High price of a free credit report

Looking for a free credit report? Interested in FreeCreditReport.com? Think again.

The site's TV ads feature slackers singing of their life problems and are appealing to a younger crowd. It also has a Web site name that implies the report is free. Little do people know FreeCreditReport.com charges a credit-monitoring service that costs $14.95 a month, automatically taken from your credit card.

Kris Steele remembers these commercials, especially the lyrics that spell out F-R-E-E. Anxious about his credit, he went to the site and signed up for the report. A few months later, he checked his statements and found the Web site was charging him $14.95 a month. Steele doesn't recall seeing anything about this fee and feels duped by the sites faulty name and advertising.

The problem with FreeCreditReport.com is in its advertising. Due to legal issues in the past, it now has a disclosure on its home page saying it's not affiliated with the annual free credit report program. This disclosure is in fine print on the side of the home page, on a subdued background.

This is leaving consumer groups concerned.

The three major credit bureaus, Experian, Equifax and TransUnion are required to offer reports through the authorized AnnualCreditReport.com but the bureaus also make money from their own credit reports. The only authorized site for free credit reports is AnnualCreditReport.com.

To see the NY Times report, click here.

CONSUMER WOES: Digging deep into the debt hole

Why do Americans continue to dig themselves into a hole?

Back in the day, people set money aside for personal purchases and saved for surprise expenses. Today, the average American household carries $8,565 in credit card debt, a 15% increase from the year 2000.

In total Americans have $2.56 trillion in consumer debt, up 22% since the year 2000 according to the Federal Reserve Board. For some reason, debt is increasing as most American's incomes are not. We have grown into a consuming society that believes it is OK to be in debt, in order to have that new phone, new outfit, or new car.

Disposable income that must be used for debt (credit card payments, car loans, mortgage interest, principle) is up to 14.5% from 11% just 15 years ago.

The New York Times tells the story of Diane McLeod and her debt hole.

McLeod began debt free, but a divorce caused her to spend and rack up $25,000 in credit card debt. She bought a home soon after with a $135,000 mortgage. Five years later illness and irresponsibility caused McLeod to owe $237,000 on her mortgage.

Now in foreclosure, it is hard for her to see light at the end of the tunnel.