"Also, if you invest in stocks, mutual funds or other non-federally insured assets, it has been documented that making investments on a regular basis can result in a higher return over time than trying to time the market."

5. Consider consolidating accounts. Think about how many different financial institutions you use and how many accounts (savings, checking and investments) and credit cards you have. You may be able to simplify your finances, reduce mail and paperwork, avoid certain fees and even get better deals by consolidating multiple accounts. Consolidating accounts also can make it easier to monitor your entire portfolio and ensure that your money is properly diversified.

If you plan to consolidate your deposits at one institution, though, make sure the combined funds don't exceed the FDIC's deposit insurance limitations. Remember that you can have more than $250,000 in one bank and still be fully insured provided that the money is in different ownership categories - single accounts, joint accounts, retirement accounts and so on. 

Also, consider canceling the credit cards you never use, preferably well before you apply for another loan — in case dropping a long-time card temporarily lowers your credit score. "Review your credit reports to make sure you know which accounts are listed as open and active," advised Reynolds.

6. Look into automated money-management tools. Software that you download to your computer or Web services managed by your bank or another third-party can give you an updated snapshot of all your account information from multiple institutions, in one place. The programs also can help you organize your finances, understand how you spend your money, and spot a potential fraud or theft (by providing a regular summary of account balances).

But it's also important to take commonsense precautions. "You need to do your research and choose a known and trusted organization, as most of these services collect account numbers and passwords along with other confidential and personally identifiable information," explained Rob Drozdowski, a Senior Technology Specialist at the FDIC.

7. Update your will and other legal documents, and make sure your family knows where to find them in an emergency. These additional documents can range from bank statements and pension records to directives that govern what happens to your bank accounts, property and other assets if you become incapacitated.

In addition to reviewing your will (and letting loved ones know where to locate the original), check the beneficiaries listed on life insurance policies and retirement accounts and consider having or updating documents (such as a "durable power of attorney") that would enable someone to handle your finances or other personal matters if you lose the ability to do so.

8. Get your other papers under control. Even if you rely on technology, it's difficult to go completely paperless. Start with a central filing system at home for your bank, tax, insurance and other financial records. Also designate one place for gathering your bills.

9. Don't let a disaster catch you off guard. If an emergency were to occur and you had only few moments to evacuate your home, perhaps for several days or even weeks, would you have access to cash, banking services and the personal identification you need to conduct your day-to-day financial life?

One strategy is to store copies of important documents — such as health insurance cards, your driver's license, bank account numbers and credit card information — on a secure Web site that you can access from anywhere. The bottom line, according to Reynolds: "By spending a few minutes organizing and simplifying your financial life, you can save many hours and perhaps significant amounts of money."

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Spring Maintenance Tips

A handy checklist for your home tune up

Like many of us, homes need a tune-up after the long winter months. Everything from the roof to the sump pump needs a once-over after the season has taken its toll. To help you cover all the bases, we’ve come up with a handy spring-maintenance checklist. Consult it every year and your home will thank you.

Inspect Brickwork and Stucco

  • Spalling is a chipping or popping away of a brick’s face, leaving the brick’s interior susceptible to moisture and crumbling. Look for this and any deteriorated mortar that typically occurs on older homes.
  • Is your brick plagued with efflorescence, those unsightly white deposits caused by soluble salts left behind during water evaporation? The Brick Industry Association recommends dry brushing in warm, dry weather to remove it.
  • If you discover water penetration in brick, consider sealing the brick with an appropriate sealant.

Replace Rotted Siding or Trim, and Repaint as Necessary

  • Repainting siding or trim is often more than a one-weekend project. For color consistency, you just can’t just touch it up—you need to paint a whole section.

Clean Gutters and Downspouts

  • Make sure gutters and downspouts direct water away from the house.
  • If you live in a place where there’s a lot of freezing and thawing, gutters will expand and contract, so make sure they’re flush to the roof, with no sags or dips. 
  • Get a professional cleaning if you live in a two-story house. Do-it-yourselfers will be safer cleaning a ranch home.
  • Consider installing gutter guards.

Inspect Your Roof

  • Shingles that curl (turn up) and claw (turn down) can make your roof inefficient and susceptible to leaks. Call a minimum of three roofers before committing to one for repairs. You’ll educate yourself in the process and end up with a better deal.

Get a Chimney Checkup

  • Have a professional chimney sweep clean and inspect your active or decorative chimney. Professionals should also check the chimney flue and cap for cracks or leaking.

Don't Overlook Your Attic

  • Check your attic for proper ventilation and birds’ nests.
  • Look for obstructions over vents, damaged soffit panels, roof flashing leaks and wet spots on insulation. Keeping a good airflow will save you when it comes to cooling costs.
  • When you’re rooting around, wear long sleeves and gloves to protect yourself from insulation.

Check Your Heat/Air Unit; Change Batteries in Detectors

  • Change filters and clean the air purifier as needed.
  • Have your ducts professionally cleaned. It’ll make your indoor air quality healthier and your furnace more efficient.
  • Change batteries on smoke and carbon monoxide detectors.

Prune Landscaping and Create Good Drainage

  • Shrubs and landscaping help against soil erosion and should be planted to form a negative grade, which means water will flow away from the house.

Give Concrete a Little TLC

  • Seal and inspect asphalt or concrete driveways. Most of us put off sealing driveways until the fall, but the spring is an ideal time to do it. The sealer you use, the driveway material and climate will affect how often you need to seal your driveway.
  • Power-wash concrete patios, and inspect decks for rotting wood and secure railings. Seal both if necessary.
  • Have a professional service your pool.

Weatherproof Windows and Doors

  • Remove interior storm windows (old homes only) and replace screens on clean windows and doors. If you don't have air conditioning, you want to make sure you have good airflow throughout the home. You can also save on utility bills by adding blinds to windows that face south and west. Open windows when the sun sets and closing them at sunrise.
  • Examine putty and caulk lines around exterior windows and doors, and ensure that weather stripping creates a good seal.

Don't Forget the Sump Pump

Make sure the sump pump is operating correctly, and install a battery backup pump. The backup, another pump that floats above the original pump, will kick on when the electricity goes out. If your sump pump fails, an alarm goes off, letting you know the backup is working. A few hundred dollars will save you thousands in water damage.

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LPL: Mid-Life Investing - Making the Most of Your Asset-Building Years

As you move through your peak earning years, you'll probably see your net worth steadily rise. At the same time, you'll still have some work to do before you realize your financial goals. That's why it's important to have a solid plan in place. Here are some steps to help keep your portfolio on track.

Organize your portfolio. Asset allocation is a straightforward and effective strategy whereby you divide your portfolio among the major asset classes of equities, fixed-income securities, and cash equivalents. The division should be based on your goals, your tolerance for risk and your time horizons. Generally speaking, the larger the equity portion of your portfolio, the greater the potential for growth and the greater amount of risk. On the other hand, the more fixed-income securities you include, the greater the potential for income and preservation of principle. There are also risks associated with fixed income investments, however, generally speaking, they incur less risk than equities. You may need to periodically rebalance your portfolio — to remain consistent with your original allocation — or modify it as you come closer to realizing your goals.

Don't overlook tax planning. Chances are your income tax bracket is higher now than it was during your early years and than it will be when you retire. Consider maximizing pretax contributions to your employer-sponsored retirement plan or making deductible contributions to an IRA (if you're eligible) to help reduce current income while providing tax-deferred savings opportunities. Also, keep in mind that short-term capital gains are taxed as income, while long-term capital gains and dividends are taxed at lower rates. Finally, explore the potential benefit of including tax-exempt bonds in your portfolio.*

Protect what you've accomplished. As your wealth continues to increase, it's important to preserve what you've accumulated and safeguard your future. That's why estate planning and life insurance are two of the cornerstones of a sound financial plan. A qualified legal professional can help you implement an estate plan that is best for your situation or review an existing plan to ensure it is still consistent with your goals. Also, be sure you have enough life insurance in place to help cover any liabilities — such as your mortgage — and protect your family's financial future.

Financially speaking, mid-life shouldn't be a time of crisis. Instead, it's a time to take advantage of some of your most productive years. In the long run, you may be in a better position to enjoy the fruits of your labor.

*Some tax-exempt investments may be subject to the federal alternative minimum tax as well as federal or state capital gains taxes.

© 2010 Standard & Poor's Financial Communications. All rights reserved.