Florida Consumer E-Newsletter
December 2007
Charles H. Bronson
Commissioner
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A Message from the Commissioner
Dear Friends:
Many consumers truly look forward to their holiday shopping experience each year, viewing the entire process as a rite of passage to be shared and enjoyed with family members. Still, others procrastinate and lament the day that they actually have to make a decision concerning which gift to purchase for that certain finicky relative. Regardless of which scenario most accurately depicts your situation, an overwhelming majority of Florida’s consumers will use credit cards as their preferred method of payment when purchasing their holiday gifts. Some will even be enticed with special promotions into actually opening a credit card account at the point of sale.
Although these cards can be extremely useful because of their convenience, they can very easily become a huge burden if not managed wisely. During this holiday season and beyond, I encourage consumers to exercise responsibility when securing and/or using credit card accounts. We have included some valuable information below which may help you to achieve this goal. Remember, we’re here for you. Our Consumer Hotline, calling within Florida 1-800-HELP-FLA (435-7352), outside of Florida 850-488-2221 or en Español 1-800-FL-AYUDA (352-9832), will answer any consumer related questions you may have or direct you to the best resource for assistance.
Sincerely,
Consider these statistics - more than 115 million Americans carry monthly credit card debt (revolving debt averaging approximately $8,000 per household), an amount that has more than doubled over the past decade. More than 641 million credit cards are in circulation and they account for an estimated $1.5 trillion of consumer spending. With record profits being earned, the banking industry continues to devise techniques that are likely to entice consumers into taking on more debt.
Like loans, using credit cards can help consumers build a positive credit history. Unfortunately, the impact on a consumer’s credit history can also be largely negative if credit card accounts are handled irresponsibly. Credit card companies are required to provide certain key information prior to issuing a card, but the responsibility still falls on the consumer to use this information wisely. The following are a few things that a savvy consumer should keep in mind when applying for and using credit.
What Should I Know?
When considering opening a credit card account, one should look for the plan that best fits their needs. Before accepting any card, consumers should take the time to read and fully understand the terms of the cardmember agreement. Familiarize yourself with the balance computation method used, such as average daily balance, and any possible charges or fees that this account would incur. This agreement should identify the Annual Percentage Rate (APR) used to calculate the monthly finance charges on the account, and whether or not a much higher delinquency rate will apply if the consumer is late a certain number of times in any specified time period. Other important information that should be outlined in this agreement would be whether or not there are any annual fees or transaction fees for using the card.
When trying to choose which credit card works best for you, look for the following:
- Low Annual Percentage Rate (if this is an “introductory rate” find out when it expires)
- Low or no annual fees
- A grace period (time during which no payments are due) before finance charges are posted
- Other benefits such as rewards programs, discounts on goods or services, free gas, airline miles, etc.
Once you open a credit card account, consider these guidelines to maximize the efficiency of your card(s):
- If you have multiple cards, attempt to pay off the accounts with the highest APR first.
- Pay the bill as early as possible and never be late or miss a payment entirely.
- Pay more than the minimum payment whenever possible. Doing this will mean more money is going toward paying for the actual item purchased instead of going toward interest and finance charges.
- Try to negotiate a better APR. Many companies will consider this, especially if payments are made on time.
- Keep credit card numbers stored in a safe place in case cards are lost or stolen.
- Keep copies of all your sales slips and compare them to charges on the monthly bill.
- If you get behind on your payments, stop using the card and call the credit card company immediately. Many times they look favorably on this and will be willing to work out a repayment schedule to ensure you maintain credit worthiness.
For additional information, please call our consumer hotline at 1-800-HELP-FLA (435-7352) calling within Florida, 850-488-2221 outside of Florida, or en Español 1-800-FL-AYUDA (352-9832), or visit us online at www.800helpfla.com. We’ll assist you in finding answers for any consumer related questions you may have or direct you to the most suitable resource for assistance. Remember ... consumer education is the best defense against fraud and deception!
Additional Resources
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The links below are for your information only. The goal of the Division of Consumer Services is to provide additional information to consumers. The Florida Department of Agriculture and Consumer Services does not review or confirm these sites for accuracy.
Federal Trade Commission - Choosing and Using Credit Cards
Chances are you've gotten your share of "pre-approved" credit card offers in the mail, some with low introductory rates and other perks. Many of these solicitations urge you to accept "before the offer expires." Before you accept, shop around to get the best deal. Learn more...
PBS Frontline - The Secret History of the Credit Card
Frontline and the New York Times join forces to investigate an industry that few Americans fully understand. Learn more...
CNN Money 101
This site provides 23 lessons relating to money and finance. Learn more...
SallieMae
They're a great convenience, but they can also pack a punch. Here's how to avoid the expensive downside of credit mismanagement. Learn more...
FDIC Card Card Savvy Student Handout
Here are the key tips for managing a credit card. They will help you minimize your expenses, limit your accumulated debt, and maximize your personal wealth. Learn more...
