Money Management Tips for Newlyweds

June is traditionally the most popular month for weddings. To keep the joy lasting beyond the honeymoon, newlyweds should not wait until the first bills come to talk about finances.

"Financial problems are one of the leading causes of divorce, but much of the financial stress can be avoided if you have a financial plan and start out with good habits before you get married," says Bill Hardekopf, CEO of LowCards.com.

Here are a few money management tips for newlyweds:

1. You have a wedding rehearsal to know where you stand, you should also have budget rehearsals to know where you will stand financially as a couple. Don't assume that because you are combining incomes that you will have twice as much money. Before you get married, calculate your combined income, debt, savings, assets, and expenses to know exactly what you have and what you will have to pay.

2. List all of your debt: credit cards, student loans, car loans, wedding/honeymoon bills, engagement ring payments, mortgage, money owed to parents, etc. Your monthly debt, including your mortgage, should not be over 35% of your gross income.

3. Get a copy of both of your credit reports. This will give a clear picture of how both of you handle money and it will help avoid any future surprises. Aim to get your score over 750 in order to receive the lowest interest rates for your first mortgage and other loans.

4. Control your loans. Don't apply at the same time for a mortgage, an auto loan, a credit card, and finance new furniture, especially during the first year of your marriage. Each of these will be reported on your credit score. Multiple new loans will be a red flag that you are a credit risk. This can reduce your credit score and increase the interest rates you will pay. Just because you qualify for a credit card or mortgage doesn't mean that you can afford it.

5. Don't use a credit card if you can't pay for it with cash. If you currently carry a credit card balance, pay for everything in cash until the credit card balance is paid off. When you have a credit card balance, every additional purchase you make with that card is a loan and will add interest to the original purchase price.

6. Keep major purchases, savings accounts, loans, and credit cards in both of your names so that you each have equal access and can build a good credit history.

7. Keep the existing credit card and loan accounts in the original holder's name. This will help avoid hurting the credit score of the other partner.

8. Admit to being a spender or a saver. With a budget and compromise, these types can live in harmony together.

Federal Reserve Board Wants Changes in Credit Card Industry

Significant changes in the credit card industry now seem to be occurring on a weekly basis.

Last week, two senators introduced the Stop Unfair Practices in Credit Cards Act trying to protect consumers against some of the punitive practices of credit card companies.

On Wednesday, the Federal Reserve Board took steps give consumers more notice when credit card companies want to increase their interest rates.

The changes require the credit card companies to provide 45 days notice (instead of the current 15 days) before any term, such as the interest rate, can be changed to better allow consumers to obtain alternative financing or change their account usage. This includes a 45 day notice before the creditor increases a rate due to the consumer's delinquency or default.

The changes came as a result of research with a variety of consumers. The research found that consumers often do not read inserts mailed in their statements or the fine print on their bills. These proposed changes would also require creditors to make credit-card statements easier to read with better explanations of complicated language such as "grace period" and "effective APR".

"These new changes proposed by the Fed would be helpful to consumers," said Bill Hardekopf, CEO of LowCards.com, a consumer resource website on credit cards. "Credit card companies have been able to increase interest rates without most consumers ever realizing it is taking place. These companies now must give consumers more notice when their rates are increasing. Hopefully, these increases will not slide under the consumer's radar and will lead to greater competition within the industry.

"But these changes by the Federal Reserve Board should not be a substitute for the changes proposed by the Senate bill last week. Those changes were extremely beneficial to consumers. Hopefully, both of these proposed changes will take place in the credit card industry. Then consumers will reap some very significant benefits."

Changes proposed in the Senate under The Stop Unfair Practices in Credit Cards Act included a limit on the interest rate increases that could be imposed; no interest charges for debt paid on time; stopping the practice of retroactively applying rate increases to previously incurred debt; making sure payments are applied to the balance bearing the highest interest rates; and stopping the practice of charging multiple fees for a single instance of exceeding one's credit limit.

On Wednesday, the Fed also proposed:

* Requiring disclosure of the effect of making only the minimum required payment on repayment of balances.

* Permitting advertisements to refer to a rate as "fixed" only if the advertisement specifies a time period for which the rate is fixed and the rate will not increase for any reason during that time. If a time period is not specified, creditors could only use the term "fixed" if the rate cannot be increased while the credit card is open.

"The goal of the proposed revisions is to make sure that consumers get key information about credit card terms in a clear and conspicuous format and at a time when it would be most useful to them," said Federal Reserve Board Chairman Ben Bernanke in a statement. "Greater clarity in credit disclosures allows consumers to make more-informed credit decisions and enhances competition among credit card issuers."

Senators Introduce Bill to Stop Unfair Credit Card Practices

On Tuesday, two senators, Carl Levin and Claire McCaskill, introduced the Stop Unfair Practices in Credit Cards Act to take action to protect consumers against some of the punitive practices of credit card companies. This bill is the result of months of studies, hearings and examinations.

"These would be very good changes for the consumer. If passed, this Act would end some extremely unfair and punitive practices that have been in place in the credit card industry for years that severely hurt consumers," says Bill Hardekopf, CEO of LowCards.com. "The credit card industry has received a tremendous amount of attention since the credit card practices study was released last fall by the Government Accountability Office. These Senators have outlined good changes that will protect consumers, but still allow credit card companies to make money on the loan, not on all of the fees and unfair practices currently in existence."

Here are some of the changes suggested in the bill:

* No interest charges for debt paid on time-- This ends the practice of charging interest on any portion of debt paid on time during a grace period. Currently, if the card holder pays less than one hundred percent of the monthly bill, even if the card holder pays on time, he or she could be charged interest on the entire billed amount, including the portion that was paid by the specified due date.

* Unfair unilateral rate hikes--Prohibits issuers from raising rates without the card holder's
written consent. Penalty hikes would be limited to no more than a 7% increase.

* Apply rate increases only to future debt--This will stop the practice of retroactively
applying the rate increase to the previously incurred debt; the rate increase will only apply to the debt added after the increase. Earlier debt would continue to accrue interest at the rate previously in effect.

* No interest charges on fees--Fee income now produces about 10 percent of all income obtained by credit card issuers. The bill would prohibit credit card issuers from charging or collecting interest on the fees imposed on consumers, such as late fees and over the limit fees.

* Over the limit fee restrictions--Stops the charging of multiple fees for a single instance of
exceeding the limit. Charges the fee only when the action, not a fee from the issuer, causes the limit to be exceeded.

* Pay-to-pay fees--Drops the $5-$15 payment fees charged by making a payment by telephone or electronic transfer.

* Fair treatment of cardholder payments--Switches the way payments are applied to balances so that the payment is applied first to the balance bearing the highest interest rate, and then to each successive balance bearing the next highest rate, until the payment is used up. Issuers would also be required to apply payments in the most effective way to minimize fees and interest charges that may be incurred.

Another Sign of a Troubled Economy?

Have recent problems with sub-prime mortgages and the housing bubble forced consumers to use credit cards more often and increase their debt? This week's study released by the Federal Reserve showed that credit card debt jumped higher than expected, up $6.8 billion, or an annual rate of 6.7%

"Last month alone, credit card debt increased an average of $81 for
every household that has a credit card. In February, it increased $26 per household with credit cards so that is over $100 in two months. This continues the growth of
credit card debt that increased $600 per household with credit cards
in 2006 " says Bill Hardekopf, CEO of LowCards.com. "This increase in credit card debt could be the ripple effect of households struggling to deal with major financial issues like the increase in sub-prime mortgage rates, the housing bubble, and higher gas prices. I think this is an indicator that more households are in financial trouble. When people run out of financing options and money, they use credit card to help them get by."

Consumers using credit cards to get them through the month are in a dangerous situation. One late payment or missed minimum, and the fees and universal default rates could be devastating. There are several tips for consumers to help reduce the credit card dangers.

"Consumers can help themselves by paying the card a week before it is due to avoid any chance of a late payment. Pay more than the minimum, even if it is only a few dollars each month," says Hardekopf. "If you are hanging on and still keeping a good payment history, call your issuer and ask for a lower rate. If you get a lower rate, use the rest of your payment to pay down your minimum balance.

Most importantly, do not use your credit card for small purchases that are not necessities. Do not pull out your credit card at a restaurant; you do not need to take out a loan for that meal. Every time you use your credit card, ask yourself if you really want to pay 15-25% interest on that item.