Friday’s need-to-know money news

Today’s top story: Student loan interest rates go up July 1st. Also in the news: Chase rolls out an all-mobile banking app, 5 ways your friendships can blossom on a budget, and how to make living with your parents pay off.

Student Loan Interest Rates Go Up July 1
Prepare for an increase.

Chase Rolls Out All-Mobile Banking App. Is It for You?
All of your banking done on your phone.

5 Ways Your Friendships Can Blossom on a Budget
Don’t let student loans cramp your style.

How to Make Living With Your Parents Pay Off Financially
Start building your savings.

Q&A: The dark side of reverse mortgages

Dear Liz: I have had a reverse mortgage on my condo since 2009, due to financial necessity. The interest rate on my mortgage keeps going up. Could the interest rate be reduced by changing lenders or would there be exorbitant fees involved in the process? My financial standing is not good, and I am in credit card debt. However, I do pay the minimum payment each month on each card. Being retired, I need some guidance on relieving the financial pressure I am currently experiencing.

Answer: Please consult a bankruptcy attorney.

Changing reverse mortgage lenders would indeed involve considerable expense and wouldn’t relieve any financial pressure because you don’t have to make payments on this kind of loan. (For those who don’t know, reverse mortgages allow people ages 62 and older to tap their equity in a lump sum, through a stream of monthly checks or via a line of credit. The debt grows over time, typically at a variable interest rate, but the borrower doesn’t have to make payments. The loan is repaid when the borrower moves out, sells the home or dies.)

If you can pay only the minimums on your credit cards, you probably have more debt than you’ll be able to repay. Some people manage to dig themselves out of such debt, often by working two jobs and dramatically cutting their expenses. They may use a debt management plan offered by a credit counselor to reduce their interest rates. Sometimes they sell their homes and use the equity to pay off the debt.

You can explore these options, of course, but chances are they won’t be a solution for you.

You may not be able to find a job, or have the stamina to work. Selling your home to pay off the debt would leave you without a house in your old age and may leave you without income, if you’re getting monthly checks from your reverse mortgage. If you borrowed a lump sum instead, your debt may have grown to the point where you don’t have much equity left anyway.

Your situation is one of the reasons many financial planners are leery about reverse mortgages. They can be an extremely helpful tool in retirement, but sometimes people use them as a way out of a financial jam without addressing the spending or other issues that got them into the jam in the first place.

Q&A: Identify the goal for rolled-over account

Dear Liz: I retired from civil service in 2014. Upon retirement, I requested that my Roth IRA funds be sent to a bank. The funds have been earning 0.6% interest. Is it possible to move the funds to another bank or elsewhere to earn a higher rate? Or, should I leave the funds at the bank until an unforeseeable emergency occurs?

Answer: It’s not clear from your letter whether you withdrew money from your Roth or simply had the whole thing transferred from one custodian to another (the bank). Either way, you’re free to move your money elsewhere. If the money is still inside the Roth, you’d move the Roth. If it’s outside, you’d just move the funds.

Before you do anything, though, figure out your goal for this money. If it’s your emergency fund, then it needs to be kept safe and liquid. An FDIC-insured bank account is likely the best bet, and many online banks are offering somewhat higher rates than you’re getting now.

If you want this money to grow, however, you’ll need to take more risk with it. That typically means investing a portion of it in stocks and bonds. If that’s your goal, look for a discount brokerage or low-cost mutual fund provider. If you’re new to investing, books such as Kathy Kristof’s “Investing 101” or Eric Tyson’s “Investing for Dummies” could be helpful.

Friday’s need-to-know money news

Today’s top story: 6 ways the tax plan could change homeownership. Also in the news: What the Fed rate hike means for student loans, what it means for your CDs, and how Donald Trump is shrinking your paycheck.

6 Ways Tax Plan Could Change Homeownership
Analyzing the impact.

Fed Rate Hike: What It Means for Student Loans
Checking your rates.

December 2017 Fed Rate Hike: What It Means for Your CDs
Impacting your savings.

Here’s How Donald Trump Is Shrinking Your Paycheck
Looking at the nuances of the tax plan.

Thursday’s need-to-know money news

Today’s top story: What to do about the Fed rate hike. Also in the news: How to deal with credit card fraud, driverless cars, and how your credit card debt is costing you nearly $1000 a year.

Fed Rate Hike: Here’s What to Do
Don’t panic.

First Time Dealing With Credit Card Fraud? You Got This
Important steps to take.

Are Fully Self-Driving Cars Just Around the Corner?
Should we fear the driverless car?

Credit card debt is costing you nearly $1,000 per year
Interest piles up.

Friday’s need-to-know money news

Today’s top story: 5 times your credit card issuer can raise your interest rates. Also in the news: 3 DIY options for making a will online, how to split insurance in a divorce, and how much you can make in the freelance economy.

5 Times Your Credit Card Issuer Can Raise Your Interest Rate
How to avoid the bump.

Making a Will Online: 3 DIY Options
Doing it yourself.

How to Split Insurance in a Divorce
Deciding who gets what.

How Much Money Can You Make in the Freelance Economy?
Setting your own schedule.

Wednesday’s need-to-know money news

Today’s top story: Fed point fingers as ‘Debt Relief’ companies prey on student loan borrowers. Also in the news: Distressed borrowers say student debt help was anything but, why investors care about rate hikes, and why your credit cards shouldn’t retire when you do.

Feds Point Fingers as ‘Debt Relief’ Companies Prey on Student Loan Borrowers
Looking for easy targets.

Distressed Borrowers Say Student Debt Help Was Anything But
Compounding a problem.

Why Investors Care About the Fed (and Rate Hikes)
The impact on investments.

Credit hit: Why your credit cards shouldn’t retire when you do
Building credit is still important.

Wednesday’s need-to-know money news

Today’s top story: 4 ways to ride the rising interest rates wave. Also in the news: Why you should set your own credit card limits, reasons why credit isn’t as boring as it sounds, and more than 1 million student loan borrowers are in default.

Fed Rate Hike: 4 Ways to Ride Rising Interest Rate Wave
Only the third increase since the 2008 financial crisis.

Set Your Own Credit Card Limits and Improve Your Life
Knowing your limits.

3 Reasons Credit Isn’t as Boring as It Sounds
It’s about more than just cards.

More than 1 million borrowers defaulted on their student loans last year
The amount owed by borrowers has increased 17%.

Tax refund predators are waiting

People who don’t have much money during the rest of the year can become big targets during tax refund season.

For those living paycheck to paycheck, tax refunds — which average around $3,000 — may be the largest chunk of unobligated cash they see all year. Retailers hope to get some of that money, but so do debt collectors, buy-here-pay-here car lots, and purveyors of interest-free loans that come with fat fees. People flush with cash need to proceed with caution.

In my latest for the Associated Press, how to protect yourself from tax refund predators.

Q&A: Will closing high-interest cards hurt your credit score?

Dear Liz: I have a few credit cards with very high interest rates — in the mid-teens. My FICO has improved (805 to 830) and I carry little or no balance on the credit cards. I have contacted the issuers asking for lower interest rates but they won’t budge. I have other credit cards with single-digit interest rates. I would like to close the credit cards with the higher interest rates and understand that I may see a drop in my FICO score. How long will take to get my credit score back in the 800s? Is this a wise move?

Answer: Sites that offer credit scores often also have simulators that estimate what might happen if you take certain actions, such as closing cards. You’ll note, though, that these simulators come with plenty of caveats that add up to: Your mileage may vary. A lot.

The reality is that it’s often tough to predict exactly how account closures will affect your scores or precisely how long those scores will take to recover. That doesn’t mean you can never close a card. For example, if you’re not using the card and you’re tired of paying an annual fee, then closing it can make sense if your scores are good and you’re not going to be in the market for a major loan, such as a mortgage. (You don’t want to close or open other accounts while you’re in the process of getting a loan.) If your scores drop a bit, it won’t be a crisis.

Closing a bunch of accounts at once, however, is generally not a good idea — particularly if you’re just doing it to “show them who’s boss.” If you’re not paying interest on these cards, their rates are irrelevant.