The Good, The Bad, The Credit Card

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A credit card is a double-edged sword. One edge offers convenience and security when making purchases. You’ll even find some transactions (renting a car, reserving a hotel room) can get tricky without one. So yes, a credit card has a useful side. But it can also have a second edge, a dark side. It’s all too easy to find yourself in trouble with debt, fees and finance charges (not to mention a shrinking credit rating) if you allow easy access to credit to get the best of your budget.

To begin with, your mantra with your credit card(s) should always be: No balance, no late payments. This simply means you shouldn’t make purchases you can’t afford. Strive to pay off your balance each month, and make your payment on time. Of course, that’s the best-case scenario. Life sometimes presents unforeseeable circumstances that require alternate decisions. No matter where you may find yourself, take a look at some tips that can help you with credit cards and their usage.

  • When searching for a credit card, look for one that offers a solid, long-term relationship. That means take a pass on those that offer such enticements as introductory rates lasting only a short period of time, or a free toaster. Do they even give away toasters at financial institutions anymore?
  • Always read the Terms & Conditions associated with the card(s). Pay special attention to fees for annual use, late payments, cash advances and over-limit usage. How do you typically use a credit card? Would any of these fees apply to you on a consistent basis, taking a bite out of your wallet?
  • Always, ALWAYS make your payments on time. Your payment history accounts for 35 percent of your FICO score, so late payments can really affect your credit score. Late payments will also cost you money with fees and higher interest rates on loans. Mark bill due dates on your calendar if it helps you remember.
  • Make it a priority to pay off your balance each and every month. That way, it doesn’t matter what your interest rate is. If you can’t swing paying off the balance, be sure to pay more than the minimum amount. You want to pay down your balance as quickly as possible. Balances owed make up 30 percent of your FICO score, and experts recommend using just 30 percent of your allowed balance ($2,000 limit = $600 used).
  • Always check your statements to be sure all transactions are correct. Someone doesn’t have to physically steal your credit card to gain access to your account. Fraudulent activities such as skimming can give thieves all they need to harvest your account. If you find any suspicious purchases on your statement, report them to your card issuer.
  • If your card issuer suddenly raises your rate or lowers your credit line for no apparent reason, feel free to take your business elsewhere. If you have a balance on the card, you can either pay it off or transfer it to another card.

One last note: if you’re leaving town and plan on using your credit card(s), be sure to call the issuing financial institution for each card and let them know where you will be. Why? This is a practice that helps protect you. If your card company sees strange purchases (a Mexican sombrero) coming from a city far away (Cabo San Lucas), a red flag goes up. There’s question as to whether it’s really you making the purchases or perhaps someone who’s stolen your identity.

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Curious about your credit score? You can get an idea of what it is at by clicking here. Or, you can get your actual credit report once a year at