Opening the mailbag

I like to hear from readers, especially those who have specific questions about financial issues. Here are some letters I’d like to share with you.

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money.” View Archive

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 secure credit card requires the user to deposit money into a bank account. Since 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 www.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 even be liable for that amount since 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 am 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 it could be that there may be other issues 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 low interest rates. But there is no use fretting about your inability to refinance. Talk to a few lenders to get a sense of how soon you might qualify for a refinancing. You don’t want to have 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 in 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 moving forward?

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 or less.

Q: I am 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, 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 teenagers that they would primarily be the caretakers for our dog. A year after getting him, I’m always fussing at them to deliver on their promises.

Here’s something else you really need 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.

Readers may write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or singletarym@washpost.
com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read previous Color of Money columns, go to postbusiness.com.

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