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January 5, 2007     Cape Gazette
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January 5, 2007

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36 - CAPE GAZETTE - Friday,-January 5 - Monday, January 8, 2007 Delaware Money Schc000000 00)ffers financial management tips More Americans than ever are planning to make a positive finan- cial change as their 2007 new year's resolution. To assist them in keeping their resolutions, State Treasurer Jack Markell would like to encourage Delawareans to become more financially literate by attending free financial man- agement courses offered by the Delaware Money School. "Personal finances are at the forefront of everyone's minds," Markell said, "and while many people make annual resolutions to improve their financial habits, they sometimes need a little help in reaching those goals - that's where the Delaware Money School comes in." Closing charge accounts can damage credit scores Take Charge America offers tips for improving rating Many consumers do not know that closing a credit card can actu- ally damage a credit score. Americans have racked up more than $800 billion in credit card debt, so it may seem that eliminat- ing the temptation to charge pur- chases would be a good thing. Mike Sullivan, director of educa- tion for Take Charge America, a national nonprofit credit counsel- ing agency, urges people to think again. "It takes credit to earn credit," he said. "If your goal is to increase your credit score, cancel- ing your credit cards may actually work against you in the short- - tenn." The majority of Americans !s between five.and 10 credit , but industry analysts say many consumers have become addicted to plastic, possessing dozens of credit cards, including cards for individual stores. "It's a fine line to walk," said Sullivan. "Carrying too many cards can also lower your credit score because it increases the chances that you will rack up larg- er amounts of debt. There is no magc;inuber when it comes to the umbr of credit cards you should have. It depends on how much money you spend and how much you can afford to pay off." However, Sullivan said it is important to keep track of your debt ratio. He suggests that ideal- ly, you want to keep your balance on each card to no more than 30 percent of your credit limit. So, what do you need to consid- er before closing a credit card? Sullivan has seven suggestions: Beware of the debt utilization ratio: Closing out cards will decrease the amount, of available credit people have and increase the debt utilization ratio. For example, if. those who have $50,000 in available credit and owe $10,000 owe 20 percent of their available credit. Those who close one account with a $30,000 credit limit will then owe the same $10,000, but it will be 50 percent of their available credit. This can lower a credit score. Time is can be asset: A portion of a credit score is based on the length of time someone has had specific credit lines open. That means the longer people have a credit card, the more credit histo- ry they have. Foi: instance, for those who have two cards - one that has been open for five years and another for 10 years - closing the card that has been opened for 10 years reduces the credit history to five years. That can lower a score, regardless of total balances. A longer credit history shows peo- ple can manage credit responsibly. Risky behavior: Five billion credit card solicitations are sent to Americans every year, many woo- mg consumers with low- or no- interest rates. Those who try to control their debt by opening mul- tiple low-interest cards, transfer- ring balances and closing cards along the way couid be sending the wrong signal to potential lenders. Not only can this lower credit scores, 'but many lenders consider it to be a risky credit move. It's best to pay off a debt, rather than transfer it from card to card. Continued on page 38 LYNN O'DONNELL ,,,. / 302-644-8330 302-644-8209 Practice pc/manly limiteJ to." Real Estate Settlements Estate Planning and Administration Elder Law: Guardianships, Powers of Attorney, Mledicaid Planning, MillerTrusts Member of Not/bna/ Academy of Eider Law Attorneys According to a recent "Money" magazine sur- vey, 37 percent of Americans plan to make a financial change as their New Year's resolu- tion, sweeping well past the 23 percent of respon- dents in previous years. The survey also revealed that of individuals who have made a financial resolution in the past, only 24 percent were successful in keeping their fiscal VOWS. "Because the Delaware Money School offers so many effective courses aimed at helping Delawareans, it's easy to imple- MARKELL ment positive financial habits," Markell said. t'The important thing to remember is that it's never too late to begin. "If you can't fit a class into your schedule in January, attend one in February." The Delaware Money School was started by Markell in 1999 and was managed by the "Office of the State Treasurer until 2001, when it incorporated and became a private nonprofit organization with a mis- sion of providing and managing financial literacy initiatives. The classes are free to attendees and taught by financial professionals from the nonprofit, and corporate sectors. "We have classes on everything from debt management to retire- ment and estate planning," Ronni Cohen, executive director of the Delaware Money Scho61 added. "With free classes offered in all three Delaware counties, we real- ly bring the education opportuni- ties directly into local communi- ties." To learn how the Delaware Money School's classes can help ring in a more financially fit new year, visit www.delaware- or call 877- 307-6858. 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