Credit Cards
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 Company
Getting a free pizza in exchange for applying for a credit card isn’t a great
deal when you figure you’ve given away personal information and if your credit
report is repeatedly accessed by the card companies; it could negatively impact
your credit history.
Shop around and compare the terms of credit cards from various sources. There
are numerous differences:
- The 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.
- Some credit card companies charge an annual 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
If you charge $1,000 at 18.5% interest and pay only the minimum payment each month,
it will take 11 years and cost you $987 in interest to pay back the $1,000.
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.