A University of Alabama Law School Clinical Program funded in part by West Alabama Regional Commission

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.

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