Financial Directory

Simplifying Your Credit Cards

Credit cards can pose a greatest threat to your financial security.  Even though most cardholders intend to pay their full credit card bills, this rarely happens and credit card issuers know this, and they use it to their advantage.  Here are guidelines to make the most of your credit cards.

• Avoid Carrying Several Credit Cards:  If you lose your wallet you are liable for only $50 of fraudulent charges on each card.  With several cards, those fees add up fast.  To close your credit card account, you need to call each company to sever ties and not just cut up the card.

• Pick One or Two Credit Cards to Use:  Take a good look at your payment patterns.  If you carry a balance from month to month, find a card that you can lock in a low interest rate.  Low introductory rates can soar after a few months, so read the agreement carefully.  If you pay off your balance every month and use your credit card for everyday purchases, look for a card with the best reward perks or one with no annual fee.   

• Pay On Time:  In a 2005 study by the government Accountability Office, 35 % of card holders paid at least one late fee and the average cost of late fee was $34.

• Take Charge of Your Credit:  Reserve the card for use when an emergency arises and you can’t borrow money from a family member.  Only carry the credit card with you when you suspect you will need it such as when you are traveling or for large purchases that you could cover the charges later.  To avoid having to pay interest every month, don’t charge any item that you could not afford to pay for with cash.

• Having Several Credit Cards is not a Good Thing:  Too much available credit can harm your credit rating and keeping you from getting a mortgage or other real big loan.  An applicant with a lot of available credit cards makes lenders nervous that there is always the potential that the cardholder will run up all the available cards to their maximum limits:  Bad for your credit score.