Credit card management
Big Thicket Messenger - December 2007
When it comes to holiday spending, consumers are known for going a little overboard – be it in the spirit of the season or just poorly managing funds.
Part of the reason people overspend is due to the often misunderstood language included with each credit card bill they receive. Important information is often printed particularly small in the hopes that people won’t, in fact, read their agreements and will fail to notice any changes in policy. With the credit card season upon us all, consider the following tips before putting it all on plastic over the next several weeks.
* Know your credit card limit and where you stand. In the past, people who charged a card that was over its limit would have to go through the embarrassing ordeal of being told their card was declined. These days, many credit companies have chosen to go a different route, allowing consumers to overcharge their cards and then face exorbitant fees and increased interest rates once the limit is exceeded. Before you leave the house and swipe your card, know exactly what your card balance is, how much you can spend before reaching your limit, and avoid exceeding that limit at all costs.
* Pay on time. Sometimes the day your bill is due each month changes. While it might be due on the 10th one month, the next due date may be the 8th day of the following month. This can, and often does, lead to late payments and late payment fees. A late fee is often in the neighborhood of $35. But a late payment also allows a company to invoke a penalty rate, which can be as high at 27%. In your agreement, it will likely say this rate can be issued after as little as one late payment, so don’t just assume that since this is the first time you are late there will not be any penalties. Avoid these penalties by paying on time and knowing when your due date is each month.
* Avoid cash advances. Particularly during the holiday season, a cash advance can be very enticing. But cash advances should be avoided. Most cash advances will include a fee for the advance and a higher interest rate than the actual credit card, making the cost of a cash advance far more than it actually appears.
* Verify your charges. Verify any and all charges on your card by keeping your receipts and checking them against what appears on your statement. This will accomplish two things. First of all, you’ll catch any fraudulent charges if they exist. Secondly, you can examine your spending habits, which may or may not be healthy.
* Don’t get tied down. You can shop for a credit card just like you can shop for holiday gifts. Not all cards are the same as some carry higher interest rates than their counterparts. Research companies, their interest rates and policies and politely ask friends if they would recommend (or not recommend) any companies. Take the results of your research to your company and then negotiate a new deal with them or move to another company.