Opening the mailbag

Posted: March 07, 2014

I LIKE TO hear from readers, especially those with specific questions about financial issues. Here are five:

Q: Given the increased frequency with which credit cards are being compromised, I wonder if using a secure credit card is a safer way to shop online. My reasoning is that a secured credit card requires the user to deposit money into a bank account. Because this account wouldn't be linked to my checking, it seems more secure. Should the account become compromised, the only risk is what money you've already earmarked for online shopping.

A: You are right to be concerned. The Federal Trade Commission just came out with its list of top consumer complaints for 2013. Identity theft is No. 1 again. In fact, if you want tips to help deal with the damage from this crime, go to FTC.gov/idtheft.

To protect yourself, you don't have to use secured credit cards, which often come with fees you might not pay with a standard credit card. If you're looking for security, you can just earmark one standard credit card and use it for online purchases. With just one card exposed online, this should make it easier to track purchases and spot fraudulent charges.

Remember, federal law limits your liability to $50 if your standard or secured credit card is lost or stolen, although you are not likely to be liable even for that amount because banks routinely waive the charge for fraud victims. Just be sure to act fast once your card has been compromised. Your liability depends on how quickly you report the loss or theft.

Q: I am trying to refinance my home but having a hard time getting approved. I had to file for bankruptcy about five years ago. Should I wait until my credit score goes a little higher to try to refinance again?

A: It's important to note that lenders use more than just credit scores to qualify borrowers for loans. So other issues may be making it difficult for you to refinance.

As it relates to your credit score, time is the great healer for past credit mistakes or issues. I know you want to take advantage of current low interest rates. But don't fret about your inability to refinance. Talk with a few lenders to get a sense of how soon you might qualify for a refinancing. You don't want your credit reports pulled too often, because those inquiries, if not spaced apart enough, can lower your credit scores.

Q: My partner had a horrific few years during which she got divorced and was laid off by a Fortune 500 company. Her credit took a big hit, including a repossessed vehicle. We want to purchase a home in two to four years. What's our best bet?

A: There's no quick fix to rebuilding credit. You just have to wait to get further away from the time any late payments and the repossession were reported in your credit files. How much your scores can go up and hit the range to qualify for the best credit terms depends on the information in your individual credit reports. And this makes it hard to come up with a specific amount of time it will take to climb back to a good score. But if you pay your bills on time and reduce the amount of credit you have outstanding, you should see a bump in your credit in a few years.

Q: I'm a truck driver owner-operator. Can I open a myRA account?

A: With an edict from President Obama, the Treasury Department is creating a starter savings account called "myRA," short for My Retirement Account. It's targeted at low- and middle-income workers and will be set up through a payroll deduction. MyRA will be more like a savings bond, and will be backed by the U.S. government. Savers would contribute after-tax dollars. It costs as little as $25 to open an account, and contributions can be as low as $5.

To answer your question, after the initial launch of myRA, the treasury is going to consider ways to expand access to individuals who are self-employed or whose employers don't offer the option to directly deposit a portion of a paycheck into a myRA account, a treasury official said.

Q: My 9-year-old wants a dog. I love dogs, but they are too much work for this single mom. We already have a beautiful 15-year-old cat, but my son thinks he is boring. What do you think?

A: I fell for the promises from my three teens that they would be the primary caretakers for our dog. A year after getting him, I'm always fussing at them to deliver on their promises.

Here's something else to consider in addition to the work, especially as a single mother if money is tight: The cost of owning a pet is more than a lot of us realize.

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