7 financial policies to be thankful for
In the spirit of Thanksgiving, let’s take a moment to appreciate the government policies that truly help Americans. Some policies may be familiar; others may come as a surprise. Either way, I hope you’ll find a few tips that help put money back in your pocket.
1. CARD Act (Credit Card Accountability, Responsibility and Disclosure Act). Passed in 2009, and now fully in action, the sweeping reforms of the credit card industry include: Credit card companies can’t raise interest rates willy-nilly and have to explain if they do; people under 21 can’t get cards without proof of income or an adult cosigner; and late fees can’t go higher than $25, unless you have a history of lateness.
2. Health care reform. Changes will continue to roll out until 2015, but right now the best health care reform to take advantage of is that young adults, even those who are no longer students, can stay covered by their parents’ health insurance until age 26. (Previously, kids were cut off at age 18; or if full-time students, 23.) This is good news for recent college grads whose job search is taking longer than expected.
3. Income Based Repayment (IBR). Got student loans? With IBR, if your federal student loan balance is more than (or about equal to) your salary, you may qualify to pay according to how much you make, rather than how much you owe—meaning lower monthly payments. Hardly anyone knows about IBR even though it began in July 2009, so spread the word. If you or someone you know has student loans, go to ibrinfo.org. It could save you thousands of dollars.
4. Free credit reports. Your credit score is like the SAT score of your finances; scores range from 300-850, and 720 or higher makes you eligible for the best (aka lowest) interest rates on credit cards, mortgages, and more. You have to pay to get your score, but it’s calculated from your credit report, a detailed record of your credit history that you should request for free once a year through Equifax, Experian, and TransUnion (access all three via their central website, annualcreditreport.com). Once you verify the report is error-free, get a free estimate of your score at creditkarma.com or pay $19.95 for your official score at myfico.com. And don’t bother with sites like freecreditreport.com, which will bill you $14.95/month if you don’t opt out.
5. Saver’s Credit. This little-known tax break can help you save for retirement, even if you earn very little. For every $1 you put into a 401(k) or IRA (up to $2,000/year), the government gives you back between 10% and 50% at tax time (the rate depends on your income). Use this chart to see if you qualify.
6. Earned Income Tax Credit (EITC). This refundable tax credit for low- and middle-income working individuals or couples, primarily for those with children, helps workers keep more of what they earn. To be eligible for the 2010 tax year, your earned income and adjusted gross income must each be less than $43,352 ($48,362 married filing jointly) with 3 or more qualifying children; $40,363 ($45,373 married filing jointly) with 2 qualifying children; $35,535 ($40,545 married filing jointly) with one qualifying child; $13,460 ($18,470 married filing jointly) with no qualifying children. For more details and updatedinfo regarding tax year 2010, keep checking eitc.irs.gov.
7. Renters’ rights. With a 10% increase in the number of rental units over the past 5 years, renters need to know their rights. If you run into a problem or just want to be more informed, The National Housing Law Project provides a good list of state and local tenant protections. For more info on your legal rights as a tenant, contact your local branch of the Legal Aid Society, your state attorney general’s office, or a housing counselor through the office listed for your state on HUD.gov.
Have any of these policies helped you? Share your stories.