With
credit card issuers continuing to raise rates and change terms, now is a good
time to assess your credit card situation. Here are some helpful steps you can
take to manage your credit card use and achieve credit card success:
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Think long-term when getting a new card. Store cards usually have low credit
limits and high interest rates, so it’s best to minimize these types of cards.
Aim for having two major credit cards—one you pay off every month and one with
a low interest rate for higher priced items.
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Analyze terms and conditions. Make sure to always read the terms and conditions
of the card before applying for it. In the fine print you should look for
annual fees, late fees, cash advance fees, over-limit fees and balance transfer
fees. Determine how you would use the card and how many of the fees would apply
to you.
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Pay on time. Paying more than 30 days late to an issuer could lower your credit
score and negatively affect your credit report. If you’re ever late, it’s a
good idea to call the bank and give an explanation. This will help your chances
of the issuer reducing or waiving the late fee. If you regularly pay on time,
you may want to consider asking the issuer for a lower rate.
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Pay in full or pay down your balance. If you pay the entire amount due every
month, you will not have to worry about paying interest. Even when you have a
zero percent introductory rate on a new card, concentrate on paying off the
balance. When you can’t pay the full amount, try to pay more than the minimum.
It will help you to reduce the outstanding balance more quickly.
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Understand how payments are applied. Interest rates are often different for
cash advances, balance transfers and purchases. Issuers will often state in the
contract that they reserve the right to apply payments to lower-rate balances
before higher ones. After July 2010, when an account has multiple balances at
different interest rates, any money paid over the minimum must be applied
either to the balance charged the highest rate or equally to all balances.
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Check your credit report and score. Make sure all of your payments are
acknowledged, and there are no errors. Consumers are entitled to one free
credit report from all three major credit reporting bureaus—TransUnion, Equifax
and Experian—each year.
Keep your cards manageable and be aware of when you should change or close
cards. Following these steps will help you develop a successful practice for
your credit card use.
