New Year Brings New Personal Finance Laws
MADELEINE BRAND, host:
The new year is here and with it new changes in the law that could affect your wallet. Joining us to talk about this is Michelle Singletary. She writes The Color of Money column for The Washington Post, and she joins us regularly for conversations about personal finance.
Welcome back, Michelle.
MICHELLE SINGLETARY reporting:
Thank you. And happy New Year.
BRAND: Oh, same to you. So explain how these new laws or regulations could affect consumers' credit card payments.
SINGLETARY: Well, credit card issuers have to by the beginning of this new year make sure that people are making a dent on their credit card balance. So they're now going to be required to pay at least 1 percent of what they owe plus any fees because traditionally people would make payments, minimum monthly payments, and not really make any dent in what they owe. They were mostly paying interest. And so the regulators said they were concerned about that, that people weren't making a significant dent in the amount of credit card debt. People could spend years paying on their credit card and not really pay it down.
BRAND: So this is good news for consumers in the long run, that they might be able to get out of debt but a bitter pill to swallow, perhaps, right after the holiday season. I'm wondering if there's any good news for consumers in the tax season?
SINGLETARY: Well, there is good news. And I still think it's good if you pay more because you know how I feel about debt. But for the good news, there's a new financial product that's available now in the new year. It's called the Roth 401(k). And it's similar to the traditional Roth or the Roth that we know. But it's good news for people who earn a lot of money. You put money in after it's been taxed but it grows tax-free and when you pull it out, it's not taxed.
BRAND: So this is for people who earn how much?
SINGLETARY: Well, actually, there's no income limits for this new Roth 401(k). Now the traditional Roth, if you're single, you're only eligible to contribute to it if you earned less than--between 95 and $110,000. If you're married, filing jointly, the phaseout is between $150,000 and $160,000. So in other words, their income limit. So if you earn more than that, you can't contribute to a Roth. So that's why lots of people were looking forward to the Roth 401(k).
BRAND: You know a big problem these days is identity theft so are there any changes that could help people fight identity theft this year?
SINGLETARY: Well, there was a new law that went into effect before this year, but by the end of this year, many merchants have to change their machines--You know those machines that print out your credit card numbers?--so they can only print the last five digits of a credit card number. Now lots of people have already impose that. Lots of merchants have already imposed that. But there's some that still haven't. So you want to check your receipts and make sure that they're not printing out your full credit card number. They're only supposed to be printing out the last five digits.
BRAND: And if they are, shred it immediately. Right?
SINGLETARY: That's right. Absolutely. Because this is--you know, identity thieves look for these receipts because it has your credit card number. That's one step into stealing your identity, and once that happens they can open up credit cards in your name, and charge up, and for many folks it takes a long time to get rid of these false accounts on your credit report.
BRAND: Michelle Singletary writes The Color of Money column for The Washington Post. She's our regular contributor on matters of personal finance.
SINGLETARY: You're welcome. Thank you.
BRAND: And if you have questions for Michelle, we'd like to hear them. Please, go to our Web site, npr.org, and then you can click on the `contact us' link. That's at the top of the page. Be sure to include `Michelle' in your subject line.
DAY TO DAY is a production of NPR News with contributions from slate.com. I'm Madeleine Brand.
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