Manage Your Credit for a Happy Post-holiday

publication date: Dec 17, 2007

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author/source: Roswell Beacon

When it comes to the holidays, some consumers inevitably spend more money than they have. Whether it’s due to the spirit of the season or just poor money management, it’s still a mistake that can take months to correct.

Part of the reason people overspend is due to the often misunderstood language included with each credit card bill they receive. Important information is often printed particularly small in the hopes that people won't read their agreements and will fail to notice any changes in policy.

With the credit card season upon us all, consider the following tips before putting it all on plastic:

• Know your credit card limit and where you stand. In the past, people who charged a card that was over its limit would have to go through the embarrassing ordeal of being told their card was declined. These days, many credit companies have chosen to go a different route, allowing consumers to overcharge their cards and then face exorbitant fees and increased interest rates once the limit is exceeded. Before you leave the house and swipe your card, know exactly what your card balance is, how much you can spend before reaching your limit, and do not exceed that limit.
• Pay on time. Sometimes the day your bill is due changes from month to month. It might be due on the 10th one month, and the 8th day the following month. This often leads to late payments and late payment fees. A late fee is often in the neighborhood of $35. But a late payment also allows a company to invoke a penalty rate, which can be as high as 27 percent. In your agreement, it will likely say this rate can be issued after as little as one late payment, so don't just assume that since this is the first time you're late there will not be any penalties. Avoid these penalties by paying on time and knowing when your due date is each month.
• Avoid cash advances. Particularly during the holiday season, a cash advance can be very enticing. But they should be avoided. Most cash advances will include a fee and a higher interest rate than the actual credit card, making the cost of a cash advance far more than it appears.
• Verify your charges. Verify all charges on your card by keeping your receipts and checking them against what appears on your statement. This will accomplish two things. First, you'll catch any fraudulent charges if they exist. Second, you can examine your spending habits, which may or may not be healthy.
• Don't get tied down. You can shop for a credit card just like you can shop for holiday gifts. Some carry higher interest rates, so research the companies, their interest rates and policies, and ask friends if they would recommend their credit card companies. Take the results of your research to your company and then negotiate a new deal with them, or move to another company.