Credit card management gets tricky with hidden fees |
By David Pilley on January 17, 2011
.jpg.aspx?width=75&height=75) I think everyone comes to a point in their lives where getting a credit card might sound tempting. Buying something now and paying for it later sounds like a sweet deal, but you need to handle the plastic responsibly. Make too many purchases and you could end up with a not-so-sweet bill. To prevent further damage from having an outstanding balance, you need to manage your credit card usage.
First, is your credit card the right one? It depends on how you are using it. If you are going to use your credit card for most of your everyday purchases, you need to look at a card with a high credit limit or with rewards. If you are going to use the card just for emergencies or just for the sake of maintaining a balance, look for a low interest rate. If you are going to pay the bill in full each month, then look for a card that doesn’t have extra fees.
In any case, you need to watch out for teaser rates and hidden fees. A teaser rate is a low introductory interest rate that will go up when the time limit expires. If you are getting a card with a teaser rate, you need to be sure you can handle the spike in interest or you could end up wallowing in debt. Your card might also have fees if you make a late payment, exceed the credit limit, or if your check bounces. If your card has an annual fee, you can call the company and ask to get rid of it.
When dealing with a monthly bill, you need to create a budget and stick to it. Don’t fall into the trap of thinking you can purchase anything you want. You’re buying it now, but you eventually have to pay for it. If you are going over your monthly budget, even by just one dollar, you need to be absolutely sure you have the sufficient funds to pay the bill at the end of the month.
If you’re going to carry a balance, make sure you pay it off in full within a six-month period. If you can’t, the interest will just keep growing and growing and growing…
Finally, take into account any incentives from using the card. Many cards offer rewards, such as rebates or frequent flyer miles. If these rewards can be redeemed easily and you are going to utilize these rewards, then by all means look for a card that offers them.
And if you are going to have more than one credit card… well, just make sure you have the funds to deal with all those numbers!
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