Once You Have The Credit Card

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  1. 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. 
     
  2. 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.
     
  3. 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.)
     
  4. 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.
     
  5. 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!
     
  6. 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.