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150 using credit responsibly dont buy credit card

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Using Credit Responsibly Don’t buy credit card insurance. When you purchase this kind of insurance through a credit card company, your card payments will be made for you if you be- come disabled and you can’t satisfy your financial ob- ligations. The insurance will also pay off your credit card debt if you die. The problem with this kind of in- surance is that it tends to be highly priced and gener- ates big profits for card issuers. A better way to protect yourself from the financial impact of unemployment or disability is to build up your savings and maintain zero or low balances on your credit cards. Another al- ternative is to purchase disability insurance and possi- bly a term policy. • Consider whether it’s worth the money to register your credit cards with a special service in order to protect yourself from unauthorized charges in the event your cards are lost or stolen, especially if you carry just a few credit cards. The federal Fair Credit Billing Act says that if you notify a card issuer as soon as you realize that your card has been lost or stolen, you won’t have to pay any unauthorized charges. The law also says that if you don’t realize right away that your card has been lost or stolen and unauthorized charges appear on your card as a result, the most you will have to pay is $50. Certainly, a card registry ser- vice is a nice convenience since it will take just one call—to the card registry service—to report that your cards have been lost or stolen rather than having to make separate calls to each of your credit card com- panies. However, is the convenience really worth the expense, especially if you have few credit cards? 151
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Credit Hell You can create your own no cost credit card reg- istry for free by recording information about each of your cards in a file on your computer, or for safety reasons, put the information in a secure place within the confines of your home. Note the name of each credit card company, each account number, and the toll-free numbers to call should any of the cards become lost or stolen. Getting a Loan There are two basic types of loans—unsecured and secured loans. An unsecured loan is one that you do not have to collateralize with an asset. After your loan application is approved, all you have to do is sign on the dotted line. Therefore, to help protect themselves against the financial repercussions of a possible default, most lenders only make unsecured loans for relatively small amounts of money and often charge relatively high rates of interest. A secured loan works quite differently. The lender will require you to secure it with one of your assets so that the lender can take the asset if you default on the loan. The greater the amount of money you want to borrow, the more likely your loan will be secured. Common examples of secured loans include mortgages, home equity loans, and car loans.
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