“Credit Traps for the Unwary”
notes from Coffee Talk session, Setpember 30, 2011

Credit Traps for the Unwary

We passed out the handout and Nichole went over the main points.

1.      Revolving credit - Stop spending on credit cards and use debit cards instead. More money goes out the window every month you use a credit card. You are more likely to spend less when you know it is immediately coming out of your account.

2.      Hidden fees - Interest rates are going up as are the fees. This is wasted money you are paying when you use a credit card and don't pay it off.

3.      “Surf your debt” - Periodically transferring your balance from one introductory offer to another. Someone who does this is really just prolonging debt and it isn't really getting you anywhere. They need to look at their budget. If credit card companies think that you are “surfing your debt” they will revoke the 0% offer and charge you interest. They include this in the contract.

4.      Fraud and identity Theft - On a credit card the maximum liability is $50 but on a debit card the maximum liability is everything. For example, if someone charges $500 on your debit card you are responsible for the full $500. Need to watch your accounts and check them every day for weird purchases or amounts. For example, they usually test on Napster for $1. Suggest subscribing to identity theft protection. They alert you on everything, provide free credit reports which are updated every month and have a $1 million protection plan. Another way to prevent identity theft is to put your picture on your credit card.