You and Your Credit Cards
By Nikki Willhite
How do you feel about credit cards? How you answer that question
will have a lot to do with how you have used them, both now and in the past.
If you have not had a problem with running up consumer debt in
the past, you may regard credit cards as a great convenience. You may even
consider them a moneymaker if you pay the balance off each month and take
advantage of 2% rebates on expenditures.
If, on the other hand, they have proven to be too much of a
temptation, you may see them as evil, and do everything from freezing them in
ice cubes, to try to get by without one.
It is hard to do without a credit card these days. You need at
least one credit card for things like identification, reservations, online
shopping, let alone the unexpected for which you do not have the cash.
In a fast paced world like ours has become, the convenience of
using a credit card is a positive factor for many of us. We canít carry enough
cash for all our purchases, and it is much easier to hand over a plastic card
than deal with writing a check and the monthly reconciling of long bank
Having said that, here are some things to remember
when it comes to using credit and taking care of your credit card...
*Know yourself! If you know that you lack self-control, than you
better stick it into an ice cube in the freezer. Be honest with yourself. I know
I could not be in a room with a piece of fudge without eating it, so if I don't
want to eat it, I donít go there! Donít go shopping with a credit card if you
know your judgment will be impaired by the plastic vs. cash.
*If one piece of fudge is fine, then just get a one credit
card with a low spending limit.
*Keep your credit cards to a minimum. Itís a lot easier to go
over your budget allowance if you have more than one card. No one needs
department store specific cards. No one needs more than two major credit cards.
If you are at a store and they tell you that if you fill out an
application for their store credit card you can save 20%, do it. Then when the
card comes in the mail, throw it out!
*An easy way to make sure you stay within your credit card
allowance is to deduct the amount of your charge when you get home from your
checkbook. Then when it comes time to pay the bill, the money is already set
aside. Or you can keep a running total. Either way, donít "nickel and dime" your
way into debt. Be aware of how much you are charging each month.
*Never carry a card with an annual fee. There are too many cards
out there that are free.
*Some people keep one card for major purchases that they cannot
pay off at the end of the month, and the other card for monthly purchases. The
interest rate on the first card should be as low as possible since it will not
be paid off each month.
*Check the interest rate on your charge card periodically. They
may change it on you. Be sure you are getting the lowest rate available.
*If you are ever rejected after submitting an application for a
credit card, find out why. You are legally entitled to a FREE copy of your
credit report and the reason why you were rejected from the company who turned
your application down. Rejection notices are official and come on paper. There
will be a contact number that you can call and ask for this information.
*Remember that only paying the minimum balance on a credit card
will never pay the loan off. Even if you never add to the amount on your card,
the monthly minimum payment will go down and down, and extend the loan forever!
*If you do not pay your credit card payments on time, it will go
in your credit history for 7 years. Other credit problems may last as long as 10
years. If you miss a payment, it is a good idea to get a copy of your credit
report and have the reason for the missed payment listed on it.
*Donít assume that if a credit card company gives you a high
credit limit that you can afford the payment. No one knows all the facts of your
financial situation except you, and the credit card companies want you to go in
*Another plus of using credit cards is that the purchases paid
for by major credit cards offer consumer protection.
If you have a problem with a merchant, it is much easier to get
your money back with the help of your credit card company than to get it back on
*Remember that the interest you are paying on a credit card is a
lot more than the interest you make from money in a savings account. When
possible, pay off those credit cards.
an old saying that goes...
"Those who understand interest receive it...Those who
don't pay it"