Financial decisions that can cost you cash

KANSAS CITY, Mo. - Halloween can be a scary time, but financial decisions do not have to be frightening.

Credit counselor Jana Castanon said there are tricks and treats to some financial decisions -- for example: getting rid of all credit cards. On one hand, consumers who cut up cards can live within their spending means and avoid paying interest rates, but it can also cost you.

No credit can lower your credit score. That can cost you when doing business with companies like insurance, rental car and mortgage companies, which look into credit history.

“You have to have something in that credit file in order to get lower rates on a lot of services,” Castanon said

When it comes to transferring balances to lower interest rate credit cards, Castanon said it helps you create a plan to pay off debt; however, consumers can be tempted to run up debt again if they do not change spending habits.

"The disadvantage of balance transfers is that most people do not change their spending behavior so a year later they would now have two cards open with high balances.” she said.

Opting out of overdraft protection can help avoid problems. Castanon believes overdraft protection can give you a false sense of security that the bank will cover your purchases; however, it can be expensive if you routinely overdraw your checking account.

Here are some of Castanon’s other financial tricks and treats:

Bundling of services

• Trick: If you purchase a more expensive plan than you need to bundle your land line, cable and Internet services, you may pay more than necessary.
• Treat:You might enjoy significant savings if you evaluate and bundle the serves you really use and shop around for the best deal.

Automatic bill paying

• Trick: If you neglect to balance your check register and the automatic payment results in an overdraft, you've defeated the purpose.
• Treat:Arranging for your payments to be sent to creditors before the due date means you'll never have a late fee or a dinged credit report.