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Alert! Managing Credit Cards Should be Your Focus.

Managing Credit Cards

Read This Before You Apply for a New Credit Card…or Even Make a Credit Card Purchase.

Instead of focusing on the way we’re managing credit cards, we get sidetracked. Instead we talk about applying for cards, credit card rates, and extra card benefits, like rewards points.

Managing our credit cards is a secondary topic. Maybe it’s just not sexy enough. What does that mean? It means we should be very aware of all the rules and factors that affect our credit cards, and what they truly cost us.

Managing your credit cards goes way beyond knowing what your credit limit is.

Before you apply for more credit cards.

There are plenty of questions you need to get answers to as you consider a credit card offer and especially before you apply and accept.

Don’t be suckered into accepting a credit card offer you see in the mail just because they chose YOU for a special offer…that of course expires in a few weeks! They send millions of mailings every week to people like you and me.

So, let’s pretend you’re going to apply for a new credit card…maybe even your first card. You need to put the ‘offer’ under the microscope and break down the offer to its basics. Remember, credit card offer details differ greatly from offer to offer, card to card, from rates to benefits.

In the process of your examination, you may learn some things that can surprise you.

Here are the questions you should ask.

  • Is there an annual fee? There are plenty of cards that don’t charge an annual fee, so don’t think you have to accept an offer with an annual fee. Credit expert and NerdWallet spokesperson, Sarah Rathner says, “you want to find a card that provides greater value than its annual cost, if it has one.”
  • Is there a 0% introductory offer? How long is the offer? Are there any restrictions for using it? What will the rate be AFTER the period is over? More than that, will that 0% rate stay in effect if you miss a few payments?
  • What is the late payment fee? Be assured, there IS a fee for making a payment just one day past the stated due date. Most credit cards assess a $39 fee when your payment is late…a fee they add to your outstanding balance.
  • Are there rewards or points, and if so, how do you earn and redeem them? Points programs have program rules, and they’re well defined, so learn what they are. With some cards, you may find that it’s not as easy to redeem points as you might think.

“You want to find a card that provides greater value than its annual cost.” – Sara Rathner

The key to managing credit cards? Read the fine print!

Nowadays, credit card companies are required to give you ALL the details of their offer AND the terms of conditions pertaining to using the card—And that’s before you become one of their new credit card holders

Where are these details? If you received an offer in the mail, the Terms and Conditions are included in the offer you received. Yes, it’s all in fine print. But it is there.

And it’s up to you to read them.

More than that, it’s also important to think about what’s not in the fine print. Because that’s where all the trouble with managing credit cards comes in.

How poor card management turns into a bad situation.

It happens to many people that apply for and get credit cards, especially younger people getting their first credit cards. They soon get in way over their heads. Here’s how:

  1. They use credit like cash. In other words, the excitement of suddenly having access to more purchasing power feels like having cash in your pocket. So, they hit their credit limit fast.
  2. They have no strategy for paying their debt off. Many people fail to focus on paying down their debt and don’t have a plan for how to do it.
  3. They’ll accept several credit card offers. Obtaining credit is contagious because it increases someone’s buying power with little effort.
  4. They only pay the monthly minimum due. This seems like another bargain. Not only do you get a credit account, you don’t have to pay it all back right away. Many people get used to paying just the minimum due, to “save money.”
  5. They start mismanaging their credit. Many people start missing payments (incurring fees), going over their credit limit (incurring more fees), and not paying attention to the overall effect it has on their credit score.
  6. They ruin their credit. Over time, they ruin what they once had. Easy access to credit. With a low credit score, it’s harder to qualify for loans, or you might only be able to get high-interest loans and other credit cards.

Finally, beware of credit card scams.

NerdWallet spokesperson, Sarah Rathner, warns consumers to beware of credit card scammers who call pretending to be from your credit card, offering to help or alert you of dangers.

Often, they’ll say there’s some sort of problem with your card and you need to provide your card number information. That will only make your credit problems worse if they get ahold of your account.

You can hear Sarah’s full interview on the Easy Prey podcast, hosted by Chris Parker, who is also the CEO of WhatIsMyIPAddress.com.

You can find her interview of the podcast—Managing Credit Cards (Episode 27) and other interviews by clicking the link below.

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