Choosing a Credit Card
What you should know about credit:
- Credit is not free money, it is a responsibility.
- Buying with a credit card is a loan and loans must be paid back.
- As you obtain credit you will establish a credit history that will affect you in the future – because that history will show potential employers, lenders, and landlords your financial trustworthiness.
- A bad credit history will follow you for a long time.
- If you have a bad credit history you may have trouble obtaining a loan, a credit card, and even a job.
- Good credit can even translate into lower interest and payments.
Before applying for a credit card ask yourself the following:
- Can I pay the balance in full every month?
- Can I resist the temptation to spend more than I can afford?
- Do I want a credit card to build a good credit history, or just to allow myself to make compulsive purchases when I don't have cash?
Choosing a CompanyThe Annual Percentage Rate (APR)is yearly interest rate or cost of credit, the lower the APR the better. But beware the low APR offered may be for a limited time period after which the rate jumps to a much higher level.Shop around and compare the terms of credit cards from various sources. There are numerous differences:
- Some credit card companies charge anannual fee while others do not. However, a card with no annual fee may be accompanied by a high APR.
- A grace period is the time between the date of the credit card purchase and the date the company begins charging you interest.
- Other fees that may be charged may include late fees, monthly fees, and cash advance fees.
- A 24 hour toll-free customer service number is important particularly when an unforeseen problem develops.
- Know what you are getting yourself into by reading the fine print.
Using a Credit Card
Having a credit card can be a convenience. It can also be a positive experience if you know your responsibilities as a credit card holder.
- Sign your credit card or write “Please Ask for I.D.” with a pen as soon as you get it.
- Retain and safeguard your receipts as if they were money as well as any other documents specifying the conditions of your purchases. This will help you resolve any disputes if they arise.
- Never leave your card or receipts lying around.
- Never lend your card to anyone.
- Never give your card number over the phone unless you initiated the phone call and you are dealing with a reputable company.
- If you mail your payment, be certain to mail your check from a post office collection box or local post office.
- Do not sign blank receipts. Draw a line through blank spaces on charge slips above the total so the amount cannot be changed.
- Review your statements carefully for any questionable charges. Write to the credit card company’s “billing error address” to dispute any questionable charges on your statement. Make sure you pay the charges on your credit card that are NOT in question.
- If your credit card is stolen, report it to the credit card company promptly. If so, federal law limits your personal liability to $50.
What to do if your credit, ATM, or debit card is lost or stolen:
- Call your card issuer as soon as possible and report the loss or theft. Follow this up with a letter that includes your account number, date you noticed the card was missing and when you first reported it missing.
- You are not liable for any unauthorized charges on your card made after you report it missing.
- For unauthorized charges made before you report the card missing, you may owe up to $50.
- If you do not report the loss of your card within two business days, you may be responsible for up to $500 of unauthorized charges.
- If you fail to report it within 60 days, you could have unlimited loss from unauthorized charges.