My colleague Alexis Jeffries and I had fun reporting a recent story called "Five Ways To Pump Up Your Income," which ran in the December 2009 issue of MONEY.  Who couldn’t use some ideas right now on how to make more dough?

As Alexis recently blogged, many of the ideas we came up with didn’t make it into the final piece. But there’s an idea that did make it into the article — lending money to friends, families and strangers through so-called peer-to-peer networks — that had a surprising aspect that we didn’t cover in the piece. More

My daughter recently reached a dubious milestone in her life: She received her first credit-card solicitations in the mail. “A great rate is just the beginning …” read one of the offers, which were targeted at college students. Problem: My daughter is not a college student. She’s 12 years old.

My first reaction was to be angry at the mean, incompetent credit card companies trying to lure my tween into a life of debt. But as often is the case with parenting, and with finances, the story is more complicated than that. More

Opening the August credit card statement is going to send the blood pressure of some Chase customers skyward.  For the second time this year the bank has changed up the rules for how it calculates the minimum payment due for certain customers, increasing the rate from  2% of the outstanding balance to 5%.  If you’re carrying a $5,000 balance that means your required minimum payment went from $100 in July to $250 this month.

That move, in turn, has raised some serious hackles. Over at about.com the call to action is to file a complaint with the Federal Trade Commission over this “unfair practice.”

Hmmm. Unfair? I’m not so sure. Unfriendly, absolutely. There is no question that tightening the payment screws at a time when unemployment is at a 25-year high and furloughs are the hot new employment trend isn’t exactly consumer-friendly. Yet there is indeed a residual benefit for cardholders. Increasing the minimum payment rate by 150%  means Chase customers will pay off their debt a whole lot faster. That’s a boon for their personal balance sheet as well as saving a bundle in interest costs. While I don’t believe for one second that Chase’s motivation is to help its customers — this is all about Chase reducing its risk — I think Curtis Arnold over at CardRatings.com got it right by tagging the change a case of “tough love.” What's your take? The poll is open.

Older nonwealthy Americans are racking up credit card debt at a rate that outpaces other groups.

People age 65 and up carried an average of $10,235 credit card debt in 2008, according to a study released Tuesday by  Demos, a public policy research group. That's an increase of 26% since the organization's last survey of low- and middle-income borrowers in 2005. The average debt for all borrowers in the survey rose just 3%, to $9,827, during that same time period.

Rising health care costs may be one reason seniors are turning to plastic, the study shows. More than half of indebted families surveyed cited medical expenses as a major factor that contributed to credit card debt; the average household, in fact, attributed $2,194 of credit card debt to medical expenses. Senior households, however, blamed almost $4,000 of credit card debt on out-of-pocket medical costs. Prescription drugs were the medical expense most often cited.

Another key finding in the survey, aptly titled "Plastic Safety Net," contradicts the notion that credit card debt is strictly a result of frivolous spending. Three out of four households surveyed said they used credit cards to pay for expenses including car and home repairs, job loss, college attendance, loans to relatives and operation of a business. More than a third of households reported relying on credit cards to cover basic living expenses for five of the last 12 months. Households that used credit cards for basic living expenses had a much higher average balance — $13,302 — than those who did not ($7,795).

Results were based on a phone survey between April and August 2008 of 1,205 low- and middle-income households whose incomes fell between 50% and 120% of the local median income. Participating households had to have credit card debt for more than three months at the time of the survey.

You knew things were bad in the credit department, but now there are some new numbers to back it up: We’re collectively about 27% riskier credit bets than we were a decade ago, according to the TransUnion credit bureau. The firm’s national Credit Risk Index for the first quarter of this year clocked in at 127.3 compared to the 1998 start-point of 100. The index is based on the average weighted probability of 90-day delinquencies on mortgages, auto loans and credit cards.

TransUnion’s global chief scientist Chet Wiermanski didn't even try to position the latest reading as a green shoot. “…(T)he index remains at an all-time historical high," he commented, "indicating that delinquencies and foreclosures will continue to rise in the coming months."

The five states that pose the biggest credit risk, according to TransUnion:

•    Mississippi (Credit Risk Index of 166.45)
•    Texas (162.59)
•    Nevada (158.97)
•    South Carolina (158.76)
•    Louisiana (153.84)

The least risky states:
•    North Dakota (82.02)
•    Minnesota (88.53)
•    Vermont (91.82)
•    South Dakota (94.75)
•    Iowa (95.26)

The high/low credit risk lists might suggest a new Weather Channel indicator: Is there something about cold-weather winter states that engenders better credit management? Okay, okay, what’s really at play is of course something more down to earth, like jobs. All five of the lowest-risk states have unemployment rates below the 9.5% national average.

The worst year-over-year Credit Risk Index changes occurred in poster-child states for mortgage duress: Arizona (up 14.8%), Nevada (up 14.4%) and California (up 13.8%).

You can check out your state’s delinquency rate for auto loans, credit cards and mortgage at TransUnion's website Even if your personal FICO credit score is sterling, merely being in a state with a high delinquency rate could expose you to more scrutiny if you plan on applying for any credit in the near future.

Cue up the chief scientist one more time:

"It is apparent that many of the states experiencing the highest increases in credit risk are the same when looking at the Credit Risk Index statistic on both a quarterly and yearly basis," said Wiermanski in the release that accompanied the data. "This leads TransUnion to believe that consumers in these states will experience prolonged systemic difficulties in both their ability to satisfactorily repay their existing credit obligations and in their ability to acquire new credit.”

Ouch. Good luck with your mortgages and credit cards, everybody.

The new credit card reform law is full of good consumer protections, but here's one you might not know about: It's going to require companies like FreeCreditReport.com (owned by credit bureau Experian) to clearly state that their services aren't actually free.

Who doesn't love those FreeCreditReport.com commercials? You know, the ones featuring the lovable 20-something singing about his credit troubles in a variety of musical genres? In the first, he's dressed in pirate gear and crooning about how he has to work in a seafood restaurant because his identity was stolen (it works best if you don't think too hard about it). My favorite jingle is the one that has him singing about how he married his dream girl, only to find out that her credit was bad, too. You can see all the commercials here:

The only  problem, of course, is that FreeCreditReport.com is not really free. In order to get your report through the site, you must sign up for a trial membership in the site's "Triple Advantage Credit Monitoring" program. If you don't cancel your membership within a 7-day trial period, you're billed $14.95 a month. And plenty of people have fallen for the site's promise without realizing they were going to be billed. The Better Business Bureau has received 9,865 complaints about the site in the last 36 months, with some complainants saying that they kept being billed even after canceling membership.

But now, thanks to the Credit Card Accountability, Responsibility and Disclosure Act, companies touting free credit report services must disclose in their ads that consumers are entitled by law to receive a free credit report from each of the three credit bureaus, and that the official web site to obtain them is AnnualCreditReport.com. And radio and TV ads must clearly state, in both the audio and the video, "This is not the free credit report provided for by federal law."

That's good news, since the web-only public service commercials the Federal Trade Commission created in response to FreeCreditReport.com's ads need all the help they can get:

The sweeping financial reforms President Obama announced today would bring about one important victory for consumers — a new financial product safety commission.

As described in a Treasury Department white paper, the Consumer Financial Protection Agency (CFPA) would have jurisdiction over credit cards, mortgages and other payment products, which were previously regulated by various banking agencies. The agency's mission would be to ensure that consumers have a clear understanding of the financial products they use, as well as to protect them from abusive or unfair practices.

As President Obama said in today's speech, "This agency will have the power to set standards so that companies compete by offering innovative products that consumers actually want — and actually understand. Consumers will be provided information that is simple, transparent, and accurate. You'll be able to compare products and see what's best for you."

Consumer advocates are hailing the proposed agency. "By setting up a single consumer financial protection agency, the administration is ensuring that the same rules will apply to similar products across all financial institutions," says Kathleen Day, spokesperson for the Center for Responsible Lending. "Companies will not be able to shop regulators for the most favorable treatment." States would be free, however, to make laws even stricter than federal rules.

The CFPA has already received support from two influential Congressmen — Sen. Chris Dodd (D.-Conn.) and Rep. Barney Frank (D.-Mass.), who both chair key financial committees. Still, the proposed reforms  face stiff resistance from Republicans in Congress, as well as from financial services lobbying groups. The American Bankers Association, for one, has announced its oppposition.

Still, if Obama's proposals are enacted, they could make a big difference to your pocketbook. Here's a quick look at how you might benefit:

Mortgages: To make consumer choices easier, all lenders would be required to offer a "plain-vanilla" mortgages with simple terms and pricing along with other financial products. Consumers would also be entitled to receive clear disclosure about their mortgage, including the risks and benefits. Prepayment penalties would be restricted or banned.

Mortgage brokers would have to ensure that the products they sell are affordable to borrowers, as well as avoid conflicts of interest. The new rules would ban "yield spread premiums" — a form of compensation from lenders that have encouraged brokers to push higher-priced loans that are less affordable for consumers. Brokers would also be paid over time based on the loan performance, rather than a lump sum at closing.

Credit. The agency would regulate forms of consumer credit that previously fell through the cracks, such as overdraft protection plans, according to the White House proposal. For example, the CFPA might prohibit charging for overdraft coverage unless the consumer has opted in to the plan.

Help for low-income families. A key mission for the new agency would be to enforce the Community Reinvestment Act and fair lending laws. This would ensure that low-income communities have access to financial services, lending and investment.

Tell us, what do think of the notion of a Consumer Financial Protection Agency?

Sallie Mae, the nation’s leading private college loan lender, recently rolled out a new Smart Option Student program. Its innovation: borrowers must repay interest from the get-go rather than following the normal route of deferring all payment until graduation.

Sallie Mae rightfully points out that by paying interest from day one, the total cost of the loan will be much lower than if you defer payments and have the interest costs added to the loan principal. The Smart Option loan also mandates a shorter loan term between five and 15 years-again in the name of helping borrowers reduce their overall interest costs.

That’s all well and good, but marketing this as a great step forward for consumer-friendly student loans seems to only tell half the story. This is also just good business for Sallie Mae, and that no doubt is a major motivation behind this program.

The private college loan industry has been ravaged by the credit crisis. Rolling out a new product that is backed by an immediate income stream (the interest payments owed by the borrower from day one) gives Sallie Mae instant cash to pay its investors or issue new loans, rather than having to wait the typical four years for the income spigot to be turned on.

Around the same time Sallie Mae launched its “smart” option college loan, Chase unveiled its own tough-love medicine for thousands of its credit card customers: it boosted the required minimum monthly payment on a number of its accounts from 2% to 5% of the balance. This one smacks of the drug dealer pushing the client into rehab. Is it good for the client? Absolutely. The faster you get that debt paid off, the better. But let’s be real: the motivation for this is to help Chase, not its credit card customers.

After years of luring in customers with lenient repayment terms, Chase now decides to switch gears and impose new rules that just happen to help the company improve its bottom line. Yet with unemployment at a generational high and families struggling to boost their emergency savings during this harsh recession, having your credit card company come out of left field and suddenly insist you increase your payment rate seems like it is going to cause plenty of short-term pain — for a patient that is already not feeling too chipper.

– Carla Fried

Right now about 80% of the federal Stafford (student) and PLUS (parent) loans for college are doled out through third-party lenders via the FFELP program, with the Federal Direct Loan Program handling just 20% or so of loan volume.

The FFELP program is now on the endangered species list.

President Obama’s new budget proposes for 100% of college loan shopping to come in-house. Under the administration proposal third-party FFELP lenders would be cut out of the mix and all Stafford and PLUS loans would be originated through Uncle Sam’s Federal Direct Loan Program.

The Obama bean-counters estimate that moving the entire program in-house would save about $4 billion a year, and $47.5 billion in the first 10 years. The bulk of the savings comes from the elimination of federal subsidies to FFELP lenders.

Mark Kantrowitz, publisher of the finaid.org website says this move would be “a death blow to the student lending industry.” If so, it’s just the final punch.

Let’s remember that this is the same student loan industry that was rocked in 2007 when New York attorney general Andrew Cuomo revealed kick-back schemes where lenders offered financial aid offices incentives for steering potential clients in their direction. That scandal no doubt played a role in Congress pushing through a big college lending reform bill later that year that severely cut back federal subsidies paid to the third-party lenders through FFELP.

Certainly not having to shop around various FFELP lenders for a Stafford or PLUS will be a boost to students and parents, but it will remain to be seen if the actual cost to borrowers will be lower (taxpayers are another matter.) Many FFELP lenders offered small rate-reductions and discounts to qualified borrowers, under the Federal Direct Loan Program those discounts may not be available.

Stay tuned as this budget item is sure to get plenty of air-time in Capitol Hill debates. That said, there’s still no official plan for fixing the really big headache in the college loan process: the insanely difficult FAFSA form that is required to obtain financial aid.

– Carla Fried