Can You Hear This?

Every day I learn that you can never say I’ve heard it all because, sure as shootin’, the next person that opens their mouth in your presence is probably going to prove you wrong. The most amazing shockers I hear these days are ususally related to money matters. Untold numbers of myths exist out there, but here are few I’ve heard more than once.

I have a client that believed paying the late fees on her bills meant the creditor wouldn’t report the payment as being late. It was quite a shock for her to learn that, no, the creditor collects the late fee for late payment and still reports it as late to the credit bureaus. They don’t cut you any slack just because you went ahead and sent them that extra amount they charge you for not paying on time.

I have heard several times the stories of woe experienced when a checking account was overdrawn. Believe it or not, just because you have checks in your checkbook, it doesn’t mean you have money in the bank. According to some of my banking friends, this is a common misconception among lots of folks. Maybe the bank should hold an educational seminar…………………..?

One client was in a financial pickle because she failed to realize co-signing a loan actually means you’re accepting responsibility for it. The company she worked for had a credit union on site and members could get a loan of several thousand dollars with just a couple of signatures, theirs and someone else’s. The result, when the company started laying people off and the credit union began calling in the loans, she was responsible for over $10,000 of other people’s debt. Word to the wise, if you don’t want to pay for it, don’t sign up!

I often get asked if there is such a thing as too much credit? The answer: YES! Every time you open another charge account, even if the credit limit is only a few thousand dollars, it’s still more credit. Assuming that you are one of those people who likes to take advantage of the sales clerk’s offer to “open a new charge account with us now and save 10% on today’s purchases”, listen to me. The answer to that question should always be……………NO, NO, NO!

How did I learn that? At one time in my youth, long before I knew anything about the mortgage business or credit, I heard my Aunt, whose husband is a minister, saying that she couldn’t believe the bank had refused them credit for something. The banker in question was a member of their church and knew that they were financially responsible people. So what was the problem? The answer: since it wasn’t common knowledge that too much credit could be a problem, the banker met with them to explain. It turns out that with all the store charge cards and other credit cards she had, she had over a $100,000 of available credit. This is a bad thing when you are trying to get new credit. The bank was looking at the amount of debt she had the potential to incurr if she went on a shopping spree. That was when I learned there was such a thing as too much of a good thing. The story made enough of an impression on me that as I got older and began to have the sale clerk’s ask me if I wanted to “open an account today” I knew to say no!

I actually learned that lesson twice, the first time was when my great-grandmother, knowing I loved chocolate, gave me a whole bag of Hershey’s milk chocolate stars and said I could eat all I wanted. Naturally, being 7 or 8 at the time, I ate the whole bag. I definitely learned the concept of too much of a good thing can be bad on that occasion.