Credit Cards: Good or Evil?

There are a ton of great articles online about credit cards, and I suggest you dig into as much information as you can before you make a decision to get a credit card...or even get rid of one!  Getting a credit card can be a smart decision depending on what its purpose is.  For example, if you're a traveler, it can be difficult to book a flight, rent a car, or reserve a hotel room without a credit card; it's also a great way to build your credit rating.  The downside: it can be easier than you think to find yourself with debt, fees, and charges; also causing your credit rating to go down.

As I was diving into credit card advice, I found a perfect mantra to keep you on track on our very own VCU website: "No balance, no late payments."  The idea is to not make purchases you can't afford.  If you don't have the money to immediately pay off your credit card balance, don't make the purchase.  Pay off your balance each month and make sure you make that payment on time!

When I was a sophomore in high school, my parents helped me apply for a credit card to start building my credit.  With a simple part-time job, a used car, no cellphone, and no relationship; I didn't have many expenses...a CD here, a DVD there.  When I wanted a new movie that had come out, and I could afford it, my parents encouraged me to put it on my card and immediately pay it off when the bill came.  This is a great discipline to keep no matter what your purchase is!

Sometimes, life presents unforeseeable circumstances that require other decisions.  No matter what situation you find yourself in, here are some tips about credit cards that everyone should know:

•  When searching for a credit card, look for one that you want to stick with long-term.  A good introductory rate could run out in a few months and you're left with high interest rates and fees.  Find out what the normal rates, fees, and charges are for the card before you apply.
• Read the Terms & Conditions for the card.  Pay attention to any fees that might apply to you on a regular basis.
• ALWAYS make your payments on time.  Your payment history accounts for 35% of your FICO score (credit score).  Late payments add up fast and can really affect your credit score!  If you are late on a payment, the company reserves the right to jack up your interest rate!
• If you pay off your balance each month, you're not getting charged interest.  Balances owed make up 30% of your FICO score.  If you cannot completely pay off your balance, pay as much as you can.  If you make your "minimum payment," you have most likely doubled your purchase price.
• Check your statement CLOSELY  to make sure all transactions are correct.  Be on the lookout for suspicious activity or even an error on your statement.
• If your credit line unexpectedly raises or lowers, or you're unhappy with your interest rate; leave your credit card company!  Pay off any balances or transfer your balance to another card.

For credit card news, advice, and offerings from Vantage Credit Union, check out this link: http://vcu.com/cluster/Credit%20Cards

Tune in tomorrow for a short intro about your credit score!

Signing off...

Rob Cartwright