Credit Cards

	Smart Move
	A credit card can have a place in your life—if you handle it carefully.

Credit cards are handy—and seductive. When you’re moving, it sure can be convenient to use the card to pay for expenses. However, when the bill comes, you could wind up paying 18 percent or more in interest if you can’t pay the full amount. A credit card can have a place in your life—if you handle it carefully. For example, you often need a credit card to rent a car or make an airline reservation. But caution is the key. To manage a credit card wisely, consider the following guidelines:

• Talk about credit with your spouse and agree on how you both will manage credit card spending.



• Have only one major credit card. Multiple cards mean numerous chances to build debt. Also, it’s less expensive in the long run to pay a larger amount on one card than to make minimum payments on many.



• Get rid of store cards. They often charge the highest interest rates (frequently 22 percent or more a year). Don’t just cut up the card; call the store and have them close your account. Ask for a letter of confirmation and keep it with your other credit records.



• Shop for a card with no annual fee and a lower interest rate. The Internet is a great resource. Try the Bankrate Web site. If you belong to a credit union, find out what it offers. Credit unions often charge lower rates on credit cards.



• If paying your credit card bill by mail, send your payment several days before the due date. If making the payment over the Internet or by phone, find out when the payment will post to your account. Some companies wait a day or two before posting your payment so you need to make the payment a day or two before the due date. Late payments are expensive (often $30 or more) and hurt your credit history.



• To avoid interest charges, pay off the entire balance each month.



• Keep your credit limit low, preferably around $2,000 or $3,000. This will ensure you can’t fall too deeply into debt. If the credit card company automatically raises your limit, you always have the option of telling them to reduce it.



• Beware of cards that offer low “introductory” interest rates. This rate usually is only for a short time—often around six months. Find out what the rate will be after the introductory period. If you make a late payment or charge more than your credit limit, your interest rate could jump overnight.



• To stop most credit card offers from coming in the mail (known as “opting out”), call 1-888-567-8688 or visit www.optoutprescreen.com. The toll-free number and Web site are operated by the major credit reporting agencies.

Cash Advance Checks Tip: Tear up or shred checks that credit card companies send with your bill or in separate mailings. Although it can be tempting to use the check for something you want, it will be costly. The amount of the check is considered a "cash advance." Interest rates for cash advances are usually high and the credit card company will begin charging interest immediately.

Save Big Bucks on Credit Card Bills If you pay more than the minimum payment on your credit card bills, you can save thousands of dollars in interest. For example, if you owe $1,000 on a credit card that charges 18 percent interest and make only the minimum payment, it will take you almost eight years (90 months) to pay off the debt and you will have shelled out $1,804. Take a look at how paying more than the minimum payment will save you big bucks: Add to Each Payment You’ll Save Pay Off the Bill This Much Sooner $5 $330 32 months $15 $550 54 months $25 $620 64 months $50 $690 75 months