Continuing from a previous discussion, let’s talk more about debt. To be really smart about debt, it pays to know what the costs are of the credit cards you are using. Those costs would include what fees are associated with the cards you hold, how your interest rate is calculated on the balances you carry from month to month, and what types of actions will be assessed additional charges.
Fees: Credit cards can have all sorts of fees for the various services they provide. There may be annual fees for simply having the cards open, fees for balance transfers (or moving a balance from one card to another), and fees for taking a cash advance. Some of the more egregious fees have been eliminated through the Credit Card Accountability Act of 2009. Read all of the literature that comes from the company issuing your credit card so that you know what types of fees are associated with your card.
APR: If you do not pay your credit card bills off each month or choose to carry a balance, a finance charge at the card’s stated annual percentage rate (APR) will be applied to your account. Again, read the fine print on your card literature carefully. There may be more than one applicable APR for various transaction types such as purchases, balance transfers, and cash advances. Understand fully how the credit card company calculates the balances that any finance charges would be applied to and how to avoid an increase in your APR due to penalties.
Penalties: Certain actions on your part, such as not making the minimum payment due or not paying by the statement due date, could also cause your account to be assessed penalty fees. As stated above, these penalties not only impact you immediately through the one-time fee associated with the occurrence of the triggering action/inaction, they may also cause your interest rate to increase substantially, for as long as you hold that card. Therefore, the finance charges you pay on outstanding balances will be higher over time. Read your card literature carefully to understand what triggers a penalty; this includes any changes to the “terms and conditions” of your cards which you may receive.
To learn more about debt and credit, check out some of the great informational articles available through NEA MB such as the Credit Card Act of 2009: What it Means to You (page 2 provides a direct link to the 2009 Act itself), Things to Look Out for When Shopping for a Credit Card, and some important differences between Debit Cards v. Credit Cards. Or try out some of the calculator tools available like What Will it Take to Pay Off My Balance?
© 2009 NEA’s Member Benefits Corp. Please see important information about this blog.
I learned that NEAMB now has a debt counseling service for NEA member benefits. I saw their booth at the NEA RA in New Orleans, chatted with the people there, and picked up some literature to bring home with me. I hadn’t seen this service promoted anywhere else. How is MB making this service known to NEA members?
Comment by donmack — July 14, 2010 @ 10:00 pm
The National Foundation for Credit Counseling (NFCC) is an non-profit credit counseling service. You can find information for the NEA and NFCC partnership on our web site at http://www.neamb.com/home/1199_880.htm and http://www.debtadvice.org/nea/. In addition, the NEA Member Benefits Affiliate Relations and Communications groups have been working to inform NEA leaders and members through presentations and exhibiting at conferences and meetings throughout the country. We have also used other channels such as the first Breaking Down Debt blog post and the NEA Member Assistance brochure and web page to help share this information.
Please help us spread the word and tell your family and colleagues about the service or have them go to neamb.com and find the NFCC agency in their area.
Comment by NEAMB Elizabeth — July 19, 2010 @ 11:29 pm