- Make 2003
the Year You Get a Grip on Your Credit Cards
(ARA) - By now, you’ve
probably made some New Year’s resolutions; you might even
have already broken one or two! But along with the usual promises
about losing weight, eating better and exercising more, how about
getting a fresh start on your finances?
For example, now is the perfect
time to take control of your credit cards.
Credit cards are a great convenience,
and it might be hard to imagine going to the mall or even the
grocery store without one. But for many people, credit cards
are a two-edged sword. If you don’t keep a tight rein on
them, you can quickly find yourself in a situation where you’re
paying exorbitant interest rates, or only paying the minimum
balance each month.
Here are some tips for using
your credit cards wisely.
The first thing to do is to
get organized. This is a good time to obtain a copy of your credit
report and make sure the information is accurate. Does the credit
report list your current and past addresses accurately? Are there
any loans or credit cards on your report that don’t belong
to you? Have any of your creditors reported late or delinquent
payments in error?
“If you find these types
of mistakes, or any others, be sure to dispute them immediately,”
advises Jennifer Leuer, communications manager for Experian Consumer
Direct. She suggests checking the CreditMatters.com Web site,
where you not only can order a credit report, but also can learn
more about credit reports and scores -- including guidelines
for disputing possible inaccuracies.
Next, review your credit cards
and make a list containing important information about each card.
Include the account number and contact information, especially
the 800 number to call in case your card is ever lost or stolen.
Make sure your ATM card is on the list as well.
Now that you’ve got a
list of your credit cards, it’s time to evaluate them. Go
back over your recent statements to double check your interest
rates. “Many credit card companies entice you with low introductory
offers that expire after a certain time period,” notes Leuer.
“You may find out that instead of the 1.9 percent you thought
you were paying in interest, your rate has gone up -- way up.”
Another hidden cost is the
annual fee charged by some credit card companies. These fees
can range from $25 up to several hundred dollars for gold or
platinum cards. Take stock of the fees you’re paying. If
you have a credit card that carries a hefty fee, you may need
to shop around for a better deal.
As you take inventory, you
may discover that you have cards you’re not using. If so,
consider canceling them. Your credit rating is based in part
on available credit and it could work to your disadvantage if
lenders see that you have thousands of dollars of unused credit
at your disposal. On the other hand, it’s a good idea to
keep one or two cards that carry a zero balance, just in case.
If you aren’t in the habit
of checking your monthly statement, you should vow to do that
during the coming year. Hold on to your receipts throughout the
month so you can reconcile charges when your bill arrives. “It’s
important to read your bill every month to look for mistakes
such as double billing, uncredited refunds for items you returned,
charges that you didn’t authorize and other errors,”
says Leuer. “If you find a mistake, contact your credit
card company immediately.” (That list is coming in handy
already!)
And remember to pay your credit
card bills on time, since late payments can adversely affect
your credit rating. Not to mention the fact that most credit
card companies charge a hefty fee if you don’t pay on time.
If you accidentally miss a payment, call and ask if the late
fee and interest can be removed. Most cards will do this at least
one time … if you ask.
If you find that you’ve
accumulated more debt than you’d like, you need to come
up with a plan to pay off your balance. Figure out a way to pay
more than the minimum due each month. If you owe a credit card
company $5,000 at 18 percent interest and you pay just the minimum
every month, it will take you over 30 years to pay off the debt.
You’ll want to start by
paying off the card with the highest interest rate first. And
stop carrying your credit card with you at all times; it’s
just too tempting. Reserve it (or them) for emergency use only.
Save money any way you can -- by bringing your lunch to work
instead of going out; having coffee at home instead of buying
a latte every day; renting a video instead of taking the family
to a movie theater. Even if it saves $20 a month, that is $20
more you can put toward becoming debt-free.
Make it a habit to review your
credit cards and your credit report every January and you’ll
be ready when it comes time to make a big purchase such as a
house or a car.
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- For more information on managing
your credit, visit www.CreditMatters.com. Also, www.Experian.com offers an identity fraud
center, expert credit advice and the CreditManager monitoring
service. Another top credit monitoring service is CreditCheck,
which can be ordered through www.ConsumerInfo.com. Both services offer
consumers a 30-day trial and a free credit report as an incentive
to try the service.
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- Courtesy of ARA Content
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ARTICLE POSTED
JANUARY 22, 2003
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