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Credit Cards

How to Guard Your Privacy

If you don't act, companies can share information about your assets, income, debt levels and mortgage.

I keep getting privacy forms for my credit cards, and they're confusing. For example, the form for my Citibank cards had these two choices: "limit the personal information about me that you disclose to nonaffiliated third parties" or "limit the personal information about me that you share with Citigroup affiliates." Can I choose both options? -- P.V.S., Pittsburgh

You can, and you probably should. Since 2001, financial institutions have been required to send their customers annual notices about their privacy policies and to give them a chance to opt out of having their personal information shared with other companies. If you don't act, the financial institutions can share information about your assets, income, debt levels and mortgage payments, in addition to your name and address.

If that doesn't appeal to you, Citibank is giving you two choices: You can restrict the bank from sharing your data with companies that are not affiliated with Citibank, or you can restrict the bank from sharing data about you with its own affiliates. In the case of Citigroup, that would include Smith Barney, Primerica and CitiMortgage.

To get the maximum privacy protection, go ahead and check off both boxes. Consumers who want to keep their personal information under wraps "should take every chance to opt out that's offered," says Tena Friery, of the Privacy Rights Clearinghouse.


If you don't mind getting a lot of marketing materials and targeted advertising, you don't need to do anything. Financial institutions must usually wait 30 days after sending the opt-out notice before they can start sharing your information. If you have second thoughts at any time, you can tell them to stop. And once you've notified your financial institutions, you don't have to opt out again.

It's easy to toss privacy notices and forms with the rest of your junk mail, so ask the company for another form if necessary. Get information and sample opt-out letters from the Privacy Rights Clearinghouse at and the Federal Trade Commission's privacy page.

Student-loan payoff

I am a speech-language pathologist assistant working with the special-education department in a low-income school district. I have a mountain of student-loan debt. My federal Perkins loan has been forgiven 100% because of where I work. Can my Stafford loans be forgiven, too? -- L.J., Liberty, Tex.

Your job may qualify you for Stafford-loan forgiveness of up to $17,500. But the requirements are tougher than they are for Perkins loans, which are awarded to students with the greatest financial need. You must teach for five consecutive years in a low-income school before any portion of the Stafford loans can be forgiven, and you must meet certain education and certification criteria.


To find out which schools qualify and get application forms, call 800-433-3243 or go to the section on "cancellation/deferment options for teachers" at has a listing of forgiveness programs for other loans and occupations. (For more on public-service jobs that qualify you for student-loan forgiveness, see Shrink Your Loans.)

EE bonds explained

Why is it that if series EE savings bonds mature in 30 years, the Treasury Department's Web site mentions penalties for cashing them in before five years? Are the bonds at face value then? Or would I just get the interest plus what I paid for the bond? For example, if I paid $50 for an EE bond with a face value of $100, what would I get after five years? -- Francy LeGault, via e-mail

Your bond would be worth $50 plus interest if you cashed it in after five years. The specific amount depends on the interest rate when you purchased the bond. If you bought the bond in April 2002, for example, it would be worth $59.08 in April 2007.

Series EE bonds are designed to reach face value after 20 years. Interest is added to the bond monthly and paid when you cash it in. If you cash in a bond during the first five years, you forfeit the last three months' worth of interest as a penalty. If you don't cash in, the bond continues to earn interest for 30 years.


If you bought an EE bond in May 2005 or later, the bond earns a fixed rate of return. For example, series EE bonds purchased in November 2006 earn a fixed rate of 3.6% for the next 20 years.

EE bonds purchased between May 1997 and April 2005 earn a market-based interest rate. That rate was set at 4.39% last November, and it will be set again on May 1. Bonds bought before May 1997 earn variable interest rates that are updated every six months based on the year of purchase.

You can monitor your bonds free at the TreasuryDirect Web site. Or use a service, such as, which for $12 per year will track an unlimited number of bonds for you (the charge for you and your family is $25 a year).

401(k) boo-boo

I retired last month, and I think I made a mistake when I elected to withdraw my 401(k) money. I had planned to open an IRA and transfer the total into it, but when I received the check, 20% had been withheld. My broker said that if I open a new IRA and deposit the total amount of the withdrawal by making up the tax, I can recover the withheld taxes when I file my return. Is this true? -- David Brown, via e-mail


Your broker is right. You won't be hit with a penalty or a tax bill as long as you deposit the money in an IRA within 60 days. In that case, you can recover the withheld taxes when you file your income-tax return.

But the big catch is that you have to come up with additional cash to make up the difference. Otherwise, you're depositing only 80% of the money in an IRA, and the rest will be subject to an early-withdrawal penalty.

You could have avoided this problem by making a direct transfer to your new IRA administrator rather than having the lump-sum check made out to you. That way, the money wouldn't have been subject to withholding. The company administering your new IRA is generally more than happy to help with the paperwork.

Take benefits early?

I'm trying to decide whether to take Social Security at age 62 or at 66. I would continue to work, but only part-time. How would that affect my benefits? -- F.L., Haddonfield, N.J.

It depends on how much you earn. Normally, if you take Social Security at age 62, your payments will be reduced by up to 25% for the rest of your life. But your benefits may be reduced even further if you take them early and continue to work. If you earn more than $12,960 in 2007, you'll forfeit $1 in benefits for every $2 you make over the limit. Earning $25,000 this year would put you $12,040 over the limit and cost you $6,020 in benefits.

But that money isn't lost forever. Claiming benefits before your normal retirement age does result in lower benefits over your lifetime. But if you also lose money to the earnings test, your future benefits will be recomputed -- and increased -- to account for the fact that you didn't take them early. So, for example, if you lose six months' worth of payments, your benefits will be recalculated as if you started taking them at age 62 and six months instead of age 62.

Once you reach full retirement age -- 66 for people born between 1943 and 1954 -- you can continue to work without losing any Social Security benefits, no matter how much you earn. To estimate benefit amounts at different ages, plus the break-even point for waiting, see the Retirement Benefits calculators at

A teenager's IRA

My 17-year-old grandson wants to open a Roth IRA with money he has earned mowing the neighbor's grass, shoveling snow, walking dogs and so on. Because he is paid in cash, how can he prove he has legitimately earned the money? -- Arline Pohovey, Glen Ellyn, Ill.

Don't worry. Your grandson doesn't need a Form W-2 to justify opening a Roth IRA. He does need earned income, however. In the unlikely event that the IRS questions his income, he should keep a contemporaneous log of each job he does and how much he is paid.

Your grandson's annual IRA contribution is limited to $4,000 or his actual earnings, whichever is less. And he doesn't have to contribute his own money. You or his parents can help -- as long as the actual amount doesn't exceed his earnings or the $4,000 limit. The deadline to open and fund a Roth IRA based on 2006 earnings is April 17.