Still Going With Credit Tips & Pitfalls From The National Foundation For Credit Counseling

BOSTON (CBS) - More of the tips and pitfalls of credit from the National Foundation for Credit Counseling.

Purchasing extended warranties

• Tip: An extended warranty can provide you with peace of mind.
  

• Pitfall: Some items are inexpensive or have a very good track record, thus you don't need to pay for a warranty on them. If the item under warranty does break, you may be asked to jump through some difficult hoops to activate the warranty, or the warranty may not cover what you thought it did.
  

• Dee: Don't bother if this is a small appliance such as a toaster oven or a crock pot. Consider it for your computer if you are not tech savvy or if you buy a large expensive flat screen TV.

 Closing unused accounts

• Tip: Streamlining your finances makes them more manageable. Also, less plastic in your wallet equals fewer temptations to spend.

• Pitfall: Closing an account will lower your total credit line, potentially making your debt ratio worse. Further, you'll lower the longevity factor of your credit score.

• Dee: If you do decide to get rid of some of your credit cards know which ones to cancel. Longevity, how long you have had your card, is a factor in your credit score. Keep the cards you have had the longest.

Also consider keeping the ones with the highest limit. Your debt to credit ratio is a factor used to determine your credit score. You do not want to be using all of the credit that you have available. If you are maxing out your cards this will negatively impact your credit score.

If your credit cards are a temptation, leave them at home and carry only the cash you need for the day.

Remember there are pros and cons to every financial decision we make!

The NFCC further states, "Consumers should thoroughly research and fully understand the risks and benefits to any financial decision. Simply because an offer sounds appealing, doesn't mean it is."

In:
• Anthony Silva