Take Charge of Your Cards

Take Charge of Your Credit Cards

Credit cards offer tremendous benefits for consumers, including the ability to afford purchases big and small, in good times and bad. But chances are you can get even more out of your credit cards — and save more money — if you remember these basic tips.

Choose them carefully. Don't choose a card just because of the freebies that come with it or because there's no annual fee. Look for a card that's best for your borrowing habits.

Ask yourself if you expect to pay your balance in full or if you'll routinely carry a balance on your card from month to month, which means you'll be charged interest. Generally speaking, if you expect to pay your credit card bill in full each month, your best bet is a card with no annual fee and with the kind of rebates or rewards that fit your lifestyle. If you don't expect to pay off your card balance in full most months, look for a card with a low interest rate and the right mix of rebates or rewards to justify any fees, including an annual fee.

Also, before you apply for a card, carefully review all other terms and conditions, which must be disclosed to you before you incur any charges on the account. Once you use a card, you have entered into a contract with the card issuer and you are obligated to abide by the terms disclosed to you.

Use them carefully. Credit cards offer great benefits, especially the ability to buy now and pay later. But you've got to keep the debt levels manageable and pay on time. If you don't, the costs in terms of fees and interest, or the damage to your credit score, could be significant. Among the most important things to know and do:

• Understand your card's terms, especially when interest will be charged and at what interest rate. Be aware of the circumstances that would allow your card issuer to increase your interest rate.
• Pay as much as you can to avoid or minimize interest charges. If possible, pay your bill in full each month. Remember, paying only the minimum due each month means you'll be paying a lot of interest for many years with little reduction in the amount you owe. Those interest costs could far exceed the amount of your original purchase.
• Pay on time to avoid late fees. One option is to arrange for an automatic withdrawal from your checking account to cover your credit card bill and perhaps other recurring expenses (but be sure to record the transaction). Another option is to pay online, generally at least two days before the due date to be sure it is processed on time. If you pay by regular mail, allow enough time for delivery and processing by sending your payment about a week before the deadline.
• Stay below your credit limit to avoid penalties and a reduction in your credit score.
• Read all the mailings from your card issuer. They may include notices of an interest rate increase, a reduction in your credit limit or other changes in your account.
• Check for errors on your credit card bill. If you find charges you didn't make, call your lender immediately to guard against fraud. Also, protect your rights under the law by mailing a letter to the card issuer's address for billing disputes (found on your credit card bill) within 60 days of the date of the bill. A phone call, fax or e-mail isn't enough to fully protect yourself.

Guard your credit card numbers from thieves. Never provide your credit card numbers — both the account number and expiration date on the front and the security code on the back — in response to an unsolicited phone call, e-mail or other communication you didn't originate. In general, only give your credit card or card numbers to reputable merchants or other organizations, and preferably only when you initiate the transaction.

When using your credit card online, make sure you're dealing with a legitimate Web site and that your information will be encrypted (scrambled for security purposes) during transmission.