Credit Cardholder's Bill of Rights PR Toolkit
Tips to Manage Your Credit Card
Credit cards have become an integral part of our economy and society. Their ease of use allows all of us significant financial freedom and flexibility. However, too often people get in over their heads by not taking the time to understand the terms of their card and not asking for help at the first signs of trouble. As of February 2008 the American consumers were accountable for $2.5 trillion in outstanding debt – almost one-third of the national debt level.
With credit comes responsibility and the relationship is a two-way street. Consumers should be their own best advocates when it comes to managing their finances, and lenders should use terms and conditions that are clear and easily understood by borrowers.
For tips and other financial tools, please visit My Money Management
The Financial Services Roundtable offers consumers the following 10 tips to consider when using their credit cards:
1. Make a budget.
Creating a budget will help you set targets for monthly expenses such as utilities, groceries, medical costs, household needs, and transportation. Set realistic targets and then try to spend even less. Make hard decisions about how to squeeze more of what you earn from your budget to pay off your debt. Don’t forget to budget for the unexpected, such as replacing a broken hot water heater or emergency medical treatment.
“A budget is the key to taking charge of your finances,” said Steve Bartlett, President and CEO of the Financial Services Roundtable. “It allows you to understand where you are spending your money and allows you to control what you do with it.”
2. Track your spending.
Using the budget you've developed, track your spending carefully so you can look for additional ways to save. The more money you can apply to your debt each month, the sooner you should be out of debt. In addition, diligently monitoring your bank account and credit card statements will make you less likely to fall victim to identity theft.
3. Understand interest and late fees.
Know your interest rates and what the late fees are on all of your debts. Avoid late fees to ensure they're not adding to your debt, and explore options for lower interest rates. If you can't make a payment, call the banks or companies you owe and talk with them about your situation.
4. Read your statement.
When you get your credit card statement, be sure everything is correct. Check the due date. Look at the new charges and match everything with your receipts. Make sure your last payment was recorded correctly. If something seems out of place call your creditor immediately to get it fixed.
5. Pay on time.
Pay your bill as soon as it arrives so you won’t forget about it. Late payments often result in penalty fees and higher interest rates. Also, don’t be afraid to call the credit card company and change the monthly due date. If your credit card payment is due at the end of the month along with your car payment and apartment rent, call and ask to have the due date moved up.
6. Pay more than the minimum.
Understand how paying more than the minimum can be a critical first step in reaching your goals. If possible, never pay just the minimum – you’ll end up paying what you owe over and over in fees and interest. This is particularly true for credit cards, though it may also be useful for paying other loans, such as those used to buy furniture, appliances, or electronics.
7. Reduce your number of creditors.
With most people, a large part of their debt management problems arise because of the sheer number of creditors they have to pay. There’s the credit card company, the store cards, the utility bills, the car loan payment, the home loan payment, the student loan payment, and so on and so on. Try to reduce your debt management problems by reducing the number of creditors you have. If possible, consider consolidating your existing debt into one larger account.
8. Pay the most expensive debts first.
Interest can add up quickly on debts of any size. Be sure to focus on paying off the ones with the highest rates.
9. Use online banking.
Use online banking to pay your bills and to track your account activity. This not only allows you to avoid any nasty bank queues, but also lets you do your banking 24-hours a day, 7 days a week.
10. Get help early.
If you’re getting in trouble with debt, get help early. Consider talking with a certified credit counselor – an experienced professional who can help you get out of debt. To find a credit counselor approved by the Department of Justice, visit http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm.
“The financial services industry has been a long-term supporter of credit counseling, both because it’s good for consumers and for the economy,” said Bartlett. “The guidance you receive from the certified counselors, coupled with these tips, will help consumers successfully manage their finances and avoid getting into trouble.”
For tips and other financial tools, please visit My Money Management
