Jeanette A. Tucker, Claesgens, Mark A. | 9/7/2005 9:00:54 PM
Loss of belongings could be the least of the worries for some refugees of Hurricane Katrina – many of whom have lost their jobs or had to take temporary unpaid leave, according to LSU AgCenter family economics professor Dr. Jeanette Tucker.
"Such circumstances generally mean people could be forced to rely on credit for their essential needs," Tucker said.
The LSU AgCenter expert advised there are specific steps evacuees should take to ensure they benefit from full use of their good credit and to ensure that their credit record is not harmed in the wake of the disaster.
"If you have lost, been separated from or had to leave your possessions behind, check to see if you have all of your credit cards," Tucker stressed. "If any cards are missing, call the card issuer immediately"
The good news on a lost or stolen card is that if a thief uses a card before you report it missing, the most you are liable for on each card is $50.
If you don’t have the card issuer’s telephone number, Tucker says you may be able to obtain it by calling (800) 555-1212, contacting a local card-issuing bank or checking the card issuer’s Web site.
"If the storm and flood have put you out of work temporarily and you are unable to make payments on your credit cards, call the card issuer and try to negotiate a new payment schedule," Tucker said, but cautioned, "First, make a realistic budget based on your reduced income so that you can determine how much you can afford to pay each month. This will prevent you from making promises you can’t keep."
The average late fee on credit cards is $27.46, so contact your card issuer before your account becomes delinquent, she stressed.
In addition to that advice, Tucker pointed out that some people may need to use credit cards to cover extra expenses.
"Review your personal financial situation, and proceed with caution," she advised. "Know the credit limit on your cards so that you don’t exceed the limit. Going over the limit can be very expensive, with the average over-the-limit fee being $30.18."
Cash advances also may seem like a convenient way to help you through tough times, but they are very costly, Tucker pointed out, since you will be charged a transaction fee of approximately 3 percent of the amount borrowed. "Cash advances also carry a higher interest rate and typically do not have a grace period," she said, adding, "And interest accrues as soon as you receive the cash."
If you know you are not going to be able to pay off extra charges or cash advances within the next month, the LSU AgCenter expert said to investigate other sources of credit. Banks and credit unions can offer installment loans at an interest rate lower than most credit cards, she said.
"This is a time when it pays to talk to the banker personally," Tucker said.
Many credit unions also offer special plans that are an alternative to high cost "payday" loans and "check cashing outlets." These credit union loans often are available in amounts from $100 to $350, require no collateral and are offered at competitive interest rates, she said.
"Avoid alternative lending sources such as payday loan companies, car title loans, rent-to-own plans and advance-fee loan offers," Tucker said. "They may use deceptive advertising, charge high interest rates and fees, demand unaffordable repayment terms and use harassing collection practices."
The LSU AgCenter expert also said to beware of credit card scams, promises to repair your credit or other types of fraud that come over the telephone or via e-mail.
"Never give anyone your credit card number over the phone or via e-mail unless you have initiated the call and know the business to which you are giving the number," she said.