Ah, the credit card. That magical card of freedom. You may have gotten your first card in college, before you had any salary at all but just in time for that upcoming spring break trip: clothes, gas money, hotel…and then, one month later – BOOM!
Instantly you learned why your parents warned you about credit cards. Now that you’re older, even if you have a steady income there are still some credit card rules to live by.
1. If you can’t afford it now, you probably can’t afford it later.
2. Pay your bill on time or early every month. Late fees are harsh and make that 20% off discount that made you buy that thing in the first place obsolete. Also the interest rates kick in once your payment is late. Late payments ruin your credit score as well, making it difficult to get loans for things you really need – a car or a home.
3. Don’t get a new card every time a clerk suggests it. Sure, you may get a discount. But what if it encourages you to just buy more next time? More purchases equals more spent money equals more credit card debt. Just say no.
4. Avoid gimmicks. Are you really going to spend enough that you’ll earn that free trip to Hawaii the credit card company offers you? If you do spend that much, can you pay off the debt? And if so, is it worth it? If you’re only making purchases on a credit card to incur “free” stuff, consider what you’d be able to do with the money not spent on interest rates, late fees and so on. There’s a reason companies offer these incentives.
5. Keep a low-to-no-balance. The idea of a credit card is that it’s there when you need it – you’re in the wilds of Western Montana and there’s not an ATM in sight. You need gas. Pull out that handy credit card. But clothes you can’t afford? A splurge vacation? Wait until you have the money.
6. Don’t use an easy pin. Is your pin 1111? 1234? 6969? If so, change it. These are three of the most common pins people use and they’re the first codes thieves will try if they get a hold of your card.
7. Don’t leave your credit card information around. Never include the Card Security Code (CSC), the expiration date or the full number on checks for payment. If you keep copies of your credit card information, be sure to keep it in a secure location.
8. Don’t respond to emails from credit card companies if you didn’t initiate the response. There are a lot of identity thieves, fishing scams and credit card scams around.
9. Make sure no-one is watching when you enter your pin number. Look over your shoulder!
10. Be responsible. Just like Mom and Dad said, it’s important to be responsible. Use your card judiciously, pay off balances as soon as possible, pay on time, and be discreet with your card.