Give Yourself Credit
Credit cards are safer to carry than cash and they're always there when you need them in an emergency. They make it easy to shop. They also give you extra time to pay for a purchase.
Unfortunately, credit cards can also be dangerous. Using them too much can lead to overspending and debt. Being careless with them can make you a victim of fraud.
Tips for Choosing Your Credit Card Issuer
- Beware of special offers. If you get a credit card offer in the mail that advertises an unbelievable 2.5-percent interest rate, don't believe it. Check the fine print. The interest rate will probably rise - maybe higher than 20 percent - in the coming months.
- Shop for the best deal. Look for a card that has a low annual fee and interest rate. Make sure that you'll owe no interest as long as you pay your monthly bill in full and on time.
- Think twice. Think twice before purchasing insurance that promises to pay your credit card bills if you can't. Often, this insurance is not worth the expense.
Tips for Using Your Card
- Don't carry your credit card with you every day. If you think you will overuse it, keep the card at home. To keep your credit cards safe, don't carry more cards than you plan to use.
- Keep your credit card number to yourself. Criminals use stolen credit card numbers to make purchases over the phone, through the mail, or on the Internet. They can even use your number to make themselves a new credit card. To protect your number, shield your credit card from the people around you when checking out at store registers. Don't give your credit card number over the telephone unless you initiated the call and are making a specific purchase. Only shop at secure Internet Web sites. Guard your receipts too, since they carry your credit card number.
- Don't leave blanks. Always total your charge slip before signing your credit card receipt. Never sign a blank charge slip. Don't leave blank spaces where additional amounts could be added to your slip later by a dishonest sales person.
- Report stolen or lost cards immediately. If you don't call and write, the company can hold you liable for fraudulent charges of up to $50 per card. By calling early, you allow the company to stop the thief by canceling your credit card number.
- Don't write your Personal Identification Number (PIN) on your credit card. A credit card company may give you a PIN number that you can use to receive a cash advance from an Automated Teller Machine. If your card is stolen, a thief can use your PIN to "borrow" large amounts of cash on your card.
Tips for Paying Your Bills
- Pay your bill on time. That way you'll avoid paying late fees of $25 or more. Being late can also drag down your credit score, increasing the cost of any credit you may need. You should know that even if you pay your credit card bill on time, they can and will increase your interest rate if you are late with payments on other debts.
- Pay as much on your bill as you can. Pay at least the minimum. Paying even a few dollars more than the minimum is better. Credit card companies are increasing the minimum payment from around 2% to about 4%. In effect this doubles that minimum you must pay each month. At first this may be hard to do, but over the long run it helps you cut the time and cost to pay off the balance.
- Pay your entire bill, if possible. Otherwise, you'll wind up paying high interest rates on the remaining balance.
- Make sure your monthly statement is accurate. To correct billing errors, follow the instructions on the back of your statement.
- Know your rights and responsibilities. Three major laws protect borrowers from unfair practices. For more information, visit the Federal Trade Commission Web site.
Additional Resources
Consumer Data Industry Association (CDIA)
CDIA is an international trade association of credit reporting, mortgage reporting, and collection service companies. It provides information about the Fair Credit Reporting Act and educational material for consumers. Address: 1090 Vermont Avenue, NW, Washington, D.C.
URL: http://www.cdiaonline.org
The Federal Trade Commission (FTC)
The FTC publishes consumer brochures and booklets about credit. It also can provide you with instructions for filing complaints against a lender. You can find these materials on the FTC Web site, or call (202) FTC-HELP. To contact the FTC by mail, write to the Federal Trade Commission, CRC-240, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580.
URL: http://www.ftc.gov
Federal Citizen Information Center (FCIC)
This site lists many publications about credit, including "Consumer Handbook to Credit Protection Laws," "Credit Matters," "How to Dispute Credit Report Errors," and "ID Theft: When Bad Things Happen to Your Good Name." You can download these publications on the FCIC Web site; order by mail from Federal Citizen Information Center, Pueblo, CO 81009; phone at 888-8-PUEBLO; or by fax at (719) 948-9724.
URL: http://www.pueblo.gsa.gov
