Tips For Managing Your Credit Cards
by Colin McDougall
The Beginning of the Credit Card Era
In 1951, Diners Club issued the first credit card to 200 customers who
could use it at 27 restaurants in New York City. From that modest beginning,
credit cards have become an indispensable part of modern life. Consumers rely
on credit cards to help them achieve their lifestyle goals by letting them
take advantage of special bargains, spread payments out over several months,
and provide cash in emergencies. Credit cards have become so widespread that
they are often accepted as a piece of primary identification.
Getting the most from your credit cards involves four main steps:
- Use your credit cards wisely.
- Protect yourself against fraud.
- Review your credit history regularly.
- Get the right card for your needs.
Use your credit cards wisely
Follow these simple tips to get the most from your card.
- Pay your credit card bills on time. This is the single most
important thing you can do to preserve and enhance your credit rating.
Always pay at least your minimum payment and allow time for your payment
to reach the company if you are using the mail.
- If possible, pay off your balance in full each month.
If this is not possible, then make as large a payment as you can comfortably
afford. Paying off or paying down your balance is a sound financial move—one
that will save you money on interest charges.
- If you can’t pay off your balance in full, then slow down on your credit
card use for the next while. Take time to step back and have a careful
look at how much you earn and how much you spend each month. A little budgeting
can save you big money down the road.
- Check your statement carefully each month. Review your statement
carefully. Do all the charges look correct? Have any required credits
been applied? Are there any unusual or unexpected charges? Your credit
card company will correct legitimate errors, but only if you bring them
to their attention in a timely manner before you pay your bill.
- Transfer your balance to a card with a lower interest rate. If
you have two or more credit cards with outstanding balances, consider
moving the outstanding balances to the card with the lowest interest
rate. You will save money each month and simplify your record keeping
by receiving only one bill.
- Negotiate for a lower rate with your credit card company. If you
have a good credit history, you are a valuable asset to your credit card
company. Call them and seek ways to lower your interest rate. This is
often possible, but never advertised. If the interest rate you are
currently paying is very high, imply you may cancel the card and go
with a competitor unless they adjust your rate downward. It doesn’t
hurt to ask, and you may be surprised at the results.
Protect yourself against fraud
While credit card fraud is a problem, here are a few simple steps you can
take to greatly reduce the risk of becoming a victim.
- Sign new cards immediately. When you receive your new or replacement
card in the mail, sign it, in ink, right away. If it is a replacement card,
destroy the old card by cutting it into many small pieces.
- Shred old credit card receipts. You can purchase an inexpensive paper
shredder at an office supply store. All old receipts with your credit card
number and any unneeded documents with your social insurance number or other
sensitive personal information should be shredded before disposal. This
prevents the common practice of criminals going through the trash to find
receipts and stealing your identity
- Never fax your credit card number. Your credit card number can lie for
hours in the fax basket at the other end. Anyone passing by can record your
number and begin to use your card number fraudulently. It is even possible
for criminals to intercept your credit card number while the fax is in
- Use caution when giving your credit card number out on the phone or on
the Internet. Only give out your credit card number on telephone calls
you initiate to business or organizations you trust. Never give your number
out to callers who call unannounced, no matter how legitimate the call
- On the Internet, look for an Internet address that begins https:\.
The “s” indicates that it is a secure connection and a small padlock symbol
should appear in the bottom right hand corner of your screen, indicating it
is safe to transmit your credit card number.
- Call your credit card company instantly if you suspect trouble. All
credit card companies have 24 hour lost and stolen help lines. If you lose
your wallet or purse or have it stolen, call without delay! Much fraud
happens within the first hour or two, before the victim realizes the cards
are missing. Your credit card company will block your cards from being used
and stop you from being responsible for any charges thieves incur.
- Take advantage of any security features your card offers. Many newer
cards have the option of including your photograph on the card. This is
excellent protection and is highly recommended.
Review your credit history regularly
After you have obtained the best credit card, and are using it wisely, review your credit
history on a regular basis. This helps ensure your history is accurate and that
any issues have been resolved to your satisfaction.
North America has three national credit-reporting bureaus.
Your credit rating is held at one or more of these bureaus. When checking on your rating,
be sure to contact all three, as your rating may be held on file at more than one bureau.
The three national credit bureaus are Equifax, Experian, and Trans Union.
Check the Yellow Pages, under Credit to find the numbers in your area.
Get the right card
With all the choices in cards available, chances are
good,very good, you can find a better card for your needs. Today’s cards can save
you money, offer better features, and even support a cause you believe in. Here
are some tips on finding the right card and where to check that you have the best
card for your needs.
- Be alert for companies offering a great interest rate for transferring your
existing balance to their card.
Usually these rates are only in effect for a short time, often six months. At
the end of this time, the rate can revert to a much higher permanent rate. Keep
your eye on the Annual Percentage Rate (APR); this is the figure that counts in
the long run.
- Lower is better: read the fine print and find the Annual Percentage Rate
(APR). This is the interest rate the companies charge you if you carry a balance.
You want the lowest rate possible; as each percentage point drop will save you
money on the months you have an outstanding balance.
- Nothing can be better: Try for a credit card that does not charge an annual
fee. Many credit cards charge you a fee each year to use their cards. While this
may be offset by other benefits the card may offer, you can find cards that do
not charge this annual fee. Why pay for the privilege of using a credit card when
you don’t have to?
- Explore the options: Today’s cards offer a wide range of excellent features,
including frequent flier points, programs that bank points toward a new car, and
cards that support charitable organizations. Other options worth having include car
rental insurance coverage, trip cancellation coverage, and extended warranty
About the author:
Colin McDougall is the editor of personal finance websites offering
student credit cards and other
personal & mortgage loans.
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