The US Treasury Department along with the Ad Council recently launched a new credit education website, located at ControlYourCredit.gov, with the goal of helping young adults learn how to make good financial decisions and use credit responsibly.
The website invites visitors to “solve the great mysteries of credit” by checking them into room 250 of the dark and foreboding Bad Credit Hotel that conjures up images of a ’40s film noir mystery movie. In the process of making phone calls on a classic rotary phone, investigating a transforming Rorschach painting, and using clues found on scraps of paper to unlock a hidden safe, visitors find an interactive tool for calculating the cost of interest, information about their credit history, tips for dealing with debt collectors, and more.
While there is nothing revolutionary about the information contained within the ControlYourCredit.gov site, and the absence of any mention of credit reporting errors is unfortunate, the production value alone is worth a visit and only time will tell if this tactic will be effective in helping educate new credit users.
Especially during the holidays, retailers offer a “No interest and no payments for 12 months!” type sales pitch as a way for you to purchase that must have flat-screen television, bedroom set, or mountain bike without having to put any money down. For those strapped for cash, this seems like a perfect way to get what they want today and then pay for it down the road when, hopefully, their finances are in better shape.
What many people do not realize is that no interest, no payment agreements are frequently not the ideal solutions they may seem. Depending on the retailer and your ability to make timely payments once they come due, these types of agreements may result in you having to pay much more than you intended and can cause serious damage to your credit score.
To start with, even the most financially responsible consumer can see their credit score drop because they took advantage of a no interest, no payment sale. This is because in many cases you are opening a new line of credit with the retailer that, depending on if and how it is reported to the credit bureaus, may increase your credit utilization ratio.