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Credit Cards
Once You Have The Credit Card
- SHOP AROUND. Beware of sleazy "teaser rate deals"
that jump way up after 3 months. Look for the best offer around.
Remember, the interest rate (APR) doesn't matter if you always
pay off the full balance. But if you carry an unpaid balance,
it matters a lot more than the annual fee.
- ONE CARD: One national credit card is all you need to help
you build a credit record, if you pay it off on time. Remember,
you can build a credit record without carrying an unpaid balance.
Don't get into the card shuffling habit, use just one card.
- PAY OFF THE FULL BALANCE: If you must carry a balance, always
pay as much as you can afford, every month. Never pay only the
minimum balance, or you'll never pay down the card. (Hint: See
hypothetical real-life situation above.)
- PAY ON TIME: Mail checks early. Late credit card payments hurt
you 3 ways: (1) You know about the bad credit reports. (2) Banks
also charge late fees of about $20-25 bucks. (3) Finally, 1-2
late payments in a year can put you in the penalty box-- your
interest rate could jump to a penalty rate of 24% or more.
- KEEP A LOW LIMIT: If you make timely payments, your bank will
automatically raise your credit limit without asking you and other
banks will send you offers for more "pre-approved" cards.
Don't take the bait. Decline the increases! Keep your balances
low! Don’t max out your card! Throw away the offers!
- AVOID CASH ADVANCES: Don't use your credit card like an ATM
card for cash withdrawals-- the interest rate on advances is at
least 2% higher than on purchases and interest accrues immediately.
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