Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.



Buying a Car 101

Karen Gibbs

Hi Karen, I’m ready to buy a car but want to know how to select a dealership.  Also, what are your thoughts on dealer financing?
- Paul, Owings Mills

Blue CarThanks for your timely questions Paul.  The new car season is upon us and dealers are looking to make room for the new 2017 models and move older vehicles off their lots.

Buying a car is a major purchase.  It is a “durable good” that can be expected to last three years or more.  Along with the purchase price, you must factor in title, taxes and registration costs, insurance premiums as well as maintenance and upkeep.

The first step is to identify how much you have to spend and what type of vehicle you want to drive.  Many dealers will ask you how much you can afford to pay every month.  I prefer to consider the total cost of the car instead of monthly payments.  Factor in a 20% down payment, a four year financing term with monthly payments not more than 10% of your household income.  Crunch ...

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How to avoid bank fees

Karen Gibbs

Hi Karen, how can I avoid paying banking fees that eat into my savings?

-Donna, Baltimore, MD

Credit Cards in a Wallet

Thanks for your question, Donna.  The average household spends $290 annually on banking fees which, to some, can be quite a bit of money.  There are ways to minimize, if not avoid altogether, fees that financial institutions charge.

First off, make sure you are aware of all the terms and conditions in your banking agreement.  Somewhere in the fine print, most institutions outline what fees they charge and when.

One of the easiest ways to avoid a minimum balance charge, a fee incurred if your balance falls below a certain level, is to have your paycheck deposited directly to your financial institution.  Most banks will waive the minimum balance fee if you enroll in direct deposit.  If you don’t use direct deposit and your average monthly balance is less than $500, you can expect to see an average of $12 charged to your account monthly for maintenance fees.

The ...

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The Truth about Overdrafts

Karen Gibbs

Hi Karen, are overdrafts counted against your credit score?

- Marsha, Stevenson, MD

Coins and PensMarsha, overdrafts, spending more money than you have available in your checking account, are not reported to the three credit reporting agencies.  However, they can be very expensive.  The average bank fee for an overdraft is $35 and banks have been known to continue to charge for each overdraft even when they are aware of lack of funds in the account.

The surest way to avoid overdraft fees is to closely monitor your account and make sure you have enough money to cover transactions.  Balance your checkbook after each transaction and you’ll always know, down to the penny, exactly how much money you have available.

Many financial institutions offer overdraft protection, for a fee.  This is where you link your checking account to another bank account such as savings, line of credit or credit card.  

Federal laws, however, limit you to six transfers per month from your ...

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Focus on Marriage & Money

Karen Gibbs

Karen, my boyfriend and I are planning a November, 2017 wedding.  What financial issues should we discuss before tying the knot?

- Melissa, Gwynn Oak

2 Wedding Champagne glassesCongratulations, Melissa, on your pending nuptials. You’re smart to try to anticipate money issues that may arise.  (The love of) Money is the root of all evil and the source of most martial tensions.

First, pick a time where both of you can talk freely and openly about your attitudes toward money.  You want to know if you’re financially compatible and what to expect if you’re not.  Is one of you a spender while the other is a saver?  Are you debt free or in hock?

Most of our attitudes about money are formed by watching our parents.   A good place to start is to inquire about your parents’ attitude toward money.  How did they handle it?  Who handled the family finances?  Do either of you harbor (unconscious) gender biases as to who makes more or pays the bills?

As ...

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Karen, I have a social security number.  What is a social security account and why would I need one?

- Yvette, Eldersburg

CalculatorGreat question Yvette!  It’s never too early or too late to start thinking about and planning for retirement.  We’re celebrating 81 years of social security – which provides a foundation for retirement security as well as protection against old age and unemployment.

Never designed to be a sole source of income for retirement, it is nonetheless the main source of income for most seniors.   For one third of all seniors, it is the only source of retirement funds.  Social security also provides for disabled workers and their families as well as pays survivor’s benefits to widows, widowers, divorced spouses and dependents.

Social security is an efficient way of providing benefits to seniors, but it only covers about 40% of pre-retirement income.  So you need to have some sort of company retirement benefit (either ...

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