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The Fed rolls out guide to credit

By Leslie McFadden ·
Wednesday, November 10, 2010
Posted: 2 pm ET

On Wednesday, the Federal Reserve rolled out a  Consumer's Guide to Credit Reports and Credit Scores, a new online resource that explains basic credit topics, such as what goes into a credit report and credit score. The guide also links to tips for improving your credit score and advice on getting the most from credit cards.

True to the name of the guide, it uses a consumer-friendly FAQ format and layman's terms to address common questions about credit that range from how credit reports are used and how to dispute credit report errors to what causes credit scores to change. While you won't find detailed advice in the guide, it's a good reference for credit basics.

If you still have a question about credit after perusing the guide, search or see if I've addressed the issue in a previous Credit Card Adviser column. If not, submit your question for consideration.

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Leslie McFadden
November 11, 2010 at 1:52 pm

Closing a credit card account with a balance remaining only closes the account to new charges. Closing the account doesn't block late fees if you fail to make the minimum payments on the remaining balance on time. It also doesn't prevent the accumulation of interest charges on the unpaid balance. Basically, closing accounts does nothing to reduce the pace of debt -- it just shuts off your spending on those particular accounts.

I suggest calling the credit card issuer and asking to be put on a hardship plan if you are having trouble making the minimum payment. This Bankrate article goes into more detail on the subject:

November 10, 2010 at 2:27 pm

If having trouble paying credit card, do I cancel the card to prevent the Late Payment fee? BOA is charging the late fee & interest on an account. Person cannot pay at all, for now. would closing the account at least stop the balance from getting any higher? Please advise. Thanks.