BBB encourages residents to 'spring clean' their finances

OPELOUSAS - Springtime usually means Americans cleaning and fixing up around the house. It also is an excellent time to take stock of your financial picture and do a little or perhaps a lot of fix up with credit cards and loans.

According to some sources Americans usually have an average of 11 credit cards and loans. Knowing what you owe, to whom and how much your family earns is a good beginning. We are not talking budget at this point because for most Americans just the word brings fear to their minds. Accessing what you have and what you owe will put you in a better place to take charge of your life and your goals; like vacations, hobbies and of course retirement.

In early January 2006, a change in banking regulations heightened minimum credit card payments for millions of consumers. Federal banking regulators urged credit card companies to increase the minimum payment on balances from two percent to four percent. By increasing the minimum payment consumers will pay down their balances faster, with a greater percentage of their payment going to principal instead of interest and saving them money down the road. If you have been one of those consumer making just the minimum payments this will allow you to pay off your debts in a reasonable amount of time.

Most credit card issuers previously required customers to pay off two percent of their outstanding balances each month, now they will require customers to pay all monthly interest and fees, plus one percent of the outstanding balance. If making the minimum payment has been a problem for you in the last couple of months, this could be a red flag and cause for concern regarding your financial picture.

Have you recently noticed while opening your statement that your interest rate on some of your credit accounts has increased? Although some large banks do notify their customers, banking regulations doesn’t require advanced notice of rate increases. Some banks also give consumers a choice to “opt out” of paying the increased rates when consumers decline to accept the change, but they lose use of the card.

If you are one of the lucky ones whose interest rate on credit accounts has not risen be aware it could happen to you. According to the Consumer Action survey, card issuers raised rates if any of the following occurred:

•Credit score gets worse

•Paying mortgage, car loan or other creditor late

•Going over credit limit

•Bouncing a payment check

•Too much debt

•Too much available credit

•Getting a new credit card

•Inquiring about a car loan or mortgage

Credit is a big responsibility and can be a great asset to your family. If you don’t use it carefully, you may owe more than you can repay, damage your credit rating, and create credit problems for yourself that can be difficult to repair.

Be a wise consumer, take responsibility for your financial picture and know who you owe and how much. Let credit work for you instead of working to pay off those credit card bills. Bad credit and poor payment history will be a costly road to travel and will take years to correct.

Make your springtime financial cleaning a success by remembering to “Start With Trust.” Receive information on local companies by calling the BBB’s Smart Call 981-3497, 24 hours a day; up to date information on local and business scams, identity theft, general consumer tips and alerts or contact our website at www.acadiana.bbb.org for information on local or national companies and not for profit companies.