Military Officer - August 2007 - (Page 70)

ﬁce, late fees have jumped from an average of $12.83 in sive hoops for consumers to jump through to be declared 1995 to $33.64 in 2005 and can be assessed even if your unable to pay, regardless of the circumstances. payment is only a few hours — yes, hours — late. But banks might have gone too far. They’ve come under Are you late getting your payment in the mail? That’s ﬁre lately for charging these exorbitant fees and interest rates, and Congress recently held hearings putting banks OK — just call your bank, and for a mere $5 to $15, they on notice, essentially telling them “if you don’t clean up will let you make your payment by phone! your own act, we’ll clean it up for you.” Consumer groups If you go over your credit limit, banks usually let the are asking for elimination of unjust fees and charge go through — but then hit you penalty interest as well as aggressive marketwith an over-the-limit fee as high as $50. Previously, banks would reject the transDon’t wait ing tactics. As a result, some large banks have ceased the practice of universal default. action if you went over your limit — a until Conbit embarrassing, to be sure, but at least gress acts PROUD DEADBEATS you walked out of the restaurant without Don’t wait until Congress acts to take charge paying double for your dinner. to take of your cards. By initially offering you a zero or very charge of low interest rate, many banks invite you ■ deadbeat your cards. byStrive to become a customers— a term used banks to describe who pay on to transfer your balance from another time and in full. But bear in mind that if your credit card. To do this, you must pay a fee card is a rewards card, it might not be renewed, that can be a ﬁxed amount or a percentbecause, quite possibly, the bank is losing money on you. age of the total amount being transferred, which can po■ Check the details of your credit card contract. Learn tentially wipe out any interest savings in one fell swoop. Also, interest rates on any new purchases you make might what your interest rate is, how it’s calculated, and what fees can be imposed. Then structure your payments to be extraordinarily high to allow the bank to recoup its minimize your costs. loss from the low interest rate on your transfer balance. ■ Pick up the phone. If you don’t like your terms or you Each time a merchant accepts your credit card as were charged a late fee because you were one day late, call payment, he or she pays an interchange fee of about 2 the bank and negotiate. Competition for your business is percent to the credit card company. This cost is likely ﬁerce, and many banks will respond to your requests. passed on to the customer through higher prices. The Merchants Payments Coalition calls the interchange fee ■ Know what you owe. Use a calculator like the one “the biggest fee consumers have never heard of.” found on MOAA’s Web Base — from the home page Other fees to watch out for include inactivity fees, (www.moaa.org), select Financial Center from the Serforeign-currency conversion fees, cash-advance fees, and vices drop-down menu. Then scroll down to Financial bounced-check fees. Calculators and choose Credit Card Pay Off to determine what it will take to pay off your debt. DEBT FRENZY ■ Stop using your “extra” credit cards. Sometimes canWe’ve all seen the commercial showing the man boasting celing your cards can actually hurt your credit score, so about his beautiful yard and country club membership. instead simply cut them up. With a terriﬁed grin on his face, he explains, “How do I ■ Minimize the credit card offers reaching your mailbox do it? I’m in debt up to my eyeballs — somebody please by calling (888) 5-OPT-OUT (567-8688). Similar to the help me!” Federal Trade Commission’s Do Not Call Registry, this This perception of the overextended, extravagant con- prevents credit bureaus from selling your information to sumer trying to keep up with the Joneses is largely incor- credit card companies. rect. According to the National Association of Consumer ■ Shop for deals at card-comparison Web sites such as Bankruptcy Attorneys, four out of ﬁve people whose debt www.cardweb.com and www.cardratings.com. load has forced them to turn to bankruptcy protection Are credit cards a bad thing? Absolutely not. If you are not rolling the dice in Vegas. Instead, they are ﬁling use them responsibly and are savvy about the costs that for bankruptcy because of medical costs, job loss, and can balloon your balance into an unmanageable amount, other uncontrollable events. your credit card can be a handy item in your ﬁnancial A bankruptcy bill passed in late 2005 gave banks the toolbox. Just remember to leave home without it every upper hand by initiating inﬂexible, complicated, expenonce in awhile. MO 70 MILITARY OFFICER AUGUST 2007 http://www.moaa.org http://www.cardweb.com http://www.cardratings.com

Table of Contents Feed for the Digital Edition of Military Officer - August 2007

Military Officer - August 2007 Contents From the Editor From the President Your Views MOAA Directory Rapid Fire Washington Scene Financial Forum Ask the Doctor Chapter Activities Cover Story: No Longer in Reserve A Different Path Weird Science Charge? Pages of History Faces of MOAA Member Books Information Exchange Advertising Index MOAA Calendar MOAA Scholarship Donors Sounding Taps MOAA Member Services Encore

Military Officer - August 2007

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