• Sign your card as soon as you receive it.
  • Pay your balance off each month.
  • Don't charge more in one month than you can pay off. 
  • Before you use your credit cards ask yourself, "Is this worth going into debt for?
  • You'll save time and money paying all your bills online.
  • If you have a good payment history your credit card company will waive your late fee.



You will eventually get a credit card. In fact, like most people, you will have several credit cards. In the near future they will probably include a credit card with every birth certificate.

And here’s the interesting thing: they never come with instructions.

What they do come with is reams of disclosures written in incomprehensible legalese, which are primarily designed to protect the credit card company from lawsuits.

Here are things you need to know.

A credit card is essentially an easy way to borrow some money. When you use your credit card at a merchant to buy a product, you are actually borrowing the money from the credit card company to purchase the item. The credit card company will pay the merchant for the item you just bought, and add it to the amount you owe.

Of course, like any loan, you have to pay back the amount you borrowed. So if you buy an item for $100.00, you are borrowing $100.00. Not a penny more. If you pay back the $100.00 as soon as you get your credit card statement, it doesn’t cost you a dime in fees or interest. What a deal. You get to use the credit card company’s money for a month, more or less, at no charge.

But what if you don’t pay back the full amount when you get your credit card bill?

Well, the credit card companies, in their generosity, only require that you pay a small amount of the $100.00 every month, usually less than 3%, about $3.00. As long as you pay the minimum balance each month, the credit card companies are thrilled. But what happens to the remaining $97.00? Does it just sit there until you eventually pay it off at $3.00 a month? Sadly, no. That $97.00 is working for the credit card company. They didn’t loan it to you for free. In fact, they often charge interest rates that would make a loan shark blush, sometimes as high as 23%.

So let’s take a look at what would happen if you continued to pay the minimum balance each month on that $100.00.

1.It would take you 4 years
2.You would pay an additional $160.00 in interest rate charges
3.The item you bought for $100.00 actually cost you $260.00

All You Need to Know
About Credit Cards
Quick Tips
​A credit card is essentially an easy way to borrow some money.
When you use your credit card at a merchant to buy a product, you are actually borrowing the money from the credit card company to purchase the item. The credit card company will pay the merchant for the item you just bought, and add it to the amount you owe.

For Your Information
It is unlikely you will stop at $100.00, however. Most people continue purchasing more and more products, adding to the balance, to the point where the average American has a combined credit card debt of $10,000!. A $10,000 credit card debt at 23% will take 56 years to pay off, at a cost of $45,000! 

So if you love your credit card company and want to contribute to their profitability, be sure to rack up a lot of charges and pay only the minimum balance. They will love you for it.

They will love you even more if you forget to pay on time, or borrow more than they want you to, or violate any of the numerous rules they impose that result in a fee. Credit Card fees in this country average more than $250.00 a year. If you have a better use for $250.00 than handing it over to a credit card company, then pay your bill on time and live with whatever restrictions they put on your account.

But let’s be real for a moment. Most Americans do not live on what they take home each month, and will purchase items on credit. This is not a horrible thing. It keeps the economy moving, provides you with necessities and luxuries you could not otherwise afford, and provides jobs for a lot of people. The important thing is make sure you credit card balance is reasonable, given your income, and that you enjoy a reasonable rate of interest.

Credit Card Safety

While the chances of cutting yourself with a credit card are slim to none, credit card safety is a growing problem. By this, of course, we mean keeping your credit card information out of the hands of people who make a living by stealing your credit card information.

There are a few simple things you can do to reduce the chance of getting stung by one of these creeps.
But first an important note: as soon as you notice that someone has committed fraud on your account, notify the credit card company. Consumers are protected by law -- in cases of credit-card fraud online or off. You are only liable for a maximum of $50 of the amount stolen, and probably none of it, if you report it on time.

Okay, here are couple of Credit Card Safety tips:

1.If your credit card application offers you the option of “Opting-Out” of having your information sold to mailing list, check it. You won’t miss out on anything but potential fraud.
2.One way to do this is to visit The Consumer Credit Reporting Industry Opt-Out Prescreen Web site. On this site you can fill out a form and opt-out of receiving pre-approved credit or insurance offers in the mail. You can also call 888-5-OPT-OUT (888-567-8688). 

3.Sign your card -- as soon as you receive it.

4.Don’t throw out your credit-card statement, receipts or carbons without first shredding them. There are people who will go through your garbage looking for private financial information. We call these people Trash.

5.Never give your credit-card number over the telephone unless you initiated the call. This is a big one.

Even when you place the call to a legitimate merchant never give your card number out over a cordless phone. Radio scanners that eavesdrop on these conversations are available for a few hundred dollars at any electronics store, and your voice can be received by one from a far greater distance than the maximum useful range of your cordless phone. One common scam is when someone calls you "back" right after you place an order, claims to be from the merchant and tells you that there was a problem with your card number -- would you mind giving it to them again? The best thing to do is ask for a contact name and call the merchant back at the number you used originally. 

6.Make certain you get your card back after you make a purchase (one habit to observe is to leave your wallet open in your hand until you have the card back). Also, make sure that you personally rip up any voided or cancelled sales slips. 

7.Always keep a list of your credit cards, credit-card numbers and toll-free numbers in case your card is stolen or lost.

8. Check your monthly statement to make certain all charges are your own, and immediately notify the card issuer of any errors or unauthorized charges.

Credit Card Applications

You will most likely receive dozens of credit card applications as soon as you reach a certain age, attend a college, get a job, join the army, or go to job fair. Some of these applications will ask for a lot of information, while others don’t require much more than a beating heart and a signature. But they all include the following information, which is the minimum they are forced by law to tell you. These items determine whether you end up with a great credit card or a crappy one. 

Annual fee - A flat, yearly charge, similar to a membership fee. Here’s a tip: unless you have record of extremely irresponsible money management (we’ll talk about that later), don’t pay a yearly membership fee. You can get a terrific card without it.

Other fees – Banks love to impose additional fees for the privilege of borrowing money in less traditional ways, such as cash-advance fees. This is when you use your credit card to get actual cash, instead of buy a product at a store. In addition to the extra fee, the interest rate is usually much, much higher. There may be additional fees for using a credit card check, which you will receive periodically. When you use one of these checks to buy an item, instead of using your card, you may also end up paying a fee and a higher interest rate. According to CreditCards.com, the credit card industry took in $43 billion in late payment fees, over-limit fees, and balance transfer fees in 2004.

Grace period - A time period, usually about 25 days, during which you can pay your credit-card bill without paying a finance charge. Under most credit-card plans, the grace period only applies if you pay your balance in full each month. Also, the grace period usually does not apply to cash advances, credit card checks or any other non-traditional usage.

Annual percentage rate (APR) - The yearly percentage amount you will pay to “borrow” money on your credit card. Today those rates range from about 7% to 23%, and include both fixed rate cards and variable rate cards.

 With a fixed rate card, the rate remains the same throughout the life of the card, as long as you play by all the rules. If you violate even one of the rules, such as not paying on time, your rate is likely to go up.

 With a variable rate card, your interest rate is tied to other economic indicators, such as the the prime rate or the Treasury Bill rate. For example, you may get a card that says your interest rate will be whatever the prime rate is, plus 3.9%. You may or may not get a lower initial rate if you get this type of plan, but if you’re the adventurous sort and like to follow economic indicators – ah, forget it. Just get a fixed rate.

Introductory rate – How would you like to get a 0% interest rate on all of your purchases for six months? What a deal. You can buy anything you want and pay no interest for 6 months! There can’t possibly be a catch, right? Well, if you’ve followed this far, you probably guessed there is a catch. Actually, there are a few.

Catch 1:If you break any rule, you lose the 0% rate and end up paying a ridiculously high percentage rate. The banks count on that.

Catch 2:After six months, the regular interest rate kicks in, usually on the high balance you created by thinking you didn’t have to pay an interest rate

Catch 3:After the six month introductory period passes, all of your new purchases, at the higher rate, remain until all the 0% purchase balance is paid in full. This means that every payment you make, minimum or otherwise, first goes to pay off the 0% balance, allowing the higher interest rate balances to continue to accrue interest. And thought the banks were just being generous, with their 0% offer.


What You Don’t Know About Credit Cards Will Cost You

High-rate card - Suppose you charge $1,000 on a 23.99-percent credit card. After that, you make no further charges and pay only the minimum each month. The payment will start at $51 and slowly work its way down to $10. You'll make 77 payments over the next six years and five months. By then, you will have paid $573.59 in interest for your credit privilege. 

Low-rate card - If you charge that same $1,000 on a 9.9-percent fixed-rate card, the minimum monthly payment will start at $50.41 and go down to $10. You'll make 17 fewer payments, finishing in six years and paying $176 in interest. This saves you almost $400! 

Avoid Credit Card Billing Errors

carefully go through your monthly credit-card statement, making sure all the transactions are legitimate and that fees are justified. 

Write to your card issuer or creditor within 60 days after the first bill containing the disputed charge is mailed to you.

In the letter, give your name, account number, the date and amount of the disputed charge and a complete explanation of why you are disputing the charge. 

Send your letter, by certified mail, to the address provided on the bill for the purpose of disputing the bill.

While the bill is being investigated, you don't have to pay the amount in dispute. 

If it is determined that there was an error or that you don't owe the amount you're being held responsible for, the card issuer must credit your account and remove any finance charges or late fees relating to the amount not owed. If the bill is correct, you must be told in writing what you owe and why.

You will owe the amount disputed plus any finance charges. 

Improper use of a credit card is the number one reason why so many people ruin their credit. The cost of doing so is enormous.












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