Choose Wisely!

If you are shopping for a credit card, especially if it’s for the first time, you need to wade through the sexy features. Money back? Miles? Perks? The best card for you is the one most closely matching your needs and how you’ll use it. Ask yourself these questions.

Are you planning to pay your bill in full every month? If you are, and you want to spend as little as possible on obtaining a credit card, focus on finding one with no annual fee.

How important are the perks? If you plan to pay your bill in full every month and believe perks like earning airline miles or money back on purchases are worth the usual annual fee, then you’ll want to focus on the best combination of features for you and choose the perk that excites you the most.

What happens if you don’t pay in full? If you know that occasionally you will need to carry a balance, you should focus on cards with low interest rates. Be sure to read the fine print of any card you are considering to find the lesser of the evils for your particular circumstances.

Do you use your credit card for cash advances? If you think you might borrow money from your credit card, you’ll want to look for a card that carries lower interest rates and lower fees on cash advances. Be aware this is one of the most expensive ways to borrow money.

Take Charge of Your Credit

Submitted by admin on Fri, 10/30/2009 - 13:50

November 2009

It can be tempting to reach for the plastic, especially when you’re face to face with a gorgeous pair of shoes or the perfect purse that you know perfectly well you can’t afford. But recklessly charging up your credit card can actually cost you even more than that designer splurge in the long run. Knowing how to manage your credit is a vital skill and the most stylish thing you can do! Lisa Serwin offers her expert tips.

Get a handle on your debt
Already amassed a lot on your cards? You can work with your credit card company to set up a payment plan or to reduce your interest rates. If they won’t help you, try calling a reputable credit counselor for assistance. Often, they will work with your credit card company to help reduce what you owe. Log onto www.consumercredit.com to find a counselor who can help you.

Know your credit score
A credit score tracks whether you are more likely to be a good customer or a bad customer. The higher your score the less of a risk you present to lenders. Your score is based on a variety of things including your payment history and any existing debt. By law you’re entitled to a yearly free credit report—get yours at equifax.com, experian.com, or transunion.com.

Use credit smartly
Credit cards aren’t bad if you use them responsibly. If you have good credit because you have always paid back what you borrowed, you will be permitted to borrow more and pay lower interest rates than if you have bad credit. It may not seem like a big deal now but if you’ve got a great credit score, you can buy a car or a house more cheaply than someone whose credit score is lower. So remember a few too many splurges racked up on one credit card could cost you real money down the line.

Understand the concept of APRs
If you are unable to pay your credit card bill in full every month, you are charged interest for borrowing the money. The amount of interest is called the Annual Percentage Rate or APR. There are APRs for purchases, cash advances, balance transfers, and even missed APR payments. To make matters more complicated, while APRs are quoted on a yearly basis, many credit cards quote fees on a daily, weekly, or monthly basis. Before selecting a card, you need to look at APRs (and the fine print) very carefully.

Less is more
There are no rules about how many credit cards you should have. However, you really do not need more than two—one for your day-to-day needs and one for emergencies. Any more serve as temptation, and shopping is tempting enough!

Pay on time
Ideally you should only buy on credit what you can pay off during the same month. If you are unable to pay the bill in full when you receive it, pay off as much as you possibly can. And never pay late—a recent late payment can lower your credit score by sixty points or more.

Protect your identity
Check your account statement regularly and look for charges that aren’t yours. Shred or rip up any credit card offers that come to you in the mail that you are not planning to use so no one else can fill out the application.

Adapted from So Many Shoes, So Little Money: A Girl’s Guide to Finance by Lisa Serwin, On-Demand Publishing LLC, amazon.com.