2. Wise Use of Cards
Once you select the best card for you,
use it wisely. A dangerous aspect of credit
cards is the temptation to use them to
finance a life style the holder really
cannot afford. The lure is especially
seductive for seniors whose incomes drop
significantly on retirement, yet seniors
especially do not need mounting debt burdens.
Inability to pay off charge cards within
three months can be a sign of trouble
down the road.
Pay on time; allow time for mailing.
Be sure to pay the bill on time, to avoid
late fees and interest charges. Allow
enough time for mailing, and be alert
to late charges that are placed
on your bill when you have allowed plenty
of time for the payment to be received.
Do not hesitate to challenge such charges.
Don't make just minimum payments.
One of the most common and costly traps
for consumers is falling into the habit
of making only minimum payments. If you
pay only the minimum month after month
you will pay off the balance slowly or
not at all. If you pay the minimum and
continue to charge on the account, you
will soon find yourself with a very large
balance compared to the merchandise you
bought, and one that is mounting rapidly.
Another trap for the unwary is buying
what the card issuer is peddling, not
what the cardholder needs. The deals
promoted by credit card companies often
mean high profits for card issuers but
wasted money for consumers. Why pay $134
for protection against loss or theft of
your card, for instance, when the law
limits your liability to $50? If you are
solicited over the phone, never accept
immediately. Ask for written materials
describing the offer before you decide,
and do the math. An article you can buy
locally for $50 is not a bargain at $8
a month for 10 months!
Summary: Credit card companies have one
goal: to make money from you. Like any
other business, a credit card company
must make a profit in order to stay in
business and provide the convenience that
credit cards offer. But it is up to you
to see that the profit a company makes
from you is reasonable.