BOSTON (CBS) – More of the tips or pitfalls on credit from The National Foundation for Credit Counseling.

Opting into overdraft protection –

  • Tip:  You’ll avoid the embarrassment of having your purchase denied at checkout.
  • Pitfall:  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. A wise philosopher, Will Rogers, once said if you find yourself in a hole, quit digging.

 Freezing your credit file with the reporting agencies –

  • Tip:  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.
  • Pitfall:  There are 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, cell phone companies, utilities, and employers who may need or want to obtain a background check.

  • Dee: I like credit freezes especially if your identity has already been compromised and someone has your Social Security number. You can wait if necessary for the account to be unfrozen.

And yes, many people do check your credit report but most need to ask for your social security number and you can explain at that time that your credit file is frozen and ask them to wait a few days.

The National Foundation for Credit Counseling (NFCC) is the organization I recommend most often to listeners whenever they tell me they need help with credit card debt. It has many local member agencies that it can recommend. You can link directly to them from our website here at CBS Radio.

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


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