The week's best financial advice

Crackdown on gift cards

It's getting tougher to buy gift cards, thanks to new credit card rules that put retailers "on the hook for fraud," said Robin Sidel at The Wall Street Journal. Gift cards have become popular with identity thieves, who buy them with stolen credit card data. In the past, the credit card issuer was responsible for any losses. But industry rules now put the responsibility for theft on merchants who haven't upgraded their checkout technology to accept the new generation of chip-embedded cards, which offer better security. To protect themselves, some merchants are asking customers to buy gift cards with cash or show identification, while others have put limits on repeat purchases or stopped offering the cards altogether. "Americans are expected to load $651 billion on prepaid cards this year, up 57 percent from six years ago."

Cosigning student loans

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Parents should think hard before cosigning a student loan for a college-bound son or daughter, said Caitlin Kelly at Time. Most young people with low or nonexistent credit scores will need a cosigner for private loans. But parents shouldn't say yes without a serious conversation about how their child will handle the eventual payments. Parents should be "financially, mentally, and emotionally prepared" to pay the loan's full balance if necessary. Some loan contracts allow parents to end their obligation after a certain number of payments, but this provision has "proved disappointing in practice." Lenders reject more than 90 percent of people who apply for cosigner release, according to the Consumer Financial Protection Bureau.

Time to refinance?

A surprising number of homeowners aren't taking advantage of "historically low" mortgage rates to refinance, said Diana Olick at CNBC. The number of people refinancing their mortgages dropped by nearly a third in 2015 in anticipation of the Federal Reserve's interest rate hike. But mortgage interest rates actually fell 30 basis points over the same period, as investors spooked by global economic turmoil rushed to the safety of government bonds. Right now, 6.7 million homeowners have enough equity in their homes and high enough credit scores to save an average of $3,000 per year on mortgage payments by refinancing, according to an analysis by Black Knight Data & Analytics. But "that opportunity is likely to vanish in coming months, should rates rise as expected."