Top 5 Must Do’s for New Credit Card Users
There appears to be no way of avoiding the use of credit cards these days. Even for the harshest of credit card opponents, a cashless society still seems to be the wave of the future. By and large, credit cards are the preferred payment method at most retail and merchant outlets such as, car rental companies, coffee shops, bookstores, copy centers and even public transits. Put simply, when it comes to expediting the currency exchange process, credit cards have no match. In fact, most financial experts recommend the use of credit cards to help build a good credit history, which then increases the likelihood of obtaining a high credit score. For all you new credit card users, the following list represents a quick “must do” in regards to maintaining its attributes:
Must Do#1: Paying Your Bills on Time…
Paying your credit card account on time is hands down the most important thing you can do with a new credit card account. The key here is to avoid late fees and penalty interest rates, which can climb as high as 29.99% on some credit cards. A good credit history should be your long-term goal. The reason: a good credit history often leads to higher FICO scores; which by in large, helps you qualify for lower interest rates. In final, knowing the date your payment is due is critical to avoiding a late payment, a major credit ding when you factor in a good name early on.
Must Do#2: Staying Below Your Credit Limit…
If you happen to exceed the credit limit on your card, your card issuer may charge you an over-limit fee, or perhaps even penalize you with a higher interest rate. To avoid that happening, most financial experts recommend keeping a daily record of what you spend. Logging your spending habits, along with checking you balance online, should provide the kinds of checks and balances you’ll need from excess spending. Buyer beware: Some merchants (for example, hotel and car rental companies) are known for putting holds on credit card, which likely is based on the entire estimate of the amount you will be charged. This can deceptively reduce your available credit without you even knowing it.
Must Do#3: Avoiding the Fee Traps…
Credit card fees. You know they’re there, waiting for you to make a mistake, then without notice, “wham” you’ve been trapped. Twenty years ago, credit cards were a stable, profitable part of the banking industry. But after a few companies realized the upside potential of adopting a more aggressive business model, this relatively staid business would convert into a multi-billion-dollar fee collecting bonanza. Nowadays, credit card companies not only charge late payment and over-the-limit fees, but collect fees for cash advances, transferring balances, and fees for returned payment. Some companies even charge a fee when you pay your bill by phone. To avoid these numerous fee traps, consumer must make sure to pay attention to the transactions that trigger these fees.
Must Do#4: Paying More than the Minimum Payment…
Minimum payments are for losers. In fact, if you can’t pay your balance in full each month, you end up losing thousands of dollars in interest payments. By paying more of the balance, overtime, you’ll pay significantly less in interest charges, which will allow you to pay off your balance a lot sooner.
Must Do#5: Watching for Changes in the Terms of Your Account…
At any given moment, credit card companies can change the terms and conditions of your account, sending you advance notices about changes in fees, interest rates, billing, and other features. By reading these advances notices, you can decide whether you want to change the way you use the card. For example, if cash advance fees increase, you may decide to use a different card for cash advances. This is very significant for card holders with a variable rate. In addition, card holders must beware that credit card companies are not required to send you a notice about raising your interest rate. The Truth and Lending Act only mandates that Interest rates are listed on your monthly bill. In final, read your bill carefully and make note of any changes.
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