Some
credit card and credit management facts you can’t
afford to forget:
- Never commit more than 15% of your take-home pay to
credit payments.
- Shop around for a credit card -- features
and FEES vary significantly.
- Maintain a strong credit
history; monitor it for accuracy. You can’t "move away" from
your credit history, and many employers check it
prior to making a job offer. Don't let you credit
history interfere with your job search.
- Missed
or late payments on credit cards can trigger (1)
costly fees that add to your debt, (2) penalty
interest rates that are significantly higher than
the usual card rate.
- A CFA study found that 78%
of college juniors and seniors did not know that interest
was the best indicator
of loan costs.
Track charges to insure you can pay the bill in
full each month. Send a $2 check and your name
and address
to: United College Marketing Services, 2021 Midwest
Road, Third Floor, Oak Brook, IL 60521 for a set
of transaction ledger envelopes that fit over your
card.
- Avoid "miss a payment" offers --
they only cost you more in interest charges.
- Unauthorized
use of lost or stolen credit cards (including telephone
calling cards) is limited to
$50 per card. Notify the company as soon as possible
to avoid fraudulent use and the fee.
- Most Americans including 33% of households earning
$100,000 or more, DON'T pay the amount due on their
credit card every month.
- Getting into debt is much
easier then getting out of debt. Credit use can lead
to overspending.
- Consider risks and benefits of credit
card debt before applying for a card. Do you really
need a
card? One national credit card is enough to help
you build a credit record.
Terms you shoud know:
Average Daily Balance-
most common calculation method; credits your account
from the day payment is received.
Two Cycle Billing - Uses 2 months account activity
to calculate your balance.
Annual Fee- sometimes there is no fee, often range
from $25 to $100, gold or platinum cards are often
$75 up to several hundred dollars.
Grace Period- (a free period) no finance charges
when you pay your balance in full before the due
date. No Grace Period- usually a finance charge from
the date you use your card or from the date each
transaction is posted to your account. Cash Advances-
most cards do not permit a grace period for cash
advances; even if they have a grace period for purchases.
Transaction Fees- Some Credit Card issuers charge
a fee for: a cash advance, a late payment, going
over the credit limit, or not using the card.
How much is the credit limit? How widely accepted
is the card? What services and features does it have?
Annual Percentage Rate (APR) -The amount of interest
you pay on a loan over a period of one year (12%
-30%). Know your RATES ! Is it tied to prime? Are
there quarterly rate increases? Does the rate go
up if your late?
