Tips from the Illinois Treasurer's Office

With the holiday season upon us (yes, the holiday season now starts with Halloween), I thought this tip from the Illinois Treasurer's office was perfect timing.

Have you ever sat down to a nice, home-cooked dinner only to have it interrupted by a phone call that sounds something like this:

Caller: “Hello! Is this Mrs. Smith?”

You: “Yes it is. Who is this?”

Caller: “Mrs. Smith, this is Sandy with ABC Company. We have an exciting new product available for you…. Since you’ve been a valued customer for so many years, to show our appreciation for your business, we’d like to offer this new feature to you at absolutely no cost for three months. If you are happy with the benefits, simply do nothing and a small fee of $5.99 will be added to your statement each month. If you’re unhappy with the product, simply call to cancel your subscription and you will be billed nothing!”

Sound familiar? After a long day of work, what is the easiest response to end this conversation quickly and return to your dinner already cooling on the table? “Sure… whatever.”

Do you know how quickly those “Sure…whatever” responses can add up? If you’re still trying to discover the amount of your monthly Debt Reduction Challenge pledge, we’ll help you uncover another money saving opportunity this month by auditing your creditor statements. Some of you will identify in this step ways to pledge more, for the Challenge, which will allow you to pay that debt off even sooner!

In Step 6, you will gather and review each and every bill or creditor statement you receive every month to better understand exactly what you’ve been paying for. Let’s get started!

If you don’t have a central location where you keep your monthly bills – a desk, a kitchen drawer or the top of your dresser, now is the time to get organized. Collect all of the bills you pay each month in one place. Make sure you include bills or statements for:

· Credit cards

· Utilities

· Phone (including cellular, landline and DSL/internet service)

· Bank accounts

· Investment services

AUDIT PROCESS

1. With statements in hand, begin reviewing each of them and look carefully at each itemized charge. Highlight any charges you don’t understand or consider questionable..

2. Next, contact each of your creditors about the statement in front of you. Once on the phone with a representative, ask for an explanation of any charges you do not understand. NOTE: Do not be intimidated or insecure about requesting an explanation for charges.

3. Ask to have any unused products/services appearing on your statement cancelled. In addition, if you can prove through your statements that these services have gone unused for some time, ask for the cancellation request to be retroactive to recover the costs from previous months – in some cases, you may receive a credit for an additional month or two.

4. The final step is to explain that you are researching all of your expenses in an attempt to reduce your overall monthly costs. Explain that you intend to research some competitors but, before you do, you want to make sure that you are already receiving the services that most meet your needs. During this conversation, be sure to ask the question: “Is there anything I can do to reduce the amount of my monthly bill?” In some cases, you’ll be able to reduce the bill by giving up some of the features (premium cable channels, mobile internet service, etc.) This is a good time to evaluate whether you really need all of these services or if there is a product/service you can exchange that will provide you cost-savings without completely eliminating the feature.

VALUABLE PEACE OF MIND OR HUGE MONEY MAKER?

The debate continues whether credit card insurance provides a valuable benefit to the consumers who choose to purchase it. Some (mostly the insurance issuers) will argue that it provides valuable peace of mind during tough economic times. Most credit and consumer experts agree – the money spent on credit insurance is typically better spent paying down debt balances so payment insurance isn’t necessary.

At the typical rate, the premium on a monthly balance of $4,000 would cost $30 per month or $360 over the period of a year. Critics argue that a life insurance policy would cost less and pay more benefits.

The bottom line? Be cautious when signing up for services by phone, letter or other means. Make sure you understand the benefits, how they are paid and most importantly the opportunities for disqualification – will your payments really be made if you become ill or unemployed? If you’re not certain, apply that money (sometimes as much as $100 per credit card each month) toward your debt. You already know the benefits you’ll receive from doing so!