January 2008 Newsletter

Happy New Year to all whatsthecost.com users, and welcome to the third installment in the very occasional whatsthecost.com newsletter!

I hope 2007 has seen a reduction in your debt, and let's hope that by the end of 2008 we’re all in less debt and paying less of that dreaded interest to the banks!

As always, you're receiving this newsletter because you've either registered as a user at www.whatsthecost.com, or you've signed up for the newsletter. If you don't want to receive future (very occasional!) newsletters, please follow the link at the end of this email. I don't like spam and take your privacy very seriously.

Credit Crunch

It looks like 2008 might be an interesting year as far as debt goes. The so called "credit crunch" is starting to hit now that some financial companies have finally realised that their business plan of lending money to people who can't afford to pay it back isn't working (insert sarcasm here!). Here in the UK we saw the first bank run in over 100 years as it was revealed that Northern Rock received an emergency loan from the Bank of England, and in the US we saw a run on Countrywide Financial.

But what does this mean to the lay person? In my very personal and non-professional opinion, it isn't necessary all bad news. Anything which brings attention to the fact that the average Joe is spending more than he or she earns isn't necessary a bad thing. It might make getting additional credit more difficult, but is that a bad thing? It means it might be harder to consolidate debt, but I've never been a big fan of consolidation, much preferring the snowball method. With luck, it will force people to come to terms with their debt, and realise the only way to reduce debt is to pay it off, not to move it around. As I always say, don't just think about the monthly payments, it's the total amount paid over time which is important - Although I'm not denying that the monthly payments are important to help with cash flow.

Identity fraud

Recently I was a victim of attempted identity fraud. I say attempted because the people involved were unable to open any accounts in my name, however it did bring home the importance of being careful with your data. As it turned out, I'm pretty sure I was "selected" purely randomly, possibly from the electoral role, or maybe from company’s house. I'm always careful to shred statements or anything which contains too much personal data, however, it does make you think.

One thing it did bring home is the importance not to give away personal details on the telephone. About a week before I heard there had been fraudulent credit applications in my name, I received a telephone call on my mobile ("cell phone" for our American friends) from someone who said they were calling from my mobile provider and wanted to check I was happy with my service. Now, call me a cynic, but this immediately made me suspicions as in all the years I've owned a mobile phone, I've never received that type of call from my provider. As long as I pay the bills, they don't seem to care if I'm happy or not!

Whoever it was knew my postal address, and asked me to confirm my date of birth, at which point I said I wasn't happy providing that information over the phone from an incoming call. Very politely he told me that was no problem, and they'd send me some information in the post. Of course I've never received anything, and after phoning my mobile provider I was told that they didn't have a record of such a call.

So, for once, top marks to the credit card companies for flagging the fraudulent applications, although of course it's in their interest to do so! Rest assured that I'm going to be keeping a close eye on my credit reports for the next year or so.

Credit Reports

I know from experience that credit reports are scary things to think about if you're in debt. However, it is important to check them once in a while. Not least to make sure that there aren't any fraudulent accounts listed, but also to check that your information matches that of any debtors you may have.

In the UK, credit reports are provided by three companies: Experian, Equifax and Callcredit. I'm not sure about the US, but certainly Experian and Equifax are used. In the UK, by law, they must give you access to your credit report for £2, however you can usually get your report free of charge by signing up to a free trial from these companies, although of course that does mean you have to remember to cancel your subscription before the free trial expires! - If you're less organized and just want to pay the £2 for your credit reports, there here are the places to go:

In the States, you can visit www.annualcreditreport.com, or call 877-322-8228. I believe that the annualcreditreport.com site will give you access to all three credit reports (more information here: www.ftc.gov/bcp/conline/pubs/credit/freereports.shtm).

So, a short newsletter this time! Don’t forget to drop me a line if you’d like to see any additions to the whatsthecost.com web site, or if you have any general queries or comments about the site.

Regards,
Adam.
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