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.

Karen, I overspent for holiday gifts.  What are your thoughts on zero-interest rate cards and on balance transfers to them?

- Nan, Clarksville

wallet with credit cardsNan, you are not alone.  According to the National Retail Federation, Americans spent, on average, $802 during the 2014 holiday season.  We probably spent that much, if not more, this year.

To encourage shoppers to buy what they can’t afford, many retail outlets offer zero-interest rate card at point-of-sale.  They may even offer a discount on your purchase if you sign up today.

It can be very tempting when you want to buy something special for that someone special or, if accompanied by children, buy something that they see and want right now.  However, beware of temptation; it can lead you to a dangerous place.

The zero-interest rate card looks good on the surface, but pull back the layers and you see that it is a money maker for the issuer.  The promotional period only lasts for a stated time.  You ...

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Karen, what are your thoughts on withdrawing money from my retirement savings for a down payment on a home?

- Jack, Glen Burnie

Home for saleJack, I’m not a big fan of raiding your retirement fund.  Most Americans are woefully unprepared financially for retirement and living on social security alone is living in poverty.  By raiding your retirement, you’re borrowing from your future to pay for your current lifestyle.  You lose tax-deferred earnings and miss out on the magic of compounding.

That being said, I understand that emergencies arise.  The government understands that as well and will allow an exception for first time home buyers.  You can withdraw up to $10,000 over your lifetime without penalty for a down payment on your first home (or if you haven’t owned a home in more than 2 years), even if you’re not 59-1/2.

You didn’t tell me what type of retirement plan you have, so I’ll list some pros and cons of the most popular ...

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I’m finding it difficult to save for retirement with no retirement plan at my job.  Is there any help out there for me?

- Patsy, Baltimore

BudgetingPatsy, you’re smart to start thinking about saving for retirement and there is help available for you.

After a two year pilot program, the federal government is rolling out myRA, a new savings plan designed for those who don’t have access to a retirement plan through their job.

According to the Federal Reserve Bank, nearly one-third of the labor force has no pension or retirement savings and, with the average monthly social security benefit of just $1,300, the so-called “golden years” won’t be so golden.

The myRA account is another way to start saving for retirement.  To be eligible, you must have taxable income and, if single, you can’t make more than $131,000 annually.  The account is yours; it is not invested with a specific employer so, if you change jobs, there is no hassle of ...

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Prepaid Debit Cards: Are they worth it?

Karen Gibbs

Karen, in light of the RushCard debacle, would you revisit the topic of prepaid debit cards?

- Tiffany, Baltimore

Credit CardThanks for your request Tiffany.  The prepaid debit card industry has exploded over the past few years.  As of 2012, the prepaid debit industry had over $65 billion dollars in assets and saw nearly $100 billion in transactions.  40% of prepaid debit card holders earn less than $25,000 annually, and these cards are aggressively marketed to those, who for whatever reason, have no relationship with a traditional financial services institution.

Ironically, most prepaid debit cards are sponsored by banks but fronted by a popular celebrity.  The seductive pitch is that these debit cards are “cheaper” than banking with a bank, but in reality, these prepaid cards charge you a lot of money to access your own funds.

There are set up fees, monthly fees, authorization fees, maintenance fees, transaction fees, check balance fees, activity fees and yes, ...

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Challenges of Tax Refunds

Karen Gibbs

Karen, how do I apply for a tax refund on income earned out of state?

- Marvin, Montgomery County

Calculator and financial documentCalculator and Financial DocumentMarvin, you’re in luck!  The Supreme Court of the United States recently ruled that Maryland’s state income law unconstitutional because it denied residents full credit for taxes paid on income earned outside of Maryland and therefore discourages interstate commerce.

Eligible residents who paid taxes to another state can file for a refund of the county portion of their Maryland income tax payments.  This could affect as many as 55,000 residents who worked in and had taxes withheld in Pennsylvania or Delaware.  Maryland residents working in the District of Columbia, Virginia and West Virginia aren’t eligible as those municipalities don’t collect taxes on Maryland residents.

Governor Hogan and Comptroller Franchot have created a website, named after the Howard County couple who brought the suit, to assist you in claiming your refund.  For more ...

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