5 Credit Card Rules for New Grads
It’s that time of year when tassels are turned and graduation caps are tossed into the air. And ready or not, a new group of young adults venture out into the real world.
If you just graduated, you might be looking forward to managing money on your own. Certainly, it’s deliciously liberating. But it can also be tricky, especially with credit cards because it’s so easy to spend like a maniac and get yourself into debt.
So to help you get started on the right track, I’ve put together five credit card rules that you should always keep in mind:
Rule #1: Don’t fall for flattery
You’ve probably received credit card offers while in college. You may even already have one or two cards. But once you’re employed, expect to get a ton of mailed offers.
The envelopes will entice you with language such as, “You’ve been selected!” and “You deserve this opportunity!” Card issuers will do their best to make you feel special and wanted.
Banks do want you, but they also want millions of others whom they told are special, too. Don’t apply for a new card unless you actually need it. Make a rational decision based on your needs and don’t fall for the hype.
Rule #2: Read the fine print before you apply
If you do decide you need a credit card, it’s OK to consider the mailed offers. But also get online and check out credit card comparison sites, like Credit.com, where you can search for cards based on what your needs are and what cards you would qualify for. (You can figure out which cards you would qualify for before applying for them by checking your credit report card.)
Narrow the list down to about a half dozen candidates (maybe less, maybe more, depending on what category you’re looking at). Then read the fine print for each one so you can make an informed choice. You want the card that matches your lifestyle and your needs. For instance, if you’re driving a long distance to work, look at cash-back cards that offer a gas rebate.
There’s really no substitute for reading what’s often called “mouse print.” Think of this as an investment in your financial future. When you know how to earn rewards or avoid fees, you’ll benefit financially.
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7 mistakes your credit card company wants you to make
It’s a mistake that even John Ulzheimer, president of consumer education for SmartCredit.com, has made, to his utter dismay.
The bank won’t mind these mistakes
Letting your rewards points or miles expire is one of many common mistakes that your credit card issuer won’t mind if you make. The prospect of earning miles for each purchase encouraged you to charge up a storm, and now the bank doesn’t have to pay out a single mile.
As he learned the hard way, Ulzheimer says, when you select a rewards credit card, you have to read the fine print and know the rules of redemption or you could lose out big time. “It can be a lot to manage,” he says, but if you’re going to play this game you have to take the time.
Here are six other mistakes your credit card company won’t mind if you make:
- Pay only the minimum each month. You know you should pay more than the minimum and cut down on the interest you’re paying for “borrowing” the balance. Thanks to the Credit CARD Act of 2009, your bill tells you how much it’s going to cost you to pay off the balance over time. But that hasn’t seemed to scare too many consumers into paying more of their bill each month, says Gail Cunningham, vice president of the National Foundation for Credit Counseling.
- Pay late now and then. Don’t be mistaken, Ulzheimer says. “The credit card companies want you to pay. But they don’t mind your paying late once in a while.” Yes, under the CARD Act, they cannot raise the interest rate on your balance if you’re only 30 days late once. But they can raise the interest rate on your new purchases as long as they give you 45 days’ notice. And they can charge you a late fee – think how much late fees of $29 to $39 generate for the credit card companies.
- Ignore the mail. You are so busy, you don’t pay attention when you get your monthly credit card statement. Whether it arrives via email or snail mail, it’s critical to open it so you stay informed of any changes to your account. You could be getting a 45-day notice that your interest rate is rising for a late payment or some other reason. Or there could be charges on your statement that are fraudulent, which you won’t have to pay – as long as you inform the credit card company right away.