fis200_week5_reading1ch7

Warning 148 using credit responsibly dont run up the

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Warning 148
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Using Credit Responsibly Don’t run up the balances on your credit cards. Ide- ally, when you make a credit card purchase, you will not charge anything more on the card until you have paid off your account balance. If you do maintain a balance on your credit card, always pay more than the minimum due so that you can pay off the card sooner, not later. The longer you take, the more your credit card will cost you. If you can’t pay the balance in full on each of your credit cards, focus on paying off your high- est interest rate cards first. Once you have paid the balances on those cards in full, put the money you were paying on them toward the card/s with the next highest interest rates. Cancel any retail charge cards you may have and pay off their balances. Nearly all retailers accept Master- Card and Visa so there is no reason to have a retail charge card. On top of that, retail cards tend to have relatively high interest rates. • Look through the flyers that come with your monthly credit card billing statements. Most of the inserts will probably be marketing solicitations, but some of them may notify you of changes in the terms of your credit—charges that will almost certainly be good for the card issuer but not for you. Other inserts may notify you of your right to opt out of having the credit card company share your personal and finan- cial information with other companies, and tell you how to opt out. Take advantage of these opportunities Tip 149
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Credit Hell because the less your information is shared among businesses, the less likely that you will be the victim of identity theft and the fewer unwanted marketing solicitations you will receive in the mail. By the way, credit card issuers are not obligated to give you any more than 15 days notice before they change the terms of your credit. • Don’t take advantage of skip payment offers. You will be charged interest on your outstanding card balance for the month you skip making a payment, so the total outstanding balance on your credit card will in- crease even if you do not charge anything more on the card. Don’t go over your credit limit. Exceeding that limit or getting close to it will damage your credit history and lower your credit score. • Minimize your use of cash advances. Although a cash advance is a quick source of extra cash, it is also an expensive source since the interest rate applied to a cash advance balance will be significantly higher than the one that applies to your purchases. Also, you may be charged a steep one-time fee for each cash advance. These same pitfalls apply to the “con- venience checks” you may receive periodically from credit card companies. Avoid credit card offers for travel insurance, collision insurance, life insurance, extended warranties, emer- gency road service, and so on. They are often unnec- essary and you can almost always buy them for less from another source.
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