Make more than minimum payments. When you only make the minimum payments, you are paying more in interest charges and it will take you much longer to pay off your debts.
Don’t skip payments. Many people skip payments before or after the December holiday season, in addition to using their credit cards to buy presents. Just remember that interest charges still continue when you don’t make monthly payments. You may also be charged a late fee, from $15 to $25.
Don’t take cash advances. There is no grace period when you get a cash advance with your credit card. Interest charges begin to accrue on the advance immediately, and continue until your entire outstanding balance is paid in full. This is because there is no way to tell when the amount of the cash advance is repaid if there is always a balance due on your card. There may also be a cash advance fee that is based on the amount of the advance.
Beware of credit card insurance offers.
Credit card insurance costs range from $15 to
$49, yet this insurance only covers the first $50 of any unauthorized charges from lost or stolen credit cards. And federal law limits your liability for unauthorized use of your credit card to only $50 anyway. In other words, if a thief uses your card to buy goods or services, you are only responsible for repaying $50 per card used.
Beware of credit repair schemes. If you have a poor credit history, no one can repair it for you. Any corrective measures that someone
claims they can take, you can do yourself at almost no cost. Don’t fall for this trap.
1. Decide to live within your means—don’t spend more than you make. Deciding to adjust your needs and wants is a key part of this decision.
2. Set a limit on how much debt you will carry.
3. Keep an eye on fees, annual percentage ratesand grace periods.
4. Keep track of your credit history.
No one will have a greater interest in the accuracy of your credit files than you. By taking a look at the information in your credit file periodically, you can correct any mistakes. At the very least, check your credit history before applying for a major loan. If there is information in your file that is incorrect, you have a right to ask that it be removed.
You have a right to know what’s in your report, although there may be a charge for a copy of your report. Contact one of the three major credit bureaus:
P.O. Box 105851
Atlanta, GA 30348 (800) 685-1111 www.equifax.com
P.O. Box 2000
Chester, PA 19022 1-800-888-4213 www.transunion.com
P.O. Box 2002
|
USING CREDIT WISELY, BULLETIN #4502 4 |
Allen, TX 75013 1-888-397-3742 www.experian.com
There are a number of federal laws that protect your credit rights. You need to know what they are and use them as necessary. The Truth in Lending Act limits cardholders’ liability for lost or stolen credit cards. When a thief uses your card, their use is known as unauthorized use. If a stolen card is used, you are only responsible for the first $50 of unauthorized charges. But be careful: if you lose a wallet with five credit cards, and a thief charges several hundred dollars on each one, you are responsible for $250 in unauthorized charges. This is a good reason to limit the number of credit cards you hold.
The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission, is designed to promote accuracy and ensure the privacy of the information used in consumer reports. Credit bureaus and other consumer reporting agencies (CRAs), as well as businesses that supply information about you to CRAs, have legal responsibilities. For a copy of the Fair Credit Reporting Act and other information on consumer issues, visit www.ftc.gov or call toll-free, 1-877FTC-HELP (1-877-382-4357).
Issuers of credit cards have devised a number of fees. Although some of these fees might have been established to discourage certain behavior (like late payments), all of these fees can make money for the issuer.
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