02/20/2007

Be a Credit Card Expert

by Melanie Powers, iQualifyNow

Research, Research, Research
Credit card research will save you time and money in the long run. Weigh the pluses/minuses of the credit card before you apply. Not all cards are the same. For instance, some will offer great introductory interest rates, while others may charge a membership fee.

Your credit card must suit your financial situation, don't just fill out all credit applications that arrive in your mail or email. Evaluate your credit card use by considering what kind of balance you carry, then go with a bank you feel comfortable owing money to. Customer service can be a huge factor if you have to dispute a purchase or you miss a payment by a few days. Choose a bank that offers a grace period and is can help you instead of an institution that treats you as though it is doing you a favor by issuing you a credit card.

Only 1 card
Maximum of two! If you owe differnet amounts among several cards, consolidating those balances into one at a lower interest rate can be a very wise move.

You'll save by paying one low rate-- most companies offer a great percentage rate on balance transfers. The second advantage is psychological-- it can be very tiring to write off several checks to creditors each month. You'll have only one lump payment to a single company, and spare yourself the trouble of remembering payments and balance due dates each month.

Use the benefits
Use credit card competitivness to your advantage and seek the most out of your credit card. This could mean discounts on purchases, cash back, free points toward airline tickets, or an assortment of goodies for account holders in good standing.

One of the best features of a good credit card account is identity protection. Use your credit card for big purchases like auto repairs or travel. If a deal goes badly ordoesn't live up to their end of the purchase, a paper trail is important and major credit card companies can help you obtain your money if foul play is suspected.

Minimum Payments
If you want healthy credit, ignore the minimum payment each month. You should use credit cards to your advantage, not the bank's. You pay for an item with a credit card and a few weeks later, when the bill arrives, pay back the balance plus a small finance charge for borrowing a bank's money.

Most people do not have the ability to payback the balance when their statment arrives. They end up making the lowest possible payment, which doesn't cover the balance. Do this for a few months and a person is quickly in trouble.

Paying more than the minimum will shrink your finance charges and leave you in the good graces with the bank. If you can keep this up, you soon will receive a credit limit increase notice by mail. So the next time an emergency pops up, such as having to replace a refrigerator/dish washer or the transmission on your car, the necessary credit will be available to you.





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