BOSTON (CBS) – More of the Trick or Treat tips on credit from the National Foundation for Credit Counseling –
- Opting into overdraft protection
- Treat: You’ll avoid the embarrassment of having your purchase denied at checkout.
- Trick: Overdraft protection is expensive, particularly for those who routinely overdraw their checking account. This false sense of security is only putting a Band-Aid on the true financial problem: spending more than you make. Even if the overdrafts result from legitimate purchases such as food or medicine, it is a better option to get to the root of the continued financial distress and solve it.
- Dee: If you routinely overdraw your checking account, you need some help. You should not spend what you do not have. You are digging yourself into a hole.
- Freezing your credit file
- Treat: A frozen credit file is a layer of protection against identity theft since no one can open a new account in your name without you first lifting the security freeze.
- Trick: There may be fees associated with this service, and you may have to wait days for the account to be “unfrozen,” which can be inconvenient if you want your credit file to be immediately accessible for instant credit. Others who may be denied access to your credit file include insurance companies, landlords, employers who need to obtain a background check, cell phone companies, and utilities.
- Dee: You can wait if necessary for the account to be unfrozen. This is very good protection against identity thief especially if your identity has already been compromised and someone has your Social Security number. And yes, many people do check your credit report but most need to ask for your social security number and you can explain that it is frozen and ask them to wait a few days.
- Purchasing extended warranties
- Treat: An extended warranty can provide you with peace of mind.
- Trick: 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. Consider it for your computer if you are not tech savvy.
The NFCC further states that “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.”
Remember there are pros and cons to every financial decision we make!