by Rep. Geoff Davis (KY)
As a father of six and former small business owner, I know the importance of establishing a budget and understanding the basics of financial issues. Learning about how to save and invest money, responsibly use credit cards and manage your credit rating are all important tools for creating a financially-sound future. April is recognized as Financial Literacy Month and I want to encourage you to take a few steps in the coming weeks to learn something new about personal finances to help eliminate the chances of identity theft, manage mortgage problems before they happen and ensure you know the best ways to save and invest in you and your family’s future.
One of the most important habits to develop is checking your credit report regularly. Congress passed a law in 2003 that entitles everyone to a free credit report every year from each of the three top credit reporting agencies: Experian, TransUnion and Equifax. The credit report will include your outstanding debt, available credit and payment history; these and other factors determine your credit score. The higher your credit score, the more likely you will be to get a better interest rate on a credit card or home loan. Additionally, if you review your credit report and believe something is inaccurate, you should dispute it with the credit reporting agencies. For more information on how to obtain your credit report, visit this website.
A couple months ago, the Federal Reserve implemented new credit card protections to make sure consumers are treated fairly by credit card companies. These protections include eliminating increases to your credit card interest rate for the first year an account is open and rate increases after the first year can only be applied to new charges. The new rules also require credit card companies to adhere to standard payment dates and times and apply your payments to the highest interest balances first. In addition, the rules prohibit double-cycle billing and similar methods that can allow creditors to rack up consumer interest charges and require transparent disclosure of how long it will take to pay off your balance if you only make the minimum payment. To learn more about the changes to credit card rules and how it directly impacts you, click here.
Financial literacy is achievable. There are an abundance of useful resources to help trim down expenses and eliminate debt. Organizations such as the Financial Literacy Education Commission’s website offer tips for planning to buy a home, living within your means and planning for your retirement. To learn about everything from buying a home to avoiding foreclosure, visit the U.S. Department of Housing and Urban Development (HUD) website. Local organizations, like the Kentucky Jump$tart Coalition, focus on teaching students best practices to successfully handle money.
Establishing simple and sound financial habits, such as balancing your check book, monitoring your credit report, and creating a monthly budget, will lead to a better financial future for your family and will contribute to your children’s financial literacy and ability to make smart choices as they get older. Ensuring you and your family are financially literate now will help to eliminate potential bumps down the road as our economy continues to struggle.
This month, I encourage you to recognize April as Financial Literacy Month and make time to take a couple of the steps above to learn more. Congress must also do more to practice sound financial management of our nation’s finances, including balancing the federal budget, to ensure a bright future for our children and grandchildren. The fate of our children’s financial future starts with each of us now.