Credit Dos and Don’ts
Credit cards are essential for many purchases, and they certainly are easier to use than checks. But before you pull out the plastic, make these basic guidelines part of your own credit management plan:
DO shop around for the right card. Look for low interest rates and no annual fees. Always read and understand the fine print.
DO keep track of every credit card purchase each month.
DO make sure you know what incentives or features you’re signing up for, such as rebates or cash back on purchases, frequent flyer miles, or car rental or travel insurance.
DO know the minimum finance charge when you carry a balance.
DON’T carry a balance if you can avoid it. It’s best to pay off the entire balance before the end of the grace period so you don’t have to pay interest.
DON'T pay bills late. Late fees are expensive and, over time, they accrue interest. They can also negatively impact your credit rating. Spend only as much as you can afford—or less.
DON'T use a credit card for purchases less than $10. These small purchases can add up fast. Use cash instead.
DON'T pay for any extras you don't want or need.
Get more tips for choosing a credit card from the Federal Reserve Board.
Our Two Cents
A Look at the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (the CARD Act)
Beginning in August 2009, and continuing to roll out in 2010, Americans have new protections against credit card abuse. Included in this Act are provisions that:
- Prevent card issuers from raising interest rates in the first year after an account is opened
- Ban most retroactive rate increases
- End many late fee traps such as weekend deadlines, due dates that change every month, and billing cycles less than 21 days
- Restrict fees on subprime low-limit cards
- Require issuers to provide contract terms in language that consumers can see and understand
- Provide protections for college students and young adults.
For the complete text of the CARD Act, see the summary on GovTrack.us.