Credit Cards 101

More often than not, credit cards are one of those things that seem like a great idea at the time, but you’ll probably regret in the end. Credit cards do have their place and can be quite useful and convenient, but they must be used cautiously.

10 Tips for Happy Charging:

It’s a loan. Remember that using a credit card it like taking out a temporary loan. Even before you sign the application, decide what purchases you’re going to use it for and stick to that plan.
The best interest. There are hundreds of cards out there. Shop around and make sure you’re getting the best interest rate possible and that your card fits your lifestyle. No matter what perks or points they offer, a high interest rate isn’t worth it.
Fees and more fees. Interest isn’t the only extra you pay for having a credit card. You’ll get charged fees for late payments, going over your limit, getting a paper instead of an email statement and annual fees. You can’t avoid fees, but keep track of what fees you are being charged.
Pay on time. Even being a day late can cost you big bucks. Plus, the credit card company can increase your interest rate if you are a late payer.
Pay it off – Always! We know it’s tempting to just keep charging. Like free money, right? Wrong. The sale you shop today won’t even count if it takes months to pay it off, thanks to interest. Use our credit card payoff calculator to find out just how much not paying off your card can cost.
Keep it down. The balance that is. Never carry credit card debt more than 10-20% of your income. If you have to carry a balance, make more than the minimum payments every month or all you’ll be paying off is the interest, not the actual balance.
Keep in touch. Moving? Let your credit card company know. Going to be late on a payment? Give them a heads up before the bill is due. It can only help you to keep your credit card company informed.
Limit yourself. We know, you keep getting these amazing credit card offers in the mail. Don’t do it! Keep the total amount of credit cards to one or two. It’s easier to keep track of and to stay out of trouble.
Majors only. Ever been at a store and you get this enticing offer of 10% off if you just open an account with them? Don’t do it! You’ll be paying them that 10% back soon enough thanks to their crazy high interest rates. The interest rates on store cards are typically double of major credit cards.
You’ve got mail. Keep your eye on your mailbox. With the newer federal credit card regulations, many companies are changing their fees and interest rates. All they have to do is give you written notice. So carefully go through your mail. It may look like junk mail but it could be an announcement of a fee or interest rate increase.

Don’t Forget

► If you’re shopping for a new credit card, try your credit union first. They historically have the lowest interest rates around, which will save you money in the long run.

► When shopping around for a card, it’s good for you to Know Your Score. A good credit score can mean a good interest rate.

► Already have a credit card? We’ve got ways for you to Avoid Credit Card Debt.

► If you like to shop online, maybe surf to our Online Shopping section first to learn how to shop safely.