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Credit Cards & You

Credit can be a wonderful thing, how else could you afford to buy a car, pay for college, buy a house, or some other BIG TICKET item. Are you going to write a check for a new car? Yeah right, that's gonna happen! That's where credit and credit cards come in.

How you use your credit card for SMALL TICKET ITEMS, helps determine whether or not the BIG TICKET items are within reach. Proving that you can handle the small stuff, a credit card, will show financial institutions that you could be ready for the big stuff. This doesn't happen overnight, it takes time to build your credit and to master the art of credit card use, and it doesn't happen unless YOU do it. Here are three simple rules to help keep credit cards and their balances in line…

1. Stick with one primary card. If you have department store cards (you know their names) and, one or more of the biggies (like Visa or Master Card), use the department store card only when you know you can pay your purchase balance off by the next statement, AND they're offering you a money saving reason to use their card (like 20% your purchase). Just remember to pay your purchase off as soon as you get the bill or it may cost you more than the 20% you saved. Use the primary card (the Visa) to pay for those purchases that will take just a little longer to pay off, or, for those emergencies that always pop up! Sticking with one primary card per adult in your family prevents credit roulette. In other words, the hiding of debt by having a small balance on a lot of cards, it may look manageable when you owe a lot of companies a little bit of money. But guess what…when you add all the balances up it can be pretty frightening and confusing when the bills come! Keep it simple by sticking with one primary card.

2. Build your credit; pay on time. Make sure you make your payments on time! Even if you can just make the minimum payment. In order to keep you, your credit history, and the credit card companies happy this is very important! By the way, if you have a few dollars extra that you would like to pay on a credit card, choose the card with the highest interest rate – not the lowest balance. You can find the current rate on your statement; the credit card companies must disclose what the interest rate of your card is on your monthly statement – it's the law.

3. Review your statements. Once a month you have the opportunity to review your statement, or more fittingly – you're spending habits. Make sure what you've purchased is on there and nothing more. Contact your credit card company immediately if you see a charge on your statement that you have NOT made. Keep your receipts – they're important when something is wrong on your statement!

It's also smart to keep a diary, or a register, for your credit cards. One register per credit card.Every time you use the card, or make a payment to the card, write it in a register or in a computer program – just like a check book register. This helps when you review your statement, you can compare your notes to the financial institution's note, that way if there is a discrepancy, you'll know right away. AND, wouldn't it be nice to know what the balance is before you open the envelope?

Using these simple techniques can have your credit working for you, versus, you working for your credit card. It's not as hard as you think – try it!

Have questions about this stuff? Email your questions and comments to the Credit Union and a representative will get in touch with you ASAP.
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