Posts Tagged ‘Wallet’

How to use your credit card to establish a good credit history

If you’re young and just starting out credit cards are certainly convenient and can help you establish a good credit history, which will be important when you need to make major purchases down the road. However, carrying a credit card comes with big responsibilities. Here are some tips on how to use your credit card wisely.

Choosing the right credit card

When selecting a credit card, you should consider your own needs. For example, if you’re going to be carrying a balance (not paying off the entire bill each month) then it is imperative to seek out the lowest interest rates that you can find. But you may be limited by a few circumstances, one of which is your paycheque. Some credit cards require a minimum income level or charge an annual fee.

High limit credit card could be a recipe for disaster. Signing on the dotted line is fun. No money comes out of your bank account and no cash comes out of your wallet. Shopping has never been so easy. Thats why when starting out the best credit cards are the ones that have low spending limits, unless you can afford to pay for any of the charges that are made on it.

Just about all credit cards offer some type of incentives such as rewards points or cash back incentives. This is done for obvious reasons. The most common of which is to entice the cardholder into using it more often. Overall it is a pretty good deal to receive rewards for credit card charges as long as you bear in mind that this is not free money. Whether you realize it or not, you have already paid for those points.

Managing your account.

Managing your account online is a great feature; just about every body has access to the Internet and can easily access their credit card statements.

Studying your credit card statement

You’ll receive a statement that details what you’ve bought and what you need to pay. The purchases you’ve made will be tallied, just like on a bank statement. You’ll need to pay attention to:

The amounts – Make sure your purchases are listed correctly by comparing the amounts to your own purchase receipts. Doing this will help you understand where your money is being spent and help you adjust your spending patterns.
The balance – If for any reason your statement seems a lot bigger than you thought it would be, you may be heading into a danger zone. Keep your balance within a range you can afford to pay off every month. And remember to save some credit for emergencies.
The minimum payment – You need to pay this amount each month toward the entire outstanding balance. Making substantial payments every month will help you keep the interest under control.
The purchase interest – This is how much you’re paying on purchases that have not been paid off in full by the payment date. Whenever you carry a balance forward from the previous month, you’ll pay this monthly interest.
The payment date – When you are busy and responsible for many bills, it’s easy to forget when everything is due. However, paying bills on time is crucial to maintaining a positive credit record. Over time, it could mean the difference between being approved or denied for other credit, such as a car loan or a mortgage. Many credit card companies advise making payment a few days before the specified payment date to ensure receipt. Another option is to pre-pay your bills using telephone or Internet banking.

Staying out of the danger zones

It’s a good idea to avoid the following, despite the temptation:

Cash advances – You’ll pay interest on a cash advance from the moment the cash is in your hand. You may also be charged a service fee. Cash advances are great for emergency cash but avoid using them as an income supplement.
Hitting your credit limit – There are many reasons why hitting your credit limit can be dangerous. If you don’t have the money to cover your purchases, you will definitely feel the discomfort that a large balance brings.
Impulsive purchases – Think about the purchase and why you are buying. Do you really need it? Don’t let the ease and convenience of credit be the driver for purchasing the item.
Overusing the card – Credit cards aren’t a substitute for saving and budgeting. When you can’t afford to go to the movies, don’t think of your credit card as a saving grace.

Use Your Credit Card as a Tool

A credit card can be a tool that you use to your advantage. If you play your cards right you’ll prove to creditors that you are a person who can take care of business in a mature and responsible way. And a few years down the road, you’ll have a good credit history. Now that’s impressive.

Credit card fraud is a serious problem in the United States, causing an estimated one billion pounds a year in losses to consumers. Consumers pay for this fraud when they have to pay higher finance charges, annual fees and increased costs for law enforcement.

Guard bills and credit cards

Consumers should keep in mind the following to protect themselves against credit card fraud. First, protect your bills and credit cards from scam artists.

Unscrupulous persons raid mailboxes and steal not only new and renewal credit card offers, but also bills, in order to obtain credit card numbers of consumers. You should be aware of when your bills and replacement credit cards are due to arrive. If your bills are late, contact your credit card company. You should sign all credit cards when they arrive by signing the back with your usual signature.

Keep a separate record of your card and account numbers

It is a good idea to keep a record of all your credit card numbers in a secure place separate from your wallet. Your credit card records should include the expiration date of each card and the phone number and address of the company that issued the card. Check your cards periodically to ensure that none of them are missing or have been stolen. Always be careful to get your credit card back promptly from sales clerks when making a purchase.

Guard your credit card numbers

When making credit card purchases over the phone guard your credit card numbers. Do not give out your credit card number out over the phone unless you are dealing with a company you know well and have done business with before, and unless you have initiated the call to the company in order to make the purchase. Never give your credit card number to anyone who calls you on the telephone. You should memorize any PIN number related to a credit card, and if you write it down, do not keep it with your credit card.

Limit identification presented to cash a check

Sometimes when you are making a purchase in a store, a business may require that you show them that you have a valid credit card before accepting your check. A merchant will often note the type of card, such as Visa or MasterCard, that you have produced and the name of the issuing bank. Do not give out your credit card number to anyone to guarantee a check.

Keep receipts and report stolen credit cards

There are a number of things you can do to protect your credit card privacy when making purchases. Destroy all carbons and voided receipts immediately. Keep receipts of all purchases you make and check your credit card statements against them. If you are not using a particular credit card, destroy it immediately. And, of course, if any of your cards are lost or stolen, report the theft immediately to the issuing company.

When you are traveling, carry the names of the issuers of your credit cards, your account numbers, and the toll-free numbers of credit card issuers in a secure place, separate from your wallet. If you report any cards as lost or stolen, make a note of the date, time and the name of the person to whom you spoke when you reported the incident.
Limit your liability for cards reported lost or stolen

Most companies have toll-free numbers and twenty-four hour service to deal with emergencies such as the loss of your credit or charge cards. You should report lost or stolen cards immediately because once you do, you have no further responsibility for unauthorized charges. The maximum liability in any event under Federal law is 50 per card. If you suspect that your card has been used fraudulently, the credit card issuer may ask you to sign a statement under oath that you did not make the purchases charged to your card.

Seeing people buying food or shopping clothes using credit cards has been commonplace these days. The phrase “Charge it!” has become a favorite expression of card users, and has been commonly heard in shops, dining places, and elsewhere.

After all, who does not want to use these credit cards? Easy to use, these sleekly-designed cards can be used to buy practically everything in commercial establishments regardless of how much (or less) money does one carry money in his wallet. Short of cash and hungry? No grocery supplies? Going to a party but no money to buy that dress you’ve been drooling for? No problem! Your good ol’ credit can care of that for you. No worries.

Credit Cards: Not Free Money

But wait. A credit card spree may be fun, but that doesn’t free you from responsibilities in paying the expenses you incurred from using your credit card. Credit cards, after all, are interest loans in disguise. Typical credit cards ask for a number of charges, including:

” A finance charge, which is an interest charge for the unpaid portion of your monthly bill;

” An annual membership fee;

” Or if you’re paying after the deadline, there is also a late payment fee which could have a higher interest rate.

In fact, many credit-card holders face credit-related problems. Poor purchasing decisions, lack of information on credit card fees, and disregard for upcoming credit payments are among the reasons why many credit-card users are often hard-pressed in paying their debts. Some are not even able to pay for the actual purchases they made, just barely managing to pay credit card company charges.

Before you get drowned in a sea of debt, here are some tips to help you manage your credit-related expenses:

” Be credit smart. Applying for a credit card application means you are ready to assume the responsibility for paying your credit. You and only you – not your parents, spouse, or whoever – is responsible for that.

” Use your credit cards wisely and sparingly. Remember: Paying goods and services using credit cards are more expensive than using cash or checks. Credit payments include interest and other fees. Use credit cards as sparingly as possible. If you really need to use credit cards, carry only the cards that you will actually use.

” Use credit only if you are sure you can repay it. Paying your debt on a credit card using another does not count.

” Avoid impulse shopping on your credit card.

” Use credit for money emergency only.

” Seek credit counseling as soon you see financial problems on the horizon.